2020 02 April

Myanmar Legal Update: Financial Relaxations Introduced by the Government in the Wake of the Coronavirus Global Pandemic


The outbreak of the novel corona virus (“COVID-19”) has affected everyday life and business. With the drop in importation of raw materials and imposition of travel restrictions, numerous businesses in Myanmar are facing an economic slowdown across all sectors. In order to restore such businesses and provide measures of economic relaxation, the Myanmar Government is periodically issuing stimulus packages to shore up domestic commerce. Pursuant to our Client Alert dated 24 March 2020 titled ‘Relief for Myanmar Businesses Affected by the Global Coronavirus Pandemic’, there have been further announcements, which are as follows:

Grant of Government Loan to Businesses

The business sectors which have suffered the most in Myanmar from the outbreak of COVID-19 are the manufacturing sector, small to medium enterprises and the tourism sector (collectively the “Priority Sectors”). In order to boost these priority sectors, the government has created a fund to which MMK 100 billion (approximately USD 72 million) has been allocated (the “Fund”).

On 29 March 2020, a working committee dedicated to tackling the impact of COVID-19 announced a welfare scheme for businesses in the Priority Sectors. Such businesses will be allowed to apply for loans during the period 30 March 2020 to 9 April 2020. The loans would be granted for a period of one year and the applicable rate of interest on such loans would be 1%. However, the minimum or maximum level of loan that can be applied for by an eligible business entity has not been specified.

Businesses must meet the following eligibility criteria to apply for a loan under this scheme:

  • Must be owned by a Myanmar citizen and must have been affected by the COVID-19 pandemic;
  • Must possess a valid license issued by the relevant government department prior to 31 March 2018;
  • The business operations must be in an active state or temporarily suspended for a period of not more than three months from the announcement date that such a business can be immediately revived upon receiving the loan amount; 
  • Must have annual income during the previous two years;
  • Must be in a stable conditions to repay the loan;
  • The loan amount must be used for payment of employees’ salaries and to operate business activities;
  • The entity must not have been suspended or de-registered from the official register maintained by the relevant government department;
  • Must have paid all applicable taxes as of the loan application date;
  • Priority will be given to entities that have regularly contributed to the Social Security Fund;
  • In the case of a company, the board of directors of the company must act as a guarantor for the loan. For all other entities, the owner of such an entity must act as the guarantor.

As a rider to the welfare scheme, the Committee announced that legal action would be taken against defaulting entities as per existing Myanmar laws. Such businesses having defaulted on their repayment obligations would also be negatively categorized by Myanmar credit rating agency and it would be difficult for such entities to obtain loans in future.

Business that have been affected by the deadly COVID-19 pandemic may apply for the loan by submitting a copy of the form given in the link here, along with the requisite documents either to the Federation of Chamber of Commerce and Industry, Union of Myanmar or Region and State Chamber of Commerce and Industry.

Interest Rate Cut introduced by the Central Bank of Myanmar (“CBM”)

To address the severe economic impacts of COVID-19 and the country’s slowing economy, the CBM slashed the key interest rates twice over a span of ten days. The CBM issued Directive No. 4/2020 (“Directive 4”) on 24 March 2020 to amend Directive No. 1/2020 (“Directive 1”) and Directive No. 2/2020 (“Directive 2”) issued by the CBM on 12 March 2020 and 13 March 2020 respectively and revised the annual interest rates, minimum bank deposit rates and the maximum lending rates on collateralized and non-collateralized loans.

The CBM vide Directive 1 had reduced the annual interest rate from 10% to 9.5% to support the economic development of the State. The minimum bank deposit rate for savings deposits, savings certificates and time deposits was slashed by 2% from 9.5% to 7.5%. Directive 1 brought about a reduction in the minimum lending rate on collateralized and non-collateralized loans by 0.5%. The interest rate was fixed at 12.5% for collateralized loans and 15.5% for non-collateralized loans. The effective date of the new interest rate was set for 1 April 2020.

The date of enforcement of the new rates specified under Directive 1 was amended by Directive 2. 16 March 2020 was scheduled as the effective date for the new interest rates.

Subsequently, the CBM issued Directive 4 to further reduce the interest rates and change the date of enforcement of the revised rates to 1 April 2020. The present interest rates, as against the previous rates (prior to the issuance of Directive 1) are detailed below:

 Particulars Previous Rate (%) New Rate (%)
Annual Interest Rate 10 8.5
Minimum bank deposit rate for savings deposits, savings certificates and time deposits 9.5 6.5
Maximum lending rate (including all charges) for loans with collateral 13 11.5
Maximum lending rate (including all charges) for loans without collateral 16 14.5

The Government of Myanmar is taking adequate measures to curb the ever-growing menace of this global pandemic. The issuance of loans to the affected businesses and reduction of interest rates are welcome steps taken by the Government and it is hoped that these measures will go some way in alleviating the severe problems being faced by the relevant business sectors in Myanmar. We may see further stimulus provided by the Myanmar Government in the future depending on the business situation and whether the economic realities facing the country at the time demand further action.

The information provided here is for information purposes only, and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.


William Greenlee

Partner & Managing Director, DFDL Myanmar/Singapore



Nishant Choudhary

Partner, Deputy Managing Director & Head of Banking and Finance Practice, DFDL Myanmar


Arijeet Nandi

Junior Legal Adviser, DFDL Myanmar


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