Myanmar’s economic outlook remains bleak after one year of renewed military rule
The World Bank is maintaining a bleak outlook for Myanmar from the double whammy of the military coup on February 1, 2021 and the ongoing Covid-19 pandemic, according to its latest Myanmar Economic Monitor released on January 26.
The international financial institution, which focuses on providing loans to the governments of low- and middle-income countries, estimates that Myanmar’s economy shrank 18 per cent in the fiscal year ended September 30 and projects just one per cent growth in the 12 months to September 2022.
Myanmar’s economy could have been 30 per cent larger without the twin blows, the report said, which shows the disastrous impact the coup had on the country’s overall economic development and the management of the pandemic.
“Critically weak economy”
“While reflecting recent signs of stabilisation in some areas, the projection remains consistent with a critically weak economy,” the World Bank said in a statement.
“Economic activity continues to be affected by substantial weaknesses in both supply and demand. Firms continue to report sharp reductions in sales and profits, cash flow shortages and a lack of adequate access to banking and Internet services,” the statement said.
Western countries responded to the coup with sanctions and a number of major companies announced plans to cease operations in Myanmar to protest the junta’s violence against civilians. Some of them, however, are facing difficulties to do so.
Foreign investors given a hard time by the junta
One of the largest foreign investors in the country, Norway’s telecom giant Telenor, had a hard time to sell is mobile phone business after the junta originally opposed the sale of its stake to Lebanese company M1. The generals only agreed after M1 pledged to forge a partnership with a local conglomerate with ties to the military. During the exit process, which lasted for about half a year, Telenor’s senior executives were prohibited from leaving the country.
Japan’s Kirin, another large foreign investor in Myanmar, is currently also entangled in legal difficulties to cut its ties to a military-linked partner in its local brewery business. Kirin has said its Myanmar partner was uncooperative in negotiations to end the joint venture. The case is now at the commercial court in Yangon which has, interestingly, just recently ruled in Kirin’s favour, but the issue is far from being settled.
France’s TotalEnergies and US energy major Chevron have recently announced they would be leaving the natural gas joint venture they are part of in Myanmar with Thailand’s PTT Exploration and Production and a Myanmar military proxy firm. They said they would hand over their combined 59.5-per cent stake in the joint venture to the partners without compensation. It is broadly expected that PTT Exploration and Production will be taking over the entire stake and continue as sole operator of the project, indicating that the state-controlled Thai company does not have any major qualms to do business with Myanmar’s junta.
UPDATE: Australian energy firm Woodside on January 27 announced in a statement to shareholders it would withdraw from Myanmar after nine years of operating various exploration and drilling sites in the country, including a deepwater gas project off Myanmar’s western coast in partnership with TotalEnergies.
The Perth-based petroleum company cited “the deteriorating human rights situation” as one major reason for the decision, which will cost the company at least $200 million in write-downs.
[caption id="attachment_38145" align="alignleft" width="300"] Closed storefronts in Yangon. Picture: Hkun Lat[/caption] The World Bank is maintaining a bleak outlook for Myanmar from the double whammy of the military coup on February 1, 2021 and the ongoing Covid-19 pandemic, according to its latest Myanmar Economic Monitor released on January 26. The international financial institution, which focuses on providing loans to the governments of low- and middle-income countries, estimates that Myanmar’s economy shrank 18 per cent in the fiscal year ended September 30 and projects just one per cent growth in the 12 months to September 2022. Myanmar’s economy could have been...
The World Bank is maintaining a bleak outlook for Myanmar from the double whammy of the military coup on February 1, 2021 and the ongoing Covid-19 pandemic, according to its latest Myanmar Economic Monitor released on January 26.
The international financial institution, which focuses on providing loans to the governments of low- and middle-income countries, estimates that Myanmar’s economy shrank 18 per cent in the fiscal year ended September 30 and projects just one per cent growth in the 12 months to September 2022.
Myanmar’s economy could have been 30 per cent larger without the twin blows, the report said, which shows the disastrous impact the coup had on the country’s overall economic development and the management of the pandemic.
“Critically weak economy”
“While reflecting recent signs of stabilisation in some areas, the projection remains consistent with a critically weak economy,” the World Bank said in a statement.
“Economic activity continues to be affected by substantial weaknesses in both supply and demand. Firms continue to report sharp reductions in sales and profits, cash flow shortages and a lack of adequate access to banking and Internet services,” the statement said.
Western countries responded to the coup with sanctions and a number of major companies announced plans to cease operations in Myanmar to protest the junta’s violence against civilians. Some of them, however, are facing difficulties to do so.
Foreign investors given a hard time by the junta
One of the largest foreign investors in the country, Norway’s telecom giant Telenor, had a hard time to sell is mobile phone business after the junta originally opposed the sale of its stake to Lebanese company M1. The generals only agreed after M1 pledged to forge a partnership with a local conglomerate with ties to the military. During the exit process, which lasted for about half a year, Telenor’s senior executives were prohibited from leaving the country.
Japan’s Kirin, another large foreign investor in Myanmar, is currently also entangled in legal difficulties to cut its ties to a military-linked partner in its local brewery business. Kirin has said its Myanmar partner was uncooperative in negotiations to end the joint venture. The case is now at the commercial court in Yangon which has, interestingly, just recently ruled in Kirin’s favour, but the issue is far from being settled.
France’s TotalEnergies and US energy major Chevron have recently announced they would be leaving the natural gas joint venture they are part of in Myanmar with Thailand’s PTT Exploration and Production and a Myanmar military proxy firm. They said they would hand over their combined 59.5-per cent stake in the joint venture to the partners without compensation. It is broadly expected that PTT Exploration and Production will be taking over the entire stake and continue as sole operator of the project, indicating that the state-controlled Thai company does not have any major qualms to do business with Myanmar’s junta.
UPDATE: Australian energy firm Woodside on January 27 announced in a statement to shareholders it would withdraw from Myanmar after nine years of operating various exploration and drilling sites in the country, including a deepwater gas project off Myanmar’s western coast in partnership with TotalEnergies.
The Perth-based petroleum company cited “the deteriorating human rights situation” as one major reason for the decision, which will cost the company at least $200 million in write-downs.
