COVID-19 Economic Recovery Plan – Booster for Trade, Investment and Export Promotion

COVID-19 Economic Recovery Plan – Booster for Trade, Investment and Export Promotion
Residential and high rise commercial buildings are seen early evening in Yangon . Photo: Ye Aung Thu/AFP

Market-oriented economic policies adopted by Myanmar has accorded a prominent role for the private sector. Foreign direct investment and promotion of trade and exports are seen as critical pillars of the country’s economic growth. Opening up of Myanmar economy, removal of sanctions and global trade liberalization through WTO have been positive developments that Myanmar has been able to utilize over the past few years.

However, more needs to be done to accelerate investment, trade and exports. Foreign trade remains relatively small compared to ASEAN peers. Enhancing Myanmar’s capacities in terms of trade negotiations, integration of Myanmar into regional value chains and export investment promotion measures to attract FDI has been supported by development partners including trade-related specialist agencies like International Trade Centre (of UN and WTO).  Efforts are also being made by state and regional governments to attract FDI and promote exports including cross border trade. A more recent development in this arena is to work towards the development of the second National Export Strategy (2020-25). Being finalized, the focus of NES 2020-2025 is export diversification into higher value-added manufacturing, market-oriented agriculture and services.  Several initiatives and plan of actions have been initiated in this regard. However, these need to be now calibrated with the changing reality of the economic impact of COVID-19. One may recall that World Bank has warned as early as during end Mar’20 that “ Myanmar is facing headwinds to growth from its exposure to the COVID-19 related slow down in China and the world”.

There is also a need for Myanmar to work in tandem with the member countries of WTO and ASEAN community to ensure that exports are least affected and countries competitiveness is retained. Global rules play a significant role in times of crisis and as early as 25th March 2020 Myanmar along with other countries has urged at WTO for global supply chains remain open and trade is unhindered.  It is also important for the country that domestic production is restored to normalcy as soon as possible. Protection of MSME, its employment, informal sector is critical for Myanmar and at the same time it has to advocate for keeping open trade routes with the rest of the world.

At the ASEAN summit (30th Apr’20) member countries have also declared that they “ Remain committed to keeping ASEAN's markets open for trade and investment, and enhance cooperation among ASEAN Member States and also with ASEAN's external partners to ensure food security, such as the utilisation of the ASEAN Plus Three Emergency Rice Reserve (APTERR), and strengthen the resiliency and sustainability of regional supply chains, especially for food, commodities, medicines, medical and essential supplies.” Countries have also declared that they would “…and refrain from imposing unnecessary restrictions on the flow of medical, food and essential supplies, following the rights and obligations under the World Trade Organization (WTO) covered agreements, the ASEAN Trade in Goods Agreement (ATIGA) and principles of international law”. and “…build on existing trade facilitating platforms in ASEAN, such as the ASEAN Single Window (ASW), to promote and support supply chain connectivity”. On MSMEs, ASEAN declaration states “ leverage on technologies and digital trade to allow businesses, especially the micro, small and medium enterprises (MSMEs) to continue operations amidst the COVID-19 outbreak”.

In a global survey on the impact of COVID-19 on MSMEs, trade promotion organisation ITC points out “ measures to contain the virus such as lockdowns and quarantines, have had devastating repercussions for business operations and disrupted many existing local and international value chains”  Though many countries have announced stimulus packages, according to this survey, access to information on how governments intend to support small businesses is inadequate for a large number of entrepreneurs to benefit from such facilities. Information dissemination is critical not only on health but also on economic stimulus.

All these reflect the need to view the post COVID-19 recovery phase as an opportunity to expand trade and investment opportunities in Myanmar. Government’s COVID-19 economic recovery plan (CERP) has attempted to do that in order to ensure that export competitiveness and investment climate of Myanmar remains upbeat.

Myanmar along with other countries has appealed to the world community on 26th May 2020 through WTO “to ensure the protection of export trade by MSMEs and the need for global information sharing across countries. Country measures towards the protection of MSMEs are also advocated with trade services like credit and banking and adoption of digital tools to keep supply chains open”.

It is in this backdrop, steps taken by Myanmar as a response to support trade and investment as part of COVID-19 economic recovery plan need to be assessed. CERP steps for promotion of investments through simplified, fast-tracking of procedures especially in sectors that would ensure augmentation of medical-related supplies who would ensure sufficient supplies in key areas of the health sector. Focus on renewables and strategic infrastructure projects through PPPs are also proposed to be taken up by the end of 2020.  Reviewing public investment portfolio is identified as an immediate priority to free up resources by restructuring or closing the non-performing projects.

There are also steps taken for promotion of international trade.  An important step is setting up of trade financing facility with MMK 100 billion by the end of 2020 which would help the promotion of trade of any products. Easy and quick facilitation of imports of COVID-19 related medical equipment and consumables that have FDA approvals.  Facilitation of export processes in terms of reviewing all applications for exportation on priority basis and promoting rice exports.

all these measures are intended to cushion the trade and investment environment and concrete measures to protect and promote MSME sector are also identified which include easy access to credit, tax incentives, credit guarantee and waiver and deferent of different types of levies and fees. All are aimed to ensure that the sector can recover and restore production capacity and employment as soon as the movement restrictions are eased.  Reports point out that several private companies in the industrial zones of Yangon have already in the process of reopening of their production units.

Myanmar government must work in close coordination with trade bodies like UMFCCI and trade promotion specialists like ITC to ensure that COVID-19 recovery plan becomes a booster for investment and exports especially the MSME sector so that integration with regional and global markets becomes a reality.