YANGON—The Myanmar government is drawing up a medium- to long-term economic recovery and reform program that aims to maintain economic reforms introduced by the National League for Democracy (NLD), amid a significant slowing of economic growth due to the COVID-19 outbreak.
On Sunday, U Thaung Tun, Union minister for investment and foreign economic relations (MIFER), wrote an article published in state media titled “COVID-19 CRISIS: We will recover and build back better.” In the article, he explains to the public the government’s latest measures and response plans to cushion the economic impact of the global pandemic.
U Thaung Tun, who is also chairman of a working committee to address the impact of COVID-19 on the economy, said the Myanmar government is “well underway drafting a new, comprehensive and inclusive medium- to longer-term Myanmar Economic Recovery and Reform Program (MERRP) with which to sustain an economic reform journey begun just four years ago.”
The Union minister said the MERRP would be implemented with environmental sustainability as part of a truly sustainable economic recovery.
“As such, we seek to capitalize upon Myanmar’s potential for green investment in sectors such as energy and infrastructure, taking full advantage of this opportunity to build back better,” he wrote in the article.
In April, the government launched its COVID-19 Economic Relief Plan (CERP), which seeks to ease the economic impact of COVID-19 in the short term. The plan focuses on improving the microeconomic environment through monetary stimulus; easing the impact on the private sector through improvements to the investment, trade and banking sectors; assisting laborers, workers and households; promoting innovative products and platforms; strengthening the health-care system; and increasing access to COVID-19 response financing, including contingency funds.
“With six months having passed since its launch, we are now conducting a stocktaking exercise to account for what we have achieved, what is left to be done, and what must come next,” U Thaung Tun said.
“Working with the Development Assistance Coordination Unit, we have mobilized hundreds of millions of dollars more in grants and concessional loans to finance our immediate relief and longer-term recovery efforts,” he said.
According to the MIFER, the government spent almost 2 trillion kyats (US$1.52 billion) to address the social, health and economic impacts of COVID-19 including disbursement of 200 billion kyats for the manufacturing, hospitality, tourism, and services sectors, 600 billion kyats for farmers, 100 billion kyats for the microfinance sector, 200 billion kyats for micro, small and medium-scale enterprises (MSMEs) and 100 billion kyats for small tea shops and street stalls to ensure their survival.
“It is clear that we have challenges to meet, but in light of our COVID-19 Economic Relief and Recovery Plan, we can expect to weather the storm and build back better,” U Thaung Tun said.
Since taking office in 2016, the NLD government has implemented several economic reforms, including amending new investment laws and introducing a Myanmar Companies Law to boost confidence among foreign investors; creating the MIFER; and drawing up the Myanmar Sustainable Development Plan (MSDP), a road map to promote equal development across social and economic sectors.
It also set up an online registration system for local and foreign companies, to remove red tape. Moreover, it introduced the Myanmar Investment Promotion Plan (MIPP), which aims to attract more than $200 billion in investment from responsible businesses over the next 20 years.
Additionally, the Project Bank has been set up as a centralized and publicly accessible database to enable the government to coordinate with ministries and departments and prioritize proposals that are in line with the MSDP. However, the reforms were derailed by the Rohingya crisis, following which foreign direct investment (FDI) in Myanmar declined significantly.
Since March, Myanmar’s tourism and hospitality industry, garment manufacturing sector and the millions who depend on MSMEs have been hit the hardest by COVID-19, though the government has yet to announce the official number of affected business.
Myanmar’s GDP growth has fallen to 1.8 percent in the current fiscal year due to the effect of the coronavirus. According to the Asian Development Bank, Myanmar GDP grew by 6.7 percent last year. However, it said growth would bounce back to 6 percent next year—a recovery equally as dramatic as the initial shock.
Recently, the government investment agency, the Directorate of Investment and Company Administration (DICA), announced that Myanmar had received over $5 billion in FDI during the first 11 months of the current fiscal year. Last fiscal year (FY2018-19), Myanmar received $4.1 billion worth of FDI.
U Thaung Tun said several new proposals for major projects in the power, manufacturing and real estate sectors were now under active consideration by the Myanmar Investment Commission, stressing that, “…the prospects look bright. This has been no easy feat.”
He said that ensuring the continued flow of appropriate and responsible investment into Myanmar would play an essential role in supporting a more resilient and sustainable economic recovery.
In July, the government granted Japan’s Marubeni, Sumitomo Corp. and Mitsui & Co. a notice to proceed with the construction of a 1,250-MW gas-fired thermal power plant in Thilawa as a low-emission alternative to coal.
Moreover, it also launched a fast-track international competitive bidding process for 30 solar power projects. According to the MIFER, the government received a total of 155 bids with an average winning price of $0.0422 per unit.
In the article, U Thaung Tun also explained the government’s decision to hire the consulting firm Roland Berger to oversee the tender process of the China-backed New Yangon City project.
“I am convinced that this course of action will result in a fairer, more competitive and better-quality project overall, providing a model for future such projects,” U Thaung Tun said.
He assured people that environmental sustainability would be a key feature of the project, with construction involving flood-resilient design, and the use of natural and manmade parks, canals, and other waterways, while at the same time conserving important wetland and biodiversity areas.
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