The Tazaungdaing Festival is also known as Festival of Lights and is an annual celebration of Buddhist origins that happens at the end of rainy season.
The tradition of hot air balloon competition dates back to the times of British colonialism at the end of 19th century, according to the Myanmar Times.
During the festival the hot air balloons built by local teams are filled with fireworks and then sent up in the air.
Craig Holmes, who witnessed and filmed the incident, told Reuters he believes the festival is dangerous.
"Most of the balloons are probably 100 meters up before the fireworks go off but every now and again they don't get off the ground properly and the fireworks go off straight into the crowd gathered below. The truth is the locals seem to think it's all part of the fun - as soon as the next balloon goes up they're all gathered around right underneath it again but we decided to watch the rest from a safer distance. In both of these videos people started running when they saw the balloon wasn't taking off, a waiting fire engine rushed in to extinguish the blaze and they all carried on again like nothing had happened." said Holmes.
There have been fatal incidents in the past, including three people killed in 2014, as stated by the local media.