Linn Maung
Since last year, the junta has been making efforts to promote the usage of Yuan outside of border trade. Myanmar Iron and Steel Association was informed recently that their applications for import licenses would be given priority provided they transact with China across the sea and at the border in Yuan rather than Dollars as major part of iron and steel import is from China only. It seems that US sanctions are actually catalysing the Beijing’s efforts to promote Yuan as an international currency rather. Junta regime is more concerned about its access to foreign currency. No doubt, dollar reserves with Junta has depleted over a period of time and it is a strategy to shift to Yuan. Similar arrangements are being worked out with Russia and India.
On June 21, the US announced its most recent actions, this time targeting the Ministry of Defense and the state-owned Myanma Foreign Trade Bank and Myanma Investment and Commercial Bank. In response to sanctions imposed, Junta attempted to downplay the impact stating that these banks have no open accounts in US banks, therefore, no financial loss and Myanmar can manage foreign exchange trade transactions.
A few days prior, on June 16, Daw Than Than Swe, the chair of the Central Bank, had stated that Myanmar was thinking about collaborating with the New Development Bank set up by the BRICS. In an effort to wean itself off the dollar, the BRICS bloc which consists of Brazil, Russia, India, China, and South Africa is likewise preparing to introduce a new reserve currency. Than Than Swe stated at a business conference in St. Petersburg, Russia, that Myanmar supported the development of a BRICS currency to lessen the usage of US dollars in trade. The latest US sanctions will probably just strengthen their dedication. On June 16, the head of the Central Bank, Daw Than Than Swe, had stated that Myanmar was exploring a sizable portion of global commerce and resources.The new currency would undoubtedly compete with the dollar if BRICS issues a new one and grows its membership.
Myanmar would be able to minimize its reliance on the dollar if its trading partners also used the Yuan as a reserve currency as they have Yuan reserves. Even trade with Thailand and Bangladesh can be in Yuan. In addition to the fresh regulations for the Yuan and Thai baht, the junta is attempting to allow direct rupee payments for border trade with India and it is likely to implemented very soon. Similarly, talks with Russia are on the final stage and Kyat Rouble trade will be implemented soon.
But what about the sanctions imposed? Are they proving counter productive? It seems that Myanmar is pushed more closer to China. If Myanmar can use the Yuan more, the United States will no longer be able to exert influence on Myanmar’s economy. Junta can manage import of weapons in other currencies. On the other hand, China will get more access into Myanmar’s economy and be able to exert influence.
Sanctions are not effective in the present world as economies are interconnected and there are always ways out to deal with such sanctions. Moreover sanctions hit the common man the most rather than regimes. Efforts must be on engaging in dailogue rather isolating or exerting undue pressure.
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