YANGON—The rising number of COVID-19 cases across Myanmar continues to hamper businesses but the government is looking to stimulate growth and there are forecasts of a recovery to come.
On Friday, Myanmar reported 4,299 coronavirus cases with 61 deaths, overtaking Thailand to record the fifth-highest number of cases in Asean.
As a result, the government announced it will extend tax exemptions for exporters until the end of the year. Trade on the Chinese border has dried up after China locked down its border town of Ruili, which faces Muse in Shan State, and its largest customs gate to avoid the further spread of COVID-19.
However, Myanmar and South Korea have agreed to gear up trade, investment and energy cooperation and the Asian Development Bank (ADB) forecast a swift recovery for Myanmar’s economy with gross domestic product (GDP) growth of up to 6 percent.
Exporter tax bonus
This week Myanmar announced an extension to the exemption of the 2 percent withholding tax for exporters until December to cushion firms from the impact of COVID-19.
In April, the government exempted the withholding tax after exporters were hit by the pandemic.
Last week, the government again extended the tax payment deadline until the end of December for quarterly income tax and monthly commercial tax for small- and medium-sized enterprises, garment manufacturers, hotels and the tourist sector.
Border trade with China stops
Myanmar’s official border trade with China has completely stopped after China shut Ruili, its main border town facing Muse in Myanmar, and the customs gate to control the spread of COVID-19.
Muse has the busiest border gate with China, with bilateral trade averaging around 4.57 billion kyats (US$3.5 million) per day before the pandemic. Since late March, China banned passengers from Myanmar from crossing the border and trucks have to follow heavy COVID-19 restrictions.
Ruili in China’s Yunnan Province on Tuesday imposed a lockdown and ordered all residents be tested for COVID-19 after two allegedly illegal immigrants from Myanmar tested positive. Ruili’s customs clearance office was also closed. The Ruili authorities said the shutdown will last at least a week, depending on the test results.
Meanwhile, about 400 truckloads of goods from Myanmar are stranded in Muse. Around 100 truckloads of goods are stuck in Jiegao, between the border and Ruili, and traders are looking for warehouses to temporarily store the goods.
South Korea looks to boost trade
Myanmar and South Korea have agreed to enhance trade, investment and energy cooperation to help ease the COVID-19 downturn.
An online meeting of the bilateral Joint Commission for Trade and Industrial Cooperation was held on Wednesday, led by Myanmar’s minister for commerce, U Than Myint, and South Korea’s trade, industry and energy minister, Sung Yun-mo.
The meeting sought to expand economic ties and implement major projects and activities delayed by the pandemic.
Sung promised to help Myanmar’s products reach the Korean market. The meeting also discussed the implementation of the Myanmar-Korea Apparel Testing Research Institute and the Technology Advice and Solutions from Korea scheme, as well as investments in Myanmar’s textile sector and bilateral cooperation in food and packaging production.
They also agreed to begin construction of the planned Korea-Myanmar Industrial Complex in December.
ADB forecasts GDP bounce
The latest Asian Development Bank report forecast that Myanmar’s GDP growth will bounce back to 6 percent in 2021, despite growth falling to 1.8 percent due to coronavirus.
The bank said the growth will be obtained by a stable performance in agriculture, higher government spending and expansion in the telecommunications sector. ADB reported Myanmar’s GDP growth at 6.7 percent in the last fiscal year before falling to 4.2 percent in April and 1.8 percent since June.
ADB reported that the approval of foreign direct investment rose to $4.3 billion (5.7 trillion kyats) in June from $3.2 billion (4.2 trillion kyats) in the same period last year. It said electricity projects, real estate development and manufacturing remained attractive to foreign investors. However, the ADB warned, “future investment inflows could disappoint expectations due to downside risks from the global economy”.
ABD said from October 2019 to June, inflation fell to 7.5 percent from 7.9 percent a year earlier, due to lower commodity prices and subdued demand. It also forecast the inflation rate would fall for this fiscal year and the next year due to weak domestic demand.
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