Government “ready” to offer loans to SMEs

The country’s biggest business and industry advocacy group has called on the government to change its policy on loans to better cater for the needs of small businesses.The government needs to change its loan policy, decrease interest rate, increase loan period and support the acquisition of technical know-how for SMEs, U Wai Phyo, Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) vice-chair, remarked.

In response, the government is throwing its weight behind small and medium-sized enterprises (SMEs) and plans to offer loans to them, according to U Kyaw Win, Minister of Planning and Finance.

The minister made the remarks during the UMFCCI annual general |meeting which took place in Yangon on December 10. SMEs in the country have a long way to catch up with those in neighbouring countries because of technological deprivation. Products manufactured in those countries have also displaced domestic products.

The UMFCCI and the ministry will work together to boost the growth of SMEs, U Kyaw Win said.

Since the businesses are hugely disadvantaged in the market compared to other regional competitors, the government will focus on the development of SMEs, the minister went on.

Nay Pyi Taw will be dishing out loans from the state-owned Myanma Economic Bank and Myanma Agricultural Bank (MADB), at an interest rate of 8 percent.

“The government is ready to give out loans,” U Kyaw Win said. Import substitution-related and export-oriented manufacturing businesses will be prioritised for the loans but other businesses will be supported as well, the minister ontinued.

At the annual general meeting, the UMFCCI urged the administration to help support small businesses. Domestic products encounter difficulties to compete with regional products State Counsellor Daw Aung San Suu Kyi said during the Myanmar Entrepreneurship Summit in the capital on December 9 that the country needs to sell value-added products rather than merely exporting raw materials.

SME loans

SME loans are scarce in the country. A major SME loan is provided by Japan International Cooperation Agency (JICA).

In June, JICA told The Myanmar Times that the organisation was going to lend K1.3 billion via local banks to SMEs. JICA also extended a K41.5-billion loan to private SMEs in Myanmar last year.

During this fiscal year, JICA’s loan for SMEs will work in two steps. They will first lend to local banks via the Myanma Economic Bank. Local banks include SME Development Bank, Kanbawza Bank, Myanmar Oriental Bank, Ayeyarwaddy Bank and Myanmar Citizens Bank. These domestic banking organisations would have to define terms and conditions for the loans.

However, this JICA two-step loan cannot provide loans for various sectors, namely agriculture, real estate, insurance, gemstone, liquor shops and restaurants, entertainment and ammunitions, among other industries.

Source : Myanmar Times

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