Fallow Fields, Empty Tourist Attractions as Conflict Takes Toll on Economy of Myanmar’s Rakhine State

The Myanmar military's heavy-handed war on Arakan Army (AA) rebels across northern Rakhine state and in neighboring Chin state's remote Paletwa region has lasted for 10 months without either side defeating the other, but has resulted in significant economic damage to local residents.

More than 100 people have been killed in military detention or in indiscriminate shootings, with about 60,000 people now living under poor conditions in makeshift camps and about a dozen others mysteriously disappearing in conflict-hit townships.

The ethnic Rakhine community relies on farming, fishing, border trade, and tourism for its income, and all of these sectors have been damaged to a greater or lesser extent by the conflict which erupted in late 2018. Agriculture and tourism, along with border trade with Bangladesh, have been directly impacted by the fighting.

Intense clashes; nighttime curfews ordered by the Myanmar military in five northern townships like Mrauk-U, Kyauktaw, Minbya, Rathedaung, and Ponnagyun; and frequent landmine incidents in rural areas have all forced farmers to give up growing rice during this monsoon season.

Rice shortage?

Rakhine Farmers Union (RFA) chairman Kyaw Zan says that based on the Union's own estimates, approximately 34,000 acres of paddy fields out of a total 700,000 acres in six townships have been abandoned. And if the fighting escalates again in the winter and summer months in the north, he says, farmers may not be able to harvest their rice in time.

Kyaw Lwin, the Rakhine State Minister for Agriculture, Livestock, Forestry and Mines, adds that the state produces about one million acres of rice each year, but that nearly 18,000 acres of fields have gone fallow owing to conflicts. But he insists that this will not lead to a rice shortfall in the state.

As locals grow concerned over rice shortages in the camps for newly displaced persons, local relief groups have been preparing to purchase additional supplies of rice to cope with unexpected shortages if these happen in the future. A local charity group called Colorless is one of these.

Group member Ko Ko Gyi says, Locals are speculating that fighting will intensify in the winter, and that farmers in these townships might not be able to harvest their cultivated rice.

Meanwhile, Minister Kyaw Lwin says, We will do our best to address this issue if that happens.

Nagara village in Minbya township is situated in one of the contested areas fought over by the AA and Myanmar's military, and suffered military airstrikes against AA rebels in April 2019. U Aung Thein, a general administrative official for Nagara village, recalls that some shells landed in the hills close to his village.

No one dares to go to the paddy fields near forested areas now because anyone can be confronted with landmines or shooting at any time, he says.

Nagara village usually cultivates about 600 acres, but villagers were unable to cultivate nearly 100 acres this year, as those paddy fields were located near a mountain range. When rice buds ripen in November, the paddy fields turn into golden valleys, but wild grass has overtaken them now, U Aung Thein says.

Instead of relying on buyers for export, local farmers sell their rice to retail or wholesale shops in the markets or transport the rice to Paletwa to get a better price. But when battles rage in the north, the Myanmar military and authorities in the Rakhine capital Sittwe block shipments of rice and aid to Paletwa.

Sapar Htar village General Administration Department official Zaw Myo Aung said that locals were frightened by landmine incidents when they fled from their village in May when the AA and government troops clashed two furlongs away. Meanwhile, the number of armed skirmishes in Kyauktaw, Mrauk-U, and Minbya townships has been increasing in recent weeks.

Maungdaw Cox's Bazar border trade

Though the agriculture sector has been affected by armed violence, the volume of cross-border trade between Maungdaw and the Cox's Bazar District's Teknaf township in Bangladesh has remained stable. According to the Department of Commerce in Maungdaw, Rakhine traders exported about 90 percent of total goods to Bangladesh while merely 10 percent of imports came from Bangladesh.

Maungdaw Commerce Department trade statistics show that cross-border trademostly in rice, fish, and other commoditiesfrom Maungdaw to Cox's Bazar reached USD 8.390 million in the 2019-2020 fiscal year ending in September. In the 2017-2018 fiscal year, Maungdaw earned USD 14.328 million, and earned USD 5.945 million between April and March in the 2016-2017 fiscal year. Myanmar's 2018 fiscal year runs from April-March to October-September.

The volume of exports from Myanmar in fiscal year 2017-2018 was nearly twice as high as the volume in the 2019-2020 fiscal year ending in September, even though hundreds of Rohingya villages had been reduced to ashes and more than 700,000 Rohingyas had been ejected from Maungdaw by military clearance operations. A United Nations Fact-Finding Mission (UNFFM) described the atrocities committed against the Rohingya community as genocide.

Asked why the export volume of Maungdaw had skyrocketed in the 2017-2018 fiscal year, commerce official U Tha Tun Sein said, Rice was the most exported good to Bangladesh. But he declined to elaborate on whether that rice had been exported by Rohingya farmers or comment on the market demand in Bangladesh, which now hosts the largest refugee camp in the world.

Lack of survey on economic stability

Myanmar's National League for Democracy (NLD) government was quick to calculate economic losses of the country's large Muse-Ruili border trade with China when three Brotherhood Alliance groupsthe Ta'ang National Liberation Army (TNLA), the Myanmar National Democratic Alliance Army (MNDAA), and the Arakan Army (AA)attacked Mandalay Division's garrison at Pyin Oo Lwin and northern Shan state's Naungkio township in August.

