Can Myanmar be saved?

After a month under military rule, Myanmar remains gripped by anger and frustration. Despite the growing danger to their personal safety, thousands of people continue to hit the streets daily to demand the release of civilian leader Aung San Suu Kyi and a return to democracy. Normalcy seems a far-off prospect. Protesters have been facing increasing violence from police, and more recently from pro-military groups wielding knives and slingshots. The deaths of four protesters, one volunteer guard and one police officer have been linked to the conflict.

Myanmar’s economy is also being severely constrained amid a strengthening civil disobedience movement. Medical personnel are on the frontlines, and this has impeded the progress of the national coronavirus vaccination campaign.

As well, about 90% of 4,000 container-truck drivers at Yangon’s four main ports have halted work, slowing delivery of imports and prompting at least one international shipping line to halt new orders.

Although drivers have said they will transport essential food, medicine and fabrics for factories, only about 30% of normal container volumes are moving through the ports via truck. Exports are also depressed as buyers seek alternative suppliers in the event of economic sanctions being imposed on Myanmar.

Already the World Bank has suspended payments for development projects that it is funding in Myanmar. And Japan, a major donor, is considering halting new assistance projects for the time being.

Direct economic and financial sanctions would take a heavy toll on the country given the high level of foreign direct investment (FDI) it needs. Multinationals investing from Singapore are likely to be very wary given the reputational risk of dealing with military regimes. While garment exports are likely to be the worst hit, financial sanctions imposed by the US could limit the use of the US dollar to trade and invest in Myanmar, which would be a real blow to agri-food trade.

With FDI accounting for 5% of gross domestic product, investor flight due to political uncertainty and slower growth will inevitably lead to lower household incomes, with a domino effect on the consumer, manufacturing, banking and real estate sectors to just name a few.

Asian countries with interests in Myanmar will be the most affected. The country’s largest foreign investors include Singapore (although some of this investment originates elsewhere), Greater China, Thailand, Japan and some European countries, notably the Netherlands and the UK.

With New Zealand being the first country to cut ties with Myanmar on Feb 9, western democracies and international development institutions have condemned the coup. China has avoided any statement of condemnation, though Beijing is known to be concerned because it had cultivated good relations with Aung San Suu Kyi and her civilian administration. China’s relationship with Myanmar’s notoriously xenophobic army has always been difficult.

Under extended military rule, be it the current arrangement or a pseudo-democratic system with the governing parties backed by the military, Myanmar will be forced to turn more to China for development aid and economic support.

China’s interest in Myanmar has been rising as of late. In 2019 Beijing explicitly decided to focus on investing in Myanmar as part of the Belt and Road Initiative. Analysts say China probably plays a larger role in Myanmar than official figures suggest, especially in infrastructure, power and mining. Ultimately, ongoing events could add momentum to this trend.

The most worrisome aspect to me is that events in Myanmar have once more highlighted and even intensified division in Asean. Indonesia, the largest economy in the region, is pushing very hard for a peaceful, Asean-led solution through dialogue to restore democracy and national reconciliation in Myanmar.

Officially, Thailand and Cambodia have remained largely silent in accordance with Asean’s mantra of non-interference. Myamnar’s foreign minister was in Bangkok last week and it was hours before the Thai government would even admit that he had spoken to anyone. Indonesia, Malaysia and Singapore have expressed varying degrees of concern. Myanmar, meanwhile, seems to have rejected an offer from Brunei, the current Asean chair, to hold a special foreign ministers’ meeting.

Clearly, Asean is in a difficult situation to produce a consensus-based decision on a divisive issue, something it often struggles to do. Putting pressure on Myanmar potentially nudges it closer to China. That’s not our desire. What we can do is to support the people of Myanmar, now at a critical juncture, to push their demand for democracy to avoid a collapsing future.