Inflation in Mandalay highest in the country: Ministry

Mandalay Region’s inflation rate, at 11.53 percent, is the highest in the country due to its status as a major trade hub in the country, said U Myat Thu, Regional Minister for Planning and Finance.

The region’s inflation rate based on the Consumer Price Index (CPI), which is calculated by the Central Statistical Organisation (CSO) under the Ministry of Planning and Finance, exceeds even Rakhine State, where inflation is 10.68pc and Magwe Region at 9.66pc. The annual average inflation rate in Myanmar is currently around 6.94pc.

Among the factors that have an impact on inflation is the dollar-to-kyat exchange rate. Over the past year, the kyat has weakened substantially against the US dollar, making imports more expensive.

On Monday, the weighted market exchange rate had fallen to K1523.9 per US dollar, compared to K1300 last year. As a major hub for traders from China, Mandalay sees high volumes of currency flows which have an impact on rising inflation.

“However, as there is a high volume of unofficial currency flows from the border, we can’t tell exactly how much this is contributing to inflation in the region,” Japan-Myanmar Entrepreneurs Association’s chair U Nay Lin told The Myanmar Times.

In addition, remittance levels are also high in Mandalay. Over the past two decades, there has been a rising number of Chinese migrant workers to the region and many of them send money home, leading to capital outflows which weaken the exchange rate and contribute to inflation.

‘‘People from border areas come here and people from China and India come here for trade and tourism. This contributes to making Mandalay’s inflation rate the highest in the country,” U Myat Thu said.

U Win Htay, chair of the Myanmar Sugar and Sugar Cane Related Products Merchants and Manufacturer›s Association, said the higher inflation could also be due to Mandalay’s efforts to develop more infrastructure.

There are currently two focal points of investment in the region – the 4000-hectare Mandalay Myotha Industrial Park project and the New Mandalay Resort City project.

As a result, “the consumption of electricity has increased and electricity is a component of the CPI used to calculate inflation,” said U Win Htay .

On the other hand, there has also been a rise in the level of investments in Mandalay, leading to capital inflows to the city.

The Mandalay Port development project worth US$38 million is already underway, and its construction is expected to begin later this year. A separate air cargo transportation project was carried out in Mandalay International Airport last year, and an inland railway port was opened in Myit Nge this year.

Eighteen significant local and foreign investments have been made in Mandalay Region over the past year: 12 Myanmar businesses invested K30 billion and six foreign businesses US$15.6 million – in sectors ranging from agriculture, brewery, garment manufacturing, sugar refining, gems extraction to tourism in the region, contributing 12 percent to Myanmar’s GDP, he said.

According to Mandalay’s Investment Committee, between 1994 and 2018, entities from 16 different countries made 70 investments totaling US$3.7 billion in the region. Over the same period, 165 local businesses invested K4.9 trillion in the region.

Still, as Mandalay is like a border town, its development can be unstable. The city’s opportunities for investment and development can easily be outweighed by the challenges, said U Nay Lin.

Source: Myanmar Times

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