YANGON – The government announced the Coronavirus (COVID-19) Economic Relief Program (CERP) on April 28, aimed at mitigating the economic impact of the outbreak on Myanmar.
The plan has seven goals, 10 strategies, 36 action plans and 76 actions aimed at flattening the curve without flattening Myanmar’s economy.
The focus is on improving the microeconomic environment through monetary stimulus; mitigating the impact on the private sector by improving the investment, trade, and banking sectors; assisting workers and households; promoting innovative products and platforms; strengthening healthcare systems; and increasing access to COVID-19 response financing, including emergency funds.
The Irrawaddy reporters Myo Pa Pa San and Aung Thiha interviewed economists and business leaders about CERP.
Wu Chin Maung Ni
CERP is an outline, and the government may have detailed plans. CERPs are somewhat general and are a description of government goals and objectives. Good thing the government has lowered bank rates and deferred income tax and set targets for this month and the end of the year. We’ll have to wait and see how quickly and most effectively it implements them.
Another action plan sees the government guaranteeing 50% of any new loans issued by banks to Myanmar businesses. I doubt that the banks have so much money, can they afford to lend now?
It is good to increase the amount of loans (to businesses hit by COVID-19) to about 500 billion kyats ($359 million). Many businesses need loans. As far as I know, the loan program is not going as smoothly as expected. I’m afraid the loan scheme will not do much and nothing will be given to those in need. But I understand that it is difficult for the government to assess (the needs of loan applicants).
Vice Chairman of Myanmar Fisheries Federation
CERP pays little attention to the fishing sector, which can actually recover fairly quickly. Wouldn’t a little more effort in this area be able to promote a rapid economic recovery? I don’t understand what those who designed CERP were thinking.
I think this plan was developed without extensive consultation. These plans should not be developed individually but in consultation with all sectors. It must assess the strengths and weaknesses of all sectors. Immediate support for the strongest sectors will lead to a swift economic recovery.
my country has the largest fishery resources in ASEAN, but its productivity is the lowest. Vietnam produces about US$10 billion (K14 trillion) worth of seafood annually. But the output here is only US$720 million (1 trillion kyat).
In our fishery we now have many EU-compliant factories. Obtaining an EU certificate is difficult. We should not just focus on domestic COVID-19. We also need to look at the international market. Since food will take precedence, we should consider what ready-to-eat products to produce. If we can produce products that can be sold directly to international markets, we can achieve a solid economic recovery.
garment factory owner
It is good that the government lowered interest rates and extended the repayment period of bad loans for another three years. Banks provide a lot of money to businesses. Since it cannot be repaid, the bank cannot receive both principal and interest. And corporate interest rates are high.
Now the government has lowered interest rates. Lending rates have been reduced to 10% (for mortgages). While not a fair price yet, it’s a lot better than it used to be. But even an interest rate of five or six percentage points is very high compared to other countries.
As the economy slows due to COVID-19, banks should offer long-term unsecured loans to businesses. The government should provide low-interest long-term loans to labor-intensive factories.
There needs to be a reduction in interest rates on agricultural loans to farmers and longer repayment periods. In addition, agricultural loans should be extended to all farmers except rice farmers. The crop insurance system also needs to be improved.
The country’s gross domestic product will only pick up if farmers in the arable and livestock sectors are able to produce in large quantities. The garment industry cannot provide employment to all those returning to Myanmar. Judging from the current trend of clothing orders, even 50% of the laid-off clothing workers may find it difficult to find employment again.
Since the epidemic has also affected the economies of European countries, workers here cannot find jobs if there is no demand from European countries. The government should carefully design programs for retrenched garment workers and returning migrant workers from abroad, including Thailand.
Chairman of Union of Myanmar Tourism Associations
It is good for the government to take such measures. But I’m confused about one thing. We understand that the government will guarantee 50% of new loans issued by private banks, but only for new investments. It is difficult to attract investment at this time.
Instead, governments should focus on helping businesses hit by COVID-19. It would be better if individual ministries took responsibility for lending to their sectors.
Transparency will be greater if there is cooperation between private associations and ministries. The government, in cooperation with the Myanmar Federation of Chambers of Commerce and Industry, provided loans worth 100 billion kyats ($72 million). Because loan applicants come from different industries, the amount each company can get is too small. So I don’t think help is enough.
All ministries and associations should have a better understanding of this. Because they know how to revive a business, and if the public-private partnership works together, more progress will be made.
Chairman of Myanmar Industry Association
Manufacturing plants have been suspended for inspections since April 20 due to an instruction from the Ministry of Labor on April 19 at 8:00 pm (Sunday night).
There are more than 60,000 registered factories across the country, including more than 7,000 in Yangon. As of April 30, only about 2,000 had been inspected, and more than 1,900 were allowed to resume operations. But less than 10% can resume operations. Most factories have been shut down during this period. And (due to inspections) it has been extended until May 15th, except for pharmaceutical and food businesses, other shops and factories cannot operate for a maximum of 1.5 months or so. As sales fell, so did the distribution network that relied on those stores and factories. Other businesses that depend on them are also affected. As the entire supply chain is affected, compensation should be prorated according to the impact of the temporary closure instructions.
More importantly, the government should consult industry insiders before issuing orders and directions. These orders should be in compliance with CERP.
Wu Yemin Maung
Secretary General of Myanmar Food Processors and Exporters Association
CERP mainly focuses on tax relief and details the amount of tax relief for different industries. Tax breaks are not enough. CERP doesn’t say much about how to help businesses recover. If the economy grows, businesses can afford to pay taxes.
For the economy to recover, the government needs to make it easier to invest and allow financing. The government should identify priority sectors for economic recovery.
As a businessman, I worry that prioritizing and investing in the wrong areas will not solve anything. The State Counselor (Aung San Suu Kyi) said that measures will be taken to restore all industries. She can do this and assist in all departments. But there must be priority sectors.
50% of Myanmar’s labor force is engaged in agriculture. my country has a good foundation for grain production. I think we should move on that way. We have labor and land. But we need a market where we can export our products. But now the chain is broken.
Farmers who cultivate crops and livestock must work according to the calendar. You cannot reap what you sowed yesterday. Likewise, you cannot export what you nurtured yesterday. It takes at least three to five months. Since (the factory) has been closed for 1.5 months, we have to start from scratch. We need capital. We have a workforce because many of the immigrants are returning from abroad. So we can produce high-quality products and export them to foreign markets. Optimism that this is an economic opportunity for us at a time when the world is in danger of food shortages. I think priority should be given to the agricultural sector.
Managing Director, Green Pindaya
Provide loans to enterprises should extend the repayment period. Digital payments are fine. The government should also conduct on-site inspections of small businesses and provide them with low-interest loans.
Investment in businesses that produce products from crops such as coffee and tea should be encouraged. We don’t know much about the country’s economic situation, but when it comes to tea, our investment this year is not profitable. So it is a good idea to produce innovative products at this time.
If it is difficult to maintain the flow of goods across the country, it is a good idea to encourage the establishment of small-scale enterprises and production. This will help the post-COVID-19 economic recovery. But there are financial constraints in the private sector. The government should provide financial and technical assistance to some parts of the private sector.
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