The Ministry of Commerce cited USD 5-7 million in losses in goods each day after critically important bridges along the route were destroyed. Organized attacks by the three rebel groups meanwhile took the lives of 15 soldiers and police officers and three civilians. The Ministry has said that the Muse-Ruili trade zone brings around USD 6 billion into Myanmar each year, mainly through the export of agricultural goods and other commodities.

Rakhine government minister and spokesperson Win Myint acknowledges that Rakhine's economic situation is getting worse due to conflicts, but said that his cabinet does not yet have specific figures. I don't know the exact figures for the agriculture and trade situation in Rakhine, as I am tasked only with municipal affairs, he said.

State minister Kyaw Aye Thein of Rakhine's Finance and Planning Ministry, and Kyaw Lwin of the Agriculture, Livestock, Forestry and Mining Ministry were meanwhile unable to provide a detailed explanation for the economic figures for their ministries last week.

Oil and gas projects in the Bay of Bengal

Resource-rich Rakhine hosts nearly a dozen large offshore projects belonging to foreign gas and oil companies like Korea's Daewoo International Corporation, China's state-owned CNPC, Shell Myanmar, and Australia's Woodside, Myanmar's Ministry of Commerce says.

Foreign investment in offshore projects has been unharmed by conflicts in Rakhine so far, but Myanmar Center for Responsible Business (MCRB) founder Vicky Bowman says that ongoing fighting has increased the political risk for investors, especially in the multi-billion dollar offshore gas sector and in transport infrastructure.

So this could lead to delays in decision-making by investors, Bowman says.

An article published recently by China's Xinhua news agency says that a China-Myanmar project in the Shwe gas field situated off southern Rakhine state's Kyaukphyu and connected with a Chinese Belt and Road Initiative (BRI) multi-billion dollar deep-sea port project earned USD 3.5 billion during the 2018-2019 fiscal year. But all revenue goes directly to Myanmar's central Union government instead of to Rakhine.

Myanmar's central government has never explained to the Rakhine public how revenue is reallocated to the state and its divisions, despite state earnings of many billions of dollars each year. The underdeveloped and impoverished Rakhine state's GDP growth is shown in the National Planning Law (2018-2019) as 2.9 percent, while Yangon and Naypyidaw are shown at 9 percent.

Yangon-based analyst Win Myo Thu, managing director of EcoDev Myanmar, explained based on the 2019-2020 budget year of Myanmar's Union government that about 60 percent of the country's tax revenue comes from the extractive industry sector that is located mostly in the ethnic regions, but to which the Union government allocates only 6.5 percent of its budget. Even compared with budget allocations under the 2010-2015 administration of Thein Sein, budget sharing to ethnic states under the present NLD government is less than 6 percent, he said.

The gap [in revenue sharing] between central Burma and the ethnic regions is one of the reasons for the prolonged civil war in Myanmar, Win Myo Thu wrote in a recent posting on his Facebook page.

Rakhine tourism hit hard

Tourism is the hardest-hit sector of Rakhine's economy, especially in the temple town of Mrauk-U, the seat of the last Rakhine dynasty more than two hundred years ago.

Hla Myint, board member of the Rakhine Hoteliers Association and owner of the Mrauk-U Princess Hotel, said that ongoing armed clashes have shut down the town's entire tourist trade. Only four tourists came to spend their holidays in Mrauk-U during the first half of 2019, and nearly a dozen hotels closed down.

Some officials may be dismayed by this information, but this is the reality here, he said.

Rakhine state tourism department figures show that 1,030 foreigners visited Mrauk-U between January and August, but this included NGO staff and employees of foreign firms. Hotelier Hla Myint said that the best year for tourism in Mrauk-U was 2014-2015, when around 4,000 Myanmar citizens from around the country came into Mrauk-U on package tours, while foreign tourists numbered around 1,000.

Ministry of Hotel and Tourism (MOHT) official for Thandwe township Myint Soe said his township had welcomed 38,701 visitors during the 2018-2019 fiscal year ending in September and is expecting 40,000 to 50,000 tourists for the 2019-2020 fiscal year. MOHT statistics show that the 2016-2017 fiscal year attracted 50,085 visitors, and that 42,718 visitors came during 2017-2018.

Although the conflict zones lie mainly in the north, tourists are also shying away from southern Rakhine state's popular Ngapali Beach during the upcoming travel season from October to March, said Khin Aung Tun, vice chairperson of the Myanmar Tourism Federation.

Travelers are seriously concerned there may be an unexpected attack at Ngapali, though the conflict zone is far from the beach, he said.

The U.S., British, and Australian embassies have recently warned their countries' nationals against traveling in Rakhine and northern Shan state.

Khin Aung Tun said that Myanmar's Ministry of Tourism had expected around 7 million visitors during the 2019-2020 tourist season, but that international pressure on Myanmar and ongoing armed conflicts in Shan and Rakhine state have already discouraged arrivals, with tourist entries across Myanmar at just over 4 million between June and August.

Meanwhile, neighboring ASEAN country Thailand is expected to draw around 40 million tourists during 2019-2020, with Vietnam expecting around 16 million.

This is a huge loss for our country, and a very regrettable situation, Khin Aung Tun said.

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