State Counsellor discusses remedies to lessen COVID-19 impacts on economy
State Counsellor Daw Aung San Suu Kyi, Chairperson of the National-Level Central Committee on Prevention, Control and Treatment of Coronavirus Disease 2019 (COVID-19), held a videoconference from the Presidential Palace in Nay Pyi Taw yesterday with Union Minister U Thaung Tun, Chairman of the COVID-19 Economic Relief Work Committee, Deputy Minister U Sett Aung who formulated the COVID-19 Economic Relief Plan (CERP) and U Zaw Min Win, president of UMFCCI to discuss remedies to lessen the impacts of COVID-19 on the Myanmar economy.
The State Counsellor said discussions would be about the economy; by economy, she meant to say economic matters related to COVID; as a first step during the time when COVID preventive measures were needed, actions were initiated in the health sector; however, after commencing activities in the health sector it was soon realized that economic aspects should also be considered.
Economic matters were handled beginning from February; they had to consider how to confront, deal with and overcome the ripple effects of COVID if economic enterprises declined due to workplaces and factories having to close down; China and Thailand were closely linked with Myanmar economically and also share borders; they had already factored in the effects of COVID resulting from movements at border entry points and that they had to look both the short-term and long-term effects.
She continued by saying that in the health sector, the country would be able to look after the health care needs of the people only if Myanmar was developed; if the country did not develop, not only the health and education needs but also other needs would not be fulfilled sufficiently. That was why they were giving great care to economic issues. The issue of “jobs” was related to the economy. Having a “job” does not only mean having an income but also relates to a person’s dignity; not having a job can lead to depression and sometimes lead to mental havoc; that was why they were taking great care to make sure that job opportunities were not affected.
Union Minister U Thaung Tun said that the global economy had slowed down because of the effects of the COVID-19 disease and that the majority of the world’s countries were facing economic hardships; the impact of COVID has also affected Myanmar to a certain extent; that was why the Union Government has adopted emergency programmes to protect Myanmar on multiple fronts such as political, economic, social and health.
With regard to efforts for remedying the economic impact of COVID-19 disease, the Union Government established a committee on 13th March to remedy the economic impact of COVID; this committee established a Kyats-100-billion fund to support and assist garment manufacturing enterprises, hotels and tourism enterprises and MSMEs – micro, small, medium enterprises, the three main enterprises who had suffered the most from economic impacts. Loans were given to enterprises owned by Myanmar nationals with 1 per cent interest beginning from the end of the Thingyan period and up to this date a total of 3,000 enterprises had been given loans up to a total of more than Kyats 86 billion; in assessing the loan applications, representatives from ministries, and representatives from UMFCCI and the Myanmar Institute of Chartered Public Accountants participated in the assessment and disbursement of loans.
For immediate recovery from the crisis, Myanmar has adopted the COVID-19 Economic Relief Plan (CERP) which is a short-term plan; in this plan measures to lessen the main negative economic impacts and to achieve recovery from economic decline have been included; furthermore, this has been aligned with the MSDP – Myanmar Sustainable Development Plan; in addition, other Union Ministries have relaxed restrictions with respect to sectors in their own ministries.
The CBM — Central Bank of Myanmar — reduced the interest rate many times; private sector banks have reduced the special minimum amount to be kept in Kyats from 5 per cent to 3.5 per cent; medicines and medical equipment have been exempted from commercial tax; licence fees imposed on hotels and tourism enterprises have been exempted up to the end of this year.
In the second part of the discussion, the Union Minister continued to say about receiving international loans for the investment sector. He said that for economic recovery funds, Myanmar received the loans of US$700 million from International Monetary Fund, $270 million from Japan, $250 million from the World Bank and $30 million from the Asian Development Bank, in total $1.25 billion.
It was very important for Myanmar to receive more foreign investment to achieve economic recovery.
For example, Myanmar Investment Commission has approved investment proposals from Thailand and Korea to establish industrial zones which can create many employment opportunities; the MIC will also scrutinize and allow the business proposals of Singapore; a total of $4.15 billion was approved in 2018-2019 financial year, and $4.09 billion in the 8 months of 2019-2020FY up to May; Myanmar is in the uptrend of foreign investment, and more capitals will flow into the country in the post COVID-19 period; the volume of investment could reach $5.8 billion, the expected target in this year.
Unemployment issue is the most serious problem in the world, investments are being allowed systematically to alleviate its impacts; and that a total of 168,000 jobs could be created up to May of this financial year.
