Jul 25, 2011

Loans at 15% will be available for the SMEs

Myanmar Industrial Development Bank will soon begin providing loans to small- and medium-sized enterprises under the Myanmar Industries Association (MIA) at below-market rates, officials said last week.

The annual interest on the loans is 15 percent, 2pc below the Central Bank of Myanmar-mandated minimum for both government and private banks, and 20 firms – mostly foodstuffs makers – have so far applied for them.

“Borrowers must be small- or medium-sized enterprises; be actively engaged in business and have potential to grow; and be ready to pay their taxes,” said the association’s chairman, U Zaw Min Win.

Dr Aung Thein, the association’s secretary and owner of Nibban electronics, said financial assistance was most needed in the foodstuffs industry.

“Food manufacturers make up about 65 percent of all registered companies under the Ministry of Industry 2 and those firms have submitted the majority of loan applications,” he said.

Additionally, potential borrowers must provide the bank with an MIA recommendation, documents of property, company registration and pledge stating the borrower will use the money for the purpose listed in the application. However, the Minister for Industry 2 and chairman of the national Industrial Development Committee, U Soe Thein, said during the MIA’s 17th anniversary on June 11 that the bank will provide the loans without collateral requirements.

Dr Aung Thein added that existing enterprises were more likely to have their applications approved. A scrutinising committee has been formed under MIA to decide which enterprises will be given recommendations, he added.

“This interest rate is lower than at other banks and much lower than through unofficial money lenders and many foodstuff producers are trying to take out these loans,” Dr Aung Thein.

However, one cooking oil maker said the interest rates were still too high.

“Companies in other countries are able to access loans at interest rates much lower than 15pc, why can’t we here?” he asked.

The bank will evaluate applications before determining how much money will be provided, Dr Aung Thein said.

Source: Myanmar Times

 
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