Title Financing Small and Medium Enterprises in Myanmar Author(s ...

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Figure 1 A Suggested Comprehensive SME Development Program in Myanmar (Financing SMEs is a part of SME development program) SMEs Infrastructure Favorable Tax and (Electricity, Enabling Environment Regulatory System (fair Positive impact on Business Development SME Financing HR for SMEs Positive impact on Source: author advancement, as well as outdated machineries and equipment and poor product knowledge and market development since these problems mainly rooted in shortage of financing. However, it should also be noted that even SMEs with access to better financial help cannot maximize productivity in an unfavorable environment and unless they get active support from other areas. Thus, financing SMEs is only a part of a more comprehensive SME development program.
Ⅵ. WHY FINANCING SMES MATTERS IN MYANMAR SMEs need finance in every stage of their development—from startup to developing stages, and ultimately, when they go public. By recognizing the role of SMEs in the economy, governments in both developed and developing nations can establish or facilitate different funding programs and institutions to give SMEs easy access to financing in each stage of their development. During startup stage, the best sources of financing can be business owner’s savings, loans obtained from friends/relatives, as well as venture capital and development financing schemes from government and SME promotion institutions. In their growth stage, there will be expansion in their financing sources, including loans from commercial banks, factoring and leasing, trade credit, and reinvestment of profit in their financing portfolio. Venture capital and development financing schemes remain as the important sources of financing for SMEs. When they have reached a stable stage, their sources of financing will further expand—equity investments from capital market and securitization of loans and long term-loans from banks become the next available sources of SME financing. If these institutional and market arrangements are in place, SMEs can easily access financing at each and every stage of their development. Various researches reveal that there are many available alternative formal sources of financing schemes for SMEs in many countries. These include venture capital, credit guarantee, import trade financing, export trading financing, trade credit, factoring, leasing, loan terms from banks, securitization of loans, and capital market 56 . 56 These can be found in various literatures on SME financing. Some of these are: (1) “SME Finance Working Group, Supporting SME Finance in Developing Countries,” Turin, Sept, 16, 2002; (2) Juliet Mckee, “Financing SMEs: Challenges and Options,” Pacific Economic Cooperation Council, 2003; (3) Chaipat Poonpatpibul and Watsaya Limthammahisorn, “Financial Access of SMEs in Thailand: What is the role of the Central Bank?”, 2005; and (4) SME Information and Advisory Centre. SMIDEC, Malaysia. 57 For example, Mekong Project Development Facility (MPDF), which is founded by International Financial Corporation (IFC) and commenced operation in 1997 funded by Austria, EU, Finland, IFC, Japan, Norway, Sweden, Switzerland, and the UK as well as Asian Development Bank (ADB) provide funds to assist and accelerate the development of productive, self-sustained SMEs in Cambodia, the Lao PDR, and Vietnam. The targeted SME is an SME that employs a minimum of 10 staff and has a financing requirement between US$150,000 and $10 million. Companies must be either 100 percent locally owned or joint ventures with significant local ownership, have sound business concept that is financially and economically viable, and be in the productive sector, excluding tobacco and military products. The estimated project cost is $0.3 million for the period between 2004 and 2008.
Page 1 and 2: TitleFinancing Small and Medium Ent
Page 3 and 4: lending infrastructure of the count
Page 6 and 7: Ⅰ. INTRODUCTION The availability
Page 8 and 9: inadequate skill to prepare compreh
Page 10 and 11: following reasons 7 : • SMEs cont
Page 12 and 13: Ⅲ. BACKGROUND OF SMES IN MYANMAR
Page 14 and 15: to limit the issuance of licenses t
Page 16 and 17: Notwithstanding their sheer number,
Page 18 and 19: Enterprise Law provides for the off
Page 20 and 21: The timing of this surge in constru
Page 22 and 23: Ⅴ. CURRENT STATE OF SMES IN MYANM
Page 24 and 25: percent in 1999, 94.6 percent in 20
Page 26 and 27: production is limited by power shor
Page 28 and 29: companies. Problems in infrastructu
Page 32 and 33: Moreover, developing countries can
Page 34 and 35: startup and expansion. Most of the
Page 36 and 37: anks with other necessary documents
Page 38 and 39: collateral, but these may go up to
Page 40 and 41: usiness decision making keep them f
Page 42 and 43: SMEs. Limited deposits and unstable
Page 44 and 45: can explain why lending technologie
Page 46 and 47: Figure 2 Present Pattern of Domesti
Page 48 and 49: There are some additional lending p
Page 50 and 51: Figure 4 Regional/Community Funds f
Page 52 and 53: Developmental financial institution
Page 54 and 55: Table 5 Percentages of Secure SME L
Page 56 and 57: (gray or black markets) 79 . In Vie
Page 58 and 59: To provide credit insurance and cre
Page 60 and 61: Figure 6: Three Systems of Financia
Page 62 and 63: Ⅷ . PPROPOSALS AND SUGGESTIONS FO
Page 64 and 65: Policy on financial sector developm
Page 66 and 67: in systematic manner, nationwide an
Page 68 and 69: Myanmar Investment and Commercial B
Page 70 and 71: Legal, judicial, and bankruptcy env
Page 72 and 73: capacity in the country. The securi
Page 74 and 75: means Myanmar needs to adopt a resc
Page 76 and 77: 7. Htein, Lynn. 2004. “Linkage be
Page 78 and 79: www.myanmar.com/myanmartimes/Myanma
Page 80 and 81:
APPENDICES Appendix I- Definitions
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The Lao PDR Small Less than 19 Less
Page 84 and 85:
Myanmar Agriculture Development Ban
Page 86:
from relatives and private money le
Page 89:
The Institute of Developing Economi
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