Myanmar Govt Suspends Advance Tax on Exports to Aid Virus-Hit Businesses

By Nan Lwin 17 March 2020

YANGON—Amid calls from the business community for government assistance to cushion the economic impact of the global coronavirus pandemic, Myanmar’s State Counselor announced a waiver of the 2 percent advance income tax on exports until the end of this fiscal year.

The current fiscal year 2019-20 started on Oct. 1 and ends on Sept. 30.

In a televised message to the public on prevention, control and treatment measures for COVID-19 on Monday, Daw Aung San Suu Kyi said low-cost loans and tax exemptions would be arranged for those businesses in the CMP (garment manufacturing), hotels and tourism, and small and medium-sized enterprise sectors that are most vulnerable to the economic effects of COVID-19.

“The government will reduce tax and interest rates so that people will not suffer, to prevent unemployment, to enable factories to continue operating and to minimize the impact on the economy of the country,” the Myanmar State Counselor said.

In 2013, Myanmar introduced a 2 percent income tax on the value of nearly all imported and exported goods. The Internal Revenue Department said all importers and exporters had to pay an advance income tax assessment of 2 percent on the customs value of imported and exported goods.

The announcement of the tax waiver followed the setting up last Friday of a central committee to tackle the impacts of the global coronavirus outbreak on the country’s economy.

The committee is led by U Thaung Tun, the Union minister for investment and foreign economic relations (MIFER). Its members include the Union ministers for planning, finance and industry; labor, immigration and population; and commerce; as well as the governor and deputy governor of the Central Bank of Myanmar; the deputy minister for hotels and tourism and other officials from related ministries.

The committee’s steps to tackle the main economic impacts of the coronavirus include drawing up both short- and long-term emergency plans to respond to the decline of the tourism sector; creating vocational training programs and new job opportunities for workers affected by the closure of factories; and advising the President’s Office on tax exemption schemes for small and medium-sized enterprises and reduced interest rates for local businesses.

The COVID-19 outbreak has already caused a slowdown in the overall economy in Myanmar. Experts warn the effect of the virus could lead to a full-blown economic crisis for the country if not contained soon. Since late January, the outbreak has continued to hit Myanmar’s tourism, border trade and export sectors, causing massive losses for producers, exporters and workers.

Airlines and hotels in the country have already suffered losses due to the travel restrictions, and recent precautionary measures implemented by neighboring countries like Singapore mean Myanmar’s airlines are likely to suffer more losses. The Tourism Ministry said tourist arrivals in Myanmar are likely to drop 50 percent due to the outbreak.

In early March, the Confederation of Trade Unions of Myanmar (CTUM) said at least 16 factories have closed in Myanmar due to a lack of raw materials from China. CTUM said closures of garment factories have led to mass layoffs, affecting more than 7,000 workers.

Daw Aung San Suu Kyi said the committee was formed over a month ago to tackle the outbreak’s health and socio-economic impacts on Myanmar citizens.

The State Counselor said, “The committee has been working hard to prevent and solve health, social and economic difficulties and has been closely monitoring the situation.”

“After making assessments on the possible economic impacts, the Ministry of Planning, Finance and Industry, the Ministry of Commerce and other relevant ministries worked together on the prevention plans,” she stressed.

A day after the World Health Organization (WHO) declared the outbreak a global pandemic, the central committee was last Friday elevated to a national-level body.

Daw Aung San Suu Kyi also said a fund for the prevention, control and treatment of COVID-19 will be launched with contributions from the public.

She urged people to contribute to the fund. She also asked the public to support the government’s efforts to mitigate the outbreak’s negative impacts on the country and its citizens.

“It’s a simple and clear fact that people are the key; no matter how the government adopts sound policies, public participation is pivotal to achieving success,” the State Counselor said.

“With respect to health, people are the key to following the Health Ministry’s guidelines and to avoiding public gatherings. People are the key to preventing rumors and misinformation in the wake of COVID-19. People are the key to avoiding panic-buying and stockpiling the goods,” she stressed.

As of Monday, Myanmar health officials had tested 123 people for possible coronavirus infection and none has tested positive, according to the Ministry of Health and Sports (MOHS). According to the MOHS, lab results for 10 suspected patients are still pending.

On Friday, the government banned public gatherings until the end of April, including the upcoming Thingyan Water Festival. The government also temporarily ordered cinemas across the country shut down starting from Monday. Meanwhile, the Ministry of Social Welfare, Relief and Resettlement has presented its plan to the government to temporarily close public and private nursery schools.

“If the public gets fully involved in the containment and prevention measures against the viral disease, our implementation will surely be successful,” Daw Aung San Suu Kyi said.

“The people are the main strength of the country. Ours is not a superpower. We have been tackling the peace, development and democracy-building processes simultaneously,” she added.

“We can prove that we can meet the challenge of this pandemic and compete with the resource rich big countries by showing them that we have the full strength of our people. People are the key,” she stressed.

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