Russia and Myanmar signed ten documents in the Kremlin on August 18, including a joint declaration on countering Western sanctions.
The talks between Vladimir Putin and Myanmar's president Min Aung Hlaing produced a package covering nuclear power, liquefied natural gas, a deep-water port and search-and-rescue satellites.
It was the former junta chief's first official visit to Russia since he took the presidency in April, and the fifth country he has visited in the role after India, China, Laos and Thailand. He has made four previous trips to Russia as junta leader, the first in June 2021, five months after seizing power.
The substance was almost entirely prospective. Behind a package covering everything from nuclear power to search-and-rescue satellites sits a bilateral trade relationship worth less than $75mn a year - roughly what Russia earns from crude oil exports in about three hours.
The signing was headed by the Declaration of the Russian Federation and the Republic of the Union of Myanmar on Ways and Means to Counter, Mitigate and Redress the Adverse Impacts of Unilateral Coercive Measures - the standard Russian formulation for Western sanctions, and the clearest statement of what each side is getting from the other. Both are under sweeping Western restrictions; neither can do much about it except say so together.
The rest were interagency memoranda: electric power and oil and gas, the electronics industry, digital technologies, information and communication technologies, culture and the arts, satellite navigation and manned space exploration, the Cospas-Sarsat search and rescue system, and ASPOS, Russia's automated warning system for hazardous situations in near-Earth space. A memorandum was also signed between Russia's Federal Anti-Monopoly Service and Myanmar's Competition Commission.
The one item with a commercial mechanism attached was a set of protocols implementing an April 16, 2026 memorandum between Russia's RC-Investments Fund and Myanmar's Ministry of Electricity and Energy, covering long-term supplies of liquefied natural gas.
Energy was where Putin spent most of his statement. “Joint construction of a power plant and an oil refinery in southern Myanmar is under consideration,” he said, adding that Russian companies were “ready to participate in hydrocarbon exploration and production, including offshore”.
On gas he was more specific about the ambition than the timetable: “There are good prospects for exporting liquefied natural gas to Myanmar, both for domestic consumption and for transit to neighbouring countries.” Myanmar is a gas producer in long-term decline whose Yadana field is fading, and which has spent two years rationing fuel - the idea of it becoming an LNG transit route for Russian cargoes is a considerable stretch of the map.
The nuclear project got the strongest billing. “Last year, an intergovernmental agreement was signed on the construction of a Russian-designed nuclear power plant in Myanmar,” Putin said. “This is truly a flagship bilateral project.” That agreement, signed in March 2025 by Rosatom director general Alexei Likhachev and Myanmar science and technology minister Myo Thein Kyaw, covers a 110MW small modular reactor with scope to expand to 330MW. Myanmar has no nuclear power, generated 24.3 TWh of electricity in 2019, and is a country where armed resistance groups control something close to a third of the territory.
Putin also listed “an ironworks and an organic fertiliser production facility” under construction, and plans “to build a deep-water seaport on the country's southern coast capable of handling large-capacity vessels”.
That last one is the Dawei project, and it is where the Russian corporate involvement is actually visible. Inter RAO (MOEX: IRAO) has been working up a coal-fired power plant, an oil refinery and an LNG terminal tied to the Dawei deep-sea port, and signed an agreement in June with the Launglon Economic Development Company. Gazprom (MOEX: GAZP) International has discussed the engineering for the Dawei refinery. RosGeo signed a memorandum in October 2025 to run an artificial-intelligence pilot extracting gas from thin sand layers at five wells in the Aphyauk field - Myanmar's first AI-based production enhancement project.
The most substantive economic disclosure was about plumbing rather than projects. “Reliable financial settlement mechanisms have been established,” Putin said, “with two-thirds of commercial transactions now conducted in Russian rubles.”
That is the real achievement here, and it is a sanctions-evasion achievement rather than a trade one. Mir cards are now accepted at Myanmar hotels and shops. Myanmar's central bank delegation went to Moscow in July to talk to Sberbank (MOEX: SBER) about cybersecurity, fraud prevention and its biometric Smile Pay system, and attended a St Petersburg forum on ruble-based digital payment platforms and cryptocurrency regulation.
