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

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Figure 2 Present Pattern of Domestic Capital Mobilization Process in Myanmar Financing from Banks Family Members and Trade Credit Deposit (weak, due to negative Lending (insufficient, due to interest rate, poor confidence and tight collateral requirement, Strong unfamiliarity with banking sector unfriendly banking procedures) Families with Small Savings Financial Market Weak SMEs Nonexistence Unavailable Strong (Distorted Formal Mobilization Process) Investment in gold, cars, real estates, and other tangibles Speculation (unproductive in informal factors) sectorn Price Instabilit Source: author From the institutional aspects, the present number and the type of financial institutions are not sufficient to provide adequate financing to business sector. There is a large room for improvement in terms of the number of banking and non-banking institutions in Myanmar. Moreover, banking facilities and techniques, qualifications of human resources, and mindset of people in the banking sector need to be changed and improved. Non-banking institutions, like savings and loan associations and rural development funds (as in the case of Thailand), need to be existence to reduce SME financing gap. To improve SME credit availability, credit insurance and guarantee funds need to be developed and promoted. National credit bureaus need to be established in order to provide support for loan decision making and better support for SMEs. Checking and bill discount culture within the business sector needs to be nurtured and promoted. Banking regulations should be prudential but should not be restrictive insofar as the development of financial institutions.
Ⅶ. SME FINANCING IN ASEAN COUNRIES AND JAPAN In the past few years, SME financing was not a priority policy area for the government as well as the banks in ASEAN countries. However, the more governments recognize the economic role of SMEs and change the paradigm in the competitive environment of banking business, the more they are forced to focus their attention onto this sector. As a result, governments will encourage SME financing as a priority area to strengthen SMEs in their countries. Banks also adopt new technologies to make profitable business dealings with the SME sector. In general, SMEs are placed in disadvantageous position with respect to financing because of their inherently weaknesses in: (1) information asymmetry; (2) lack of transparency; (3) high perceived risk and transaction costs; and (4) weak governance structure. Information asymmetry and lack of transparency are caused by the lack of financial information due to incomplete accounting records regarding their business and inability to establish close relationship between banks and SMEs. High perceived risk and transaction costs arise from inadequate collateral and high NPL history of SMEs and small amount, plus the fact that large-volume transactions from this sector need to be handled by banks. The management of SMEs is often dependent upon the expertise of a single person, informal relationship in dong business and mixing roles in decision making result in weak governance structure for SMEs. Nonetheless, SME sector now has been seen as a potentially large profitable area by many financial institutions including banks. Consequently, various new technologies have been developed to successfully deal with this area and to access the right level of risks and opportunities of SMEs as objectively as possible. These technologies help financial institutions to view financing SMEs as a business opportunity and develop ways to resolve the opaqueness of SME financing. 7.1 Common SME financing methods and programs in Asian countries Generally, there are six lending methods available in SME financing, of which five belong to transactional-based lending technologies and where trade credit is included in relationship lending technology 68 .The difference between these two lending methodologies depends on whether banks use hard information (mainly from financial statements and objective analysis on the borrowers) and soft information (off-balance sheet information and information from personal sources) in making loan decisions. 68 Inter alia Berger & Udell, A more complete conceptual framework on SMEs financing, 2004 pp 20-27
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 30 and 31: Figure 1 A Suggested Comprehensive
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 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
Page 82 and 83: 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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