How MSMEs in Myanmar Are Adapting to Crisis

The needs of human being are increasing in the developing world. The impact of the COVID-19 pandemic and global conflicts has shown that many reforms are needed for resilient economies in all countries. With the economic recession, many countries have found it mandatory to change economic policies.

Depending on the type of product, production capacity and demand are changing. In times of intense competition and crisis, alternatives are always needed, and conventional methods are no longer useful. This ensures that the country can still fit into international business.

The economic development of a country depends on trade balance. If imports exceed exports, the country’s economy will be affected by a trade deficit. About 70% of the production force in Myanmar is from rural areas. It is not acceptable that imports always exceed exports in a country rich in natural resources like Myanmar. Most of the social life in Myanmar depends on 99% of micro, small, and medium enterprises (MSMEs), which are the major driving force for Myanmar's economic mechanism.

Economic Disruption Due to COVID-19

The COVID-19 pandemic hit Myanmar's economy hard, leading to reduced consumer demand, supply chain disruptions, and limited access to essential services. Many MSMEs, particularly in sectors such as tourism, manufacturing, and retail, saw a sharp decline in revenues. Government-imposed lockdowns and restrictions further exacerbated these issues, making it difficult for businesses to maintain operations and retain employees.

Political Instability and Its Consequences

The military coup in 2021 further destabilized the business environment. Political unrest, violence, and uncertainty led to a loss of investor confidence and disrupted economic activities. International sanctions and a reduction in foreign aid also impacted the financial health of many businesses. The instability has caused disruptions in banking services, currency devaluation, and difficulties in accessing raw materials and markets.

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Support Initiatives and Their Impact

Despite these challenges, there have been efforts to support MSMEs. The United Nations Development Programme (UNDP) and the Directorate of Industrial Supervision and Inspection (DISI) provided technical assistance to MSMEs in applying for government COVID-19 relief funds. These loans aimed to help businesses in priority sectors survive the economic downturn.

“I received technical support on preparing financial statements and cash flow from UNDP, which was very helpful for me,” said U Shin & Son, Car Body Repair, Mandalay.

“UNDP’s support has helped me to understand clearly the criteria and put together the necessary documents for application. This kind of technical support is very important for small and medium enterprises like us who do not have the capacity to apply in the short window of time,” said Su Pyae Food Center, Yangon.

Additionally, initiatives to improve financial inclusion for women-led MSMEs have been undertaken. Research by the United Nations Capital Development Fund (UNCDF) and UN Women highlighted the need for targeted financial products and services for women entrepreneurs, who face even greater hurdles in accessing finance and sustaining their businesses during these turbulent times.

Digital Transformation and Adaptation

The pandemic has also accelerated the digital transformation of many MSMEs. Businesses have increasingly adopted digital tools and platforms to reach customers, manage operations, and facilitate remote work. This shift has opened new opportunities for growth and resilience, although it also requires significant investment and skills development.

Overall, while the MSME sector in Myanmar faces significant hurdles, ongoing support and targeted initiatives are helping to create a more resilient and inclusive business environment.

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