FEATURE-Hermit Myanmar avoids Asia

[RANGOONP@xxxxxxx]

FEATURE-Hermit Myanmar avoids Asia money crisis

By Sutin Wannabovorn 

YANGON, March 4 (Reuters) - One of the key stops on arrival at Yangon airport
is the currency booth, where foreigners are obliged to buy $300 in Foreign
Exchange Certificates (FEC) that can be spent at hotels, tourist spots or
state shops in Myanmar (Burma). 

FECs also can be exchanged for the local kyat currency in the black market at
many times the official rate. 

The FEC is Myanmar's way of stopping currency speculators from putting
pressure on the kyat, and have helped the country escape the brunt of Asia's
monetary crisis, a government official said. 

``The current regional monetary crisis does not affect us,'' Khin Muang Latt,
director general of Myanmar's (Burma's) Directorate of Hotels and Tourism,
told Reuters. ``We do not have a stock exchange and money trading rooms like
in other countries.'' 

He is confident that the government can maintain full control of the supply of
much-needed dollars and other hard currencies. 

``The FEC is equivalent to the U.S. dollar, helping us to keep control of
dollars,'' Khin Muang Latt said. ``Even if you change the FEC in the black
market, the difference will not be more than one or two percent.'' 

Tourism brought significant hard currency into Myanmar in 1997 and is expected
to do the same in 1998, he added. 

``Last year we gained $50 million from tourism and we set the same target for
this year.'' 

According to diplomats, Myanmar officials in December said the country's
foreign reserves were $220 million. But the diplomats and businessmen believe
its true reserves are much lower. 

INFLATION ON RISE AS MYANMAR PRINTS MORE FECS 

Tourists, businessmen and ordinary people also say Myanmar's currency strategy
has fuelled inflation and further encouraged Yangon's thriving black market. 

While curbing the supply of hard currencies, the government has printed large
amounts of FEC and kyat, they say. 

The official exchange rate is six kyat to the dollar. 

But it traded on the street at about 180 to the dollar in February 1997, fell
to a record low of 370 last December at the height of the Asian currency
crisis, then recovered to the current 240-270 range after the military
government cracked down on black market trading. 

One Western tourist hoping to profit from the difference in the kyat's
official and black market rates actually lost money. 

``I changed $50 at a money exchanger at 270 kyat for one dollar, but when I
eat at restaurants I have to convert kyat back into dollars at 300 kyat per
dollar,'' he said. 

``To survive in Myanmar, you have to rely on the black market for
everything,'' a taxi driver said as he filled up his car with two gallons of
black market petrol. 

The official diesel price is 180 kyat per gallon (about 45 kyat per litre)
against 450 kyat in the black market, while petrol costs 160 kyat per gallon
at official stations and 400 kyat elsewhere. 

But the official stations usually run dry, forcing people to the black market.

INVESTORS SEEK EXCHANGE RATE REVISION 

``Doing business in Yangon, one never knows what is the value of kyat we have
in the our pocket. This confusion has made businessmen quote everything in
dollars,'' a hotelier said. 

Volatile exchange rates and the unsuccessful ``Visit Myanmar Year'' campaign
last year meant problems for hotel and the tourism industry, he said. 

The government said more than 150,000 tourists visited Myanmar from April 1997
to February 1998 but hoteliers said the number was much lower. Most of the
4,000 hotel rooms in Yangon were vacant, forcing hotels to lay off employees. 

``At least half of the hotel employees have already been laid off in the past
two months,'' he said. 

The well-placed Traders Hotel, run by the Kuok and Shangri-La Group, has since
late 1996 laid off 204 employees. 

The hotel and tourism sector, which amassed $770.56 million in approved direct
foreign investment for 39 projects at end January 1998, has seen a slow down
of building. 

One hotelier said the private sector asked the ruling State Peace and
Development Council (SPDC) at a recent business seminar to reform its economic
policy and bring the kyat's official rate in line with its prevailing market
value. 

``Adjusting the exchange rate may be the private sector's suggestion, but the
government would continue keeping the rate at six kyat to the dollar. As I
told you, we have FEC to control the dollar,'' Khin Muang Latt said. 

Myanmar, a hermit nation for nearly 26 years, will continue to find its own
way to deal with economic and monetary problems, he added. 

Myanmar's need for dollars also has led it to reject Malaysia's proposal for
members of the Association of South East Asian Nations (ASEAN) to use local
currencies for trade within the group. 

``In tourism and industries, what we want is hard currencies. As long as local
currencies are not strong enough to counter hard currencies, the idea is not
practical,'' Khin Muang Latt said. 

``In the European Union they have been trying for three or four years to seek
measures to counter the U.S. dollar, but so far they have not succeeded.
Sometimes fighting against hard currencies, you will not win.'' ^REUTERS@ 

02:36 03-04-98