A scheme to help small and medium-sized enterprises (SMEs) apply for a bank loan in Yangon is set to launch after data collection is completed.
Announced at the Myanmar Federation of Chamber of Commerce and Industry (UMFCCI) in August by Yangon Chief Minister U Phyo Min Thein, the project will be welcomed by SMEs.
The programme will eventually provide smart cards to SMEs that qualify, which will help them obtain a business loan and will cover 45 townships in Yangon.
The Chief Minister said: “So far, we have collected the relevant data for SMEs in the Yangon Region. After we have made the necessary ground checks, SME smart cards will be issued to those businesses. Every SME will have a smart card with its loan data uploaded.”
Data checks slow process
The lack of data about past loans is one of the major factors that has historically slowed down the processing of the transactions. This has meant that money is slow to get to the SMEs, which can have negative consequences for their survival.
It’s a time-consuming process to check this data, and as Myanmar lacks a functional central department that could provide data, it has lagged behind in this regard. Data must be collected systematically to help SMEs get simpler access to loans. When the data has been analysed, the Yangon City Bank has agreed to offer loans.
The government has statistics that show there are officially more than 40,000 industrial businesses and more than 20,000 SMEs in Myanmar. It’s hoped that the new programme will help many of them.
At the same meeting, the Minister for Planning and Finance announced further assistance for the construction and agricultural sectors in terms of loans.
At present, only farmers can apply for loans from the Myanmar Agricultural Development Bank (MADB), but future measures will extend this assistance to businesses further along the supply chain.
This will mean businesses involved in cultivating crops, buying machinery and processing goods will also be eligible, as will those that are diversifying into new export markets.
Help for SMEs
It’s planned that financial help will go towards SMEs involved in cultural and traditional industries, regional product services and household works. Priority will be given to the businesses involved in replacing imports with domestic alternatives.
It’s a positive signal of governmental help for local businesses. Historically, it has been difficult for SMEs to get access to financing, which has led to a heavy reliance on foreign loans from institutions including the Japan International Cooperation Agency.