Myanmar Brief MYANMAR COVID-19 MONITORING draws from a monthly survey of households and en- terprises undertaken by the World Bank Poverty and Equity and Macro, Trade and Covid–19 Investment Global Practices with support from Myanmar Central Statistical Orga- Monitorıng №7 nization (CSO) to provide regular updates on households’ living conditions and en- terprises’ activities. It also includes a community assessment led by the Social Development Global Practice. Myanmar COVID-19 Monitoring was generously sup- ported through the Trust Fund for Statistical Capacity Building (TFSCBIII) by the Unit- ed Kingdom’s Foreign Commonwealth and Development Office, the Government of Korea, and the Department of Foreign Affairs and Trade of Ireland. Additional sup- port was provided by the governments of Australia, Denmark, Finland, and Sweden. 28 October 2020 EMA I L → MYA NMA R@WORLDBA NK .ORG ➚ The Firm –Level Impact of the Covid–19 Pandemic Summary of Results from Round 4 11 SEPTEMBER — 1 OCTOBER 2020 The economic impact of the Firms report less confidence second wave of cases and in remaining open for stay-at-home orders on firms Reduction in sales remains Large and service sector firms business and are not well- appears worse than the first the number one concern of report escalation in adverse prepared to withstand a wave firms impacts from COVID-19 second wave T he economic impact of the second wave of the COVID-19 pandemic has F I G U R E 1 P E R C E N TA G E O F F I R M S R E P O R T I N G T E M P O R A RY CLOSURES – BY SECTOR been significantly more severe on busi- nesses than the first wave, according After nearly fully opening up in August, firms increased their to the World Bank’s firm-level survey. temporary closures The latest survey, the fourth in a series of eight surveys planned, was adminis- 1—May 2—July 3—August 3—September tered between September 11 2020 and October 1 2020 and covered a na­tionally representative sample of 500 firms (Box 1). The fourth round of the survey overlaps with the beginning of the second-wave of COVID-19 cases and re-introduction of stay- at-home orders that started initially in Rakhine in late August and then in Yangon in early September. Firms are not well-prepared to withstand the second wave. In relation to firms’ preparedness for the second wave of COVID-19 transmissions in Myanmar, firms ROUNDS across all sectors (66 percent) reported that they were not ready, and agricultural, micro, and smaller firms were found to be the least prepared (73, 68, and 64 percent, respectively). The survey FIGURE 2 SHARE OF FIRMS REPORTED TO BE CLOSED-BY found that, on average, 83 percent of firms in Myanmar reported GEOGRAPHICAL AREA negative impacts, an increase from the 75 percent reported in Au- gust. Firms of all sizes experienced a rise in temporary closures in Firm closures were greatest in Yangon September as the government imposed a stay-at home order for all businesses, except essential ones, in Yangon on 24 September to limit the acceleration in Covid-19 cases. As compared to August, all sectors except those in agriculture, saw a rise in firms temporar- ily closing (Figure 1). Notably, medium and large firms went from nearly eliminating temporary closures during July and August1 to experiencing a drastic rise in temporary closures in September: an increase of 32 percentage points for medium firms and 47 per- centage points for large firms. Across regions, Yangon, with most cases and the strictest stay-at home orders, experienced the greatest ROUNDS increase in temporary closures between August and September (a 36 percentage point increase). Chin and Dry Zone, as well Manda- 1 Less than five percent veys in Myanmar tend to collected from Septem- lay, experienced smaller increases in temporary closures (about 6 of medium-sized firms focus on the manufactur- ber 11 to 1 October 2020. to 8 percentage point increases, respectively). The lowest increase and less than one percent ing, retail/wholesale, and of large firms saw tempo- service sectors, the World 3 The round 4 data and share of temporary closures were reported by firms in the Hilly rary closures in July and Bank survey provided a includes 401 of the same August. more accurate cross-sec- firms that were surveyed Zone, from 7 percent in August to 9 percent of firms in September. tion of Myanmar’s firms in round 3 The remain- 2 The survey was na- that encompassed the ing firms have been sub- Relative to the first set of lockdown measures introduced to prevent tionally representative agricultural sector, small stituted due to attrition the spread of COVID-19 in March, all regions, except Mandalay and and included firms from and medium enterpris- reasons. a wide range of sectors. es (SMEs), and informal Delta and Coastal Lowland, saw a greater share of temporary firm Whereas firm-level sur- firms. Round 4 data was Myanmar COVID–19 Monitoring 28 October 2020 Brief No. 7 closures during the second wave (Figure 2). B O X 1 W O R L D B A N K ’ S C O V I D - 1 9 B U S I N E S S P U L S E S U R V E Y S I N M YA N M A R Reduction in sales remains the number one concern of the firms. The share of The World Bank has been undertaking firm-level surveys in Myanmar to understand firms reporting a reduction in sales was the impact of the COVID-19 pandemic. Four rounds of nationally representative sur- 93 percent in September, a 12 percentage veys have been administered in May, July, August and September of this year. The points increase from August. Reductions in