JICA to lend US$100m to local SMEs in 2018-19

Japan International Cooperation Agency (JICA) will lend 11.5 billion Japanese yen (K151.685 billion) to small and medium-sized enterprises (SMEs) in the fiscal year of 2018-19 through domestic banks. This decision was officially announced on September 5.

The JICA’s Official Development Assistance (ODA) two-step loan will be managed by state-owned Myanma Economic Bank under its SME loan programme.

To be eligible for the loan, businesses have to meet the criteria laid out under the 2015 Small and Medium Enterprises Development Law. Therefore, manufacturing business, labour-base business, retail and wholesale business, service business, among others are permitted to apply.

The maximum amount of a loan for one SME is K500 million with the fixed capital at 80pc and working capital at 20pc.The interest rate is 8.5pc for one year, and its repayment can be done in 1-5 years.

For phase one of the loan, it can be secured from Small and Medium Industrial Development Bank, Myanmar Citizens Bank, Myanma Apex Bank, AYA Bank, KBZ Bank, and CB Bank. For the second phase, the Participating Financial Institutions (PFIs) include the Myanmar Citizens Bank (MCB), KBZ, Myanma Economic Bank (MEB), CB, AYA Bank, First Private Bank (FPB) and United Amara Bank (UAB) chosen by the Ministry of Planning and Finance.

Starting from this month, the MEB has announced that K36 billion will be given out to SMEs in every state and region, including Nay Pyi Taw, via seven selected PFIs.

“Giving loans to SMEs is good. It should reach those who are actually in need. Although it should be available for SMEs, sometimes the loans go to big enterprises. It needs to be well scrutinised,” said U Win Htay, an SME entrepreneur from Mandalay.

There are precedents that big enterprises under the name of medium-sized ones obtained loans to build a hotel and thus JICA should monitor those loans, U Win Htay pointed out.

In fact, in extending loans, priority must be given first to manufacturing. Then it should be followed by the service sector such as hotel and tourism. The third would go to construction, he added,. “There are shortfalls in bank loans due to SMEs being weak in securing mortgages,” the businessman commented.


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