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Myanmar economy at risk after military takeover

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Lis MARTIN & Sophie DEVILLER


Foreign investors flocked to Myanmar as it began its democratic transition a decade ago, but last week’s military coup is likely to accelerate a trend of Western withdrawal.


Myanmar’s untapped potential was up for grabs in 2011, when generals in charge of a 49-year junta loosened their grip, paving the way for democratic reforms and economic liberalisation in the country of more than 50 million people. Investors pumped money into telecommunications, infrastructure, manufacturing and construction projects.


But the buzz was already fading by 2017 for the West, after a military crackdown on Rohingya Muslims in Rakhine state led to allegations of genocide.


And the sight of generals running the show again could be the last straw for Western businesses, analysts say.


“Now with the coup, the view would be: basket case, banana republic’’, Yangon-based analyst David Mathieson said. “I think what we are going to see is a lot of Western countries going ‘No way.’’


Panic over the return to military rule was immediate.


The response reverberated from the outskirts of Yangon — where construction work halted on a Thai-owned $1 billion industrial estate project — to Australia, where a Perth-based resources company developing a silver, zinc and lead mine in Shan State suspended share-trading.


In the coup’s immediate aftermath, US President Joe Biden threatened to reintroduce economic sanctions that were formally removed in 2016. Some targeted sanctions were imposed on key Myanmar military personnel over the 2017 Rohingya crisis.


And as the European Union considers an economic embargo, the country’s rag trade industry could be at risk.


The garment sector has boomed in recent years, bolstered by scores of international brands such as H&M, Gap and Adidas, which shifted their production to factories in Yangon’s outskirts. According to Singapore-based Capital Economics, Made-in-Myanmar clothing, footwear and handbags make up three per cent of the country’s gross domestic product. But with the military back in power, a Yangon-based private sector source worries for the fate of the industry’s 700,000 workers.


Global heavyweight clothing retailers might look for a “PR bounce” and halt sourcing from Myanmar’s factories, he said, requesting anonymity owing to the sensitivity of the issue.


But the unintended impact could be “malnutrition and sex-trafficking” for the mostly female workers.


“The people who are going to suffer are the factory workers... Brash actions from multinational retailers are going to hit them hard’’, he said.


Already, the country is reeling from the difficult economic headwinds of the coronavirus pandemic, prompting the International Monetary Fund to send Myanmar a $350 million emergency cash package in January. — AFP


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