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

in systematic manner, nationwide and simple accounting standards for SMEs should be
adopted by the government in conjunction with the accounting bodies in the nation. The
existing sets of standards are rather difficult to meet for SMEs, since many of them do
not possess adequate knowledge or capacity. Therefore, a minimum acceptable standard
with simple format of accounting should be made available to the SME sector.
8.2 Suggestions to improve demand-side conditions
Suggestions to improve demand-side conditions are designed to directly deal with
the problems in the demand side, as discussed in section 6. Lack of qualified collaterals
is an important impediment for many SME owners who want to access bank loans, since
banks in Myanmar make loans only on a collateral basis. Some business owners possess
land and buildings that can be used as collateral, but they do not have the land or
building titles. In such case, the government could help by making simple and easy the
process of land and building titling.
Banks only grant loans that are between 30 percent and 40 percent of the value of
collateral property—this is another constraint for SMEs that want to avail loans. By
using credit guarantees on loans to SMEs by government or trade associations like
UMFCCI, the amount of credit grant based on the value of collateral property may be
increased. Concerning with bank loan, one of the major problems is that SMEs can
only access for short-term loans and that these loans need to be renewed annually. This
makes high transaction cost and additional administrative burden for SMEs. By
allowing private banks to implement their risk management system and to encourage
them to grant medium- to long-term loans to SMEs and to diversify the services the
offer, this problem could be reduced, if not totally eliminated.
Inadequate financial record keeping, the lack of ability to use accounting
information and neglecting the role of accounting and financial information in business
decision making are some negative characteristics of SMEs in Myanmar. Some business
owners deliberately hide or fail to keep proper accounting records for tax reasons. This
leads to the problem of information asymmetry the businesses and banks.
Banks have no chance to assess the soundness of a business and the quality of
business governance that reflect on the proper accounting statements, which can serve
as a partial substitute to collateral. To eliminate this problem, business owners should
be encouraged to use proper accounting records on their business transactions by
educating them to know the benefit of accounting and financial information, by giving
them incentives such as tax holidays and easier access to bank loans, by offering
accounting courses in the industrial zones, and by setting up simple SME accounting
standards. These programs could be made by government agencies in conjunction with