Myanmar is planning to take a US$60 million loan from the Asian Development Bank (ADB) to establish a Credit Guarantee Corporation (CGC), U Maung Maung Win, the Deputy Minister for the Ministry of Planning, Finance, and Industry, said in Parliament on May 21. The proposal was sent by the President.
U Maung Maung Win said small and medium enterprises (SMEs) in Myanmar lack a credit guarantee system which limits the amount of unsecured loans the banks are able to extend to an SME.
In Myanmar, 98pc of the economy comprises SMEs, while 95pc of the workforce is employed by this sector, according to government data.
Yet, bank lending for business in Myanmar comprises just 37 percent of GDP, which is low compared to other countries in the region. “Establishing the CGC will help solve the problem of SMEs having insufficient collateral and documentation, which prevents them from getting a loan from the banks,” he said.
The ADB will extend the loan at an interest rate of 1pc per year during a grace period of eight years, and 1.5pc per year during the repayment period over the next 24 years.
THIHA KO KO