By U Thaung Tun, Union Minister for Investment and Foreign Economic Relations and Chairman, Working Committee to address impact of COVID-19 on the economy.
We are in the midst of a crisis. That is now, I hope, well understood by all. The COVID-19 pandemic has had a severe impact on us – individually and collectively. Millions around the world have been infected by the disease. Some have lost loved ones; many more have lost jobs.
As countries around the world went into various stages of lockdown, the virus waged war upon our economies, wiping away years of growth in just a few short months. For those already faced with disadvantage, COVID-19 magnified existing challenges, shedding light on geographic inequality and economic disparities.
Downward demand pressure has crippled manufacturing — a major job creator. Region-wide border closures have dealt a blow to tourism, hitherto a major growth driver. Indeed, developing Asia’s GDP for 2020 is forecast to contract by 0.7%, ushering in our region’s first recession in close to six decades.
In Myanmar – our economy, our lives, and our communities have not been spared. Our fast-growing tourism and hospitality industry, the thriving garment manufacturing sector and the millions who depend on micro, small and medium-scale enterprises (MSMEs) for their livelihoods have been hard hit. Our nation’s youth face disruption to their education and our mobile migrant workers have returned home, for now.
Our GDP growth rate has fallen to 1.8%. While we may still retain our position this year as one of the region’s fastest-growing economies, this figure falls short of the 6.8% growth we achieved the previous year. It is clear that we have challenges to meet but in light of our COVID-19 Economic Relief and Recovery Plan, we can expect to weather the storm and build back better. Indeed, the Asian Development Bank has forecast our return to a growth rate of 6% in 2021 — a recovery equally as dramatic as the initial shock.
In a different time, our isolated economy afforded us a degree of protection from the ravages of such pandemics. Yet in a new Myanmar — greater connectivity and economic integration have left us exposed to black swan events such as this.
Our nation will be forever grateful to the men and women who have so bravely staffed our hospitals, clinics and quarantine centres, and who continue to provide our nation’s first and last line of defence. As Chair of a committee dedicated to fast-tracking the procurement of vital medical supplies, I had the honour to join the Union Minister of Finance, Planning and Industry in handing over new ambulances to the Ministry of Health and Sports earlier this month. More ambulances are slated to be deployed to hotspots in the coming weeks and months.
The committee remains focused on ensuring fast-tracked delivery of intensive care and personal protective equipment to urban and rural health centres, and on working with our equally dedicated partners, such as UNOPS, to identify and procure medical supplies and drugs openly, transparently and efficiently via international and local markets. In doing so, we seek to relieve at least some of the pressure faced by our colleagues at the Ministry of Health and Sports, ensuring they have every possible resource at their disposal at this critical time.
In coordination with the Ministry of Planning, Finance and Industry, and the Development Assistance Coordination Unit, the Working Committee to Address COVID-19’s Impact on Myanmar’s Economy, which I am proud to chair, has also been hard at work. In April this year, within weeks of Myanmar’s first confirmed case, we launched our COVID-19 Economic Relief Plan (CERP) – paving the way for a raft of measures intended to mitigate the COVID-19’s economic impact while setting in place the foundations for a rapid economic recovery.
In line with our CERP, to date, we have disbursed close to MMK 2 trillion aimed at addressing the social, health and economic impacts of COVID-19. This figure includes the disbursement of MMK 200 billion to assist our nation’s manufacturing, hospitality, tourism, and services sectors. A further MMK 600 billion has been provided to farmers at MMK 50,000 per acre of farmland. MMK 100 billion was provided to our microfinance sector and MMK 200 billion to our MSMEs. A further MMK 100 billion has been disbursed to small tea shops and street-stalls to ensure their survival.
Working with the Development Assistance Coordination Unit, we have mobilized hundreds of millions of dollars more in grants and concessional loans to finance our immediate relief and longer-term recovery efforts.
Importantly, I am pleased to note that foreign investor interest in Myanmar has remained resilient. Indeed, for the first time in years, Foreign Direct Investment for a single budget year has passed the USD 5 billion mark. With several new proposals for major projects in the power, manufacturing and the real estate sector now under active consideration by the Myanmar Investment Commission, the prospects look bright. This has been no easy feat. Yet, ensuring the continued flow of appropriate and responsible investment into Myanmar will play an essential role in supporting a more resilient and sustainable economic recovery.
