Burma’s Exports Hit by Global Economic Downturn -IRRAWADDY

http://www.irrawaddy.org/highlight.php?art_id=14642

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By KYI WAI Monday, November 17, 2008

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RANGOON — Burma’s exports have been severely hit by declining orders from some of the country’s key trading partners, including China, Thailand, Singapore, India and Malaysia, which are reeling from the economic effects of the world financial crisis.

“The global financial crisis is also affecting Burma’s trade and economy,” said a senior government official.


A trader inspects some black lentils at the Bayintnaung commodity wholesale market in Rangoon. A deepening global economic recession is beginning to take a toll on Burma’s exports, as demand for agricultural products falls in neighboring countries. (Photo: The Myanmar Times)
“The effects of the financial crisis in the US have reached China, and now China’s economic difficulties are beginning to impact our country, as demand for agricultural products has fallen,” the official added.


Agricultural products, including rice, beans and pulses, are Burma’s second-largest source of export income after natural gas, earning US $600 million from China and India annually.

“Demand for beans and pulses has fallen noticeably since September and now there are no new orders,” said a dealer in Rangoon. “Prices are at their lowest level in three years. If we don’t get more orders, prices will continue to decline.”

The sudden drop in demand has taken many exporters by surprise. Some companies that have stockpiled agricultural products for export are now having trouble earning back the money they’ve spent, according to industry insiders.

Rubber is another product that has been hard hit by the global slump.

“There was no buying at the beginning of the rubber season,” said a member of the Rubber Production Association. “Our business depends entirely on exports, so now everyone at the rubber plantations—employers and employees—is in serious trouble.”

According to a report on Burma’s rubber production, the country exports over 50,000 tonnes of the material annually, produced mainly in Mon State and Irrawaddy, Rangoon and Pegu divisions.

Even rice exporters are finding themselves short of customers. “Some domestic companies received rice export permits, but now they have no buyers,” said a representative of the Union of Myanmar Federation of Chambers of Commerce and Industry.

The deterioration of the export sector is expected to have far-reaching effects on Burma’s struggling economy. It will shrink the country’s foreign exchange reserves, increase the number of unemployed, lower purchasing power and productivity and result in the collapse of some businesses, said one economic expert.

“To rehabilitate the economy, government stimulus packages—reducing taxes, creating more job opportunities and supporting businesses with money—are very, very important,” said the expert.

“If the government neglects to do something, it will also feel the effects of this crisis. The government has an obligation to improve living conditions and prevent an economic breakdown,” he added.