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MYANMAR BUSINESS SURVEY: DATA ANALYSIS AND POLICY IMPLICATIONS Figure 3.51. Share of financing, for the average firm 1% 1% 5% 3% 10% 10% 71% Personal saving Retained earnings Loans from state development banks Others Personal loans from family\relatives\friends Loans from private banks Money lenders Source: ESCAP-OECD-UMFCCI Myanmar Business Survey Database. banks in Myanmar, with 27 per cent not using banking services at all, although 50 per cent reported having a current account. This figure is much higher than that shown by the World Bank Enterprise Survey, which found that only 30 per cent of firms had a current or cheque account (World Bank, 2014a). Micro and small-sized firms appear to rely much more on informal sources, such as personal savings and loans from family/friends, in their financing mix compared with medium and large- sized firms (figure 3.52). Firms of all sizes utilize retained earnings to the same degree, as they make up 9 per cent to 14 per cent of financing. Loans from private banks account to medium and large-sized firms account for 6 per cent and 7 per cent of financing, respectively, compared with 3 per cent for small-sized firms and less than 1 per cent for micro firms. This may be due to the prevailing stringent collateral requirements, which micro and small sized firms are unable to meet. Medium and large-sized firms also have access to other sources of finance such as stocks/equity and corporate bonds, thus showing more diversified financial structures. The results of the present survey clearly suggest that immediate and massive interventions by the Government will be necessary to upgrade the banking sector in order to meet the funding needs of firms in Myanmar. The commercial banks, often collaborating Figure 3.52. Share of financing, by size of firm Micro 1%1% 3% 9% 10% 76% Small 1% 1% 5% 3% 9% 12% 69% Medium Large 2% 1% 8% 7% 1% 1% 12% 6% 13% 60% 14% 61% 9% 6% Personal saving Retained earnings Loans from state development banks Others Personal loans from family\relatives\friends Loans from private banks Money lenders Source: ESCAP-OECD-UMFCCI Myanmar Business Survey Database. 50
CHAPTER 3. Data analysis with state development banks or credit guarantee agencies, typically finance more than half of private funding in advanced economies (Abe and others, 2012). 8. Many firms have no need for institutional loans, while firms that use money lenders do so largely based on trust As shown in the previous subsection, personal savings are by far the most popular source of financing with more than 90 per cent of firms (more than 2 800) using at least some savings in their financing mix (figure 3.53). Firms that used at least some personal savings, largely felt that they had no need for a loan; more than 1 000 firms cited this reason while more than 100 firms reportedly used savings as they did not believe that their loan applications would be approved (figure 3.54) 20 Only 10 per cent of surveyed firms (almost 300) obtained a loan from a private bank, with the most frequently cited reason for doing being that they offered the best interest rates. Less than 4 per cent of the surveyed firms (105) obtained loans from either state development banks or money Figure 3.53. Number of firms, by source of financing 3 000 Number of respondents 2 000 1 000 0 Personal saving Personal loans from family/relatives/friends Loans from state development banks Others Retained earnings Loans from private banks Source: ESCAP-OECD-UMFCCI Myanmar Business Survey Database. Figure 3.54. Reasons for the selection of financing source Number of respondents 0 500 1 000 1 500 Personal savings Number of respondents 0 50 100 150 Private banks State development banks Money lenders Number of respondents 0 10 20 30 40 50 Number of respondents 0 10 20 30 40 50 Money lenders Best interest rates offered Only available sources of credit your firm could obtain Best lending conditions and services Long relationship with your firm Did not think our loan application would be approved Lender that your firm trusts the most Most convenient location Quickness of loan approval No need for a loan Source: ESCAP-OECD-UMFCCI Myanmar Business Survey Database. 51
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Myanmar Business Survey Aaron Soans
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Myanmar Business Survey: Data Analy
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FOREWORD With vast natural resource
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Acknowledgements This publication w
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2. Market conditions As the country
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Abbreviations and acronyms ADB AEC
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Page 17 and 18: CHAPTER 1. Business environment Int
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Page 87 and 88: eferences Abe, M. (2014). “Growin
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United Nations ESCAP Rajadamnern No
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