MANDALAY — Myanma Economic Bank will provide some 700 billion kyats (US$520 million) in loans to small and medium enterprises (SMEs) across the country next year.
Under the arrangement of the Ministry of Planning and Finance, the loans will be provided at a 9 percent interest rate with a maximum repayment period of three years, according to the Mandalay Region Chamber of Commerce and Industry (MRCCI).
“The interest rate is lower, and the ministry said that certain types of loans will be offered without collateral, and the procedures will be simpler. So, most of the businesspeople here are interested in it,” U Win Htay, chairman of the Mandalay Region SMEs Committee under the MRCCI, told The Irrawaddy.
Currently, local SMEs in Mandalay Region only have access to credit guarantee insurance (CGI) loans provided by Japan International Cooperation Agency (JICA) and private banks, respectively at 13 and 16 percent interest rates.
Local businesspeople lamented that those loans are not very helpful, as they are short-term loans with small loan amounts that carry high interest rates.
Union Planning and Finance Minister U Kyaw Win in a meeting with the MRCCI on Monday in Mandalay said that Myanma Economic Bank would start disbursing loans in January for SMEs.
“The minister said SME loans will be increased in different sectors, and that his ministry would also review the legal procedures of private banks to provide SME loans,” said MRCCI chairman U Aung Than.
Among the challenges facing many SMEs in Mandalay Region are exorbitant land prices and a wide variety of taxes such as income tax, commercial tax, profit tax and so on, said industrialist U Nay Win from the Mandalay Industrial Zone.
Other pressing challenges include financial needs and technology as local SMEs have to compete with imports that are cheaper and better quality.
According to the Ministry of Planning and Finance, there are about 40,000 registered SMEs in the country.
Translated from Burmese by Thet Ko Ko.