COVID-19 second wave more severe on local firms than first

The economic impact of the second wave of the COVID-19 pandemic, has been more severe on Myanmar businesses than the first wave, according to the World Bank’s latest firm-level survey. The latest survey, the fourth in a series of eight surveys planned, was conducted in September and covered a nationally representative sample of 500 firms. The survey, which covers the second wave of COVID-19 and re-introduction of stay-at-home orders that started initially in Rakhine in late August and then in Yangon in early September, found that local firms were not well-prepared to withstand the second wave. Of those surveyed, 66 percent reported that they were not ready, and agricultural, micro and smaller firms were founded to be the least prepared.

On average, 83pc of firms in Myanmar reported a negative impact on their businesses, an increase from the 75pc reported in August. Firms of all sizes experienced a rise in temporary closures in September after the government imposed stay-at-home orders on businesses in Yangon. As compared to August, all sectors except those in agriculture, saw a rise in business closures. As people have lower incomes, spending has declined and consumer demand has fallen. As a result, there are more difficulties for businesses. It will take time for the country’s economy to recover. That efforts are needed to rebuild entire supply chains using resources in the country, from raw material to finished products, to meet the needs of the domestic market and to increase export capacity to foreign markets. Reducing in sales remains the number one concern of firms surveyed, more so far smaller firms than larger ones.

The share of firms reporting a reduction in sales in 93pc in September, a 12 percentage point increase from August. Issues related to capital appears to be a growing problem for a greater share of firms in September. There were more firms that filed for insolvency and bankruptcy, laid off workers and experienced difficulties with making payments on loans and credits facilities compared to before. In September, half of the surveyed firms in agriculture and about a third of retail and wholesale firms reported the likelihood of falling into arrears within the next three months. With the onset of the second wave, firms reported less confidence that they will remain open for business. Firms in September expressed less confidence regarding their likelihood of remaining operational in one month, compared to August.

Source: Myanmar Times


Myanmar citizens raise investments in the country despite pandemic

Despite COVID-19, Myanmar citizens’ investment across the regions and states for fiscal 2019-20 amounted to over K1.88 trillion, which is around K200 million higher than in the previous fiscal year. Approval was given to over 130 Myanmar businesses to invest in nine sectors during the period, data showed. Yangon Region received the highest volume of investments with over K901 billion from 50 local investors.

Mandalay Region received funds of K410 billion, while Shan and Ayeyarwady received K170 billion and K161 billion, respectively. Investors also channeled funds into Bago, Tanintharyi, Sagaing, Mon and Kayin. They also invested in the other states and regions, including the two poorest – Rakhine and Chin. The majority of the investments were in the industry, hotels and tourism and housing and development sectors. A handful of investors also channeled funds into the power supply, oil and gas and mining sectors, which is typically dominated by foreign investors.

Despite the government’s plan to promote growth and value-add in agriculture, livestock and fisheries, few local firms invested in the sector. The MIC then issues a Commercial Operation Certificate which enables investors to enjoy benefits such as tax relief and exemptions and other privileges. In fiscal 2019-2020, over 23,000 job opportunities were generated as a result of Myanmar citizens’ investment, data showed. Some 22,700 locals and over 480 foreign workers were employed.

Source: Myanmar Times