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 №9 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. 24 November 2020 EMA I L → MYA NMA R@WORLDBA NK .ORG ➚ The Firm –Level Impacts of the Covid–19 Pandemic R O U N D 5 R E S U LT S 1 3 — 2 8 O C T O B E R 2 0 2 0 Close to half of all firms in Around one-third The impacts of Yangon were temporarily of firms have the second-wave closed in October and there reduced their of stay-at-home was a small increase in Almost all firms investments measures are temporary closures nation- now report a during COVID-19, Since the second wave, fewer deeper and larger wide driven by small sized reduction in sales with service firms expect to recover with than the first- firms and those in the as the number sector worst just over half expecting to wave manufacturing sector one concern affected recover from the pandemic NOTE The latest survey, the fifth in a series of eight surveys planned, was administered between October 13 2020 and October 28 2020 and covered a nationally representative sample of 500 firms. The figures below show the results of Round 1 (which was during the initial round of stay-at-home measures in May), Round 4 (September) and Round 5 (October). We have not shown Round 2 and Round 3 for visual reasons in the figures. A Operating status FIGURE 1 THE IMPACTS OF THE SECOND WAVE ARE LARG- T E R T H A N T H E F I R S T W A V E B U T M O R E F I R M S A R E A P P LY I N G FOR GOVERNMENT SUPPORT he economic impact of the second wave of the COVID-19 pandemic remains significantly Share of firms reporting temporary closures, reduction in sales, more severe on businesses than the first, ac- expecting not to recover, applying for government support and stating they are unprepared for the second-wave cording to the World Bank’s firm-level survey. As government stay-at-home orders persist, the 1—MAY 2—SEP TEMBER 3 — OCTOB E R overall share of temporary closures among firms has slightly increased in October. Manufactur- Temporary Reduction in Expecting Applying for unprepared Closure sales not to government for second ing firms were the firms to report an increase in their closures in recover support wave October, from 12 to 19 percent (Figure 2). The share of temporary closures declined for retail and wholesale (by 2 percentage points) and services (by 7 percentage points). Medium and Large firms continue to have the higher rates of temporary closures as they are more closely regulated by authorities to observe stay-at-home orders. Large firms saw fewer closures in October (12 percentage point improvement), but around 1 in 3 remain temporary closed. Small firms were the firms to experience a rise in temporary clo- sures since September (6 percentage points). F I G U R E 2 F I R M S SA W A S L I G H T I N C R E AS E I N T E M P O R A RY CLOSURES IN OCTOBER – DRIVEN BY MANUFACTURING Different regional mandates have yielded varying degrees of temporary closures across Myanmar with almost half of all Share of firms reporting temporary closures – by sector firms in Yangon temporarily closed, double the national aver- age. Yangon continues to see the highest proportion of temporary 1—MAY 2—SEP TEMBER 3 — OCTOB E R closures at 42 percent, but the share of firms reporting closures in Mandalay more than doubled between September and October (from 11 to 24 percent). These results reflect a stay-at-home order introduced in certain townships of Mandalay in October. Tempo- rary Closures in Hilly Zone and Chin and Dry Zone reported the lowest shares of closures in Myanmar (8 percent and 6 percent of firms, respectively) and temporary closures in both regions im- proved in October (Figure 2). Myanmar COVID–19 Monitoring 24 November 2020 Brief No. 9 B Business Performance F irms reported fewer negative impacts from COVID-19 in October, but the vast majority of F I G U R E 3 A L M O S T H A L F O F A L L F I R M S I N YA N G O N A R E T E M P O R A R I LY C L O S E D , D O U B L E T H E N A T I O N A L A V E R A G E firms remain adversely affected by the pandemic. The majority of firms (87 percent) reported nega- Share of firms reporting temporary closures – by region tive impacts of COVID-19 in October, a share that declined 6 percentage points since September. At 1—MAY 2—SEP TEMBER 3 — OCTOB E R 97 percent, nearly all firms in Mandalay report- ed negative impacts of COVID-19 in October. This is the highest share reported of any region in that