Tuesday, 18 March 2014

Loan disbursement to SMEs to be double in coming FY

YANGON—A total of Ks 20 billion will be disbursed to small- and medium-sized enterprises (SMEs) in the coming financial year (2014-2015), according to the Small and Medium Industrial Development Bank. Last year, the loan disbursement to SMEs amounted to K 10 billion.

The number of registered SMEs has reached over 64,000 while the number of unregistered SMEs is about 62,000.

During the eight-month period from December 2012 to July 2013, the loan disbursement to registered SMEs by the government reached Ks 10 billion. In that regard, the first loan for Ks 5 billion was disbursed to 24 entrepreneurs. The second Ks 5 billion loan went to 32 entrepreneurs, said senior adviser U San Thein from the Small and Medium Enterprises Bank.

There are more than 120,000 SMEs across the country. Due to the loan disbursement of only Ks 10 billion to 62 entrepreneurs, this move has its weaknesses, he added. There has been widespread criticism among those entrepreneurs that the loan disbursement is too low.

The entrepreneurs were unanimous in saying that they face investment difficulties. The loan disbursements tend to go only to people who are close at hand. And the loan amounts are lower than the market rate for their mortgage.

The authorities need to find ways to solve the loan disbursement problem. Plans are under way for Germany-based GIZ to conduct a course on loan disbursement procedures.

The entrepreneurs will submit information about mortgage properties, and the future prospects of SMEs, to the Small and Medium Enterprises Development Center under the Ministry of Industry. Only after these facts have been scrutinized by the Center will the entrepreneurs be able to take out loans from the bank.

The bank interest rate for the SMEs is K 8.50, which is considered a bit high. The SMEs Development Bank must take the loan from Myanma Economic Bank at an interest rate of 8.25 percent so as to disburse the loan to the SMEs.

Compared with the rates in ASEAN countries, that rate is not so high, according to the SMEs.

source: Eleven Myanmar
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