Loan scheme hinders SME growth

The availability of loan is one of the major challenges for development of Small and Medium-sized enterprises (SMEs) in Mandalay region, according to a talk on the challenges of the SMEs.

Head of Mandalay Region SME Department said: “The major challenges of SMEs in Mandalay are: capital, technology, market penetration, access to information and infrastructural development.”

Maung Maung Oo, secretary of Mandalay Industrial Zone Management Committee said: “Some entrepreneurs who have no own land have to put up their machinery as collateral. Entrepreneurs cannot take loans without collateral. The loan scheme has to pass numerous steps, and the loan repayment period is three years. Entrepreneurs have to invest 80 per cent of loan amounts in machinery and operate their businesses with the rest. Entrepreneurs face difficulties as they have to repay loans. So the government needs to reform the loan system. It should be the long term scheme and needs to reform the interest rates agreeable to both sides.”

Most of SMEs don’t get loans from banks as they are weak in submitting their business plans systematically.

From 2014 to 2018, only 45 out of 841 SMEs recommended by the SMEs Department got loans. SMEs want the government to change the loan repayment period to five or seven years.

There are more than 4,000 registered SMEs in Mandalay Region. This number is higher than that in Yangon. About 60 per cent of SMEs in Mandalay are foodstuff industries.


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