Nearly one third of companies in Myanmar have temporarily closed because of the coronavirus lockdown and the vast majority of those still operating have reported lower turnover, according to the Asia Foundation. A nationwide poll of 750 local businesses – the largest survey so far of the impact of the pandemic – covered the two weeks ending May 10. During that period, 29pc had completely closed and 92pc reported lower sales due to COVID-19, with 74pc losing more than half of sales. The key reasons for reducing operations or closing were employee safety and lack of customers. The Asia Foundation released the telephone survey results today (June 8) to gauge how the pandemic has affected business profitability, workforce and access to finance, as well as the impact of the government’s COVID-19 economic response for businesses. Some 22pc of companies reported being profitable, compared to 55pc in a similar survey conducted between last November and February 2020. Half reported business survival at moderate or high risk, with garments and textiles and hospitality being at particularly high risk. As of June 7, Myanmar had recorded 240 cases of COVID-19 and six deaths as a direct result of the virus, according to health ministry data. Despite the relatively low number of recorded cases, the pandemic has extensively disrupted economic activities and is expected to have a long-term impact on various sectors. In April the IMF said Myanmar was facing the slowest growth rate since the transition to U Thein Sein’s government in 2011 as a result of the crisis and lockdown measures. A survey in March by EuroCham Myanmar found that more than 60pc of European investors were either significantly or moderately affected, with revenue losses forecast to range from 30pc to above 50pc. The Asia Foundation survey found that businesses had laid off on average 16pc of their employees due to COVID-19. With many small businesses yet to access government funding, many could run out of cash soon. National level estimates of additional cash flow requirements to September for enterprises amount to around K900 to K2100 billion, equivalent to 0.7pc to 1.7pc of GDP. The survey manager Ville Peltovuori highlighted that about 64pc of businesses expect to face cash flow problems that threaten their survival. Comparing the figure with the percentage of firms that have accessed the government’s emergency loan scheme shows that many more businesses require financial assistance, he said. This explains why many businesses have taken loans from microfinance institutions, whose share of businesses’ latest loans increased to 51pc in the survey from 25pc pre-COVID. However, their ability to lend has been limited by travel restrictions, repayment deferrals and lower lending interest rates during the pandemic, this newspaper reported last month. The higher interest rates set by microfinance institutions underscore the importance of the flexibility of loan products and tailor-made COVID-19 products from government and private banks. Some 71pc of businesses have concerns about repayment, but 82pc of those that had discussed rescheduling had been able to reach an agreement with their lender. “Whether they will eventually run out of cash depends a lot on how quickly economic activity can return to normal,” Mr Peltovuori said. Since most of the businesses concerned about running out of cash said it would happen before the end of June, it might already be too late for them. He added that profitability may take longer to recover even when economic activities return to normal because the fall in income will hurt consumer demand for goods and services. The COVID-19 Economic Relief Plan, announced by Daw Aung San Suu Kyi’s government in late April, outlined a range of fiscal, monetary and tax measures to support business. But most are not aware of those policies. The most well-known measure was the emergency loans, although 67pc were still unaware of it, while the least well-known policy was on income tax on exports, which was unknown to 92pc. The Asia Foundation recommended that the authorities step up publicity about government measures supporting businesses to boost take-up by those eligible. It also suggests that the government and commercial banks should explore ways to offer loans that address business needs for operating capital to get through the pandemic. Despite the difficulties and apparent lack of information, government approval among companies is high. Ninety-two percent say they are satisfied with the response of the union government, with a similarly high rating for state and region governments and the township-level General Administration Department.
