The Small and Medium Industrial Development Bank (SMIDB) has given over 130 billion Kyat worth of loans to small and medium enterprises (SMEs) within three years

The Small and Medium Industrial Development Bank (SMIDB) has given over K130 billion worth of loans to small and medium enterprises within three years, according to SMIDB.

“We have given loans primarily to small and medium enterprises for three years and the total amount has reached over K130 billion. The government gave K30 billion to us last year and the rest of the loans is taken out from our bank’s capital,” DrThanTun, chairman of the Bank, told Myanmar Business Today.

Those loans are given to about 400 enterprises from various states and regions. Currently, there are 40,000 registered small and medium enterprises in Myanmar while around 40,000 more are unregistered, said DrThanTun referencing on figures from small and medium enterprises organisations.

However, many small and medium businesses opt not to take SMIDB loans. U HninOo, who is in animal husbandry business, told Myanmar Business Today, “Businesspeople from our animal husbandry sector had applied for loans from SMIDB but they didn’t get the funds because the bank said the collaterals were not enough. Even if we get the loans, the amount is not sufficient to operate a business and on top of that we will have to pay the interest. That’s why, we don’t take the loans.”

However, SMIDB says it is hard to give big amount of loans to small and medium enterprises due to the bank’s financial limitations. The Bank gives loans only if the borrowers can provide suitable collateral, and the l0an amount ranges between 20 and 40 percent of the collateral value, according to SMIDB.

Still, there are a lot of industries that are in dire need of financing. For example, aqua farming businesses were severely impacted in 2008 when Cyclone Nargis struck Myanmar. The cyclone hit primarily the Ayeyarwaddy delta where majority of aqua farming businesses were located and 70 percent of the businesses has stopped since then. Also, trade sanctions from the US and the EU meant the farmers couldn’t export their products to Western countries.

“Now, aqua products can be exported to European countries as the trade sanctions have been lifted. But aqua farming businesspeople need loans to start up their businesses,” U HninOo said. 

There are currently a total of 23 state-run and private banks in Myanmar currently. However, SMIDB is the only bank that gives loans to small and medium enterprises with 8.5 percent interest rate, SMIDB claims.

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