Fuel prices are on the rise at the domestic markets in Myanmar due to the record-high exchange rate of the US dollar. Following is an interview with Dr. Win Myint, Secretary of the Myanmar Fuel Oil Importers and Distributors Association, regarding the impacts of the rising fuel prices in the country.
Question: Let me know how the rising fuel prices in the domestic markets in Myanmar are being impacted by the falling kyat value and the rising US dollar rate?
Answer: In Myanmar, there was the record-high exchange rate of the US dollar — ranging from Ks 1500 to Ks 1580. The rate rose to 80 Kyats within a day, and it has risen dramatically. The prices of crude oil have remained stable in the international oil market, whereas the country was experiencing the highest currency exchange rate. The fuel price remained relatively low compared to the time when the exchange rate to the US dollar for the Myanmar Kyat was around Ks. 1400. I have talked about the dollar rate surge and that we have to buy engine oil in dollars. When we sell it here, we conduct the trading through the use of Myanmar currency. We sell it depending on the exchange rate of foreign currency that we had spent. Sometimes, it doesn’t take effect immediately for some reasons. Suppose the dollar rate has gone higher, the engine oil prices will not go up immediately. When the dollar rate drops, the fuel oil prices cannot drop easily, either. I’d like you to check the market floating price, the ups and downs of the dollar rates. Whenever the dollar rate is up, the prices of fuel oil will reasonably be higher. The reason is that we need dollars to buy fuel oil again.
Q: What measures have you taken to appease the consumers?
A: Our team has adopted some basic principles, and we also trade in accordance with the policy of market-oriented economy. We are implementing the characteristics of a market-oriented economy, and believe that every citizen is entitled to enjoy the advantages of trading in heavy fuel oil. Having said that, we don’t control the fuel prices any more, as we are implementing in accordance with the market economy. We may need to set limits in the prices if the dollar rates remain unstable. We are monitoring the rates and prices. As you are already aware, we are not in a position to control the dollar market. We conduct the survey of the fuel prices continuously. Then we ask our office staff to prepare a flow analysis of the currency exchange market. We also have formulas to calculate the possible market prices, to figure out how much the original prices, sales prices and the amount of profits are. We resort to making negotiations with the traders, thus avoiding black marketing and fuel shortages. So far, I admit that the prices have gone up to some extent, but they are reasonable with the changing currency rates.
Q: If the dollar exchange rates continue to rise and Myanmar currency continues to drop, to what extent will it impact on the fuel oil prices?
A: What I shall say is that it would depend on the traders. Compared to former times, fuel oil trading takes two or three steps in the international market. Formerly, fuel oil was delivered to us after we had made the payments in advance. Now things are changing. To make the situation worse are the traders who do not want to make the deal anymore, because of the unstable dollar exchange rates which cause many inconveniences in the market.
Q: Could you explain the factors for the appreciation of the dollar, and the situations in neighbouring countries?
A: As far as I am concerned, many countries will suffer the consequences of a trade war between the United States and China that can lead to negative impact on the global economy. In dealing with foreign exchange policy, every country has assigned to set up their own relevant policies and regulations in regard to their central banks, so that there would be better solutions for the country. There are several different types of policies that may differ from one country to another. The main thing is to securing a free trade flow, which is an economic practice, whereby many countries can import and export goods without any intervention. Everyone is in favour of trade liberty, and I hear that many countries have to encounter the impacts of the consequences of a trade war.
Q: Being a businessperson, how would you find the most appropriate solution of dealing with this crisis?
A: Regarding this kind of condition, there can arise three types of situations. If you ask the manufacturers, they would say that it is better to get higher prices. Generally speaking, we all want the prices to remain stable and we should find a better solution to deal with this problem. I think the situation will return to normalcy if the government does it part by making significant endeavors. As for me, all I want to urge the government is to make an announcement of what percentage of dollar amount is being impacted, so that they can target for reduction within a month. Personally, the Central Bank of Myanmar should open up the selling and buying rates of the dollar currency, making arrangements for the purchase of foreign currency from the central bank, so that it would be a good approach in solving the problem in the long run.
Translated by Win Ko Ko Aung