CORONAVIRUS - The situation in Myanmar

1. General condition

Since the number of the local transmission and positive cases are increasing a lot these days not only in metropolitan cities like Yangon but also in other Regions and States (especially in Rakhine State), the government urges people to stay at home as much as possible, in social distancing, to wear the masks when going out. But most of the production factories for essential sectors such as foods are still in operations with close supervision and with prevention measures.

The updated news can be checked at Myanmar’s Ministry of Health and Sports: https://www.mohs.gov.mm/ .

2. Preventive measures

Myanmar government has been taking precautionary measures to control and limit the risk of the spreading the corona virus in Myanmar:

In case of urgent official missions or compelling reasons, foreign nationals, including diplomats, United Nations officials and international investors who wish to travel to Myanmar by available relief or special flights, need to contact the nearest Myanmar Embassies for possible exception with regard to certain visa restrictions. However, all visitors must abide by existing directives issued by the Ministry of Health and Sports relating to the prevention and control of the COVID-19 pandemic.
According to the announcement of government on September 7 2020, all the travelers to Myanmar (through relief flights) need to stay 14 days of facility quarantine after arriving into Myanmar.
Domestic flights are currently suspended their operations until October 31 3030.
Public transport is still operating and the Express Bus Transportation reduce the number of passengers to half (i.e one person in two seats ratio).
According to the notification of Ministry of Health and Sports on August 16 2020, gathering of five people and above are restricted and all social events are postponed or cancelled until the making further announcement.
It is compulsory wearing of face masks and in social distancing in public.
All government and private schools, universities and entertainment centers are closed. Restaurants are only available in take-away system according to the announcement on September 6 2020.
The curfew was imposed from 24:00 to 4:00 in big cities but Sittwe city in Rakhine State is under the curfew from 21:00 to 4:00 and under stay at home program because of the big outbreak according to the announcement of the MOHS on August 25 2020.
The Government has announced Yangon (except Coco Township) under stay at home program since September 21 2020 and some townships of the other Regions and States (Mon State, Mandalay Region, Bago Region and Ayeyarwaddy Division) under this program since September 25 2020.
All private cars and trucks from Yangon in Yangon-Mandalay Highway need to do health check and require COVID-19 free certificate that is valid for two weeks from the date of testing.

Sources:

3. Exit strategy

The confirmed cases are increasing rapidly day by day and local transmission outbreak was happened again after the one month of disappearing local transmission on August 25, 2020. So, the government imposed the preventive measures to control the situation.
The risk of community transmission remains still high due to the rainy season and its flu season combination with COVID-19 symptoms.
Physical distancing of 6 feet outside the home (including on public transport), and at work.
Health services operate as normally as possible.
Because of the increasing rapidly the positive cases and local transmissions in Myanmar, most of the private offices are swift to Work From Home system and some use partially shift-based system.

4. Economy

a. Economic impact

By the World Bank, Myanmar’s GDP decreased around 2-3% by COVID 19. People in poor conditions are impacted by the loss income and negative impacts of the economy. The three sectors raised by the Union Myanmar Federation Chambers of Commerce and Industry are tourism, Cut-Make-Package (CMP), and Small-Medium-Enterprises (SME), are in high vulnerability. Banking sector will also come under pressure. According to the World Bank, the net profits of private banks went negative for the first time in a decade as their ability to lend at a profit is severely limited by high interest rates required by the Central Bank of Myanmar.

Eurocham Myanmar conducted a survey to some European businesses in Myanmar to measurer by the impacts of COVID-19. More than 60% of the respondents claim that they are either significantly or moderately affected. Small and medium companies would be the most impacted and automotive, FMCG, retail and manufacturing are sectors at the frontline. While 34% of the respondents answered that the recovery from the impacts of COVID 19 will depend on how the supply chain across all industries will react, another 51% of the respondents estimate a recovery within 6 months.

