Interview with Naw Mutakapaw
Director General of MyanTrade at Ministry of Commerce
What are the implications of the COVID-19 situation in international trade-now and in the future? What are the lessons to be learned?
Myanmar’s economy has not yet seen the full impact of the COVID-19. We expect our economic development to be slower with an overall growth of about 0.5% i n FY 2019-2020 due to the pandemic. With the closure of borders in many countries, additional rules and regulations for imports in terms of food safety, quality and standards have been imposed globally. Due to social distancing measures, many factories had shut down for a certain period and experienced challenges with disruption of the supply chain, delay in logistic services which eventually led to loss of many jobs. As Myanmar participates in global trade, we have experienced the spillover effects in terms of supply and demand shocks on the economy. Although we were less affected than other ASEAN countries since we have a big domestic market that consumes some of our products, this is partly why our overall growth is foreseen to be positive while most countries in the world will have negative growth in the rest of 2020. Global trade is changing very fast. The Pandemic has only accelerated the existing trade war between the US and China. Importing countries will most certainly be applying more stringent quality and sanitary measures to ensure goods are safe for consumers. This will require Myanmar companies to increase their compliance with global standards.
Regionalization and restoring of supply chains is highly required. The supply shock caused by COVID-19 is leading manufacturers to bring productions of inputs closer to assembly factories. The pandemic has accelerated the ambition of consumers in developed economies for green growth. In Europe, there is a growing pressure to tax imports based on their carbon footprint. Market intelligence services to exporters are critical for exporters to keep abreast of a new development in partner countries. The growth in digital solutions is creating a major demand for e-commerce solutions. This is a time for IT and logistics companies to work hand in hand to better connect producers and consumers.
A key lesson is the importance of diversification, namely that we rely on multiple import sources, products, and destination markets, to reduce dependency in terms of supply of inputs and clients. This lesson should certainly influence companies to include some precautions in their business plan in case a similar situation occurs in the future.
2. What have been the priorities of the Myanmar Trade Promotion Organization in terms of pandemic and its consequences?
Myanmar trade Promotion Organization has focused on the following priorities:
- Providing exporters with timely information about market requirements and global demand.
- Assist the exporters and business owners to resume their export activities following the guidelines of the Ministry of Health and Sport (MoHS).
- In line with CERP recommendation plans are being made to create an online Expo Park for Myanmar potential Products.
- Promote e-commerce (online marketplace on the new website www.myantrade.gov.mm) as a resilience plan.
- Continue to improve our nationwide trade information network with Trade Centres in states/regions contributing to the distribution of timely information to exporters.
- Organize sectoral meetings with relevant departments, ministries and development partners to guide, steer and monitor the export performances.
- Implement plan of actions of priority and supporting sectors identified the corrective measures for Covid 19 pandemic, under the National Export Strategy, in cooperation with relevant ministries, business associations and development partners
3. What is the country’s current situation with regard to exporter financing, logistics services and export quality management?
Myanmar has been going through the transformation and the situation has become even more demanding with the global pandemic. The crisis has shown that basic logistics and quality management services should be further improved to facilitate the trade operations of our exporters. Logistics and quality management are very important areas to ensure the competitive trade and export performance of Myanmar in the international market.
Based on CERP, 100 billion Kyats soft loans have been allocated to finance trade in any product to revive the economy. According to our survey of Exporters, completed in collaboration with the International Trade Centre (ITC), exporters have faced decreased orders, cancellation of orders, and have a large uncertainty about the next few months. Since exporters continue to utilize several suppliers and employees to satisfy global demand for Myanmar products, this is why we think that it is important to financially support our exporters so they can continue to create employment for Myanmar people.
4. What plans are you already considering for the rest of 2020?
We strongly believe that our response needs to be two-fold. Primarily, and as mentioned earlier, we need to focus on providing immediate support to exporters for continuity of operations and recovery. This we are doing in line with the CERP recommendations.
We also believe that we need to work towards making the export sector more resilient in the medium-term to be better prepared for future crises. An element for this is having a well-defined plan to build up industries, support product and market diversification, and most importantly help our enterprises ready for the transformations that are only accelerated by the COVID Pandemic, namely digitization of processes, online trade, new production technique, and a more dynamic trade in Asia.
In order to achieve this, Myantrade is implementing a plan to better support our exporters. First of all, we are fully updating our Myantrade website to facilitate access to up-to-date trade information for SMEs and exporters to better understand fast evolving trade dynamics. Exporters will also now be able to contact us directly online to ask questions about exports. Since not all are going digital, we are also strengthening our help desks in Yangon (at MITC on Merchant street) and in states/regions, so that exporters, and SMEs wanting to export, can visit our trade centers to get answers to their questions
We are also gradually progressing on larger government efforts to develop e-commerce. As such, Myantrade is now facilitating an online marketplace for companies to display their products online. We will also try to explore how to support our SMEs in participating in virtual B2Bs and trade fairs.
We intend to establish Myanmar Export Development Board in public private partnership that will be responsible for guiding the export agenda of Myanmar. In terms of plans, and as you know we are developing the National Export Strategy 2020-2025, which should be endorsed by the Government soon, following which implementation will start in collaboration with various departments and institutions. They will be able to request additional funds from the National budget and include NES in their respective department’s work plans.
