World Bank Reports on How COVID-19 Hammered Myanmar’s Businesses

YANGON — The World Bank’s latest survey on Myanmar says 75 percent of services, retail, wholesale, manufacturing and agricultural firms have suffered due to COVID-19, despite some signs of recovery.

The World Bank’s data was collected from 500 firms in May, July and August in the services, retail, wholesale, manufacturing and agricultural sectors.

It said 35 percent of the firms were micro-businesses and 40 percent were small. Medium-sized firms made up 19 percent of the study and large firms constituted 6 percent.

The World Bank found that 81 percent of the firms were affected negatively by COVID-19 in May and 79 percent in July.

“The overall negative impact of COVID-19 remains significant but most areas show improvement. Reduction in sales due to the pandemic remains the area in which firms were most adversely affected,” the World Bank said.

The next most commonly reported impacts were a reduction in production, difficulty getting products or services to customers and cash-flow shortages, according to the study.

It said 87 percent of firms in the service sector were affected negatively by COVID-19 in May, 90 percent in July and 86 percent in August. Moreover, 80 percent of retail and wholesale firms were affected negatively in May, 84 percent in July and 79 percent in August.

The 86 percent of manufacturing firms also faced negative impacts in May, 80 percent in July and 76 percent in August. Of agricultural firms, 70 percent were impacted negatively in May, 68 percent in July and 64 percent in August.

Moreover, the survey found 81 percent of firms reported a reduction in sales in August while cash-flow shortages improved that month.

It said 85 percent of firms reported a reduction in sales in May and 88 percent in July. Firms’ cash-flow shortages reduced to 30 percent in August from 50 percent in July. The study said 51 percent of firms faced cash-flow shortages in May.

Among firms experiencing cash-flow shortages, loans from friends and family was the main mechanism to deal with shortcomings, the survey said.

Firms relied on loans from friends and family, followed by non-banking institutions, as only 8 percent of firms resort to commercial banks, according to the World Bank.

August saw an increase in firms reporting a fear of falling into arrears in the next three months. The survey said firms reporting a fear of falling into arrears had increased to 40 percent in August from 33 percent in July. The 36 percent of firms reported a fear of falling into arrears in May.

Regardless of the size and sector, almost all firms reported a confidence to remain operational for the following month, according to the survey.

The World Bank said 61 percent of firms were aware of government COVID-19 policies in August and the numbers of firms applying for government support has doubled since May.

It said 47 percent of firms reported that access to loans or credit guarantees was the most needed government support.

In April, the government launched its COVID-19 Economic Relief Plan, implementing monetary reforms, increasing health-care spending and other measures.

In September, the drafting of the Myanmar Economic Recovery and Reform Program began to maintain economic reforms introduced by the National League for Democracy.

It promised almost 2 trillion kyats (US$1.6 billion) to address the social, health and economic impacts of COVID-19, including 200 billion kyats ($160 million) for the manufacturing, hospitality, tourism and services sectors, 600 billion kyats ($478 million) for farmers, 100 billion kyats ($80 million) for the microfinance sector, 200 billion kyats for small- and medium-sized enterprises and 100 billion kyats for small teashops and street stalls.

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Source : The Irrawaddy

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