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Myanmar: Over 1,000 SMEs to receive loans
The government has recommended over 1,000 domestic small and medium-sized enterprises (SMEs) to receive loans from banks, according to the Central Department of Small and Medium Enterprises Development (CDSMED).
More than 1,000 SME among an estimated 9,000 in Myanmar have been recommended by the CDSMED to receive loans, an official from the department told The Myanmar Times.
There are 46,794 industries officially registered at the Ministry of Industry in Myanmar.
The department issues membership cards to local SMEs and its membership numbers at approximately 9,000.
The CDSMED has made recommendations to financial institutions on providing loans for over 1,000 enterprises. The banks will offer loans after making an assessment on the recommended SMEs.
“First of all, SMEs which want to borrow have to apply for membership for the Central Department of Small and Medium Enterprise Development.
“The department provides recommendations for any member who wants to take a loan. Financial institutions will offer loans after assessments have been made for the SMEs that we recommended in accordance with their procedures.
“The department is supposed to give a recommendation to banks or financial institutions about which SMEs are members of the department. Now we are working to provide SME loans by cooperating with local banks,” he said.
Number still small
However, given the estimated overall number of businesses and enterprises, the number of SMEs recommended by the CDSMED is still small. And, relatively few local enterprises have received loans.
“Despite the large number of SMEs which were granted membership cards, most haven’t applied for loans. We just give recommendations,” the CDSMED official said.
Currently, the Japan International Cooperation Agency (JICA) has offered SME loans through local banks. Local SMEs which want to take SME loans with an 8.5 percent interest rate can apply at the department. At present, KBZ and CB banks have been providing SME loans under this program.
“The Japan International Corporation Agency linked up with local banks to pay small and medium-sized enterprises loans.
“When businesses submit their applications and documents to us, the banks, we also send the information submitted to JICA.
“After JICA has green-lighted the application, we pay the loans,” U Zaw Man Oo, assistant general manager of KBZ bank, small and medium banking enterprise department told The Myanmar Times.
“Loans for SMEs will be easier to acquire.”
“Borrowers can discuss with banks, depending on the amount of loans, and whether they are capable of providing collateral. However, the projects must be systematic,” U Saw De Nol Khuu, leader of the project from CB Bank told The Myanmar Times.
Challenging conditions
Loans are being extended to SMEs by the Small and Medium Industry Development Bank (SMIDB), KBZ Bank, Yoma Bank and other domestic banks. But the loans require collateral and a minimum of two-year operating experience. These present difficulties for new businesses to have access to those financial resources.
“I am doing business in the field of selling international flight tickets.
“I would like to expand my business but it requires a two-year minimum operating experience. So it is difficult to secure the loans and expand the business for now,” a young entrepreneur said.
It is not only the SMEs who find it difficult to receive loans. Moderately established businessmen also have difficulties to secure loans in Myanmar, according to businessman U Nay Lin Zin, who is involved in import and export trade.
Source: http://www.mmtimes.com/index.php/business/26930-over-1-000-smes-to-receive-loans.html