Thirty months into Myanmar's civil war, the military continues to lose ground, both on the battlefield, where it has increased their targeting of civilians, and in their management of the economy, which continues to underperform.
The economy has contracted 12 percent since the coup, revenue is flat, foreign investment is lagging, inflation is surging, while currency controls have wreaked havoc on importers and done little to stop the decline of the kyat. U.S.-led sanctions on Myanmar banks have complicated dollar-denominated trade. Meanwhile the regime has begun to arrest senior officers, as it seeks scapegoats for its gross economic incompetence.
The opposition National Unity Government (NUG) has raised over $100 million to fund the Spring Revolution through a number of creative and technical savvy means, including the sale of military-owned land, crypto-bonds, lotteries, and the establishment of a full service online bank.
Revenue denial campaign
The NUG, acutely aware of the junta’s economic incompetence and the overall fragility of the economy, has worked to deny the regime revenue through a set of actions.
First, the NUG has led boycotts of products and services from the two military-owned conglomerates, Myanma Economic Holdings Ltd (MEHL) and Myanma Economic Corporation (MEC), which have over 100 subsidiaries operating in almost every sector of the economy, including ports, hotels, transportation, jewelry and gems, banks, telecommunications, commodities, food and industrial estates.
Immediately after the coup, the NUG issued a product and services boycott list that included 114 products, companies, and services owned directly by the military, their leaders and family members.
The ubiquity of military-owned products coupled with the ease of reregistering firms to evade sanctions has made a total boycott difficult. Tellingly, MEHL has not paid its annual dividend to military personnel who are compelled to invest.
Certain companies have been hard hit.
Mytel, the country’s largest cell phone provider with pre-coup market share of 32 percent, lost nearly 2 million subscribers and has lost money every quarter since the coup. Several foreign shipping companies are avoiding military-owned ports.
In mid-2023, The NUG's Ministry of Planning, Finance and Investment refocused their prohibition, launching a social media campaign for a two-month long boycott of just military-produced alcohol and tobacco products, including Myanmar Beer and Red Ruby and Premium Gold cigarettes. This is a critical revenue stream, and the military has tried to compel sales at gunpoint.
Second, the NUG has tried to deter the purchase of government bonds. According to the shadow government’s data, the military regime sold 26.5 trillion kyats in bonds, over $12 billion at the official exchange rate, or $3.1 billion at the black market rate, making bonds one of their most reliable income streams.
In 2023, alone, 14 different state-owned and crony-owned private banks, insurance companies, as well as some state-owned enterprises purchased 17.8 trillion kyats ($8.5 billion, or $4.5 billion at the black market rate).
The best estimates are that domestic financial institutions currently hold the equivalent of $8 billion in government debt instruments since the coup, which the NUG has unequivocally stated that they will not honor.
Firms now have to weigh their loyalty to the military regime with mounting liabilities on their balance sheets.
Taxes and rents
The NUG has clearly been concerned about foreign investors who legitimize and financially prop up the military regime. Yet foreign investors employ a lot of workers, in particular women in the textile sector.
They have tried to thread this needle, promising to protect investment prior to the coup, and even new investment as long as it is not in partnership with military-owned firms, while at the same time applauding western firms that exit the market.
The NUG has issued guidance to foreign investors that “care must be taken to ensure that further investments neither legitimize the military junta, nor fuel their ability to oppress the people of Myanmar.”
The opposition is trying to persuade both foreign and domestic businesses to begin to put their taxes in escrow. To date, it hasn't had great success in this. Efforts to get three international brewers who pay an estimated $155 million in taxes annually, to put their taxes in escrow have failed.
![Myanmar's new Spring Development Bank will enable treasury bonds [shown] to be purchased from the National Unity Government. Credit: Unitedbonds-nug.org](https://www.rfa.org/resizer/v2/R26OYEOW6HGKKS4W4JZCFMWX3E.jpg?auth=7a0d795593d59c3dffd99a79d636a7141a9262adc56102a14581bc5b2c055094&width=800&height=450)
Still, the more the junta falters and the more its opponents succeed, companies can be expected to hedge their bets.
For firms in natural resource extractive industries, the NUG is, likewise, trying to convince them to put their rents into escrow.
The NUG estimates that in fiscal year 2022-23, rents paid to the Myanmar Ministry of Oil and Gas Enterprises alone were $1.5 billion, accounting for roughly 10 percent of total government revenue. Oil and gas rents were the only source of revenue that have seen a dramatic rise since the coup, according to the junta-controlled Internal Revenue Department’s estimates.
Myanmar’s estimated $2 billion in gem exports are another important source of income for the regime. The U.S. government imposed sanctions on three state-owned firms involved in gem mining and marketing. The NUG has lobbied for more states to adopt sanctions on state-owned gem exporters, while human rights campaigners have gotten several retailers to stop sourcing Myanmar gems.
These efforts have paid off: revenue from gem sales declined more than 80 percent between 2020 and 2023, according to Internal Revenue Department estimates.
Finally, the NUG has sought to have the military regime’s overseas funds seized. For example, European Union and UK sanctions on the oil ministry led to some $504 million being frozen.
Immediately following the February 2021 coup, the U.S. government froze $1.1 billion of Central Bank of Myanmar assets that had been deposited in the Federal Reserve Bank of New York.
Far from quixotic
While no other country followed suit, the NUG continues to lobby hard.
The Central Bank reportedly has some $6.9 billion in 14 overseas banks, including nine in Singapore, accounting for 67 percent of total reserves. The remainder is held in Swiss, Thai, Malaysian, and Hong Kong banks.
Should the NUG succeed in freezing these assets, it would be the coup de grâce.
While the NUG has out-performed militarily, they are still up against a state with vastly more resources. The military increased its budget by 51 percent for fiscal 2023, to $2.7 billion, 30 percent of government spending. In contrast, the NUG's Ministry of Defense has an annual budget of roughly $60 million.
But given the regime’s mismanagement of the economy, which continues to atrophy, the NUG’s revenue denial strategy is not quixotic.
While the opposition is unlikely to prevail on the battlefield, they continue to deny the regime legitimacy and economic growth, while tying them down across multiple battle fronts.
The last thing an overstretched military needs right now, are flat or declining revenue to sustain their war efforts.
Zachary Abuza is a professor at the National War College in Washington and an adjunct at Georgetown University. The views expressed here are his own and do not reflect the position of the U.S. Department of Defense, the National War College, Georgetown University or Radio Free Asia.