period, followed closely by Yangon (93 percent). The least impacted firms were those in Hilly Zone and yet, even here, more than three in four firms reported negative impacts. Reduction in sales remains the top concern for nearly all firms. In October , the survey saw reduction in sales as a concern for 96 percent of firms at a rate 11-percentage points higher than in FIGURE 4 SINCE THE FIGURE 5 MORE FIRMS May (Figure 4). The greater share of firms reporting reductions in ONSET OF COVID-19, REPORTED REDUCTION IN sales in October than May reflects the harsher impact of the sec- REDUCTION IN SALES SALES DURING THE SEC- ond wave (Figure 3). REMAINS THE TOP RE- OND WAVE PORTED IMPACT BY FIRMS Share of firms reporting Firms are now less concerned with cash flow shortages and more reduction in sales – by concerned with disruptions in supply of inputs. Consistently, Operational impact of sector since May, the second greatest concern for firms has related to ex- COVID-19 on firm – by total periencing cash flow shortages. However, this concern shifted to May Sep. Oct. disruptions of supply of inputs or raw materials by October with May Sep. Oct. 29 percent of firms (nearly a 10 percentage point increase since September) reporting supply disruptions as a concern. The third most common issue in October was difficulty making repayments on loans (27 percent), followed by a quarter of firms reporting cash flow shortages and reduction in access to credit (Figure 5). With regards to gender differences, cash flow shortages continue to be worse for fully female-owned firms. There was also a deteri- oration in access to credit in October for fully-female owned firms while there has been little variation for fully-male owned firms since May (Figure 6). Almost half of service sector firms reported a decline in total in- vestments in September, compared to the same month last year. In September, 42 percent of service firms reported a decline in total investments compared to the same month last year, higher than the nation-wide average of 28 percent. Agricultural firm in- vestments remain the least affected with only 14 percent reporting a decline in September, a large improvement since July (23 per- centage point decline from 37 percent) (Figure 7). Future sales ex- pectations in the next 3 months also remain negative with the av- erage sales decline expected to be 26 percent lower than the same period a year ago, slighlty better than was expected last month. Firms in the service sector expect the decline to be 41 percent on average, while those in retail and wholesale expect a 21 percent decline. F I G U R E 6 C A S H - F L O W S H O R TA G E I S A G R E AT E R FIGURE 7 ALMOST HALF OF SERVICE SECTOR FIRMS O P E R AT I O N A L I M P A C T F O R F E M A L E - O W N E D F I R M S R E P O R T E D A D E C L I N E I N T O TA L I N V E S T M E N T S I N SEPTEMBER, COMPARED TO THE SAME MONTH LAST YEAR Operational Impact of COVID-19 on firms – by gender ownership Share of firms reporting declines in investments– by sector Male Ownership September 1—MAY 2—SEP TEMBER 3 — OCTOB E R Female Ownership September Myanmar COVID–19 Monitoring 24 November 2020 Brief No. 9 C Business Expectations M ore than half of firms in agriculture expect to fall into arrears over the next FIGURE 8 MORE THAN FIGURE 9 FEWER MAN- H A L F O F A G R I C U LT U R A L UFACTURING AND SER- three months. By October, 35 percent of F I R M S A N T I C I P AT E F A L L - VICES FIRMS EXPECT firms expected to fall in arrears in any of ING INTO ARREARS IN TO RECOVER FROM THE NEXT 3 MONTHS PANDEMIC their outstanding liabilities in the next 3 months. The number of agricultural Firms expecting to fall into Share of firms expecting firms reporting anticipating falling into arrears in next 3 months– business recovery from arrears increased (from 50 to 58 percent of firms), with more than by sector pandemic – by sector half of firms now anticipating arrears (Figure 8). Other sectors saw an improvement in the share of firms anticipating arrears. May Sep. Oct. May Sep. Oct. Relative to September, a greater share of large firms anticipated falling into arrears – from 22 to 48 percent – at proportions com- parable to those observed in the first-wave. Expectations of a recovery among firms remain below levels seen during the first-wave in May. In October, about half of firms in manufacturing and service sector did not expect to recover but there was an improvement in