fourth-round survey includes responses from 500 firms spanning a wide range of sales is the number one concern of micro, industries and firm sizes, as well as the formal and informal sectors. Out of those small, and medium firms, whereas this is 500 firms, 401 firms were also surveyed in the third-round. This note provides a less of a concern for large firms (a decline snapshot of how the business operation of these firms have changed since the on- of 17 percentage points relative to August). set of the pandemic. While cash flow shortages persist as the second most pressing issue affecting and reported by 34 percent of firms in Septem- F I G U R E 3 C A S E S R O S E E X P O N E N T I A L LY B E T W E E N R O U N D S 3 A N D 4 O F T H E S U R V E Y ber, this represents a minor improvement relative to the 38 percent of firms reporting 45000 FIRST-WAVE SECOND-WAVE the same in August. 40000 35000 C U M U L AT I V E COVID-19 Issues related to capital, however, ap- 30000 CONFIRMED 25000 CA S E S A N D pears to be a growing problem for a great- SURVEY Rd. 1 Rd. 2 Rd. 3 Rd. 4 20000 er share of firms in September, as more re- COLLECTION PERIOD 15000 port filing for insolvency and bankruptcy 10000 (6 percentage point increase), laying off Number 5000 workers (4 percentage point increase) and of cases 0 experiencing difficulties with making payments on loans and credit facilities (8 Mar. Apr. May Jun. Jul. Aug. Sep. Oct. percentage point increase) since August (Figure 4). On gender differences, the most significant disparity between male- and F I G U R E 4 O P E R AT I O N A L I M P A C T O F C O V I D - 1 9 O N F I R M S female-owned firms related to cash-flow, where 41 percent of female-owned firms re- Reduction in sales remained the top issue for firms ported cash-flow shortages compared to 28 percent of their male-owned counterparts May July Aug. Sep. 0% 25 50 75 100 (Figure 5). Reduction in sales Cash flow shortages Large and service sector firms reported Reduction in access to credit significant escalation in adverse impacts from COVID-19 in September. In Septem- Disruption of supply of inputs or raw materials ber, half of surveyed firms in agriculture Difficulty making payments on loans and other business credits and about a third of retail and wholesale Filed for insolvency or bankruptcy firms reported the likelihood of falling into Reduction in workforce due to layoff arrears within the next three months. This marks a deterioration from August when this prevelance of this concern had more than halved for larger firms (from 56 to 22 F I G U R E 5 O P E R AT I O N A L I M P A C T O F C O V I D - 1 9 O N F I R M S – B Y G E N D E R O W N E R S H I P – SEPTEMBER 2020 percent). Large and services firms report- ed the lowest degree of confidence in re- Female-owned businesses reported greater cash flow shortages maining open the following month, with this figure rising by 15 and 9 percentage Female Ownership Male Ownership August July May 100% September September points from August to September, respec- tively. Proportionally, large firms were also 50% more likely to report reductions in access to credit (increase of 21 percentage points) 0 Reduction in sales Cash Flow Shortages Reduction in access to credit relative to firms of other sizes. Compared to other sectors, agricultural firms were ob- served to disproportionally experience re- F I G U R E 6 C O V I D - 1 9 I M P ACT – B Y S ECTO R ductions in access to credit, possibly linked to their higher rates of informality becom- Fewer firms in September were May July Aug. Sep. ing a factor in accessing credit during the concerned about falling into arrears second-wave of cases (from 19 percent in August to 31 percent in August) (Figure 6 and Figure 7). With the onset of the second wave, firms reported less confidence that they will re- main open for business. Firms in Septem- ber expressed less confidence regarding their likelihood of remaining operational in one month, compared to August. This lack of confidence is more pronounced in agriculture and services, where, since Au- gust, firm confidence has fallen by 22 and 18 percentage points, respectively (Figure 8) . Further, apart from those in manufac- turing, firms of all sectors and sizes report- ed lower expectations of recovery with 58 percent of firms reporting such expecta- tions in September as compared to 67 per- cent in August (Figure 9). While firm opti- mism around recovery rose in August, this Myanmar COVID–19 Monitoring 28 October 2020 Brief No. 7 trend was reversed by September, follow- ing the second wave of COVID-19 and as- F I G U R E 7 C O V I D - 1 9 I M P ACT – B Y S I Z E sociated stay-at home orders in Myanmar. Agricultural firms disproportionally experienced reductions in access to credit There appears to be a decline in firm awareness of government support pro- May July Aug. Sep. grams in September relative to August. While more than half of firms are aware of government support for COVID-19, this share dropped from 61 percent of firms in August to 54 percent by September (Figure 10). This decline may be a result of ambi- guities of continued or new support pro- grams in the second wave of the pandemic. As with previous months, a large propor- tion (45 percent) of firms in September reported that their priority need for gov- ernment intervention is access to loans or credit guarantees. Across firm size, all types of firms experienced a slight decrease in ad- aptation except for small size firms. Seven- ty-one