Fuelling Entrepreneurial Dreams: Unveiling Domestic MSME Loans as a Catalyst for Success

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Local MSMEs and entrepreneurship are interdependent as entrepreneurs need decent support to progress MSME businesses.
MSMEs, which are the backbone of private businesses, have the ability to innovate and create employment opportunities, reduce poverty and meet market needs through entrepreneurship.
MSME also has a direct impact on the country’s GDP growth. Obtaining the necessary loans for entrepreneurs also plays an important role in the development and long-term sustainability of these businesses.
A programme was implemented by the MSME development committee of the Union of Myanmar Federation of Chambers of Commerce and Industry-UMFCCI in August to improve domestic MSME-specific production and value-added import substitution.
AYA Bank introduced a new type of loan to local entrepreneurs at UMFCCI last June that allows MSMEs to borrow for one year with a small amount of collateral.
“With the aim of bringing MSME and SME businesses into the banking system, as our first step, we started issuing MSME Micro Loans in 2022 in consultation with UMFCCI. By getting different types of loans, you will be able to connect to the banking system and access the market for additional opportunities.
“We have earmarked a large amount of loans in the coming year. Since the interest rate has been reduced and the documents have been relaxed, I admit that it will be the best, fastest and most effective loan,” U Toe Lin Nyunt, SME Banking and Bancassurance Director of AYA Bank commented.
Intending to promote local small businesses, AYA Bank introduced the AYA Micro Loan to provide loans with little (or) no collateral. If MSME entrepreneurs apply for an AYA Micro Loan with collateral, the maximum loan amount is K30 million and the interest rate is 9.5 per cent per annum and 0.79 per cent per month. When presenting collateral, it must be a deeded car, apartment, or deeded shop, and the loan term is at most one year and the loan repayment system is monthly.
If someone applies through the CGI (loan guarantee) system without collateral, the loan amount is K1 million, the interest rate is 10.5 per cent per year and 0.87 per cent per month, and the premium paid to the Myanmar insurance company is three per cent of the approved loan amount. The loan term is a maximum of one year and the loan repayment system is monthly.
“Like AYA Bank, UMFCCI has notified MSMEs of applying for loans from 1 to 31 August. There are also rules. Venture capitalists including UMFCCI and Chambers of Commerce and Industry from Mandalay, Shan, and Mon states and Ayeyawady Region have been asked to submit applications,” a businessman from Bayintnaung Commodity Warehouse told the Global New Light of Myanmar (GNLM).
If MSMEs can produce enough domestically needed goods and consumables, they will save foreign currency and contribute to national development.
MSMEs, which are the pillars of private businesses, can create employment opportunities with entrepreneurship and innovation, reduce poverty, meet market needs, and have a direct impact on the country’s GDP growth.
The progress of MSME businesses is important, said Daw Than Than Lin, Deputy Minister for Planning and Finance, at the (1/2023) coordination meeting of the MSME Development Reporting Group.
Currently, there are more than 40,000 MSME enterprises in Myanmar, according to the ministry’s statistics.

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