A military coup in Myanmar has seen the civilian government deposed after nearly 10 years of democracy, the Financial Times reported. There are three potential challenges for supply chains including the impact of military action or political protests on economic activity; sanctions applied by other countries; and, brand value issues for buyers of Myanmar's exports.
Seaports remain open, according to Splash247, while the airport is reportedly closed. The position of regional partners for Myanmar is only just emerging. Panjiva's data shows China represented 33.0% of Myanmar's exports in 2019, while the EU represented 23.2%, Thailand 15.4%, Japan 7.4% and the U.S. 4.4%.
The Chinese government has stated it "hopes that all sides can resolve their differences," the South China Morning Post reported.
The U.S. could have an outsize effect, compared to its share of Myanmar's exports, with sanctions, given control over the dollar-denominated global payments system. The White House has already noted it "will take action against those responsible." Those may involve sanctioning individuals rather than the economy at large though the latter cannot be ruled out, given President Joe Biden's comments that "an immediate review of our sanction laws and authorities, followed by appropriate action" will be made. Targets could include oil supplies, Reuters reported. Relations were only normalized between the two countries in 2016, as discussed in Panjiva's prior research.
U.S imports from Myanmar reached $1.06 billion in the 12 months to Nov. 30, 2020, from $245 million in 2016. Sanctions do not need to be particularly sophisticated to be effective, with just three product lines representing three-quarters of U.S. imports from Myanmar.
Apparel and footwear accounted for 41.4% of the total after increasing 4.7-fold in the 12 months to Nov. 30, 2020, compared to 2016. Imports of luggage, meanwhile, represented 29.9% of the total and also increased 4.7-fold. The third was fish with 4.4% of imports following a more modest growth of 148%.
Panjiva's data for U.S. seaborne imports indicates the largest importer of containerized freight to the U.S. from Myanmar in the fourth quarter of 2020 was luggage maker Samsonite International SA, with 177 20-foot equivalent units, or TEUs, linked to the company after growth of 84.5% year over year. Among the major apparel makers, privately owned L.L.Bean Inc. had 166 TEUs of imports linked to the company, representing the first imports visible in Panjiva's data since the third quarter of 2018.
Retailer H & M Hennes & Mauritz AB (publ) imported 133 TEUs after a decline of 34.8%, compared to a year earlier, while shipments linked to adidas AG reached 128 TEUs after growth of 33.0%. Second-tier apparel importers, by the scale of shipments from Myanmar, included companies as diverse as Primark Ltd and Vera Bradley Inc. with 62 TEUs and 53 TEUs shipped, respectively.
Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.