How Can the Myanmar Govt Help Businesses and Workers Weather COVID-19?

By The Irrawaddy 9 May 2020

Kyaw Zwa Moe: Like every other economy in the world, Myanmar’s economy has been affected by the COVID-19 global pandemic and has seen large-scale redundancies. The government recently released the COVID-19 Economic Relief Plan (CERP) to mitigate economic impacts. We will discuss to what extent the government can assist businesses and tackle unemployment, the strengths and weaknesses of the CERP and the potential for economic recovery after COVID-19 is over. I’m joined by economic researcher Dr. Zaw Oo and Executive Director of the Sandhi Governance Institute Ko Khine Win. I’m The Irrawaddy English editor Kyaw Zwa Moe.

The COVID-19 has seriously impacted the entire world. It is fundamentally a health crisis, but has also affected economies. Many countries, including rich ones, have experienced economic turmoil. Even countries like the US and European countries have seen millions of redundancies. The governments therefore have to provide a lot of assistance.

So far, our country is fortunate to some extent regarding COVID-19. [An outbreak] has been occurring in Myanmar but it is still not that serious. But we have already seen its economic impacts. Workers have lost their jobs over recent months and the situation could get worse. The government is taking remedial measures. Recently, it issued the CERP to ease the economic impacts of COVID-19. It has seven goals as well as action plans. To what extent do you think it can be helpful to businesses badly hit by COVID-19 and their employees?

Zaw Oo: As the plan is mainly about remedial measures, it appears that there will also be a rehabilitation plan in the near future. Talking of economic impacts, previously, the economic shocks came mainly from outside the country. We can assume that COVID-19 control measures such as curfews and travel restrictions have worsened economic impacts. According to economists from other countries, the impacts from preventative measures taken by their countries’ governments are far more serious than impacts caused by external factors. For example, it is said that the economic impacts caused by the lockdown in the US are four or five times higher than the impacts caused by disruptions to supply chains.

KZM: In our country, the workforce accounts for over 30 million [people] while the national population is over 50 million. Farmers and growers make up the majority of the workforce. There are also many people who work at factories and companies and there are also many street vendors. How swiftly do you think the government’s remedial measures can benefit them? As some have to work daily to eke out a living, if they can’t work for a day, they don’t have food for that day. To what extent do you think the government’s remedial measures are helpful to them? What else do you think needs to be done to help them?

Khine Win: The government distributed basic foods for the needy before the Thingyan [New Year] holidays. It saved the situation for them to some extent. According to World Bank reports, there are only around 1.7 million professional company employees in Myanmar, accounting for only 8 percent of the country’s workforce. The majority of the workforce is engaged in the agricultural sector and there are many tenant farmers—they are the most vulnerable people.

There are also many micro-scale and small-scale businesses. Many doubt the economic relief plan will reach them. Loans were lent at 1 percent interest to hotels and tourism businesses and clothing factories that are hit hardest. Many businesses want the loans. But the contact numbers [to enquire about loans] were turned off. If businesses lose trust, they will not rely on the government’s support plans. As the existing bureaucracy has shortcomings, I’m afraid it can’t handle further challenges to give assistance to those who are badly in need.

Again, it said it would provide financial assistance to the needy, including to the IDPs [internally displaced persons]. It should be given to them immediately as they are in real trouble. I heard that six types of necessities will be provided to them. As their families are big and they live in crowded conditions, once there is a COVID-19 infection, it could spread rapidly. But when the government imposes a lockdown to prevent this, those people suffer from financial hardship. It is very important for the government to strike a balance.

KZM: It is very good that the CERP also focuses on the IDPs. There might be shortcomings on the ground, and there are problems like contact people who can’t be contacted—in other words, problems with implementation of the CERP. Deputy Planning Minister U Hset Aung, who is one of those who designed the CERP, said they developed the plan in the shortest time possible, and set seven goals to be implemented as soon as possible. Ko Zaw Oo, what do you think the government officials who implement the CERP need to overcome the weaknesses pointed out by Ko Khine Win?

ZO: The government should adopt specific measures depending on location and business sector. I mean the magnitude of COVID-19 in Yangon is different from in Mandalay. The Labor Ministry should focus its efforts [to inspect factories before allowing them to reopen] on Yangon. But the ministry is overstretched as it has to inspect factories across the country. This is attributable to the weakness in the upper echelons of the management.

KZM: Ko Khine Win, the EU is considering providing cash to garment factory employees. The Thai government is starting to provide 5,000 baht (US$155) for millions of its people who have lost their jobs. It appears that it will provide [the relief funds] for more than one month. We can say that goal four in the CERP is similar to that, as it aims to ease the impacts on households. What is your assessment of it? We haven’t seen many efforts on it so far, though the government has provided some basic foods, including rice. But if it will take a few more months before the coronavirus can be controlled, what do you think the government should do in response?

KW: The CERP includes cash for work and cash transfers. One of the weaknesses of our country is that the existing social security mechanism is very poor and only reaches a few people. This plan is new and there are time limits, and the government is also burdened with the health crisis. The question is how long the government can provide aid for the people. The CERP doesn’t mention the amount of cash transfers and for how many months cash transfers will be provided. The government needs to take swift actions to re-create jobs for people. People have concerns.

The CERP includes establishing an assessment management committee to handle non-performing loans, to give breathing space for banks and for the government to guarantee 50 percent of new loans. Some have concerns about it and I don’t think those services are within the reach of micro-scale and small businesses. But systematic surveys have not yet been conducted. It would be better if surveys are conducted. We are considering conducting surveys. Many of the loan applicants could not obtain loans. The government should address this in consultation with all the stakeholders.

KZM: Myanmar is one of the poorest countries in the world, and is poor in all aspects, including administration and infrastructure though the current government appears to have some political will. What advantage do you think the government can take out of the COVID-19 crisis? Do you think the government, while taking remedial measures, can think outside the box and take a holistic approach to fix some economic and administrative problems around the end of this year or in next year? What are your recommendations?

ZO: It is a point of pride for Myanmar that the EU launched the Myan Ku Emergency Cash Fund for Myanmar factory employees. This is partly due to efforts of trade union leaders, committed assistance by employers and the cooperation of the Labor Ministry. As the EU granted a 5million euro emergency fund, many workers will receive at least a month’s salary. This will help improve industrial relations in our country, and the [EU] has plans to encourage reforms to the social security mechanism in Myanmar.

I also have high hopes for the agricultural, meat and fishery sectors. There will be high demand for food due to food insecurity. Among our neighbors, India’s food demand will be high. It’s clear that meat and fish products are staple foods around the world. We should not simply sell these foods in this time. The government should roll out reforms to fix structural faults in the agricultural sector while tackling the impacts of COVID-19 on the sector, and prepare to enter new markets that will emerge after COVID-19 is over.

KZM: Ko Khine Win, do you think Myanmar will be able to take any opportunities out of the COVID-19 crisis?

KW: Our country has many businesses that can’t compete with other countries. For example, in the agricultural sector, we have not been able to enter new markets. In the hotel and tourism sector, since the time of the Myanmar Socialist Programme Party, Myanmar customers have been charged in Myanmar kyats and foreigners are charged in US dollars. Only if such things can be fixed in the process of economic recovery will businesses be more successful. Similarly, in the agricultural sector, the government needs to provide effective support for the agricultural sector to be incorporated into the regional value chain—this will yield improvements in the long-term.

KZM: So, the government needs to fix all the persistent faults once and for all and move forward.

KW: Yes, it does.

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