COVID-19 Taking Huge Toll on Myanmar Manufacturing, Service Sectors, World Bank Says

YANGON—The World Bank (WB)’s latest survey on Myanmar has revealed that nearly half of all businesses in the manufacturing and service sectors do not expect to recover from the economic effects of the pandemic, while a reduction in sales is the top concern of businesses in the country.

The WB’s latest survey for October covered 500 firms across the country. The survey results show that firms in the agriculture, manufacturing, wholesale and retail, and service sectors remain less optimistic of recovery during the second wave of COVID-19. It found that the proportion of firms not expecting to recover reached 41 percent in October, up from 29 percent in May.

The bank said that the economic impact of the second wave of COVID-19 has been more severe on businesses than the first wave, with more firms not expecting to recover this time.

Declining sales were a concern for 96 percent of responding firms in October, up 11 percentage points from May, the WB said.

The sales outlook for the next three months also remained negative, with sales expected to decline by an average of 26 percent from the same period a year ago. Firms in the service sector expect the decline to be 41 percent on average, while those in retail and wholesale expect a 21-percent decline, the bank said.

It added that more than half of firms involved in agriculture expect to fall into arrears over the next three months. Overall, 35 percent of firms expected to fall into arrears in the next three months when it comes to their outstanding liabilities.

The WB found that more firms applied for government support in October, with about half of firms reporting that they accessed loans or credit guarantees, the most commonly used forms of government support.

Tax deferral, deduction and relief comprised the second-most-requested policy priority for firms in October, with 11 percent of firms seeking such measures, the bank said.

The proportion of manufacturing firms reporting temporary closures rose to 19 percent in October from 12 percent in September. The figure declined for retailers and wholesalers by 2 percentage points, however, and by 7 percentage points for firms in the service sector.

Large and medium-sized firms continue to experience higher rates of temporary closures as they are more likely to be required to observe stay-at-home orders, the bank said.

Small firms have also experienced a rise in temporary closures since September, the bank said. The increase in temporary closures was seen mostly in manufacturing and small firms; almost half of the firms in Yangon, the commercial capital, have closed temporarily, according to the bank.

The WB said Yangon continued to see the highest proportion of temporary closures in October at 42 percent, but the share of firms reporting closures in Mandalay more than doubled between September and October, from 11 to 24 percent.

Some 87 percent of the firms surveyed reported experiencing negative impacts from COVID-19 in October, down 6 percentage points from September.

At 97 percent, nearly all firms in Mandalay reported negative impacts from COVID-19 in October. This is the highest share reported by any region in that period, followed closely by Yangon (93 percent), the bank said.

Firms were less concerned in October with cash flow shortages and more concerned with disruptions to supply of inputs. The other most common issue in October was difficulty making repayments on loans, followed by a quarter of firms reporting cash flow shortages and reduction in access to credit, the World Bank said.

Almost half of service sector firms reported a decline in total investments in September compared to the same month last year. In September, 42 percent of service firms reported a decline in total investments compared to the same month last year, higher than the nation-wide average of 28 percent, the bank said.

In April, the government launched its COVID-19 Economic Relief Plan, implementing monetary reforms, increasing health-care spending and other measures. Moreover, the government said it is drafting the Myanmar Economic Recovery and Reform Program to maintain economic reforms introduced by the National League for Democracy. The plan includes strategies for helping the economy recover from COVID-19.

In September, the government said that as part of its COVID-19 economic relief plan, it had committed 200 billion kyats (US$150.5 million) for the manufacturing, hospitality, tourism and service sectors, 600 billion kyats for farmers, 100 billion kyats for the microfinance sector, 200 billion kyats for small and medium-sized enterprises and 100 billion kyats for small teashops and street stalls.

Source : The Irrawaddy

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