Myanmar Conflict Escalates: Thai Companies Pull Out Amid Increasing Instability

The ongoing conflict in Myanmar between the military government and opposition forces shows no signs of abating, leading to significant economic repercussions. The persistent fighting has prompted numerous Thai companies to withdraw their investments, resulting in a substantial divestment of 7 billion dollars. This article delves into the impact of the conflict on Thai investments in Myanmar, trade relations between the two countries, and the broader economic implications.

Thai Investment in Myanmar: A Declining Trend

Keywords: Thai investment in Myanmar, Myanmar conflict impact, Thai companies pull out

In recent years, Thai investors have played a crucial role in Myanmar's economy. Historically, Thai investors ranked third in investment promotion applications, with a total value of 11.6 billion dollars, accounting for 12.47% across 155 approved projects. However, the ongoing conflict has caused a sharp decline in Thai investments, now ranking fifth with a value of 4.45 billion dollars and 105 projects. This represents a loss of 50 projects and a decrease in investment value of 7.1 billion dollars.

Trade Relations: A Deteriorating Picture

Keywords: Thailand-Myanmar trade, trade relations impact, Myanmar trade deficit

The conflict has also strained trade relations between Thailand and Myanmar. According to a report by Prachachat Business, trade between the two countries from January to May 2024 totaled 3 billion dollars, marking a 10.46% decrease compared to the same period last year. Thai exports to Myanmar fell by 11.81% to 1.7 billion dollars, largely due to lengthy import licensing procedures. Meanwhile, Thai imports from Myanmar decreased by 8.52% to 1.2 billion dollars, resulting in a trade surplus for Thailand of 499.3 million dollars.

Myanmar's Response to Economic Challenges

Keywords: Myanmar import regulations, Myanmar trade deficit, Myanmar economic policies

In an effort to mitigate its trade deficit, the Myanmar government has implemented stricter import regulations. Starting July 1, 2024, goods found in ports or airports without proper import licenses will face legal action under export and import laws. Seven categories of goods, including fertilizers, steel, solar products, polypropylene pellets, raw materials for plastic production, commercial vehicles, and commercial machinery, now require an import license from the FESC.

Economic Outlook for Myanmar

Keywords: Myanmar economic growth, Myanmar trade, foreign investment in Myanmar

Despite the turmoil, the Myanmar economy is projected to grow by 1.5% in 2024, as reported by Thailand’s Trade Promotion Office in Yangon. From April to May 2024, international trade totaled 4.5 billion dollars, a 14.50% decrease from the previous year. Exports increased by 10.94% to 2.3 billion dollars, while imports fell by 30.82% to 2.2 billion dollars, resulting in a trade surplus of 63.53 million dollars for Myanmar.

Currency Controls and Foreign Investment

Keywords: Myanmar currency control, foreign investment in Myanmar, Myanmar exchange rate

Since May 2024, the Myanmar government has controlled the exchange rate at 2,100 MMK per USD, while the black market rate hovers around 4,500 MMK per USD. As of June 2024, total foreign investment for the fiscal year 2024-2025 stood at 95.5 billion dollars, with ongoing projects valued at 74.87 billion dollars. The top investing countries remain Singapore, China, and Thailand.

Real Estate Market Dynamics

Keywords: Myanmar real estate market, Thai condominiums, Myanmar buyers

The condominium market has also felt the impact. In Q1 2024, Myanmar buyers became the second-largest group of foreign condo purchasers in Thailand, surpassing Russians with 392 transferred units worth 2.2 billion baht. However, this trend was abruptly halted by Myanmar’s policies to prevent capital outflows, leading to a crackdown on buyers and sellers involved in promotional events and a subsequent drop in market activity.

Thai Businesses Retreat

Keywords: Thai companies exit Myanmar, business closures in Myanmar, Myanmar economic uncertainty

The instability has forced many Thai companies to cease operations in Myanmar. Notable exits include TPBI Public Company Limited, Christiani & Nielsen (Thai) Public Company Limited, and General Engineering Public Company Limited, all citing economic uncertainty and unfavorable business conditions. Grand Prix International Public Company Limited also dissolved its subsidiary due to non-commercial activities.

Conclusion

The escalating conflict in Myanmar is having profound effects on the country's economy and its trade relations with Thailand. Thai companies are withdrawing their investments, trade volumes are decreasing, and stringent import regulations are being imposed. The uncertain political and economic landscape continues to challenge businesses and investors, signaling a tumultuous period ahead for Myanmar.