wris, Author at ILAWASIA

Myanmar Government Implements Economic Relief Measures

Myanmar Government Implements Economic Relief Measures

11 May 2020

The Myanmar Government on 27 April 2020 released its COVID-19 Economic Relief Plan (CERP), which aims to mitigate the inevitable economic impact posed by COVID-19. The CERP’s seven Goals for responding to the crisis, each with detailed Action Plans, will impact all aspects of economy – from international trade and investment to private households and employment.

The seven Goals set out in CERP are as follows:

Improving the macroeconomic environment
Easing the impact on the private sector through improvements to the banking, investment and trade sectors
Easing the impact on laborers and workers
Easing the impact on households
Promoting innovative products and platforms
Strengthening the health-care system and
Increasing access to the COVID-19 response financing including contingency funds

Key Action Plans of each Goal are briefly as follows:

1.Improving the macroeconomic environment

Lower interest rates (by at least 3.0%) and lower minimum reserve requirement on banks have recently implemented by Central Bank of Myanmar (“CBM”).
The CERP also prescribes that the CBM shall conduct credit auctions as necessary to inject more liquidity into the banking and financial sector.

2.Easing the impact on the private sector through improvements to the banking, investment and trade sectors

Providing MMK 100 billion 1-year working capital loans to improve working capital of affected Myanmar Small and Medium Enterprise (“MSMEs”) in the CMP and hotel/tourism sectors at 1% interest rate per annum.
Defer corporate income tax and commercial tax payments, due in March and June 2020, to September 2020
Waiver of the 2% Withholding Tax on exports
Exemption of customs duties, commercial tax, and specific goods tax imposed on the importation and distribution of medical supplies and products related to the prevention, control, and treatment of COVID-19
Three- to six-month exemption from lease fees for impacted firms that have leased state-owned factories for manufacturing, and that have made regular payments in the past three months
Permission for commercial banks to restructure and reschedule existing loans extended to SME businesses for longer repayment periods (up to a maximum of three years)
Waiver of import licensing and FDA requirements, as long as the products are FDA approved in another country

3.Easing the impact on laborer and workers

Extending healthcare benefits for unemployed social security members from six months to 1 year from the date of unemployment and medicine and travel benefits from six months to 1 year from the date of unemployment.
Implementing labor-intensive community infrastructure projects for those laid off, or returning migrants.

4.Easing the impact on households

Electricity tariff exemption
Unconditional cash and in-kind transfers for vulnerable households
Emergency rations through community-based food banks and association
Negotiation with private financial institutions to give more flexibility related to interest and mortgage payments for households which are most negatively affected by the COVID-19 pandemic

5.Promoting innovative products and platforms

Promoting the use of available mobile payment services and usage of e-Commerce and Social-Commerce Systems

6.Strengthening the healthcare system

Immediately extending and improving quarantine centers/facilities
Immediate importation of key medical products
Improving preventive measures and health sector human resource capacity
Upgrading existing health facilities

7.Increasing access to the COVID-19 response financing including contingency funds.

Reallocation of Myanmar’s 2019-20 budget as much as practically possible up to 10% from all government entities to the COVID-19 Fund
Improve budget flexibility and responsiveness through modernization of budget reallocation rules
Increase access to COVID-19 -related development financing through acquiring significant increases in external development finance

The CERP also establishes clear and specific assessment indicator for each Action Plan. The form and content of the CERP suggest that Myanmar is well on its way to becoming a regular player on the stage of world economy. For businesses, Myanmar is certainly one to watch.

THE AUTHORS

by wris

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