According to the telephone survey results of The Asia Foundation, they found that businesses had laid off on average 16% of their employees during this pandemic and about 64% of the businesses are expected to face with the cash flow problems. So, the share of the businesses’ latest loans are increased to 51% in the survey from 25% in before pandemic. The profitability may take longer to recover even though the activities are back to normal due to the falling income will hurt consumers’ demand.

b. Trade barriers

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c. Measures for economic relaunch

The country also has experience recovering from severe shocks such as Cyclone Nargis in 2008 and floods and landslides in 2015. Back then, the apex authority under the National Natural Disaster Management Committee was activated to oversee response and recovery plans. So, the Myanmar economy can relaunch quickly after the Covid-19 pandemic even though most of the SMEs are affected badly.

d. Economic outlook

The COVID-19 situation cause an overall slowdown in Myanmar’s economy and its trading partnering countries. Cancellation of Events and Expos, cancellation of orders from clients, tourism projects, delay payment and financial transactions, logistics and supply chain disruptions, raw material and equipment shortages, foreign employees leaving the country, are unusual manners that hit to the business operations. The Confederation of Trade Unions of Myanmar (CTUM) said that 16 factories have shut down in Myanmar. There will have more factories, will shut down during the Covid 19 outbreak. But the Magwe Regional Government has allowed more than 1000 factories out of 4000 to reopen after inspections were carried out in Magwe Region on May 22. Moreover, The currency exchange rate has also become volatile. In February, Myanmar Central Bank purchased US$ 6 million in a move to ease the exchange rate volatility.

e. Short term opportunities

On March 18, the Government of Myanmar announced that the 2 percent advance income (withholding) tax on exports will be waived until the end of this fiscal year. A COVID-19 Fund worth MMK 100 billion (US$70 million, 0.1 percent of GDP) has been established at the Myanmar Economic Bank to provide soft loans to affected business (particularly the priority garment and tourism sectors and SMEs) at reduced interest rates. Starting April 20, 2020 the customs department has reduced duties for businesses operating with the Myanmar Automated Cargo Clearance System. The Ministry of Planning, Finance and Industry and Japan International Cooperation Agency (JICA) will provide Kyat 64 billion in funds to micro, small and medium enterprises (MSMEs) and the maximum amount of loan for each business will be Kyat 300 million (a yearly interest rate will be 5.5% to 10.%). Under the government’s Economic Relief Plan (CERP), the government raised the loan amount to 200 billion MMK to 500 billion MMK to be disbursed before the end of the year and the total more than 2000 SMEs have already received the low-interest loan until now.

f. Long term opportunities

The Myanmar Investment Commission-MIC approved 11 new projects on April 3, 2020 in the manufacturing, construction and other services sectors with investments of over US$555 million and over K 51 billion. The investment includes expansion of capital by 13 existing projects .Myanmar Investment Commission has systematically approved the labor intensive projects to create 3,200 job opportunities to minimize the impact of workers on the effects of COVID-19. Having the cheaper labour and government incentives to promote the foreign investment, garment sector will be an arena to look at.

5. Useful links

Ministry of Health and Sports Myanmar: www.mohs.gov.mm
Ministry of Foreign Affairs Myanmar: www.mofa.gov.mm
Myanmar Times News: www.mmtimes.com
Frontier Myanmar News: www.frontiermyanmar.net

6. Dossier Coronavirus

Het coronavirus heeft een wereldwijde impact, niet alleen op de gezondheid maar ook op de economie. Ook uw export kan hiervan gevolgen of zelfs hinder ondervinden.

FIT monitort de risico's dagelijks en ons buitenlands netwerk informeert u over alle implicaties voor Vlaamse exporteurs op hun internationale activiteiten.

In het dossier Coronavirus vindt u een aantal nuttige tips, adviezen en inzichten in de economische impact van de verspreiding van het virus op internationaal ondernemen.

Met vragen over internationaal ondernemen in tijden van Corona, kan u terecht bij exportadvies-corona@fitagency.be.

21 oktober 2020

Pipit Apriani

Senin, 26 Oktober 2020