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

equired information to financial institutions. Such kind of central credit bureaus are
non-existent in Cambodia, the Lao PDR, Brunei, and Myanmar. Databases on SMEs or
industries maintained by government agencies consist of just the number and raw data,
like capital employed and number of workers. These are thus unreliable references
when assessing the creditworthiness of a particular SME.
Venture capitalists play active role in financing SMEs in the ASEAN-6, including
Thailand, Malaysia, and the Philippines. The availability of venture capital in CLMV is
limited. In Myanmar, venture capital is virtually non-existence. Mekong Capital Ltd
undertakes venture capital activities in Vietnam, the Lao PDR, and Cambodia. In
Vietnam, there is another venture capital, Vietnam Enterprise Investment Ltd (VEIL)
managed by Dragon Ltd. These two venture capitals both aim to invest in larger SMEs.
As to the other credit facilities offered by banks to SMEs, trade credit, equipment
leasing, and factoring are available in most ASEAN countries. In terms of the portfolio,
term loan is the dominant facility offered to SMEs in ASEAN. It comprises 50 percent of
all credit facilities in the Philippines, Malaysia, and Thailand, and 65 percent of SME
loans in Vietnam banks 78 . Factoring and leasing are less- common facilities offered by
banks to SMEs. Trade financing is more popular than factoring in ASEAN countries. In
Myanmar, banks offer only short-tem loans to SMEs and no other facilities such as
trade credit, leasing, factoring, and revolving loans are available (see Table 6).
Table 6 Types of SME Financing Facilities Offered by ASEAN Banks
Term Trade Revolving Factoring Leasing Others
Loan Financing Loans
ASEAN-6 Malaysia 43% 31% 17% 0% 3% 7%
Thailand 50% 5% 37% 2% 0% 6%
Philippines 55% 32% 9% 1% 1% 4%
CLMV Lao PDR 10% 20% 45% 25% 0% 0%
Vietnam 65% 8% 7% 0% 2% 0%
Myanmar 100% 0% 0% 0% 0% 0%
Source: RAM Consultancy Service, 2004, (Myanmar data are supplied by author)
Due to poor arrangements in formal sector financing, the informal sector has
become the main channel of credit for SMEs in CLMV. The informal sector is made up of
lenders from family and friends, savings and credit associations, and money lenders
78 Report by RAM Consultancy Service Ltd (2004), p. 20