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

inadequate skill to prepare comprehensive and viable business plans are demand-side
problems coming from SMEs. These can be regarded as demand-side problems.
Unfriendly and time-consuming procedures to process loan applications that are strictly
controlled by monetary authorities and failure to adopt flexible and modern credit
assessment methods and techniques come from the supply side. Other systemic and
institutional issues, such as macroeconomic management and well-defined lending
infrastructures, also affect the ability to finance SMEs in these countries.
Having recognized the problems and constraints in financing SMEs, ASEAN
countries, especially Malaysia, Thailand, and Vietnam have implemented various policy
measures to enhance credit availability for their SMEs. They attempt to reform their
present system of financing in all aspects. Singapore is significantly leading all other
nations in the region in financing SMEs.
The previously mentioned problems and constraints are more or less common in
all ASEAN countries. However, CLMV lag behind their counterparts in all aspects of
lending infrastructures and institutional frameworks that pose significant barriers for
effective financing. Financing frameworks are extremely in short supply in CLMV
economies. As a result, SMEs face inadequacy of funding sources even though their
contribution to national economies is very impressive.
Almost every research on SMEs indicates financing as one of the top problems this
sector is facing. Such financing problem retards SMEs competitiveness and further
development.
SMEs in Myanmar are not exempted from this situation. Myanmar has its own
special financing problems, such as tight collateral requirement (only real estate),
limitation of loan amount based on appraised value of collateral property (up to 40
percent), unavailability of long-term loans from the banks, and lack of international
funding agencies that provide financial assistance to SMEs. If Myanmar wants to set up
a nationwide SME development program to sharpen the competitiveness of its
indigenous SMEs and consequently narrow the development gap between Myanmar
and leading countries within the ASEAN family, it has to address this serious financing
issue first.
This research is conducted with the following objectives: (1) to discuss the role of
SMEs in industrialization and economic development; (2) to present various problems
and constraints that SMEs in Myanmar have to contend with; (3) to address the
financing SMEs problems and their related causes; and (4) to propose ways to cope with
these problems by offering suggestions that are relevant to Myanmar context.