Supporting MSMEs vital to economic recovery in backdrop of pandemic

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By Sayar Mya (MOFA)

Unwelcome arrival of the first case of COVID – 19 stepped into Myanmar soil on 23 March 2020, bringing in more volatility. As of 5 June 2020, total thin figure reaches (236) cases and the death tally remains (6) only.
Analysts and state leaders expected in advance the chancy and dicey of pandemic, and that the necessary plans have been already rolled out with the formation of responsive bodies.

In her capacity as the Chairperson of the National Level Central Committee on Prevention, Control and Treatment of Coronavirus Disease 2019 (Covid-19), State Counsellor Daw Aung San Suu Kyi delivered a speech at the meeting on control measures of the disease on 26 March 2020.
Responding to the pandemic, the meeting held at the Presidential Palace in Nay Pyi Taw was attended by Union Ministers, Chief Ministers and ministers of Region/State governments and officials.

The meeting discussed three Covid-19 cases in Myanmar, treatments given to them, containment of the disease to those who had close contacts with them and the places they visited, transportation arrangements for migrant returnees from Thailand to their homes, accommodation for them before they arrive back to respective destinations, community-based facility quarantine for them and other measures against the Covid-19.
State Counsellor Daw Aung San Suu Kyi gave guidance and decisions based on matters presented at the meeting.
People are requested not to panic, but to remain calm and follow the advice from the health authorities on COVID-19.
What is most important is to get medical treatment early. As soon as a person gets symptoms, he should go to the nearest healthcare center immediately, without procrastination.

State Counsellor wrapped up by saying it is hoped that people know the “Four wrongful paths”. A wrongful path is a path which is wrong. What pushes onto the wrongful path are: Intention, Hatred, Fear, and Ignorance.
It is important we should not be pushed onto the wrongful path with regard to the COVID-19 disease that other countries are facing.
Our government will release up-to-date information in real-time all information that the people need to know. She concluded that the “People are the key”.
As this article is not meant for healthcare education, the writing would moves to “Supporting MSMEs”.

COVID-19 Economic Relief Plan (CERP)
In an effort to meet the current exigencies faced by Myanmar as a result of the COVID-19 pandemic, the Government had, on 27 April 2020, launched the COVID-19 Economic Relief Plan (CERP).
The CERP comprises seven goals, 10 strategies, 36 action plans and 76 actions, each with an estimated timeline and designated authority in charge, covering a range of fiscal and social measures.
1. Goal 1: Improve macroeconomic environment through monetary stimulus
2. Goal 2: Ease the impact on the private sector through improvements to investment, trade & banking sectors
3. Goal 3: Easing the impact on laborers and workers
4. Goal 4: Easing the impact on households
5. Goal 5: Promoting innovative products and platforms
6. Goal 6: Health care systems strengthening
7. Goal 7: Increase access to COVID-19 response financing
8. Conclusion
Under goal 2, the measures to ease the impact of the pandemic on specific sectors are as follows:
a. To ease impact on private sector firms through:
i. Provision of low-cost funds by:
A. offering MMK 100 billion worth of one-year working capital loans focused on micro, small and medium-sized enterprises (MSME) and companies in the hotel and tourism sectors at an interest rate of 1 percent per annum.
B. Ensuring access by microfinance institutions (MFIs) to low-cost funding.
C. Expediting the merger between Myanma Economic Bank (MEB) and Myanmar Agricultural Development Bank (MADB) to facilitate the expansion of existing pilot commercial lending programs to affected townships.
Delusion of grandeur is to be avoided by all stakeholders in the implementation of MMK 100 billion worth of one-year working capital loans in MSME sectors. Total of (126,237) or approximately 99.4 per cent of all businesses in Myanmar are classified as SMEs. On average, SMEs in Myanmar account for 50-95 per cent of employment and contribute 30-53 per cent of GDP in ASEAN member states.
The Government recognizes that SME entrepreneurship will define the country’s future national economic development.
Micro, Small, and Medium Enterprises (MSMEs) play a significant role in most economies. According to the World Bank, they represent about 90 per cent of businesses and 50 per cent of employment worldwide.
SMEs are one of the largest sources of job creation and growth in developing economies around the world. They can not only generate jobs but can also be a source of innovation, wealth creation and poverty reduction, making significant contributions to the Sustainable Development Goals (SDGs).
Widely accepted notion to do MSMEs business in Myanmar are as follows.
• Convenient store;
• Travel agency;
• Cell phone loading or recharge shop;
• Tea stall;
• Tuition centre;
• Juice kiosk;
• Tailoring shop;
• Mobile food stations.
Start & Improve Your Business “SIYB” is a management training programme with a focus on starting and improving small businesses. It is one of the biggest global management training systems used for the support of micro and small enterprises (MSEs) currently on the market. It is an advisable programme using in Myanmar.
Reeling from pandemic, a collapse of SMEs would imply job losses, consumption and demand fall, and potential financial risk due to an increase in the non-performing loan (NPL) portfolios that can generate systemic effects on the banking sector.
Normally, a nonperforming loan (NPL) is considered in default or close to default. In banking, commercial loans are considered nonperforming if the debtor has made zero payments of interest or principal within 90 days, or is 90 days past due.
Grapple with loss, other problem is the irresponsible borrowing of the SMEs that have a limited financial cleverness. The excessive expectations of the future income without understanding the basic consistent patterns in the economy can cause serious financial problems in business.
With the backdrop of pandemic, the slump of personal income and the decreasing market value of assets financed by the bank can lead to the situation in which the takeover of assets from debtors cannot redeem or trade in all their debts.
Due to the inability of many loan applicants to make a responsible decision, the Central Bank regulative instruments for commercial banks play an important role in reducing the problem of non-performing loans (NPL).

Reasons behind high NPL rates
The main factors behind the high NPL proportion in banks can be either inappropriate credit risk management or irresponsible borrowing and also lending or economic downturn in a country. Other possible reasons could be poor supervision and governance, aggressive lending and acquisition strategies, high exposure to sectors that were most impacted by the financial crisis such as real estate and lax credit controls.
In conclusion, the banks are required in paying more attention to the supervision and management of the risks, and thus reducing the amount of bad debt. With this good start from the banking sector, the concept of “Supporting MSMEs” would yield the greater good of the country in the post scenario of COVID – 19 pandemic.

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