In recent months, we have taken important steps to ensure sustainable development as planned.
First, in July we issued Japan’s Marubeni, Sumitomo Corp. and Mitsui & Co. with a notice to proceed with the much anticipated Thilawa LNG-to-Power project — a low-emission alternative to coal. The project involves the construction of a 1250 MW gas-fired thermal power plant – among Myanmar’s largest and equal to one-fifth of our country’s current power generation capacity. In line with this government’s commitment to electrify the nation by 2030, a stable power supply will unlock further investment in power and other sectors, generating new jobs for a young population eager for opportunities.
Second, in keeping with this government’s intention to scale-up investment in renewable energy, we successfully launched a fast-track international competitive bidding process for no less than 30 solar power projects.
Despite challenges posed by COVID-19, we received a total of 155 bids with an average winning price of US$0.0422 per unit – highly competitive, far below industry expectations, and representing an excellent deal for Myanmar’s consumers.
These solar projects send a clear message that Myanmar is brimming with opportunities and those with teams present in-country place themselves in an advantageous position to secure these opportunities.
Myanmar today has one of Asia’s lowest rates of electrification while demand grows at 10-20% per annum. Nationally significant energy projects such as these enable our nation’s young people to study in the comfort and safety of their homes, facilitates the mechanization of our agriculture sector, and provides access to information and technology to even our most remote communities via the internet – delivering rapid economic dividends while building further confidence in our investment environment.
A third important milestone was achieved last month with the government’s decision to engage Roland Berger, a leading global consulting firm, to oversee a competitive Swiss Challenge tender process for a new and unbundled industrial park with low-cost housing estates, water supply, sanitation, and waste management systems, and other essential infrastructure, to be situated on the western bank of the Yangon River. I am convinced that this course of action will result in a fairer, more competitive and better-quality project overall, providing a model for future such projects.
Environmental sustainability will be a key feature of this multi-billion-dollar initiative. In keeping with the project’s master plan, construction will involve flood resilient design, the use of natural and man-made parks, canals, and other waterways, while at the same time conserving important wetland and biodiversity areas.
Landmark announcements such as these have often drawn the spotlight from other transformative yet less high-profile initiatives aimed at strengthening our investment enabling environment. One such initiative can be seen in the recent launch of a new online Yangon Building Permit System, streamlining procedures and reducing paperwork when seeking construction permits. I am pleased to announce that in just five months since its launch, there have been more than 1,000 applications made.
The Ministry of Investment and Foreign Economic Relations looks forward to pioneering future digital government initiatives in the months and years ahead. In doing so, we seek to further propel Myanmar up the World Bank’s Doing Business Index when next published, and to create greater opportunities for government services to reach those most in need, overcoming gender, governance and geographic divides.
Our efforts to date have been guided by our COVID-19 Economic Relief Plan. With six months having passed since its launch, we are now conducting a stocktaking exercise to account for what we have achieved, what is left to be done, and what must come next. We are also well underway drafting a new, comprehensive and inclusive medium- to longer-term Myanmar Economic Recovery and Reform Programme (MERRP) with which to sustain an economic reform journey begun just four years ago. The MERRP enshrines the notion of environmental sustainability as part of a truly sustainable economic recovery. As such, we seek to capitalize upon Myanmar’s potential for green investment in sectors such as energy and infrastructure, taking full advantage of this opportunity to build back better.
Myanmar was spared the worst of what the first wave had to offer, yet today, the spectre of a second wave looms large upon us. As we face down this new threat, we will draw strength from one another. We shall shoulder this burden because we know that our fellow citizen shall do the same for us. There can be no doubt that we have a long journey ahead of us. There are no quick fixes. Yet, while we isolate ourselves for a time, we must resist the instinct to once again turn inward.
Just as the hottest fires forge the strongest steel, the challenges posed by COVID-19 will mould our national character. We shall come closer together as a nation – stronger, kinder and more resilient.