Trade in the shadows: Burma’s unofficial economy under military socialism 1962-1988
In the decades following the 1962 Burmese coup d’état, the military government of Ne Win set out to reshape Burma’s economy through a sweeping socialist programme. Officially known as the “Burmese Way to Socialism,” the system placed the state at the centre of all economic activity. Private imports were banned, major industries were nationalised, and commerce was channelled through a network of state corporations.
Yet the reality on the ground was very different. By the 1970s, a thriving unofficial economy had emerged that supplied the goods ordinary people could no longer obtain through official channels. From smuggled electronics and medicines to foreign cigarettes and whisky, this shadow economy became an essential feature of everyday life.
A socialist economy in name only
The government’s economic restructuring began soon after the coup. Private imports were outlawed in 1963, followed by the nationalisation of export industries, banks and large businesses. Consumer goods were meant to be distributed through state-controlled systems such as the People’s Store Corporation and, later, a nationwide network of cooperative shops.
In practice, these systems struggled to function effectively. Strict import controls and weak supply chains meant that government shops were often poorly stocked. As shortages deepened, ordinary citizens turned to unofficial channels to obtain basic goods.
This underground trade became widely known in Burma as hmaung kho, or the “shady market.” Informally, many people referred to it as “Trade Corporation 23,” a tongue-in-cheek reference to the 22 state corporations that officially controlled the economy.
Markets that sustained daily life
In the former capital, Yangon (then Rangoon), the best-known centre of illicit commerce was St John’s Bazaar. Hundreds of small stalls and makeshift shelters offered goods that were otherwise unavailable through legal channels.
Much of this merchandise had been smuggled in from neighbouring countries such as Thailand and Malaysia. Other goods were diverted from state supply chains or brought in through personal networks.
Similar markets operated across the country. In the southern port city of Mawlamyine, bazaars like Karnnar Zei and Mydah Kwin Zei served as distribution hubs for contraband goods arriving from across the Thai border. Further north in Mandalay, markets near the railway station and in the Chinese quarter specialised in consumer products smuggled from China.
These networks moved goods across the country through trains, trucks and informal trading routes, ensuring that everyday items—from kitchenware to medicines—reached consumers who had few alternatives.
An economy larger than the official one
The scale of the black market was striking. By the 1970s, international observers believed the value of Burma’s unofficial economy was at least equal to, and possibly greater than, that of the official one.
Some economists estimated that the black market accounted for as much as two-thirds of the country’s total trade during the Ne Win era. More than 90 per cent of the population reportedly relied on it to meet most of their basic needs.
This trade supplied not only luxury goods such as cosmetics, cassette tapes and imported whisky, but also critical items including medical supplies, mechanical parts and food additives like monosodium glutamate. Without these informal networks, the economy might have struggled to function at all.
Currency distortions and everyday arbitrage
The growth of the unofficial economy was closely linked to Burma’s unusual currency system. The national currency, the kyat, had no value outside the country and could not be freely traded internationally.
At the same time, the government maintained an official exchange rate of about 6.5 kyat to the US dollar. On the street, however, the real exchange rate was several times higher. By the 1970s, the unofficial rate was roughly four times the official one, creating strong incentives for black-market trading.
Foreign visitors, diplomats and aid workers quickly learned how to take advantage of this gap. Items purchased cheaply abroad—such as whisky, cigarettes, jeans or watches—could be sold locally for a large profit in kyat at the unofficial exchange rate.
These practices became so commonplace that travel guides of the era openly recommended them to tourists as a way to fund their visit.
Tolerance and crackdowns
Although the regime officially condemned black-market trading, enforcement was inconsistent. Many officials quietly tolerated the practice, recognising that it helped alleviate shortages and stabilise daily life.
From time to time, however, the authorities launched crackdowns. Traders were arrested and markets raided, forcing merchants to relocate or temporarily suspend operations. Such campaigns often targeted larger traders who competed with state monopolies in industries like rice, timber or gemstones.
At the same time, corruption within the system meant that many officials—and sometimes their families—were themselves involved in unofficial commercial networks.
Lasting economic legacies
The coexistence of an official socialist economy and a vast informal marketplace became one of the defining characteristics of Burma during the Ne Win era.
Even after the end of the regime in 1988, elements of this dual economic system continued to shape the country’s economic life. Periods of instability and strict controls have repeatedly encouraged the re-emergence of unofficial markets as traders and consumers adapt to shortages and currency instability.
The experience of Burma during the 1960s and 1970s illustrates how rigid economic policies can produce unexpected outcomes. When official systems fail to meet basic needs, informal markets often step in to fill the gap—sometimes becoming indispensable parts of the economy itself.
Andrew Selth is an Adjunct Professor at the Griffith Asia Institute and an internationally recognised Myanmar expert.
This article is an AI-assisted synopsis of Officially unofficial: The black market in Ne Win’s Burma, written by Andrew Selth, published at New Mandala.