Housewives huddle over jewelry counters in Yangon’s bustling Chinatown, but fashion is not foremost on their minds. This is banking in Myanmar’s dysfunctional economy.
On nearby Shwe Bontha Street, the heart of the gold market since colonial times, Nyan Tun is more than just a trader: He is an unofficial banker in the military-ruled country.
“Normally, the major buyers are farmers. They will buy gold with a little bit of extra money to sell before the next harvest,” he said. “Second are the housewives, who love to buy jewelery as savings.”
Photo: AFP
The global economic crisis may have reignited suspicion of banks worldwide, but in isolated Myanmar such distrust has long run deep and savers have no desire to put their money into the backward banking system.
Not that people have much to spare: Decades of economic mismanagement by the country’s rulers, plus international boycotts and sanctions, have generated a population struggling to get by and facing soaring consumer prices.
Between 2005 and last year, the annual inflation rate in Myanmar averaged 20 percent, according to the Asian Development Bank.
“If you want to catch up with inflation, you buy gold. If you save money in the bank you lose money,” Nyan Tun said.
“People have much more trust in gold as a store of value,” added the trader, whose name has been changed in this article at his request.
In military-ruled Myanmar, saying anything seen as critical of the junta can have serious consequences.
Nyan Tun said the value of a gold “tical” — about half a troy ounce — had increased more than 30-fold in the local currency, the kyat, since his early days as a gold trader in the late 1980s.
Sean Turnell, a specialist in Myanmar’s economy at Macquarie University in Sydney, said rampant increases in consumer prices were largely a result of the government’s habit of simply printing more money to fund its spending.
An abundance of natural treasures — including gold, gas, teak, oil, jade and gems — could make the country a rich nation as it once was before coming under military rule in 1962.
But Myanmar remains one of the world’s least developed countries, with nearly a third of the population living below the poverty line, according to World Bank figures, as the junta and its associates exploit these raw materials for their own benefit.
“The fiscal situation should be good,” said Turnell, on the basis that earnings from gas supplies should fund government spending. “But they [the military rulers] don’t bring money they get from gas properly into public accounts. These funds are not recorded.”
Few believe Myanmar’s controversial first election in 20 years, due on Nov. 7, will bring about much-needed economic reform, as the polls are widely expected to simply cloak military rule with civilian clothing.
However, there have been some shifts in the economic landscape ahead of the election, with the junta instigating a spate of privatizations of state firms and properties.
Along with these sell-offs of assets including ports, factories and cinemas, four conglomerates on international sanctions lists and run by junta-friendly tycoons have been given licenses to start up new banks.
Turnell said the cronyism apparent in these recent developments suggested the country was “drifting in a really strange direction away from a totalitarian system into one that works like a semi-criminal economy.”
For the average Myanmar citizen, there is still no economic stability, or decent alternative to their trustworthy treasure.
With the precious metal playing such a key role, the regime keeps a close eye on its trade. Nyan Tun said plain-clothed special branch police lurk on Shwe Bontha Street and pressure traders to stop selling when prices go up.
“Maybe the government thinks inflation is due to the price of gold, but actually it’s the other way round,” he said.
“The gold price is the index of inflation to citizens,” agreed a business editor in Yangon who did not want to be named. “People don’t know how else to judge inflation. The government gives no explanation.”
Myanmar’s banking system has never really recovered from a major crisis in 2003, which saw three banks completely collapse and was exacerbated by the policies of the Central Bank, such as recalling loans from borrowers.
People have also been hit hard in the past when the authorities scrapped certain currency units as legal tender.
A mass uprising against the military in 1988, which was brutally crushed, escalated from protests over a major episode of demonetization by the regime.
“That wiped out the savings of a huge amount of people,” Turnell said. “I have never come across a single Burmese person who saves money in the banks.”
For now gold remains the safest haven in Myanmar — the reason why a fishmonger will wear her savings around her neck.
“Gold: This is the only thing people trust,” the business editor said.
WASHINGTON’S INCENTIVES: The CHIPS Act set aside US$39 billion in direct grants to persuade the world’s top semiconductor companies to make chips on US soil The US plans to award more than US$6 billion to Samsung Electronics Co, helping the chipmaker expand beyond a project in Texas it has already announced, people familiar with the matter said. The money from the 2022 CHIPS and Science Act would be one of several major awards that the US Department of Commerce is expected to announce in the coming weeks, including a grant of more than US$5 billion to Samsung’s rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), people familiar with the plans said. The people spoke on condition of anonymity in advance of the official announcements. The federal funding for
HIGH DEMAND: The firm has strong capabilities of providing key components including liquid cooling technology needed for AI servers, chairman Young Liu said Hon Hai Precision Industry Co (鴻海精密) yesterday revised its revenue outlook for this year to “significant” growth from a “neutral” view forecast five months ago, due to strong demand for artificial intelligence (AI) servers from cloud service providers. Hon Hai, a major assembler of iPhones that is also known as Foxconn, expects AI server revenues to soar more than 40 percent annually this year, chairman Young Liu (劉揚偉) told investors. The robust growth would uplift revenue contribution from AI servers to 40 percent of the company’s overall server revenue this year, from 30 percent last year, Liu said. In the three-year period
LONG HAUL: Largan Energy Materials’ TNO-based lithium-ion batteries are expected to charge in five minutes and last about 20 years, far surpassing conventional technology Largan Precision Co (大立光) has formed a joint venture with the Industrial Technology Research Institute (ITRI, 工研院) to produce fast-charging, long-life lithium-ion batteries for electric vehicles, mobile electronics and electric storage units, the camera lens supplier for Apple Inc’s iPhones said yesterday. Largan Energy Materials Co (萬溢能源材料), established in January, is developing high-energy, fast-charging, long-life lithium-ion batteries using titanium niobium oxide (TNO) anodes, it said. TNO-based batteries can be fully charged in five minutes and have a lifespan of 20 years, a major advantage over the two to four hours of charging time needed for conventional graphite-anode-based batteries, Largan said in a
Taiwan is one of the first countries to benefit from the artificial intelligence (AI) boom, but because that is largely down to a single company it also represents a risk, former Google Taiwan managing director Chien Lee-feng (簡立峰) said at an AI forum in Taipei yesterday. Speaking at the forum on how generative AI can generate possibilities for all walks of life, Chien said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — currently among the world’s 10 most-valuable companies due to continued optimism about AI — ensures Taiwan is one of the economies to benefit most from AI. “This is because AI is