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June 06, 2018

What we need is a stronger and stabler Kyat

During my younger days, to be more precise, right after the Second World War when I started going to school, my pocket money allowance was two annas per school day. For those who are not familiar with the monetary units of those days, there were sixteen annas in one Rupee or Kyat as it was called, since then. So my daily allowance was one eighth or twelve point five per cent of a Kyat. Anyway, that amount was more than enough for a primary school student. I could even save some money to buy tops, kites and other play things that young boys loved to play with. Those were the bygone good old days, when our currency was strong.
I hope I won’t be judged as being nostalgic and dwelling in the past, by reading the above passage. It was just a prelude to what I am going to discuss in this article.
When I reached the high school level, my allowance increased to four annas   (later known as twenty five pyas) or one fourth of a Kyat. By that time I was in my teens and my life style, if I may term that, had changed somewhat. We high school students thought we were grownups, so we started to behave accordingly, and started to go to teashops during recess periods. We can afford to patronize the tea shops with that amount of money. Then, when I went to the university, my monthly pocket money allowance was fifty Kyats. It was more than enough, so there was no need to be thrifty. That amount remained the same throughout my university years.
After university I entered the government service as a trainee with an allowance of one hundred and twenty five Kyats a month plus free meals during the training period. I kept only twenty five Kyats with me for contingencies and as I was already married at that time, I sent one hundred Kyats to my wife, which was an ample amount for her as we did not have any children as yet. That was until nineteen sixty two, when I completed my training course.
When I looked back to those days, I realized one interesting thing, and that was the prices of commodities and hence the costs of living were very stable, without distinctive increase over nearly two decades. It indicated that the Kyat had remained stable. That situation continued for nearly another decade until the early nineteen seventies as far as I can remember. Then the Kyat started to depreciate, but not drastically in leaps and bounds, so the effects were not very severe. The increases in commodity prices and costs of livings were not too exorbitant, but the salary earners were starting to feel the effects of the Kyat depreciations. However, the situations were well under control until the mid nineteen eighties. By then, I remember that my family of three had to be overly thrifty with my salary of thirteen hundred Kyats a month, to make ends meet and be free from debt. The depreciation of the Kyat gathered momentum in the nineteen nineties prompting the government to hike the salary of the employees. That was a very generous undertaking on the part of the authorities, but the unscrupulous businesspersons and retailers, even including the hawkers raised the prices of everything. Their actions undermined the state’s generosity and we were back at square one, and even worse, if I may voice my views freely and frankly. It has become a phenomenon, that whenever there was a salary increase or a rumor of it, the prices rose as if on cue.
It a sort of a vicious circle—because of the depreciation , the costs of living increased, necessitating the salary hike, which triggered the unscrupulous businesspersons to raise the prices, resulting in the shrinkage in the value of Kyat, as we laypersons used to say. I am not an economist, who is versed in these matters, but as a consumer who has to bear the brunt of the effects of this shrinkage or depreciation, whatever that is called, I would prefer a stronger and stabler Kyat to a pay hike, if that can be achieved.
Here, I would like to share some of my experiences with the readers, to make my point tangible. In 1967, I had an opportunity to go abroad on duty. At the Bangkok International Airport, while waiting for the connecting flight, I had some snacks at a restaurant. When settling the bill, as I had only US dollars, I had to pay in that currency. The cashier converted the costs in Thai baht to US dollars at a rate of twenty two bhats to a dollar. Then in 1980, I was en-route to another destination and had to take a connecting flight from Bangkok Airport. I found that the bhat was very stable, still at twenty two to a dollar. Again during 1986, while returning from a seminar in Japan, I had to transit Bangkok and this time, as there was no connecting flight to Yangon at the time I arrived at Bangkok, I had a chance to stay over night at a hotel provided by the airline. While there, my ex-boss and a very good friend of mine who was working in Bangkok invited me to dinner at a restaurant.
At the restaurant, I was introduced by my ex-boss to a Myanmar gentleman, who was and still is the owner of a shipping line. During the conversation over dinner, I learned that his shipping line was formerly based in Singapore, but he had shifted it to Bangkok as the Thai government depreciated the bhat, twenty six to a dollar, so his dollars were worth more, which made the investments more viable. He went on to explain to me that, as Hong Kong, then still a British colony was to be handed over to China in 1997, when the ninety years lease would expire, the businesses there were wary of what will happen in the aftermath. So many businesses had started to invest in other countries. Their prioty choices were Singapore, Canada, Australia and some other countries elsewhere in the region. According to him, Thailand took the opportunity to jump onto the bandwagon by depreciating its bhat to attract those investors. Thus, that gentleman being a fore-sighted person, took the initiative to be one of the early foreign investors, and his decision proved to be right, as far as I can observe. Now, the exchange rate is stable at thirty one to a dollar give or take one bhat. The present exchange rate of the baht was the result of the economic recessions of the 1997, which I don’t intend to go into detail as I am convinced I had made my point.
I am citing this as a good example, where intentional depreciation of the currency can be beneficial to the economy of the country. However, unintentional depreciations due to mismanagements are undesirable. Though I am not an economist as I admitted, my common sense, observations, thirst for knowledge and rational thinking had taught me to believe that depreciating or appreciating of the currency plays vital roles in manipulating the economy. It’s true that they dictate the export and import trades, but thorough assessments and considerations should be made to avoid inconvenience for the peoples, before applying them.
In conclusion, I would like to humbly suggest that the authorities should be cautious not to create unintentional depreciations by only increasing the salary whenever the prices soared. It’s not the right remedy, but should find ways to curb the soaring prices by strictly controlling the prices of every commodity and enforce the businesspersons to obey the orders. It may take sometimes, but nothing is impossible if you really wish. By suggesting thus, I don’t mean the the employees’ salary should not be increased, it must be done when the situations demand. However, precautions should be taken not to create the vicious circle mentioned above. What we need is a strong and stable Kyat.

 Looking forward to a developed and prosperous nation.


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