In the early hours of February 1, 2021, Myanmar’s military took over the country and imprisoned some notable government leaders, such as President Win Myint and the the country’s de facto leader Aung San Suu Kyi. Power has been transferred to commander-in-chief Min Aung Hlaing. This coup d’etat is predicted to damage Myanmar’s economy.
Myanmar has a number of foreign investors. Singapore is known to be its largest investor responsible for 34% of approved investments, while Hong Kong came in second with 26%. During the 2020 fiscal year, foreign direct investments (FDI) in Myanmar amounted to $5.5 billion, with real estate and manufacturing responsible for 20% of that amount.
The US is considering imposing sanctions on Myanmar. However, depending on the sanctions, the effects of it could be limited as a huge portion of its investments come from Asia. But this doesn’t mean sanctions won’t affect the country at all. Imposing sanctions on Myanmar may force foreign investors to think twice about putting money in Myanmar. The country has already been badly hit by COVID, and with the coup to top it off, it may mean trouble for its economy in the coming months.
Swedish company H&M, whose clothing factories are located in Myanmar, is said to be monitoring the situation but has no urgent plans to reconsider their sourcing strategies. However, investment company Yoma Strategic Holdings has issued a pause on trades in Singapore. Yoma is one of the leading firms in Myanmar.
The country is declaring a state of emergency for one year. For now, it is unclear how the situation will unfold in the coming months as many world leaders are urging for the release of Ms. Suu Kyi and other detained government leaders.