percent of firms were satisfied with government policies, support and measures in relation to the pandemic and more than half (54 percent) believe that the govern- ment has led a good balanced response. However, the level of satisfaction with the government’s support is lower than average among large firms (34 percent) (Figure 11). FIGURE 8 SHARE OF FIRMS REPORTING FIGURE 9 SHARE OF FIRMS EXPECT- L E S S C O N F I D E N C E T H AT T H E Y C A N R E - I N G T H AT T H E Y W I L L R E C O V E R F R O M MAIN OPEN BY THE NEXT MONTH – BY COVID-19 – BY SECTOR Small number of firms were able to pre- SECTOR pare for the impacts of the second wave. Compared to the first wave, fewer Of the preparedness measures adopted by As COVID-19 persists firms report less firms expect to recover firms, 18 percent reported implementing confidence in remaining open policies or enforcing social distancing and other safety measures at the workplace, 15 May July Aug. Sep. May July Aug. Sep. percent secured materials through its sup- ply chain to continue operations, 4 percent of firms both rotated employees for shift- work and separately, secured additional fi- nances to mitigate bankruptcy risk, and 1 percent invested in IT and related remote work equipment (Figure 12) ). As firms pre- pare for the rise in COVID-19 cases, most firms reported preferring restrictions on travel (69 percent), the size of gatherings (57 percent) and the enforcement of late- night curfews (47 percent) to measures such as forced reduction in business oper- ating hours (Figure 13 ). As confirmed infection rates rose be- tween August and September, more firms in Myanmar reported restrictions as a concern. When asked about second wave restrictions, 39 percent of firms reported FIGURE 10 SHARE OF FIRMS AWARE OF F I G U R E 1 1 S H A R E O F F I R M S S AT I S F I E D GOVERNMENT SUPPORT – BY SIZE WITH THE GOVERNMENT’S HANDLING they are ‘very concerned’, with most con- OF COVID-19 – BY SIZE cern noted among service (45 percent) and More than half of firms are aware of medium-sized firms (43 percent). Declin- government support All but large firms are satisfied with the ing sales continue to be the area of busi- government’s handling of COVID-19 ness most impacted by the second wave, May July Aug. Sep. reported by 56 percent of firms. Firms in Hilly Zone reported the highest concern over sales decline (77 percent) while firms in Yangon expressed the greatest concern (46 percent) over temporary business clo- sures Figure 14. More than half of the firms in the services sector are likely to tempo- rarily close their businesses, while agricul- tural firms reported being the least likely to temporarily close. While sales decline reportedly has major impacts for small- er firms, temporary business closures are likely to have the greatest material impact on larger firms. Firms’ coping mechanisms to COVID-19 have remained similar between August and September. By September, more firms (5 percentage points higher) have increased Myanmar COVID–19 Monitoring 28 October 2020 Brief No. 7 or commenced remote work. Digital adap- tation is growing but remains underdevel- oped: 28 percent of firms responded that they do not have any challenges with sell- ing goods or services online. Nearly one in five firms reported that their greatest chal- lenge firms face is the lack of IT capacity and technological skills. While overall online and digital platform adaptation for major business functions were lower in September, adaptation rates among the manufacturing and retail and wholesale firms slightly increased. Agricultural and micro firms, however, were less likely to rely on digital platforms to combat the restrictions. However, the adaptation of agricultural and micro firms F I G U R E 1 4 S H A R E O F F I R M S R E P O R T I N G S A L E S D E C L I N E S A N D T E M P O R A RY C LO S U R E S A S continues to be much improved since May M A J O R C O N C E R N S F R O M S EC O N D W A V E – B Y G EO G R A P H I CA L R EG I O N (12 and 17 percentage point increases re- Firms in Yangon reported greatest concerns for temporary closures as an impact of the spectively). second wave With the second wave, firms are also re- Sales Decline Temporarily Closure of the business porting increases in their adoption of customer and employee safety measures. The top safety provision by firms directed at customers and employees remains (in this order): the provision of hand sanitiz- ers and cleaning supplies (up 17 percent- age points), ensuring the wearing of masks (increased about 20 percentage points) and social distancing (around 80 percent of surveyed firms). Interestingly, more than half of firms reported disinfecting work- places for customer safety reasons while 69 percent stated doing so as an employee safety measure (Figure 15 and Figure 16) FIGURE 12 FIRMS PREPARED FOR THE S E C O N D W A V E W I T H S O C I A L D I S TA N C - ING AND SAFET Y MEASURES Preparedness measures adopted by FIGURE 15 ADOPTED CUSTOMER SAFET Y MEASURES BY REPORTED FIRMS firms Firms improved customer safety in September May July Aug. Sep. F I G U R E 1 3 M O S T F I R M S P R E F E R T H AT T R A V E L R E S T R I C T I O N S B E R E I N S TAT E D Firms’ support of Government COVID-19 mitigation strategies F I G U R E 1 6 F I R M S I M P R O V E S A F E T Y M E A S U R E S F O R T H E I R E M P LO Y E E S I N S E P T M E B E R Adopted employee safety measures by reported firms May July Aug. Sep. Source: The World Bank’s COVID-19 firm survey