YANGON—Amid an overall economic slowdown in Myanmar, the EU Chamber of Commerce’s latest survey revealed that more than 60 percent of its member companies in the country have already been either significantly or moderately affected by the COVID-19 global pandemic.
It forecast revenue losses of 30 percent to above 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.
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Released on Monday, EuroCham Myanmar’s survey, “The Economic Impact of the COVID-19 Outbreak with European Companies in Myanmar,” addresses its concerns to the Myanmar government and proposes ways in which the authorities could provide support.
EuroCham surveyed 33 representatives of EU businesses active in Myanmar to assess their expectations regarding the economic impact of the COVID-19 outbreak.
Half of SMEs expect losses ranging from 30 percent to above 50 percent, including those involved in FMCG, retail, manufacturing and agriculture, while larger companies are better positioned to mitigate the impact with a majority estimating losses of less than 30 percent, EuroCham said.
The automotive sector was the only sector in which half of the companies expect their revenue loss to reach over 50 percent, according to the survey.
Two-thirds of the European companies reported that the preventive measures taken by the Myanmar government have had little impact on their business so far.
The government has announced a plan to assist Myanmar-owned businesses that have been hit by the global pandemic. Its initial stimulus package included 100 billion kyats (nearly US$72 million) worth of loans, eased deadlines for tax payments, and tax exemptions for local businesses. The Central Bank of Myanmar also cut its key interest rate twice in the past two weeks in response to a slowing of the country’s overall economy due to COVID-19.
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, and related businesses, causing massive losses for producers, exporters and workers.
EuroCham found that EU companies are expecting three major responses from the government to support them during the virus crisis: faster import procedures and customs clearance procedures to help import-export businesses cope with the sudden drop in trade; subsidies and relief for import and export companies to maintain a strong and steady supply chain; and corporate tax rebates for this year to ensure sufficient capital for affected companies.
A total of 54 percent of EU companies engaged in importing and exporting expect to receive subsidies and relief, as the whole global supply chain is severely impacted by COVID-19. Some 51 percent said that faster import and customs-clearance procedures would be appropriate to support the import-export industry, EuroCham said.
Some 39 percent of companies said that a corporate tax rebate would be a beneficial measure to help combat the effects of the virus outbreak.
While 34 percent of survey respondents said their recovery from the impacts of COVID-19 would depend on how the supply chain across all industries reacts, another 51 percent expected a recovery within six months.
Only 3.8 percent of companies reported a significant increase in operating costs due to the virus outbreak.
According to the Ministry of Commerce, EU countries accounted for only 7.6 percent of Myanmar’s total foreign trade in 2018-19 and 6.22 percent in 2019-2020.
As of April 2019, EU countries’ total investment in Myanmar had reached US$6.87 billion, accounting for 8.6 per cent of total foreign direct investment into the country.
EuroCham suggested that the government needed to take the initiative on discussions with trade unions to support companies and shoulder a portion of wages and costs during non-operation periods.
It also urged trade unions to accept long holidays at minimum wage without bonuses or incentives. It recommended that minimum wage increases be postponed until next year, corporate tax holidays be extended for one more year, and a six-month waiver of personal taxes for expats/foreign employees.
On Wednesday, the World Bank warned that Myanmar’s GDP growth is projected to slow to between 2 and 3 percent in the current fiscal year due to the COVID-19 pandemic, with the brunt of the outbreak’s economic impact likely to be borne by poor and vulnerable households across the country.
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