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

(gray or black markets) 79 . In Vietnam, informal channels finance up to 70 percent to 80
percent of SME needs. Among the available sources of financing in Cambodia, the Lao
PDR, and Myanmar, the main channels of funding consist of family and friends as they
are easier to approach. If SMEs borrow from gray markets, they have to pay higher
interest rates—as much as 20 percent per month for loans without collaterals.
With globalization and speedy economic integration, intra- and inter-regional
competitions among nations become tighter than ever. In order to sharpen national
competitiveness in global market, governments of ASEAN countries rely more on the
competitiveness of their SMEs in the private sector even as they continue to reduce
their reliance on inefficient SMEs. Now these countries have dynamic, export-oriented,
and internationally competitive SMEs. As the main engine for economic growth,
ASEAN countries continually develop and promote their SME sector with various
promotional tools such as strengthening inter-firm linkages, offering various kinds of
business development services, improving technological innovativeness, and
particularly improving financing access. Now, leading ASEAN countries have adequate
formal sector arrangements for SME financing, which are suitable to their financial
requirement for each stage of SME development.
In this comparative analysis on Myanmar and its counterparts in the ASEAN
countries, it can be seen that the gap between Myanmar and other ASEAN countries
especially with ASEAN-6 is too wide in the area of SME financing. Formal
arrangements for SME financing in Myanmar lag behind other countries in the ASEAN
region, even within CLMV. Inadequate formal sector financing sources, together with
other various obstacles, are major impediments to further development and growth of
SMEs in Myanmar. If no appropriate corrective actions in this area are done, the gap
between dynamic and competitive SMEs in other ASEAN countries and the traditional
and locally focused SMEs in Myanmar will be further widened and affect the national
economies as well.
7.3 Models of SME financing in Thailand and Japan
In Asian countries, Japan, Taiwan, and South Korea boast of best practice models in
SME development. Within ASEAN, Singapore, Thailand, and Malaysia also have their
own models in promoting SMEs. In the area of financing, they provide various channels
and sources of funds to cater to the different needs of SMEs in their countries. In this
section, Thailand and Japan models on SMEs financing is presented to provide inputs
on the efforts to develop a successful SME financing program for Myanmar in the
79 Ibid., p.21