The junta’s latest attempt to reduce the shortage of cooking oil in Myanmar as well as the surging price of the staple will likely have the opposite effect, cooking oil importers and traders say.
They were speaking after it was announced earlier this week that eight cooking-oil importing companies had been blacklisted for “misconduct” and “non-compliance with rules and regulations” by the junta-controlled Directorate of Investment and Company Administration (DICA).
The June 24 announcement from DICA did not specify the rules and regulations the companies allegedly violated or whether their owners would be arrested, as several cooking importers were in August of last year when the junta first began attempting to reduce the price of cooking oil.
A Yangon-based trader said that “blacklisted” likely meant that the companies would no longer be able to import cooking oil.
It is unclear how reducing the import of cooking oil will reduce shortages at retail shops or lower its price.
Perhaps the owners of the blacklisted firms can set up new companies to import cooking oil if they are not arrested or charged with crimes, the trader said.
The eight companies blacklisted include one, Ayeyar Hinthar Trading, owned by high-profile crony Zaw Win Shein. He is the adopted son of Major General Soe Maung who was president’s office minister in the quasi civilian administration of Thein Sein, which governed Myanmar from 2011 till early 2016.
The seven other blacklisted edible-oil importing companies are: First Top Edible Oil Co Ltd, Diamond Dragon Co Ltd, Six Winner Brothers Co Ltd, Thein Than Yadanar Co Ltd, Jewel Arrow Co Ltd, Agri One Co Ltd and Grand Unity Co Ltd.
First Top Edible Oil is owned by U Myint Kyu, a former chair of the Myanmar Edible Oil Dealers’ Association. He was arrested in August of last year for allegedly violating price controls set by the junta.
Three traders told The Irrawaddy that blacklisting companies or traders will not lower the price of cooking oil. Instead, crackdowns on traders will lead to shortages and higher prices, they said.
One cooking-oil importer warned that the price of the staple could “skyrocket,” explaining the sellers may become reluctant to sell during a crackdown on the trade. “If importers stop importing, there will be [more severe] shortages of cooking oil. When that happens, prices could skyrocket,” the importer explained.
The price of cooking oil – mainly edible palm oil – has surged over the past three years, and shortages have been common. Myanmar produces only about one-third of the cooking oil it consumes and imports the rest, about 700,000 tonnes a year.
The price of edible palm oil in Myanmar jumped 75 percent in the three years after the coup: from 2,570 kyats (US$1.20) per viss (1.6 kilograms) in January 2021 to 7,500 kyats in January 2024.
Importers say this is because the junta limits the amount traders can import to prevent more US dollars from leaving the country.
The junta has imposed a price cap of 5,700 kyats per viss on cooking oil. Despite this, the price of edible palm oil ranges from 11,000 to 16,000 kyats per viss.
The junta began attempting to lower the price of cooking oil last August by arresting wholesalers. U San Lin, then-chair of the Myanmar Edible Oil Dealers’ Association, was arrested at his home by officers from the Office of the Chief of Myanmar Security Affairs and the Bureau of Special Investigation. Merchants U Aye Sein, U Wan Htike and U Tun Tun were also arrested in the same fashion.
The availability of cooking oil did not increase following the arrests, and its price continued ticking up.
In October of last year, the junta tried again. Sixteen executives from nine companies that import edible palm oil were charged with violating section 409 of the Penal Code as well as the Essential Supplies and Services Act.
Violating Section 409 of the Penal Code can result in life behind bars. The section covers breach of trust.
Economist U Moe said the junta was using that section of the Penal Code because it believes that the importers breached the trust the junta gave them by allowing them to import cooking oil to be sold at the prices it fixed. It is accusing the companies of hoarding cooking oil to drive up its price, he added.
Violating the Essential Supplies and Services Law can lead to up to three years in prison and a fine of 500,000 kyats for price gouging and hoarding for the purpose of price gouging.
Traders say the price of cooking oil has not fallen. It was retailing for about 15,000 kyats per viss today. Business people in the cooking-oil market say they are worried that the junta may
target them or their companies or further restrict imports.
The junta has been trying to cap prices of rice and gold, as well as currency exchange rates, by arresting merchants. Business people say the effect of these crackdowns is higher prices and greater volatility. They point to the aftermath of each crackdown to show that prices go up and the value of the local currency falls further.
