MYANMAR: Five-Point Counter-Covid-19 Economic Stimulus Package Unveiled

In a bid to mitigate the impact of the ongoing Covid-19 crisis, the Ministry of Planning, Finance and Industry (MPFI) has announced a raft of financial assistance and tax benefits for affected businesses and individuals. Billed as the COVID-19 Economic Relief Plan (CERP), the package comprises five key measures:

State-Sponsored Soft Loans and Credit Guarantee Schemes

In a bid to meet the working capital needs of micro and small and medium-sized enterprises (MSMEs), Kyat 100 billion (US$72.02 million) has been allocated to provide soft loans (at a preferential interest rate of 1%) to MSMEs in the tourism and garment manufacturing sectors for a 12-month period. By the end of the year, should market demand require it, the fund may be increased to Kyat 200-500 billion.

In addition, the MPFI is to provide a 50% credit guarantee for all new loans extended by local banks to domestic enterprises with an annual turnover of up to Kyat 1 billion (US$720,247), who are not beneficiaries of any other government scheme. As a condition, recipients must keep (or re-hire) all staff employed as of 1 February this year. The scheme may also be extended to existing and new businesses in high-growth industry sectors should it be determined that their operations have been compromised by the outbreak. Furthermore, all banks in the country have been instructed to reschedule / restructure loans if requested by any MSME in previous good standing.

Tax Exemptions and Tax Payment Deferrals

As part of moves to reduce cash-flow problems, businesses are to be allowed to defer corporate income tax (CIT) payments for the first two quarters of 2020 (due at the end of each quarter) and commercial tax (payable every three months) until 30 September. In addition, the 2% withholding tax on exports has been waived until further notice, as has the Specific Goods Tax on counter-Covid-19 critical medical supplies and the customs duties and commercial tax on the import of such products. Businesses are also to be eligible for tax deductions equal to 125% of any expenses incurred in the payment of salaries. Furthermore, plans are also in place for highway toll fees for cargo transporting vehicles to be waived or reduced.

Investment Promotion

Fast-track approval of all large investment projects proposed by reputable international companies has been give the official go-ahead, while moves to expedite investment in renewable energy and strategic infrastructure projects have also been approved. In addition, streamlined investment procedures now apply to investments related to manufacturing counter-Covid-19 medical products on currently vacant state-owned premises.

Trade Promotion

By the end of the current year, Kyat 100 billion of funding will be available to designated commercial banks in order to provide trade financing for domestically-produced goods. At the same time, import procedures related to counter-Covid-19 medical goods are to be fast-tracked, while import licences (and any other requirements previously stipulated the Food and Drug Administration (FDA)) are to be waived for all products pre-approved by the FDA (or equivalent) in their country of origin. In an even more wide-reaching move, all export licences and permits deemed non-essential for maintaining market access or protecting health and safety are to be abolished.

Promotion of Online Trade and Digital Payments  

In a final measure, local entrepreneurs are to be encouraged to promote their products online, while the use of mobile payment platforms is to be prioritised. In a bid to promote online retail trade still further, a state-operated e-commerce website will be established by the end of the current year.