Economic Development Minister Maxim Reshetnikov set out what Russia actually ships. “This year we began supplying large volumes of mineral fertilisers, previously only petroleum products,” he said, adding Russia was “ready to further increase our supplies of mineral fertilisers, petroleum products, engineering products and, of course, agricultural products” and to “increase imports of light industry and agricultural products from Myanmar”. He said the relationship was “now entering the investment phase”.
The base is very low. Bilateral trade ran at $34.45mn in the 2020-21 fiscal year and $74.73mn in 2023-24 - more than doubling, and still negligible. Myanmar sends Russia garments, socks, mango puree, footwear, bags and human hair. Russia is also raising labour quotas for Myanmar workers, of whom some 3.5mn are already employed across Southeast Asia.
On security Putin was brief but unambiguous. “Our countries have established close military and military-technical cooperation,” he said. “Bilateral naval exercises are regularly held off the coast of Myanmar, and Russian Navy ships also make port calls there.”
No new defence document was announced. A five-year military cooperation agreement was signed in February 2026 and its terms have not been published. The existing relationship runs through arms sales to a military blacklisted by Western governments, army training, and university scholarships for thousands of Myanmar soldiers. Russian is now taught at the universities of Yangon and Mandalay and at the Defence Services Academy; about 400 Myanmar students are at Russian universities and more than 7,000 have been educated there in total.
Min Aung Hlaing said the two had discussed cooperation in “defence, security, tourism, agriculture, healthcare, and a number of other fields”, and used his statement mainly to advertise. “Myanmar has a strategically advantageous geographical location. There are huge sales markets near our country. We have rich resources, a wonderful climate and a coastline of more than 1,300 miles,” he said. “That's why we want to invite investors from Russia to cooperate with our country. Dear Mr President, I ask you to support the arrival of investors in Myanmar.”
He also delivered the line the visit was designed around: “Myanmar is a reliable partner of Russia in Southeast Asia. Myanmar always stands ready.”
Putin's own framing leaned on history rather than commerce. “Russia and Myanmar are bound by truly strong, time-tested ties of friendship, partnership, and mutual support,” he said, noting Soviet support for Myanmar's nation-building in the 1950s and 1960s and that relations established in 1948 had become “especially trusting in recent years”. He thanked Min Aung Hlaing for “your assistance in promoting Russia's relations with ASEAN” - which is the other thing Moscow wants here, given Myanmar's seat in a bloc where Russia has limited traction.
He opened with condolences for the monsoon floods still running in Myanmar, and Min Aung Hlaing reciprocated by thanking Russia for sending rescue teams after last year's earthquakes: “Russia promptly dispatched rescue teams, and many of our people were rescued. I still remember this.”
The softer items were unusually prominent for a summit read-out, which tells you something about how much hard material there was. A Myanmar consulate general is to open in Vladivostok. Myanmar cultural and religious centres already operate in the Altai Territory and the Kaluga and Moscow regions. Min Aung Hlaing told Putin an agreement had been reached to build a Russian Orthodox church in Yangon. He goes on to the Republic of Tuva, a centre of Russian Buddhism, and to a Russia-Myanmar business forum at the Plekhanov Russian University of Economics on August 19, organised by Myanmar's embassy and the Roscongress Foundation.
Prime Minister Mikhail Mishustin, whom Min Aung Hlaing also met, offered the same forward tense as everyone else: “We see excellent opportunities to boost our bilateral trade, economic, and investment potential,” and a readiness to share Russian work on “the digital economy, autonomous electronic systems, and artificial intelligence applications”.
What Min Aung Hlaing came for is not really the LNG or the reactor, neither of which is close to delivery. It is the photograph. He took the presidency in April after a general election held in only 102 of Myanmar's 330 townships, with a claimed 52% turnout, which UN experts and rights groups called neither free nor fair. Since then he has been collecting state visits. Russia, which needs friends in ASEAN and buyers who will settle in rubles, is the least demanding host available, and the one most willing to sign a joint declaration saying that sanctions are the problem.
How Myanmar’s SMEs Are Coping With An Economy Of Uncertainty – Analysis
Credit: The Sabai
August 20, 2026
Shwetaungthagathu Reform Initiative Centre
By Hsu Latt Phyu
Key Takeaways:
Despite these challenges, SMEs have demonstrated resilience through practical adaptation strategies, including alternative energy use, flexible workforce arrangements, informal financing, and digital innovation.
Strengthening SME resilience through supportive policies, improved infrastructure, access to finance, and capacity-building initiatives will be critical for Myanmar’s long-term economic sustainability and recovery.
