Webinar on “The Myanmar Economy Six Months after the Coup: What’s Next?”

In this webinar, Mr Khine Win and Mr Thompson Chau shared their insights and assessments of the devastating effects of the coup in Myanmar and most recent Covid-19 wave, how different economic actors and interlocutors are navigating the ground, and the relevance of alternative visions for responsible investment proposed by the National Unity Government.


Monday, 30 August 2021 – The Myanmar Studies Programme at ISEAS continued its monthly discussion on the current political moment in Myanmar, and the impact of the coup. Experts speaking at this webinar on the topic of the economy six months after the 1 February 2021 coup had a grim outlook for the economy: a third wave of Covid-19 in the country had added to the economic impact of the coup on peoples’ lives and livelihoods.

Mr Khine Win and Mr Thompson Chau
Mr Khine Win and Mr Thompson Chau shared their insights and assessments of the devastating effects of the coup in Myanmar. Ms Moe Thuzar moderated the session. (Credit: ISEAS – Yusof Ishak Institute)

Disruptions to daily lives and livelihoods since the coup have hit the economy hard too.  The Independent Economists for Myanmar (IEM) had highlighted the impact on the banking/financial sector earlier, and their latest report warned of a full-scale banking crisis arising from the State Administration Council’s mismanagement of the banking system. The World Bank’s Myanmar Economic Monitor in July had forecast an 18% contraction in the economy with “damaging implications for lives, livelihoods, poverty and future growth”. In addition to the World Bank’s forecast, the International Labour Organisation (ILO) had also warned of an employment crisis following the coup, while the United Nations Development Programme (UNDP) had predicted that the combined effect of Covid-19 and the coup could result in nearly half of Myanmar’s population living below the poverty line in 2022

Mr Thompson Chau, Editor-at-Large at Frontier Myanmar, and Mr Khine Win, Executive Director of the Sandhi Governance Institute, joined Ms Moe Thuzar, co-coordinator of the ISEAS Myanmar Studies Programme, to share their views on how the economy had been affected by the Covid-19 third wave, and the challenges that lay ahead, for both average people and businesses.

  • Income insecurity continued in Myanmar. In 2020, the National League for Democracy (NLD) government had spent about 1.5% of the country’s Gross Domestic Product (GDP) on Covid-19 economic relief programmes (compared to the 2% on average spent by developing economies globally). The economy was already weak from the second wave of Covid-19 that had spread before and during the November 2020 general election in Myanmar. The 1 February coup was thus akin to a fatal blow to the economy.
  • Most people in Myanmar had come to rely heavily on mobile money transfers, especially rural and poor households. Transactions had been smooth before the internet disruptions after the coup. There was now a 14% transaction cost for cash withdrawal, which had affected rural households’ income and local/home businesses.
  • People in Myanmar had lost trust in the banking system. Withdrawal limits and long queues for cash withdrawal also affected business productivity. The lack of a properly functioning financial sector added to the challenges faced by many businesses to resume operations. The SAC’s priority appears to be cracking down on the Civil Disobedience Movement, with the authorities asking banks to submit ATM withdrawal and deposit details as well as bank account transactions.
  • The banking sector challenges also affected many investors and businesses to either import items into Myanmar, repatriate assets, or pay rent.
  • The dual whammy of Covid-19 and the coup had thus resulted in Myanmar becoming one of the most severely affected economies in Southeast Asia, from a relatively optimistic outlook in 2020 for recovery.
  • While there seemed to be signs of a return to some form of economic activity in June 2021, the Covid-19 third wave in July had swept away any form of business resumption and expectations of recovery.
  • While there had been some initial hope that the pandemic might provide an opportunity for the military and democracy movement to find some common ground in fighting the pandemic, such hopes were dashed when the military ambushed doctors and community groups trying to assist households in need of Covid-19 assistance. There seemed to be no point of reconciliation possible at the present moment.
  • Confusing communications had beset the NLD government’s Covid-19 response in the earlier days of the pandemic in 2020. The SAC had not heeded lessons of the past, and instead had announced an extended “holiday” in mid-July when Covid-19 cases started rising. This was confusing for businesses, as the SAC had not effectively clarified whether the “holiday” entailed working from home (as would have been the case in a lockdown) and their concrete plans for reopening or extending the lockdowns. Adding to the confusion, the SAC had encouraged those who could work to continue working.
  • In such an environment, some investors had either exited Myanmar or cancelled their investments. For example, the military’s internet restrictions (and surveillance concerns) had caused Telenor’s exit and Ant Group’s scrapped plans to invest in Myanmar’s nascent fintech scene.
  • The agriculture sector was equally affected; the spread of Covid-19 had compelled China to close its Myanmar border, disrupting border trade and operations of farmers and rural exports. Additionally, there were reports of local agriculture start-ups (with donor support) becoming casualties of armed clashes between local “People’s Defense Force” groups and security forces.
  • The energy sector was also experiencing short- and long-term effects of the coup. The Civil Disobedience Movement (CDM) strikes and peoples’ refusal to pay electricity bills to the SAC-controlled Ministry of Electricity and Energy (MoEE) had caused huge losses in revenue for the MoEE, which could amount to 10% of state fiscal revenue. The power outages resulting from electricity crisis also had implications for the healthcare sector and the ongoing Covid-19 response, as hospitals rely on generators to continue functioning.
  • The coup had also stalled important energy reforms as well as heightening the reputation risk for investors. Recently, Hong Kong’s VPower Group did not renew contracts for two of its nine power station projects in Myanmar after its links with military-owned companies were exposed.
  • Meanwhile, the SAC seemed to be turning more inward-looking in its economic moves, prioritising import-substitution and self-sufficiency, and banning some imports to reduce the use of foreign currency.
  • At the same time, the SAC was seeking to shore up its foreign currency needs by approving or resuming several mega projects with China and Thailand. The SAC had earlier reorganised BRI project implementation committees, including removing the public consultation requirement for China-Myanmar Economic Corridor projects.
  • Thus, while the SAC’s Minister for Investment and Foreign Economic Relations had stated his confidence (in a Bloomberg interview) that Asian investors would continue in Myanmar, the reality today is that most of the business pull-outs are by Asian businesses.
  • Still, the SAC continued with its finalisation of the Myanmar Economic Recovery Plan (MERP), which purportedly retains some of the NLD government’s economic recovery measures. None of the foreign chambers of commerce and industry operating in Myanmar seemed to have been consulted, unlike during the development of the NLD’s Covid-19 Economic Relief Plan (CERP) and Myanmar Economic Recovery and Reform Plan (MERRP), although the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) seemed to have been invited to give its inputs to the SAC’s MERP.
  • Thus, at the seven-month mark of the coup in Myanmar, the majority of the people in the country faced an uncertain future as regards education and employment. The brain-drain phenomenon of the past was rearing its head again; migration for education was starting from secondary-school levels, and capital flight had already taken place. Many medical/healthcare workers were either in prison, in hiding, or had succumbed to Covid-19; this did not bode well for the future of the healthcare sector.
  • Yet, the SAC’s focus and attention continued to be on controlling the “security situation” and restricting people’s movement between or within towns and cities.
  • The NUG had softened its position on the business community, publicly praising Telenor and asking it to continue operations but calling out investors who struck deals with the SAC and who have links with military-owned companies. The NUG had also called on responsible companies to preserve employment, putting it at odds with pro-divestment union activists.

The webinar attracted the interest of over 160 attendees.

For Frontier Myanmar’s review of the World Bank’s Myanmar Economic Monitor, please click here.

For Mr Khine Win’s article on “Third Wave of Covid-19 and Myanmar”, please click here.