The current political upheaval and deadly COVID-19 third wave started at the beginning of July this year are pushing the country’s financial system into crisis and businesses are confronting with changing operating environment under the military rule.
Stability, a major part of sustainable businesses is unpredictable now and several international firms are halting while remaining companies and overseas investors reassess their investments in the country.
The departure of International Chains
The recent statement of Norway telecon company Telenor to sell its entire operations in Myanmar to the M1 Group, a Lebanese-based investment firm is causing a mounting concern for the people and indeed a loss for the development.
“Telenor entered Myanmar because we believed that access to affordable mobile services would support the country’s development and growth,” says Sigve Brekke, President and CEO of Telenor Group.
“The situation in Myanmar has over the past months become increasingly challenging for Telenor for people security, regulatory and compliance reason. We have evaluated all options and believe a sale of the company is the best possible solution in this situation”
Soon after the Telenor statement, METRO, a German wholesale food distribution company also stated to halt operations by the end of October 2021.
“The significant changes in business conditions in Myanmar give us no other option than to cease the business.” Hence, “We made this decision with regret,” the company said in the press.
Auntie Anne’s, Little Sheep and Taiwan’s bubble chain KOI have closed the shops in recent months.
Drivers of the Exits
Banking services are in collapse with limited withdrawals and the financial system on the other hand is presumably heading to a crisis, users’ confidence in the operations is rock bottom. Digital financial services have no other exception and are a matter of concern for the public due to users’ privacy invasions.
Companies need proper connectivity; the unpredictable communication disruptions and internet blackout have/will be affected significantly on their daily performances.
Moving around the country is an area of concern due to the security of people which is indeed a challenge for companies to protect and keep employees safe as the scale of workforce who can work from home is limited and the majority need a physical presence in offices under rotation plan.
The engagement for regulatory and compliance such as tax, visa and other related approvals is more challenging than ever with slower decision-making which is giving firms a headache as speed is the new currency in operations.
In the recent survey in June conducted by World Bank, more than three-quarters of the 500 companies across the country said that the impacts of the coup were worse than last year covid-19 challenges.
What is Happening in the Labour Market?
The current situations in Myanmar have extensively affected the nation’s economic development which is in fact already weakened by the first and second wave of covid-19 and as a consequence, employment crisis is in near time to project.
The exits of multinational brands, without a doubt, are having a huge impact on employment, and the working class is hence facing a deterioration of labour market. To give a notable example, around 130 employees will be losing their jobs by the time METRO departs and the company said to assist those staffs “in a responsible manner.”
According to International Labour Organization (ILO), 1.2 million jobs are losing in the first half of 2021 while 14% of working hour losses are estimated, which is equivalent to the working time of 2.2 million full-time workers, assuming 48 hours workweek.
“The estimate shows a serious and rapid deterioration in employment in the first half of this year on a scale that could drive many in Myanmar into deep poverty,” said Donglin Li, ILO Representative.
Since 2011, the arrival of international companies and Foreign Direct Investments (FDI) pushed Myanmar out of economic isolation and no surprise that the current crises are now pushing them to head for the door.
Nevertheless, the majority of remaining companies and investors from different sectors are trying to adopt “wait and see” approach and continuing the operations in the best way they can while coping with the changing environment.
During this unprecedented and difficult time ever encountered in the country, all businesses can do at this moment is to develop feasible plans to execute and to have a backup at the same time while keeping an eye on the changes.
No one can tell which companies are saying goodbye and which ones to be stick with. It is now “wait and see” for the people of Myanmar and to be well-prepared for what’s coming next.