In the third part of the discussions, U Thaung Tun presented business opportunities in the post COVID-19 period. He said that Myanmar is a country with food self-sufficiency, and is an exporter, and that the existing opportunities must be used for the development of the country with the modern agricultural methods; it is required to have multi-sector development in building a national-level economic system; in addition to food self-sufficiency, production of agricultural export items must be promoted; as an agricultural country, Myanmar could supply the global food demands in the post COVID-19 period and the country has plenty of opportunities for this; while the other country is adopting different ways to control the pandemic, Myanmar is standing on the policy of ‘People are the key’, which is a people-centred approach; because the government and the people are cooperating harmoniously it might be said that Myanmar’s situation was much better when compared to other countries.
Deputy Minister U Sett Aung explained the CERP, saying that the impacts were not very significant in the first four months and the second four months despite some losses in the latter; it is likely to have more impacts in the third and fourth four months and the short and long term plan have been formulated to address these possible losses; the impact is more serious in health sector than any other issues of the countries, so also in the economic sector; although Myanmar has not experienced severe conditions in health sector, a certain degree of economic impact has occurred due to suspension of many businesses; impacts are expected to be harder in the third and fourth four months, and that CERP was adopted to reduce the losses; the plan was aimed for collaboration of relevant ministries and departments with effective guidelines and detailed work plans for ensuring economic relief.
And that the CERP was drawn urgently, it includes the short-term detailed plans because the wider plans cannot be implemented immediately and need more comprehensive works; the relevant ministries have to specify the detail plans on specific time frame on the tasks.
These work plans target both micro economic sector and more details in private sector, direct benefits to more specific groups such as household, workers and farmers; moreover the GDP is an index to measure development of a country; main parts of GDP are supported for its development, it means attracting investments in these parts; household purchasing power must be promoted; state expenditures must be increased to support the GDP.
Therefore, the plan includes key facts to foster the GDP parts; stimulus plans for finance and currency policies are enshrined in the CERP; there are some views to use the budgets of relevant departments in the work plans; actually budget is essential for implementing every project; however, plans are needed for effective use of budgets.
The plan was drawn quite earlier, and that the amount of budget has not been estimated at present; however, the work plan will be implemented phase by phase on the availability of budgets; for example, providing financial assistance to the households, giving low-interest loans to SMEs in the initial phase, and to offer more loans depending on the budget.
The Deputy Minister added that international organizations has offered $1.25 billion loan when there are only four months left in this FY; more loans have been offered for the following financial years from $1.5 to 2 billion; the CERP includes to take out the most available amount of budget from the ministries commencing 2019-2020FY; although the proposed budget in CERP was 10 per cent, it was just the maximum amount; the respective ministries have their prioritized plans; the amount of budgets will be discussed with these ministries in prioritized manners; the amount of budget taken out is around 6.6 per cent; the funds were also used without delays, the short plans of CERP need to connect with the long term MSDP; additional plans are being drawn to support the connection as there might be some complexities in implementing short and long term plans.
The short term plan in CERP can be carried out by the departments separately, but all the departments are heading to a single goal; in addition to linking the processes of respective departments, all the regulations, policies and projects of these department must be linked; the silver lining of COVID19 is better cooperation between the government and people, as well as coordination among the departments; video call and videoconference have been widely used; widespread of mobile banking services; cloud technology has been used at the departments; the use of modern technology should be maintained in the post COVID-19 period.
U Zaw Min Win, the president of UMFCCI, discussed although Myanmar has not tested for a high number of COVID-19 cases and its death toll, the economic impacts are very significant; restrictions on business with foreign countries have caused many problems.
Labour-intensive businesses such as CMP sector, production, services, hotels and tourism and MSMEs have experienced serious blows, causing a decline of demand and incomes, slow capital a flows, higher unemployment rates and a flock of returnees from foreign countries.
The UMFCCI COVID-19 Task Force was formed in March, and it joined with the affiliated groups to carry out social and health issues from the economic perspective; commodities were sold to the workers in industrial zones; food supplies were distributed to the grassroots people with irregular incomes.
The UMFCCI raised funds to donate medical supplies and medicines to the Ministry of Health and sports and worked together with the Public Health Department for health awareness campaigns at the businesses and factories.
It is also preparing for impact assessment to realize economic impacts and to give recommendations to the government; the UMFCCI COVID-19 Social and Economic Stimulus Proposal has been submitted to the government in seeking the directives, and the UMFCCI Webinar Series will be produced to stimulate and carry out reforms with the participation of the public and private sectors during and post COVID-19 periods.
The president of UMFCCI said appreciation on the K100 billion loan programmes of the government for the relief of impacts on businesses in March; welcomed the CERP which helped for reducing the bank interest rate, relaxing banking rules for financial access; and that economic results have turned to positive trend; and the upcoming loan plan of K200 to 500 billion will surely support the businesses.
