YANGON – The Myanmar government has announced an initial stimulus package to cushion the impact of COVID-19 on the country’s economy, including loans worth 100 billion kyats (nearly US$70 million), relaxed tax deadlines and tax exemptions for Myanmar businesses hit hard by the global pandemic.
In an announcement on Wednesday, the government said a kyat 100 billion COVID-19 fund has been set up to assist CMP (garment and manufacturing), hotel and tourism industries, and small and medium enterprises owned by local businessmen.
Given their vulnerability to COVID-19, the government has identified these industries as a priority for state aid, the report said.
The loan interest rate provided by the fund is only 1%, and the loan period is one year.
The government said it would review rates and terms after assessing the economic impact of the virus outbreak.
According to the government, the fund draws 50 billion kyats from the National Revolving Fund and 50 billion kyats from the Social Welfare Fund.
Myanmar still has the highest interest rate among ASEAN countries. Recently, the Central Bank of Myanmar announced an interest rate cut of 0.5 percentage points, saying it was necessary to support the country’s economic development. Its latest directive stipulates that the minimum interest rate on bank deposits is 7.5%, the maximum loan interest rate on mortgage loans is 12.5%, and the maximum loan interest rate on unsecured loans is 15.5%.
Additionally, eligible businesses will now have until the end of September to pay quarterly income tax and monthly business tax, the government said. Income taxes for the second quarter are due by March 31, and income taxes for the third quarter are due by June 30. These payments are now available until the end of the 2019-20 financial year, which ends on 30 September. The monthly business tax that was due to be paid by March 31 can now also be paid by September 30.
The government also announced that businesses will be exempted from paying a 2% export advance tax until the current fiscal year ends on September 30.
Myanmar’s overall economy has slowed down due to the outbreak of the novel coronavirus (COVID-19). Experts have warned that failure to contain the impact of the outbreak could tip the country into a full-blown economic crisis.
Since late January, the epidemic has severely hit Myanmar’s tourism, border trade and export industries, causing huge losses to producers, exporters and workers. Airlines and hotels in the country are already suffering due to travel restrictions.
The Ministry of Tourism said that the number of tourists visiting Myanmar may drop by 50% this year due to the epidemic. The Union of Myanmar Tourism Associations told The Irrawaddy that travel bookings totaling US$800,000 have been canceled since the end of January due to travel restrictions.
The Confederation of Trade Unions of Myanmar (CTUM) said last week that nearly 20 factories in Myanmar had closed and others had reduced working hours due to a lack of raw materials from China. Closures of garment factories have led to mass layoffs, affecting more than 10,000 workers across the country, CTUM said.
Meanwhile, in the Ayeyarwady region, more than 200 crab production enterprises have temporarily closed due to insufficient demand from China, resulting in more than 20,000 workers losing their jobs, according to the Raputa Crab Producers Association.
The economic support for local businesses was announced after the second meeting of a committee formed to deal with the impact of the global coronavirus outbreak on the country’s economy. Myanmar formed the committee a day after the World Health Organization (WHO) declared the coronavirus outbreak a global pandemic.
The committee’s response to the main economic impact of the coronavirus includes developing short- and long-term emergency plans to address the downturn in tourism; developing job training programs and new job opportunities for workers affected by factory closures; and advising the Office of the President on a small and medium-sized enterprise tax exemption program and lowering interest rates for local businesses.
Meanwhile, the Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) is also investigating the risks posed to the business community by the virus outbreak.
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