If SMEs develop, Myanmar’s economy will also develop

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  • Myanmar is pushing ahead with its sweeping economic reform plans to find new sources of revenue so that the country can enjoy the renaissance and development that every citizen aspires for. With this end in view, necessary steps are being taken to enable the private sector to become a partner in development, as the economy’s engine of growth.
    To ensure the development of SMEs, getting loans from foreign countries is considered one of the pragmatic approaches.
    To provide comprehensive support to local SMEs, for improvement of competitiveness, facilitation of technology transfer and productivity improvement, the country needs to become a middle-income one through fundamental improvement of the business climate such as a fair and clear investment regime, good infrastructure and supportive business-related systems.
    The first project with loans granted by the Japan International Cooperation Agency to SMEs in Myanmar has been finished, granting 5.033 billion yen (Ks61.654 billion) to 292 small and medium-sized businesses. This number is a tiny fraction of the 60,000 registered SME businesses.
    Now the Ministry of Planning and Finance has finished negotiations to get a loan of 14.949 billion yen (Ks180 billion) from the Japan International Cooperation Agency under the small and medium enterprise development project (phase 2).
    The loan period is 40 years and interest is 0.01 per cent payable in two installments per year and, once the grace period is over, the loan amount will have to be paid back in two installments per year..
    With the use of a Credit Guarantee Insurance system, 10 per cent of the total loans of phase-2 will be disbursed to SMEs which cannot show collateral with an interest rate of 8.5 per cent. SME businesses that want to take the loans need to be in accord with the SME Development Law.
    This is the good news for the SMEs in Myanmar. To provide comprehensive support to local SMEs for the competitiveness improvement and facilitated technology transfer and productivity improvement, the country needs to become a middle-income one through fundamental improvement of business climate such as a fair and clear investment regime, good infrastructure and supportive business-related systems.
    Taking advantage of ongoing economic reforms and open foreign investment policy, progress of democratization, abundant natural resources, an inexpensive and good-quality young labour force, a growing linkage with the regional economy and potential domestic market, it is needed to ensure investment to export-oriented industry, investment to domestic market-oriented industry, investment to resource-based industry and investment to knowledge-intensive industry. Meanwhile, remedial measures are to be taken to cope with the weaknesses in investment promotion such as underdeveloped infrastructure, insufficient skilled human resources and residual investment restrictions.
    If SMEs develop, the Myanmar economy will also develop.
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