The Ministry of Industry data showed that of 73,085 SMEs registered with it, only 2,207 businesses or 3pc of the total have received funding from financial institutions.

The Minister of Industry U KhingMaung Cho said in a meeting on June 21 that the lack of financial documentation and the unavailability of collateral makes it difficult for SMEs to get loans, even with support from government loan schemes for SMEs. “There’s a need to review how SMEs can get financing,” he said.

The government together with various development agencies and funds such as the Japan International Cooperation Agency (JICA), Myanma Economic Bank, Germany’s KfW Development Bank and Denmark’s Responsible Business Fund have a number of loan schemes opened to SMEs and micro businesses.

The government, through Myanma Economic Bank and JICA, has announced support for K60 billion worth of loans to SMEs between July 2017 and January 2019. More than 98pc of all businesses in the country can be classified as SME or microbusiness with most involved in the food and beverage, construction materials, clothing and other retail goods industries.

Nara Organic Green Tea managing director U Kyaw Thiha said the government must think of new ways to support SMEs in getting loans. “Some loans are also not enough for SMEs that need the financing to expand while I believe the interest charged for loans to SMEs is higher too,” he said.

The JICA long-term investment loan has an interest rate of 8.5pc over five years with a maximum limit of K500 million, SME Credit Guarantee Insurance Loan has a 13pc interest rate with collateral or loan up to K20 million over three years while Myanma Economic Bank’s SME loanhas an interest rate  of 9pc over five years and maximum loan amount of K300 million.

Source: https://www.mmtimes.com/news/low-penetration-rate-sme-loans-ministry-industry-data-reveals.html