1. Introduction
Since the 2021 military coup, Myanmar has faced a prolonged polycrisis characterised by political instability, inflation, currency depreciation, power shortages, trade disruptions, and labor migration. More recently, fuel supply disruptions linked to the Middle East conflict have further increased production and transportation costs, amplifying existing economic vulnerabilities. While large firms may possess greater financial capacity to absorb shocks, small and medium-sized enterprises (SMEs) have been disproportionately affected. Yet despite operating in an environment where uncertainty has become the norm, many SMEs continue to adapt and survive. This article examines how Myanmar’s SMEs are coping with an economy of uncertainty.
2. Myanmar’s Current Economic Situation
Although Myanmar’s economy showed signs of a modest recovery in early 2026, the improvement remains fragile amid ongoing political instability and economic uncertainty. Inflation rose to 24.6 percent in April 2026, driven largely by higher fuel and transportation costs, while the depreciation of the kyat increased the price of imported goods and raw materials. At the same time, foreign exchange controls and import restrictions have made it more difficult for businesses to access essential inputs, while conflict-related disruptions continue to raise logistics costs and delay deliveries. Businesses also face persistent electricity shortages, forcing many to rely on generators and alternative energy sources, which increase operating costs. Meanwhile, labor migration, skills shortages, and compulsory military service have made recruitment increasingly difficult. Together, these challenges have pushed many SMEs to prioritize survival and adaptation over growth.
3. The Role of SMEs in Myanmar’s Economy
Small and medium-sized enterprises (SMEs) are widely recognized as the backbone of Southeast Asian economies, accounting for over 90 percent of businesses and employing a large share of the workforce. In Myanmar, SMEs make up 94 percent of enterprises and between 52 and 97 percent of total employment. Beyond their economic contribution, SMEs play an important social role by creating livelihoods, supporting local communities, and generating income opportunities in both urban and rural areas.
However, despite their importance, SMEs continue to face significant structural challenges. Previous studies have highlighted constraints such as limited access to finance, outdated technology, low productivity, and poor market access. Moreover, formal policy support for SMEs remains limited, reducing their ability to reach their full economic potential.
4. Challenges Facing SMEs
Since 2021, Myanmar’s SMEs have faced overlapping economic, operational, workforce, and financial challenges. Unlike large corporations, SMEs are often more vulnerable to external shocks and have fewer resources to absorb rising costs.
Inflation, currency depreciation, and fuel price increases have significantly raised production and transportation costs, while weaker consumer purchasing powerhas reduced demand and squeezed profit margins. At the same time, frequent power outages, import restrictions, and supply chain disruptions continue to increase operational uncertainty and business expenses.
International sanctions have added further pressure on some SMEs. Although sanctions primarily target military-linked entities, Myanmar’s military-dominatedeconomy means that restrictions on financial transactions, trade, and supply chains can also create unintended spillover effects for civilian-led SMEs. These indirect impacts make it more difficult for businesses to access foreign currency, credit, imported inputs, and international markets, placing additional pressure on firms with limited financial resources.
Labor shortages have become another major challenge, driven by skills gaps, outward migration, and compulsory military service, resulting in higher recruitment and training costs. Access to finance also remains limited, as many SMEs face difficulties obtaining affordable credit and must cope with ongoing liquidity constraints.
Together, these challenges have created a business environment where many SMEs prioritise survival and continuity rather than growth and expansion.
5. Resilience of SMEs in Myanmar
Despite operating in an increasingly uncertain environment, many Myanmar SMEs have demonstrated remarkable resilience by adapting their business models and day-to-day operations. Rather than pursuing expansion, many firms have focused on maintaining continuity, preserving cash flow, and responding flexibly to changing circumstances.
5.1 Energy Adaptation
Frequent power outages have forced businesses to invest in alternative energy sources such as diesel generators and off-grid solar systems. In October 2025, approximately 42 percent of firms’ electricity consumption came from diesel generators and off-grid power sources. While these investments increase operating costs, they enable businesses to continue production and maintain essential services during prolonged outages.
