The coup in 2021 threw Myanmar into chaos. The costs of the coup have been enormous: not only have hundreds of people been detained and democratic rights violated, but it could also damage an economy already hard-hit by the epidemic.
On 31 January 2021, soon after the coup began, internet connectivity in Myanmar had fallen to 50% of the ordinary levels. According to Netblocks, multiple network operators experienced a disruption targeting cellular and some fixed-line services. Following the telecommunication disruptions, major banks, including Irrawaddy Bank, Myanmar Pioneer Bank and KBZ Bank, have had to temporarily suspend all services. Meanwhile, since many of the protestors work as doctors, lawmakers and public servants, their absences caused huge disruptions to all social activities as well as to the economy.
The impact of a military coup extends beyond that. As citizens begin to worry about recession and the devaluation of their goods and currency, and as panic spreads, the expected value of the Kyat, Myanmar’s currency, will decrease as people’s expectations fall. Foreign investors may cancel their deals with local industries. And since Myanmar’s debt is mainly held by foreigners, the loss of trust in the country will certainly lead a lot of foreign debt holders (bond holders) to sell their bonds, resulting in a further decrease of Kyat. In fact, it could be observed that in one day, Kyat value decreased dramatically compared to the US dollar and the Euro. This could lead to a decline in living standards for Myanmar’s people and undermine the hard-won success of previous economic reforms, thanks to which poverty fell from 48% to 25% between 2005 and 2017.
A recent interview held by BBC also confirmed that the coup has had many Burmese fearing for business. Many are worried that, as the price of commodities rises, people will. The climate of fear has prompted many Burmese to rush out to buy goods and supplies they believe will soon run out. Long queues formed outside grocery stores and pharmacies. Gold, which many believed could hold both sustainable stores of value and high tradability, has become the most coveted good on the market, with its price 7% in the ten days following the coup.
Furthermore, many western nations have reconsidered their cooperation with Myanmar after the coup. Following the condemnation from the United Nations, the United Kingdom, the European Union, India, Japan, the United States and Australia have all called on the military in Myanmar to release detainees and restore democracy.
The military coup could also be devastating for international trade, since few investors are willing to invest in a chaotic nation under a military regime. Multinationals that moved into the country after Suu Kyi’s party established the first civilian government could now choose to withdraw their investment. Ranging from Japanese retail giant Aeon, to Norway’s Telenor, to South Korean trading firm POSCO, foreign companies operating in Myanmar have all expressed their concerns about the current situation. Prominent Singapore businessman Lim Kaling, the co-founder and director of Hong Kong-listed gaming group Razer, said he will withdraw his investment in a tobacco firm linked to Myanmar’s military.
It has been almost a month since the January 31 military coup. The situation in Myanmar remains uncertain, leaving many wondering if the damages will surpass those of the 1988 uprising. The country will probably enter a period of recession as everyday activities are disrupted and foreign investors become wary. Nonetheless, it is hard to imagine the extent of the damage, without knowing what lies in the future of Myanmar’s political scene.