High Kyat Killing Business, Say Burma's Exporters
By May Lay 29 June 2012
Burmese businesspeople exporting agricultural products and garments say that they cannot sell their goods at the current rate of exchange, even though it has increased recently from the float-rate of 818 kyat, which was introduced by the Burmese government on April 1 in an attempt to abolish the multiple exchange rate system that had existed in Burma for decades.
According to Soe Tun, a central executive member of the Myanmar Rice Industry Association, in first week of June a group of leading businesspeople and exporters held a meeting in Rangoon, following which they released an open letter to President Thein Sein requesting government assistance in raising the exchange rate to 1,100 kyat to the dollar.
“We have sent a statement to our president,” said Soe Tun. “We requested that the exchange rate be fixed at 1,100 kyat to the dollar. If that is not possible, we would like to see it at around 1,000 kyat. That would be better than nothing. We cannot survive at this rate any longer.”
He said that Burma could not compete with other rice-exporting nations unless the rate was adjusted. Burma is the third largest rice exporter in Asia after Thailand and Vietnam.
Speaking to The Irrawaddy on Friday, a garment factory owner who employs nearly 2,000 workers in Hlaing Tharyar in Rangoon Division, said, “Following the mass strikes and protests earlier this year, we have had to raise laborers’ wages. If the exchange rate remains the same, we will not be in business in three months time.”
There are 293 factories in the garment industry alone in Burma, employing no less than 100,000 workers, mostly women.
Several Rangoon businessmen have blamed the inflated exchange rate on the Central Bank’s decision to issue 10,000-kyat bank notes, saying their introduction had caused immediate inflation. Consequently, the impact of inflation caused panic-buying of the US dollar on the black market.
The exchange rate peaked at 890 kyat on June 27, its highest value this year. It began the month of June at 835 to the dollar.