SMEs tap only 35% of government loan scheme

“The state has prepared to lend Ks 20 billion (US$20 million) to SME owners. So far, 237 SME owners have borrowed Ks 6.9 billion,” said Yi Yi Khine, director of the Department for Small- and Medium-sized Enterprises Development.
The lending activities were less active than expected, as the loaned amount accounted for only 34.5 per cent of the total.
Setting to boost the capacity of SMEs, the government targeted to loan Ks 20 billion in the 2014-15 fiscal year, which ended on March 31.
During the year, the loans were given to business owners in Kachin, Kayah, Mon, Rakhine, Shan, Sagaing, Taninthayi, Bago, Mandalay, Magway, Yangon, Ayeyawady states and regions and Nay Pyi Taw Union Territory.
The number of 237 beneficiaries in the year was high compared to the past years, when fewer than 100 obtained financial assistance from the government.
In October 2012, 25 entrepreneurs borrowed Ks 5 billion (US$5 million) from the state for the first time.
Then 37 more SME owners were given Ks 5 billion in loan in 2013.
In 2014, only 62 SMEs received loans from government entities last year, primarily Small and Medium Industries Development Bank (SMIDB).
Under the government’s loan scheme, borrowers are charged 8.5 per cent a year in interest rate and the borrowers have to return the money within three years. The scheme approved by the Small and Medium Enterprises Development Centre, which is chaired by President Thein Sein, was designed to cover the 14 states and regions, and Nay Pyi Taw Union Territory. Each was allocated Ks 1 billion, and Ks 5 billion was reserved for lending through the development bank.
The SME owners have to present the progress of their businesses, their licences and the mortgage to receive state loans.
SMEs account for over 99 per cent of Myanmar's nearly 127,000 registered enterprises.  It was estimated earlier that these SMEs would need annual financial support of Ks 100 billion, or about US$100 million.