Small and medium-sized enterprises play a crucial role in the economic well-being of both developed and developing countries. The entrepreneurship of SMEs will be the future of the country’s economic development because small and medium-sized industries create 50 to 70 per cent of the job opportunities in a developing country.
It is found that more than 70 per cent of job opportunities in Japan come from SMEs. About 66 per cent of jobs in Europe come from SMEs. On average, SMEs generate more than 30 per cent of income for a developing country.
Their importance is perhaps even more important in this country, because statistics show that SMEs in Myanmar make up more than 90 per cent of the country’s private sector businesses. The development and nurturing of SMEs can effectively help alleviate poverty.
To develop SMEs, we must provide them with financial and technical support so that they can manufacture products and provide services that are currently in demand.
SMEs in Myanmar need to overcome a number of unique challenges. Many companies, especially those hoping to target the export market or foreign residents, need to upgrade their products and services to meet international standards. In this respect, the state should actively encourage business visitors and the participation of international suppliers in local trade fairs, exhibitions, conventions and seminars.
At present, the Ministry of Industry should provide assistance and organize seminars, workshops and exhibitions at home and abroad to facilitate the interaction of its own SMEs with their regional counterparts, suppliers and potential clients.
Securing access to finance for the SMEs is a sine qua non for their development. Without access to finance, businesses will not be able to cycle off inefficiency and low productivity, which springs from a lack of capital investment.
Meanwhile, it is required to review the rules and regulations of the SME Law to find out whether they are in compliance with the market-oriented economic system or not.
When we work for development of SMEs, we will face some challenges including financial support to SMEs.
We must provide the local SMEs which do not have strong assets for mortgages, such as land and buildings, with financial support. Two year’s efforts starting in 2014 to grant loans to SMEs by a Japanese bank did not see success. However, some progress has been achieved, with the granting of loans to 21 SMEs through an insurance system. A further 16 are expected to receive loans soon.
Meanwhile, banks are not willing to take risks for granting loans to SMEs because many SMEs in Myanmar are not familiar with the documentation, information and paperwork necessary in dealing with banks.
The second way requires external investment into the businesses.
Section (2) (c) of the SME Law does not allow foreign investments in SMEs.
It is fair to discuss amending that clause in order to help SMEs, most of which are facing a lack of capital investment.