Burmese rice crackdown escalates with arrests of traders, retail chain directors
Eleven business people involved in the sale of rice, including one Japanese national, face up to three years in prison for alleged price gouging, while 24 more executives face fines and higher taxes on their profits, a statement posted on the website of the junta’s information ministry on Sunday said.
The arrests followed a massive investigation targeting 58 people involved in the rice trade and inspections of 53 shopping malls and 22 outlets of the country’s largest retailers, the statement said.
Seven of the 58 people were arrested along with one director each from the country’s four biggest retail chains. Seven rice merchants are accused of selling rice at a price 31 to 70 percent higher than the reference price set by the Myanmar Rice Federation while the directors from four retail chains were accused of selling rice at a price 51 to 70 percent above the federation’s price.
All 11 are accused of selling rice at a price 31 to 70 percent higher than the reference price set by the Myanmar Rice Federation.
The statement said the 11 people arrested face charges under Section 5 of the Essential Supplies and Services Law, which carries a sentence of up to three years in jail and a fine of up to 500,000 kyats.
The statement said that another 24 of the 58 executives investigated face fines and higher taxes on profits for selling rice for 11 to 30 percent more than the federation’s price.
The remaining 27 were found to be selling rice at a price 10 percent higher than the federation’s. The statement did not mention any penalties for them.
Authorities and security personnel also inspected 53 shopping centers and supermarkets in capital cities of states and regions, including Naypyidaw, the statement said.
The inspections found 22 outlets of Myanmar’s four biggest retailers – City Mart, Sein Gay Har, One Stop and Japanese-run Aeon Orange – sold rice at a price that was 51 to 70 percent higher than the federation’s price, it said.
The federation calls for a retail price of 70,000 kyats (about US$ 15) for a 48-kilogram sack of ordinary rice and 145,000 kyats per sack of premium rice. Federation members say the junta forces them to set this price.
The junta statement referred to prices above the federation rate as “profits.” It also said some retail outlets were including the costs of promotions and staff wages in retail prices. The junta’s investigators seem not to know that this is how retail prices are calculated.
“We found that some shopping centers and supermarkets calculated costs for staff [and] the costs of promotional events and added these costs into the prices [charged] to consumers,” the junta’s statement said.
The statement said that one director from each of the four retail chains – City Mart, Sein Gay Har, One Stop and Japanese-run Aeon Orange – had been arrested. The junta is also planning to sue all four chains for violating Section 5 of Essential Supplies and Services Law, the statement said.
Junta officials have been trying to lower the retail prices of rice since late June. Business people say its tactics, which include arresting merchants and traders, have backfired.
The junta used similar tactics in the gold and currency exchange markets in May. More recently, it blacklisted cooking-oil importers in an attempt to reduce shortages of the staple and curb its surging price.
Business people say the junta’s crackdowns on market activity result in higher prices and greater volatility, pointing out that prices go up and the value of the local currency falls further not long after each crackdown.
Sunday’s arrests of directors of retail chains and business people in the rice market had an immediate effect at shopping malls in Yangon. Shelves that had stocked rice on Sunday were empty on Monday.
It was a different story at community markets, where overhead costs are far lower. Premium rice was selling for about 156,000 kyats per 48-kilogram sack at most stalls on Monday, compared to 178,000 kyats per 48 kg sack last week.
Stall owners, however, said the price cut was just temporary.
“Shops are selling at that price for just a while … Prices will go up again in a while because we can’t sell at this price for a long time as we are losing,” one seller said.
The police have also paid a visit, he said.
The owners of all rice shops in his markets were told by the police that they are not allowed to shut their shops and that their prices have to adhere to the reference price set by the federation.