5.2 Workforce Adaptation
To cope with labor shortages caused by outward migration, skills mismatches, and compulsory military service, many SMEs have adjusted how they manage their workforce. As the labor market shifts toward more informal, part-time, and casual employment, particularly in urban areas, firms have adapted by relying on more flexible labor arrangements to maintain business operations. Many businesses have also raised wages and provided short-term training to attract and retain workers, despite the additional costs involved. These workforce adjustments have enabled SMEs to sustain operations in an increasingly constrained labor market.
5.3 Financial Adaptation
Limited access to formal credit has encouraged SMEs to explore both formal and informal financing mechanisms. Following the 2025 earthquake, state-backed recovery loans and subsidised lending programs contributed to a significant increase in SME lending. At the same time, informal financing remains an important coping mechanism. Some firms rely on loans from friends and family, while many businesses facing cash-flow shortages use personal networks to sustain operations. These informal support systems often serve as an important source of resilience when formal financial channels are difficult to access.
5.4 Digital Adaptation
Myanmar’s digital economy has long been shaped by social commerce, with Facebook serving as a major platform for communication, marketing, and online sales. However, internet restrictions and the nationwide VPN block introduced in 2024 disrupted access to many digital platforms and reduced online business activity. In response, SMEs have diversified their digital presence by adopting alternative channels such as Telegram, Viber, and TikTok to reach customers and maintain sales. This ability to adapt to a rapidly changing digital environment highlights the flexibility and innovation that characterise many Myanmar SMEs.
Although these adaptive strategies have helped businesses survive, resilience should not be mistaken for recovery. Many firms continue to face significant constraints and remain focused on sustaining operations rather than pursuing long-term growth.
6. Recommendations
Strengthening the resilience of Myanmar’s SMEs requires coordinated efforts from businesses, policymakers, and development partners.
For SMEs
Businesses should also adopt digital tools such as e-commerce websites, chatbots, artificial intelligence (AI)-enabled customer service, and digital payment systems to improve efficiency and expand market access.
Where possible, firms can strengthen local supply chains by sourcing raw materials domestically to reduce dependence on imports and foreign exchange volatility.
Developing workforce retention strategies, including employee training, flexible working arrangements, and career development opportunities, may also help address labor shortages.
For Policymakers
Expanding vocational training programs and workforce development initiatives can help address skills shortages.
In addition, targeted tax relief and regulatory support for SMEs could reduce operational burdens and encourage business investment.
For Development Partners and the International Community
Development partners can support SME resilience through renewable energy programs, digital literacy initiatives, business continuity training, and concessional financing schemes.
Technical assistance and capacity-building programs can also help SMEs strengthen their ability to adapt to future economic shocks while contributing to inclusive and sustainable economic development.
Governments imposing sanctions, such as the EU and the United States, should strengthen targeted sanctions while minimizing unintended impacts on civilian-led SMEs by maintaining access to essential financial services, trade, and humanitarian support.
7. Conclusion
Myanmar’s SMEs support SDG 8 and SDG 9 by creating employment, sustaining livelihoods, and demonstrating innovation in the face of economic challenges. SMEs are operating under extraordinary economic pressures arising from inflation, energy shortages, trade disruptions, labor migration, and political uncertainty. Despite these challenges, many businesses continue to survive through adaptation, flexibility, and innovation. From investing in alternative energy sources to adopting new digital platforms and informal financing mechanisms, SMEs have demonstrated remarkable resilience in the face of prolonged uncertainty.
However, resilience should not be viewed as a substitute for structural economic reform. The future of Myanmar’s economic sustainability will depend not only on macroeconomic stabilisation and improved infrastructure but also on strengthening the resilience of SMEs.
About Shwetaungthagathu Reform Initiative Centre
The Shwetaungthagathu Reform Initiative Centre (SRIc) is a hybrid think tank (non-partisan) and consultancy firm that advances sustainable governance, policy innovation, and sustainability literacy in Myanmar. Through its Sustainability Lab, SRIc conducts in-depth public policy research and analysis to promote sustainable development and guide Myanmar toward a more resilient, equitable, and environmentally conscious future. SRIc provides strategic policy advocacy, CSR consultation, and the development of sustainability roadmaps grounded in Environmental, Social, and Governance (ESG) principles. These services support public institutions and private sector actors in aligning their operations with the Sustainable Development Goals. By integrating rigorous research with actionable consultancy, SRIc supports responsible business practices, fosters innovative CSR strategies, and designs impactful sustainability pathways. SRIc contributes to local transformation & global sustainability efforts through this dual approach.
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