YANGON — Business has slowed further since Myanmar’s Ministry of Health and Sports warned that the country faced a very high risk of a “major outbreak” of COVID-19 as large numbers of migrant workers return from Thailand.
As of Thursday afternoon, Myanmar has confirmed 20 cases, including one death.
This week the government has moved to help key sectors which are badly hit by the virus while the Ministry of Commerce announced plans to adopt online import and export procedures to allow social distancing to stop the spread of COVID-19.
The Japan International Cooperation Agency also announced nearly ¥50 billion (651 billion kyats) in loans to help economic and social development.
Additionally, the World Bank has warned the pandemic will slow Myanmar’s growth and hit poor households. The European Union’s Chamber of Commerce said more than 60 percent of its member companies in the country had already been affected by coronavirus. More garment factories also face closure after EU orders were canceled.
Trade licenses go online
Myanmar’s Ministry of Commerce has announced that it will accept online registration for import and export permits for nearly 150 types of items.
The government also said it will halve staff numbers as part of efforts to implement social distancing.
The ministry said essential products such as food, pharmaceuticals, medical supplies for hospitals and fuel are included in a list available online.
Companies can find the application form at www.myanmartrade.com.mm.
Japan agrees to ¥47 billion in loans
Myanmar’s government and the Japan International Cooperation Agency (JICA) on Tuesday signed up to official development assistance (ODA) loans for two development projects.
JICA said the aim was to contribute to Myanmar’s economic and social development. It will support ¥40.6 billion (529 billion kyats) for the first phase of the Yangon-Mandalay Railway Improvement Project and ¥7.33 billion (95 billion kyats) for a third phase of the infrastructure development in the Thilawa Special Economic Zone.
The Japanese Embassy in Yangon said the railway improvement project would boost capacity by repairing and modernizing the network and equipment with new trains for the Yangon-Taungoo section which is a part of the Mandalay route through Naypyitaw.
The number of services per day will increase from about 30 to approximately 160 and the journey times are due to be halved from 7 hours to about 3½ hours between Yangon and Taungoo. The project is expected to be completed by 2023.
The development in Thilawa aims to upgrade a 50-megawatt thermal power plant in the Thilawa Special Economic Zone. The embassy said foreign businesses, especially Japanese companies, were expanding in Yangon and electricity was an urgent problem.
The project aims to boost and stabilize electricity supplies, the embassy said.
COVID-19 to slow Myanmar’s economy
The World Bank’s latest report warned that Myanmar’s gross domestic product growth is projected to slow to between 2 and 3 percent this fiscal year due to COVID-19 with poor and vulnerable households hit the hardest.
The World Bank said manufacturing activity and exports were expected to slow throughout the remainder of the fiscal year.
With travel and border trade restrictions in place, the impact will be felt across the tourism and agricultural sectors and in supply-chain disruptions to manufacturing, particularly for clothing, which accounted for 13 percent of exports, the global bank said.
“[Some] 68 percent of the poor work in agriculture and they can suffer from declines in production and prices associated with a reduction in exports to China,” the World Bank warned.
Chinese nationals accounted for 20 percent of tourist arrivals in 2018-19, while agricultural exports represented 19 percent of total exports, or 4 percent of GDP, roughly half of which are sold to China.
The agricultural sector is the biggest employer in Myanmar, accounting for as much as 78 percent of the rural labor force, while 27 percent of the urban workforce were employed in tourism-related activity, it reported.
Moreover, the global financial institution said layoffs in the garment sector, which accounts for 500,000 jobs, could affect household incomes and domestic remittances, especially if China’s supply chain disruptions are prolonged.
“The slowdown in the manufacturing and related services could hit poor households hard,” the World Bank said.
Fiscal revenue collection continues to decline, while COVID-19-related health care spending could drive up the fiscal deficit, it warned, adding that careful financial planning was needed.
Economic reform momentum may slow down in the lead-up to the general election, which is expected in November, the bank said.
Over 60% of European firms hurt by COVID-19
The EU’s Chamber of Commerce’s latest survey revealed that more than 60 percent of its member companies in Myanmar had already been either significantly or moderately affected by coronavirus.
It forecast revenue losses of between 30 and 50 percent, with small- and medium-sized companies (SMEs) likely to be the most impacted and the automotive, fast-moving consumer goods (FMCG), retail and manufacturing sectors on the frontline.
Larger companies were better positioned to mitigate the impact with a majority estimating losses of less than 30 percent, EuroCham said.
Automotive manufacturing was the only sector in which half of the companies expected revenue losses of over 50 percent, according to the survey.
EuroCham found that EU companies are expecting three major responses from the government to support them through the virus: faster import and customs-clearance to help businesses cope with the sudden drop in trade; subsidies and relief for companies to maintain a strong and steady supply chain; and corporate tax rebates for this year to ensure sufficient capital for affected companies.
Govt loans for virus-hit businesses
The government has announced that Myanmar-based businesses that have been badly hit by COVID-19 can apply for loans as part of its initial stimulus package to cushion the coronavirus impact.
The 100-billion-kyat (US$70-million) fund was created last week for the most vulnerable businesses, including garment, manufacturing, hotels and tourism firms.
The committee said the businesses can apply for the loans from March 30 to April 9.
Businesses must have been licensed by March 2018, must have made profits for the last two years and be sufficiently stable to repay the loan.
The committee said the loans must only be used to pay salaries and fund current operations. The committee said applicants must not have been suspended or removed from the company register. The businesses must be on record as paying taxes, particularly income, commercial and special goods taxes.
The committee will prioritize businesses that have contributed to the Social Security Fund.
Clothing factories poised to shut
The Myanmar Garment Manufacturers Association (MGMA) is expecting more factory closures this week following the cancellation of large orders from the EU.
The MGMA chairman U Myint Soe said the EU is no longer accepting clothing exports from Myanmar since last week.
The EU receives about 70 percent of the country’s clothing exports.
The Confederation of Trade Unions of Myanmar said last week that nearly 15,000 workers had already lost their jobs as at least 20 garment factories had closed due to a lack of Chinese supplies.
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