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.
Business transformation during the pandemic
Businesses in Myanmar should also think about the financing options and tax waivers which may be suitable for their operations. SME owners should prepare to ensure that the businesses have the resilience level to stand an economic downturn. Affected SMEs should make to extend liquidity by working with Micro-Finance Institutes to increase the availability of credit to affected businesses. Entrepreneurs should consider the resilient level of their businesses to withstand the economic downturn.
In order to make the business more resilient in time of the crisis, owners should make a 6-month cash flow forecast, identify supply risk, production and customer demand and access cash in and out flow risk. Businesses can take this pandemic as an opportunity to change to e-commerce and go digital with online marketing and encouraging people to do online payment.
SMEs like Chinland Agriculture Product Company is doing market research and making new marketing strategy to reach out to wider market when the economy starts operate again. The company is aiming to export to Western market like the US and Canada by making more efficient and effective factories and connecting with farmers with the business transformation after the pandemic.
Partner with Diinsider
Development Innovation Insider (Diinsider) is helping SMEs and social enterprises in emerging countries with free video making and marketing services during this time of pandemic with the aim to support the enterprises to recover after the global crises. Enterprises can partner with Diinsider as it is working together with entrepreneurs for making social and economic impact. Diinsider is now in Myanmar making social impacts to bring positive changes to the community by partnering with local organizations.