How Myanmar’s SMEs Can Recover From COVID-19

Businesses around the world are experiencing the impact of global pandemic and Myanmar’s economy is also suffering from it. Due to the travel bans around the world and lockdown of other countries, the export and import industry is obviously suffered from the economic repercussions. In developing countries, SMEs make a major contribution to local employment and overall Gross Domestic Product (GDP). Because of the economic downturn in COVID-19, SMEs are mostly vulnerable and can hit the economies of the developing countries. In general, SMEs in Myanmar can support 50-59% of the employment and present 30-53% of GDP in ASEAN member states.

The impact of COVID-19 on SMEs in Myanmar

Even though Myanmar is fortunate to some extent regarding corona virus, it has already experienced the economic impact. Since the factories closed, workers have lost the jobs over recent months. Although Myanmar has seen a medium domestic impact from the global COVID-19 outbreak, the country face with near and moderate-term economic challenges as it depends on trade and investments.

As the agricultural sector in Myanmar accounts for 37.8 percent of the GDP and employs 70 percent of the labor force, SMEs in Agri business have to take into consideration for the business recovery after COVID-19. As an example, Chinland Agriculture Business Company which produces value added agri-products and create market for farmers faced with challenges as they cannot export the products to foreign countries like Japan and China as the borders are closed because of the pandemic. The in turn affect the SMEs, farmers and agri-business sector.

How the government response for the economic recovery

Myanmar’s economy has been faced with the impact of the COVID-19 pandemic like other economy in the world. The government has delivered the COVID-19 Economic Relief Plan (CERP) on 27 April, 2020 with the aim to mitigate economic impacts, tackle unemployment and recover the economy after COVID-19. That includes seven goals, 10 strategies, 36 action plans and 76 actions by covering a range of fiscal and social measures. Under goal 5 for promoting innovative products and platforms, government is encouraging businesses to promote the use of mobile payment services, bank transfer or card payments for e-commerce and social commerce systems.

Economic recovery should include the support to SMEs to increase the growth through business development, access to finance and markets to create employment. Under goal 2 of CERP, the measures to ease the impact of the pandemic on specific sectors, micro, small and medium-sized enterprises in hotel and tourism sectors can get the loan with 1% interest rate per annum.

The government of Myanmar is taking precautionary measures to support businesses and stabilize the economy which are affected by COVID-19 outbreak. The Myanmar Ministry of Planning, Finance and Industry (MOPFI) has provided relief measures for the Cut, Make and Pack (CMP) businesses, hotel and tourism businesses and Small and Medium Enterprises (SMEs). A total of MMK 100 billion which is MMK 50 billion from revolving fund and MMK 50 billion from social security fund will be used as a capital at Myanma Economic Banks (MEB) for businesses affected by the COVID-19. They can borrow form MEB with an interest rate of 1% for one year from the COVID-19 Fund. In order to apply the fund, SMEs have to provide profit and lost data, land or building ownership certificate and tax slips from last one or two years.