agriculture with a decrease in the number of firms that do not expect to recover from the impacts of COVID-19 (Figure 9). Relative to the first wave, the latest sur- vey results suggest that firms remain less optimistic of recovery during the second wave (the share of expectant firms not expect- ing for recovery was 29 percent in May – compared to 41 percent in October). D Policy & Adaption A bout half of firms reported access to loans/ credit guarantees as the most needed gov- FIGURE 10 MORE FIRMS FIGURE 11 NOT KNOWING APPLIED FOR GOVERN- H O W T O A P P LY W A S T H E ernment support. While access to loans/ MENT SUPPORT TOP REASON WHY FIRMS credit guarantees was also the number one R E F R A I N E D F R O M A P P LY - priority for firms in September, the propor- Share of firms applying for ING tion then was 45 percent of firms. This share government support – by Major reasons for not sector had increased by 8 percentage points to 53 applying for government percent of firms in October. Tax deferral, deduction or relief was support – by share of firms the second most requested policy priority for firms in October May Sep. Oct. with 11 percent of firms. More firms applied for government support in October. At 23 percent, the share of firms was 6 percentage points more than the 17 percent of businesses applying for support in September. Al- most half of firms in agriculture have applied for government sup- port (Figure 10). In asking why firms were not applying for gov- ernment support, the latest survey revealed that the top reason was due to firms not knowing how to apply (21 percent of firms), followed by the fact that they did not qualify for the support (9 percent of firms), did not understand the application form (9 per- cent) and did not have formal documents to apply (9 percent of firms) (Figure 11). A large digital divide continues in the adoption of online/digital platforms between sectors, firm sizes and regions. Agricultural firms reported the lowest share of digital adoption (10 percent in October) while 34 percent of firms in the services sector adopted Myanmar COVID–19 Monitoring 24 November 2020 Brief No. 9 digital platforms. Large and Medium sized firms are twice as like- ly than Small and Micro firms to adopt digital platforms. Large F I G U R E 1 2 A G R I C U LT U R E FIGURE 13 FIRMS IN SAW THE LOWEST SHARE YA N G O N A R E T W I C E A S differences prevail across regions too, with 42 percent of firms in OF FIRMS ADOPTING L I K E LY T O U S E O N L I N E / Yangon adopting digital platforms, more than double the adop- D I G I TA L / O N L I N E P L AT - D I G I TA L P L AT F O R M S FORMS THAN THOSE IN THE tion rates in the Hilly Zone and Chin and Dry zone. Access to IT H I L LY Z O N E O R C H I N A N D skills remains a challenge with 25 percent of firms in Agriculture Share of firms adopting D RY Z O N E reporting a lack of IT capacity and technological skills to combat online/digital platforms – Share of firms adopting COVID-19 compared with 13 percent nationally. by sector online/digital platforms – by region May Sep. Oct. Agriculture May Sep. Oct. 5% 17% Micro (1-4) 10% 13% 30% Manufacturing 24% 26% 40% Small (5-19) 38% 26% 34% Retail and wholesale 31% 24% 43% Medium (20-99) 29% 38% 58% Service 63% 17% 23% Large (>99) 34% 59% 67% Total 43% 19% 32% Total 28% 19% 32% 28% E Second-wave FIGURE 14 ACROSS ALL FIGURE 15 LARGE FIRMS preparedness SECTORS, MOST FIRMS REPORTED THE LOWEST WERE UNPREPARED FOR SHARE OF UNPREPARED- THE SECOND WAVE NESS Share of firms reporting Share of firms reporting being unprepared for being unprepared for second wave of COVID-19 second wave of COVID-19 – by sector – by size Sep. Oct. Sep. Oct. F irms remain unprepared as the second wave continued into October. By October, more firms (from 66 to 78 percent) reported they were unpre- pared for the second wave (Figure 14). The level of unpreparedness worsened for firms of all types, ranging from a 12 (manufacturing) to 14 (agricul- ture) percentage point increase since September. By firm size, Micro and Small firms continue to hold the highest shares of unpreparedness (at 81 and 76 percent; 12-13 percentage point increases since September, respectively) (Figure 15). Large firms remain the best prepared firms; however, by October, even this group had seen an increase in unpreparedness from 27 to 35 percent (7 percentage point increase) since September. Source: The World Bank’s COVID-19 firm survey