Despite some crisis in the social and economic sector, some inflexible rules and practices become flexible, especially in digitalization sectors such as online payment and e-commerce.
Taking opportunities from these situations, strict rules and procedures should be reformed, such as the processes for land utilization which is the major obstacles in the agriculture and livestock sector.
It is required to adopt a prioritized plan for recovery of businesses in a good momentum and to support MSMEs. The government should spend its budget more in the infrastructural sector to support the development of local businesses and to create more employment opportunities.
He also suggested the collaboration between the government and the private sector in the affairs of Myanmar migrant workers from foreign countries and the incentives and rule of law are required in attracting foreign investments.
The president of UMFCCI also gave suggestions on the recovery of local businesses in the post-COVID-19. The first one is the guarantee of government for the government’s special loans and international loan programme for improvement in the investments of local businesses and economic recovery in rapid pace, and the government’s role as the guarantor to get loans from local and foreign banks in the country.
The second advice is to consider the recommendations of the private sector in adopting development plan for economic recovery plans in the midterm.
The third point is to form the export promotion board with the participation of the public and private sectors.
The fourth idea is to create more job opportunities, to prioritize on promoting local businesses and ensure a fair competitive environment for local businesses.
The fifth expectation is to hold regular meetings between the government and private sector for business discussions amid COVID-19 crisis.
In response to the discussions, the State Counsellor discussed the investment sector and the current economic situation; the ongoing expectation on the economy this year despite the COVID-19 pandemic; Myanmar is still in the status of competition in the half of year due to the investments of the previous year; the country’s economy has not declined significantly yet although the significant unemployment rate in the country; some businesses were shut down due to the COVID-19; the pandemic is addressed with emergency plans despite the needs of long and short term plan; although the problems must be overcome immediately, preparations must be made to solve the following repercussions.
She added, “Just focusing on the existing problems will cause the future crisis. Economic recovery is very important. Both emergency and recovery plans are crucial although they have different approaches. The emergency plan is aimed to prevent serious impacts on the people, if possible, nothing will be allowed to hit the people although it is impossible. These measures are similar to the actions in the prevention of COVID-19. The Deputy Minister for Planning, Finance and Industry has to focus on both issues. People are the key to the national economy as it is for the people. It is needed to know the plan of how to protect people from economic hardship and how to adopt measures for economic recovery ever than before.”
The State Counsellor said that some financial institutions and countries have offered loans, and they are appreciated for this; Myanmar need to manage the loans systematically for short and long term plans; the loans are not only for COVID-19, but also for the long term plan; both plans must be linked correctly; it has be reminded on her Facebook page about the second wave of COVID-19; heath and economic issues cannot be seen differently; they are interrelated, and it will be difficult to implement relief plans for health sector alone; people are the key, followed by the unity; strength of individual person is required for the unity.
In her concluding remark, the State Counsellor said that there are no huge gaps in economic visions between the government and private sectors; both have a common goal; both sides have a good intention for the development of the country; it is required to ensure sustainable development for the long term; all have high expectation for development.
She also said that there are some different views on choosing the plans; it is better to have different ideas; a single perspective will not always be true; a single solution is not the right remedy for the problem as they might be more than one options one of the best solutions can be chosen; the best method for a certain country will not be appropriate for the other; it is needed to consider resources and situations of the country; it is also important to do changes in the right time.
Although Myanmar is not a rich country, more help was given to the public better than developed country; collaborative effort played the most crucial role among the government, employers and employees; the Ministry of Planning, Finance and Industry is the key ministry to help in financial problems of the public; private sectors are working together with the government; it is not difficult to adjust different views if there is a common good intention; the state departments need to do more cooperation.
The volume of investment is not so bad in this year; it is not a surprise that there was no serious loss in the first four months, and the country has entered the second four months which has seen some difficulties; people are informed that the government has prepared for the worst in the third four months; people do not need to worry for this period, but just face against it; public concern about economy is understandable; economy is related with the livelihoods; U Zaw Min Win discussed security measures, and even foreign investors expect guarantee for business security, and that the government always takes priority on the rule of law which can create a safety environment for the people, not for restrictions; the rule of law is necessary for stability and harmony in any community; laws must be fair and suitable for the time; the government’s directives and regulations on the economy might have both positive and negative results; changes must not be delayed to convert the bad results; people must be informed preparations to overcome challenges in COVID-19.
The government’s planning, finance and investment sectors must be published on the respective websites, and through the Ministry of Information in clear and precise reports to benefit people and the functions of ministries; the works of UMFCCI during the COVID-19 crisis are also recognized and appreciated for the constant collaboration with the government; it is expected to overcome the third four months through collaborative efforts.