5. As the Ministry of Commerce has adopted National Export Strategy (NES) in 2014 including improving digital integration, trade, and investments in the country and as the authorities have coordinated the development of this strategy and monitored its implementation, how do you assess its implementation by business and state governments so far?
Looking back, I can say that previous NES has provided the appropriate framework for the expansion of several industries, as well as for the launch of economic and fiscal reforms supporting developments in the services and manufacturing sectors. NES strategic and operational objectives were designed in consultation with various stakeholders and set to be realistic enough to reflect the ground situation of export sectors and exporters. It’s largely due to these realistic targets that the clear and transparent set of activities was realized in the NES 2015-2019, benefiting especially to the SMEs.
This was achieved thanks to the strong cooperation between the government and private stakeholders, along with support from various development partners. 131 trade development projects, including national budget initiatives contributed to the NES implementation, and more than 70% of previous NES received support with the implementation.
Since the beginning of NES implementation, many things have improved such as regulatory reform, quality management and market access, etc. NES provided a comprehensive roadmap for support to export industries; we therefore considered it was important to design a new NES for the period of 2020-2025. The new NES will cover new sectors which are vital for stimulation of innovation and technology acquisition to diversify export. With this results-based assessment, I can say that the past NES is a success and the current one will be too, since we have a stronger private-public and inter-ministries cooperation.
6. How will the NES 2020-2025 be adapted to the issues resulting from the pandemic (e.g. employment)? Will it support the implementation and design of policies aimed at economic recovery?
As mentioned earlier, we have conducted a survey, in collaboration with ITC, of major exporters. We are using the findings to adjust the priority activities of NES 2020-2025. Thus, the NES now takes into consideration our exporters’ priorities in terms of recovering from COVID-19 pandemic, as well as their longer-term objectives for reaching new markets.
Additional data was also collected from local and international experts, key officials of relevant departments, and the private sector representatives to adjust the NES priorities. Based on these inputs, Myantrade organized a number of public-private sector level meetings to further adjust NES activities as response to the economic impacts of COVID-19. NES activities were thus adjusted as short-term emergency and long-term plans. The consultations of NES activities were held during the COVID 19 pandemic and confirmed short-term and long-term activities to respond to the impacts of the COVID-19. These activities will be submitted to the economic impact working committee to support the implementation of CERP.
We must remember that the NES is a whole-of-Government and whole-of-country initiative. All relevant departments should take part in its implementation. Efficient implementation, as well as monitoring and evaluation of NES will depend on inter-ministerial cooperation and the support from all private sector and development partners. The vision for the upcoming years is to spur innovation, to encourage start-up activities, and support the technological catch-up required for our SMEs to be more productive and competitive in global markets. NES 2020-2025 is also designed to support poverty reduction, rural development and income promotion in line with MSDP.
7. What are the particular challenges at each stage of NES implementation?
We aim for the NES 2020-2025 implementation to start with the new financial year 2020-2021. The allocation of funds from the National Budget for NES implementation is one of the key elements of successful export development in Myanmar. As a whole-of-country initiative, NES implies a lot of collaboration between relevant departments and industry representatives. However, the communication is sometimes challenging due to other priorities of each institution. We also need to keep our development partners apprised of NES objectives, progress and new priorities, so that we can better coordinate and align interventions. Overall, good cooperation is challenging to achieve but is the key success factor in export development.
8. What is the current level of cooperation of the government agencies with global institutions and how would you assess the level of support and aid?
All Ministries involved in international trade are cooperating in the design and implementation stages of NES activities in line with their institutional mandates.
The NES implementation is led by Public-Private Partnerships (PPPs). This public-private coordination serves to create a unique industry-level platform to achieve export-led growth for Myanmar. Development partners provide additional support for implementation. More than 100 private sector organizations participate in NES design and implementation, ranging from UMFCCI to border trade associations.
Development partners provide continuous support to MoC and other departments to build capacities of officers and introduce global best practices. NES is an excellent framework to provide the basis for cooperation between the government agencies and international institutions. Seeing this kind of strong cooperation, we are grateful to all concerned agencies and officials, private associations and development partner organizations for their support to the successful implementation.
9. What future holds for Myanmar economy whether to a better state or a worse situation compounded by pandemic?
This situation is opening up new opportunities for the Myanmar economy and that we will recover and become a stronger and more resilient state. As a fast-emerging economy, Myanmar has many opportunities to learn from this crisis and build stronger systems and institutions that will be able to be agile in future crises. There is an opportunity to develop an e-commerce platform with the initiatives of entrepreneurs and support from the Government sector. With the advantages of large labor force and various agri-products available, Myanmar could become an agro-food and food processing exporting country in the future. Hence, our economy will be better in a few years as we will have learned and adapted to a fast changing and evolving world.
10. What advice would you give to businesses in priority export sectors?
- Ensure good quality products that can meet international standards. This is even more important following the COVID-19 pandemic.
- Always keep informed about the latest global trends and best practices for sector development.
- Adapt as much as possible to global demand and importing countries requirements.
- Try to update and modernize the business continuously.
- Explore new market opportunities.
- Develop new value-added diversified products.
- Keep in contact with Myantrade/ Myantrade website/ trade centers for news and advice.