Burma suspends trade licences

Inflation tops 50% and staple food prices are soaring

By Larry Jagan BBC regional analyst in Bangkok

Burma's military government has suspended the import licences of all non-Burmese trading companies indefinitely in a bid to conserve foreign exchange.

Colonel Kyaw Thein, a member of the government, told journalists in Rangoon the government began to tighten its policy in January, when it ceased to renew expired trading permits.

But now, he said, all trading permits have been suspended.

The Japanese, South Korean and Indian governments are reported to have privately urged Burma's military government to reverse the decision.

More hardship ahead

Burma's economy relies heavily on imported goods for medicines, household and electronic goods and many staple foods, so the curb on imports is likely to intensify shortages.

Already hit by rising petrol prices, fuel shortages, and a plummeting local currency, Burmese consumers are now set to face even harder times.

Fuel is in short supply

The end of import licences means that many essential consumer products are going to become increasingly scarce and more expensive.

The military spokesman said that, at present, the curbs did not apply to local Burmese companies.

Tight controls

But local businessmen in the import-export trade have been complaining for several months now that they were unable to import goods.

They say the banking authorities have proved willing to release only paltry amounts of foreign currency in trading firm's accounts.

Requests for foreign exchange to pay for an order usually result in currency worth less than 20% of an order's value being granted.

There's no doubt that the military regime is anxious to redress the abysmal trade imbalance and try to protect its foreign currency reserves.

But the measures are likely to make the life of the average Burmese even harder, and the United Nations has warned that the country is heading for a humanitarian crisis.

Already one child in three under the age of five is suffering from malnutrition, the UN says.

Unrest fears

In the past few months the price of staple products like rice and cooking oil have increased significantly. Inflation is running at more than 50%.

Already, local economists are warning the government that if the current economic crisis continues it may spark social unrest.

Burma has also lost foreign investment as firms have pulled out of the south east Asian country following pressure from human rights activists.

In January, European lingerie-maker Triumph decided to close its bra-factory in Burma.

Other firms to quit Burma in the last decade include Coca Cola, BHS, Levi Strauss and Reebok.