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    Southeast Asia
     Aug 24, 2007
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Fuel price policy explodes in Myanmar
By Larry Jagan

BANGKOK - Public protests have broken out across Myanmar's old capital Yangon after the military government unexpectedly removed fuel-price subsidies, resulting in a 500% spike in rationed fuel prices.

The shock policy is part of the government's emerging economic and financial reform program and notably coincided with a high-level mission to the country of International Monetary Fund (IMF)

and World Bank officials, who have long pressed the junta to reduce or abolish a range of price subsidies.

The move has shocked the country's already fragile economy and, depending on the eventual scale of the protests and severity of the government's response, could have grave implications for political stability. Significantly, the spiraling acts of civil disobedience have been led by former political prisoners known as the 88 Generation Students Group, who nearly 20 years ago as student leaders led the pro-democracy demonstrations the junta cracked down on with an iron fist in 1988.

Myanmar's ruling junta, known as the State Peace and Development Council (SPDC), has for decades maintained strict social controls - though security forces have loosened their grip in certain areas of Yangon since abruptly moving the national capital to a newly built city known as Naypyidaw in November 2005. The numbers joining the marches has grown since. More than a hundred people joined the first demonstration on Sunday demanding that the government intervene to lower fast-rising fuel and food prices.

More than 300 people took to the streets to protest on Wednesday, according to witnesses, and news reports indicate the rallies continued on Thursday. The junta has responded through stick-wielding vigilantes, including members of the pro-government Union Solidarity and Development Association. Some protesters have been beaten and whisked away in unmarked cars, according to witnesses who spoke with Asia Times Online.

"The government has raised fuel prices without giving any prior notice, and due to this hike, all the people are suffering," said one protester at Sunday's march. "Therefore we, the 88 Generation students, [National League for Democracy] members, university students, high-school students and civilians are protesting and demanding an immediate rollback in the prices of fuel."

The police have arrested more than a dozen key 88 Generation Student Group leaders in recent days, including renowned activist Min Ko Naing and poet Ko Ko Gyi.

"The junta is not scared of public statements or press releases by opposition groups, but they really do not want the public to come out to the streets, for this type of movement can get out of hand," Ko Ko Gyi told Asia Times Online before his arrest. The junta has also detained protest organizers from the recently formed Myanmar Development Committee.

In a statement released on state-run media, protesters were detained for "undermining stability and the security of the nation". But the crackdown and arrests, some on-the-ground observers say, have acted to fuel public anger.

"More demonstrations are likely to follow, as [Yangon's] residents are already fuming at the increase in fuel prices," said a Western diplomat based in the country's capital.

Economic meltdown
There are preliminary indications that the subsidy policy is seizing up the economy. Prices for compressed natural gas, which the government had in recent years promoted for use in commercial vehicles, have increased fivefold, while the price of basic commodities has skyrocketed in line with the higher transportation costs. Bus fares and taxi charges doubled almost immediately in urban centers such as Yangon, Mandalay and Moulmein, resulting in drastically reduced passenger loads.

According to a Yangon-based financial analyst who requested anonymity over concerns of possible government reprisals, the increase in bus fares will disproportionately affect the urban poor. Manual workers and day-laborers in the country' main cities, who earn less than 2,000 kyat (US$2 at the unofficial exchange rate, which is much closer to the real world than the official rate) a day, will, because of higher prices, have to pay more than half their wage in travel costs, he estimated. In certain instances, it may even be as much as three-quarters of their daily income.

Win Min, an independent Myanmar analyst based at Chiang Mai University in northern Thailand, estimates that inflation was already running at nearly 40% annually, and with the recent removal of fuel-price subsidies that rate could double to 80%. "There will be an increase in layoffs as businesses are forced to close, and we are likely to see a significant rise in the price of food, clothing and basic commodities," he said.

Indeed, Yangon food prices have already risen steeply. Since last week, rice has risen by nearly 10%, edible oils by 20%, meat by about 15% and garlic and eggs by 50%, according to aid workers based in the city who monitor local market prices. A standard plate of Burmese noodles has nearly tripled in the past week, one aid worker said.

"These price rises are crippling for most residents in Rangoon," a Myanmar economist told Asia Times Online, using the old name for Yangon (the junta officially renamed both the city and the country, long known as Burma, in 1989). "They could hardly afford food before. Now their weekly budget for essential foodstuffs is going to buy even less - their purchasing power has been reduced by more than 25% virtually overnight."

Crucially, the policy could cause a backlash among one of the junta's key political support groups: the civil service. One elderly retired office worker who spoke by telephone with Asia Times Online complained that her pension now barely covers the taxi fare she pays to retrieve it from government offices. Inflationary 

Continued 1 2 

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