A worker makes a lacquerware at a workshop in Bagan, Mandalay
Dr. Maung Maung Thein, former minister for Finance and Planning, pointed out five constraints that make banks hesitant to grant loans to SMEs during the event of SME Financing Landscape in Myanmar: A Multifaceted Approach.
He pointed out that most SMEs lack statistics, have more than one business statistic record, are unable to provide complete statistics, are weak in laying out a business plan and do not own immovable properties.
“They are weak in having complete statistics. Banks always look at the statistics. They also keep more than one record. For instance, one for his wife and one for himself,” he said.
The first four facts can be addressed, he said, by raising financial knowledge and the last fact can be overcome by making credit insurance business develop.
Credit insurance is popular in other countries but, in Myanmar, only Myanma Insurance provides that kind of service, U Maung Maung Thein said.
“Internationally, not having anything for collateral is overcome with credit insurance. If a person buys a credit insurance policy, the insurance will pay off his debt if he cannot pay it back. In Myanmar, only Myanma Insurance provides that kind of service. Therefore, credit insurance needs to be fully developed.” he said.
Local economists said SMEs still have a long way to develop despite the government’s efforts since under the previous administration.