1. Small
(a) Manufacturing sector Up to 50 Up to 500
(b) Labor intensive Manufacturing sector From 301-Up to 600 From 500- Up to 1000
From 100 – Up to
(c) Wholesale Business From 31-Up to 60
300
From 100 – Up to
(e) Servicing Business From 51- Up to 100
200
6
SMEs two-step loan project (Phase I) sector wise
disbursement (MMK Million)
Total 230 45781.75 5 660.00 14 2005.00 14 3434.93 72 16248.80 7 1175.00 342 69305.48
SME Two-Step Loan Project (Phase-1) Disbursement
(Sector)
Other
2%
Services Manufacturing
23% Labor Intensive
Whole Sale
Retail Sale Retail Sale
Manufacturing
5% Services
66%
Whole Sale Other
3%
Labor
Intensive
1%
8
SMEs Loan
• A major SME loan is provided by Japan International Cooperation Agency
(JICA).
• JICA’s loan for SMEs works in two steps. They will first lend to local banks via
the Myanma Economic Bank (MEB). MEB first provide JICA loans to Small and
Medium Industrial Development Bank (SMIDB) to lend (SMEs) entrepreneurs in
three cities (Yangon, Mandalay and Pathein). Later, JICA loan was distributed for
SMEs to private banks through MEB.
• Local banks include SME Development Bank, Kanbawza Bank, Myanmar Apex
Bank, Ayeyarwaddy Bank, Myanmar Citizens Bank & Co-Op Bank. These domestic
banking organizations would have to define terms and conditions for the loans.
• This JICA two-step loan cannot provide loans for various sectors, namely
agriculture, real estate, insurance, gemstone, liquor shops and restaurants,
entertainment and ammunitions, among other industries.
• Present status of JICA loan delivery up to August 2018 is as follow;
SMID KBZ MAB AYA MCB Co-Op Total
SMEs borrower 88 57 45 75 32 45 342
Number
Loan Ks. Million 17198 11444 10210 10505 9188 10758 69305
Loan policy for SMEs
JICA Two Step Loan MEB’s Own Fund loan
• It is MEB deposit-generating
• Loan borrower – 342 loan.
• Loan amount – 69305 Ks. • No. of borrowers- 150
million
• Interest – minimum deposit • Loan amount- 10599 ks m.
rate (8%) + 0.5 % • Interest – 9 %
• Maximum loan size -500 ks. • Maximum loan size – 300 ks.
Million
• Maximum duration 5 years
Million
• At least 80% to be used for • Maximum duration – 5 years
fixed capital • 50% at least to be used for
• Not allow to purchase land fixed capital
Loans for SMEs & Farmers
• Basis for setting the interest rate for SMEs loan is not to
be under the deposit interest rate which is 8.0%.
• Another determinant factor is the exchange rate which is
not in a stable position. JICA loan has been injected
through the State-owned bank due to the exchange rate
risk.
• Although JICA’s two step loan does not cover the need of
the agriculture sector, JICA provides loan through
Myanmar Agriculture Development Bank (MADB) to help
farmers to buy farm machineries and assets through hire
purchase scheme. Interest rate is 8% per annum which is
the same as that for seasonal crop loans.
Credit Bureau
• The credit bureau is a joint venture between the Myanmar Banks
Association (MBA) and Asian Credit Bureau Holdings based in
Singapore.
• IFC, a member of the World Bank Group, has supported the
Central Bank of Myanmar to develop a regulation for credit
reporting. The Central Bank of Myanmar (CBM) issued the
Regulation on Credit Information Reporting System on March 31,
2017.
• It provides a basis for the establishment and operations of credit
reporting companies
• This is a key step in building up modern financial infrastructures
that are necessary to improve access to credit for consumers and
SMEs in the country. It will help creditors in risk management,
information asymmetry and control of multiple borrowings. It will
soon relax on over-reliance on collateral. It makes possible credit
monitoring of consumers to manage indebtedness.
CGI
• Businessman can apply for a loan from the bank without collateral or
insufficient collateral after he or she has bought guarantees.
• Borrower has to buy full guarantees from Myanmar Insurance that is owned by
the Ministry of Planning and Finance. If the businessman had defaults for many
reasons and the customer could not pay back the borrowed money, the Myanmar
Insurance will return just 60 percent of the loan to the bank. Therefore the bank is
going to take a 40% loss. So risk on CGI is going to be 40% as well. Thus, bankers
said that the system is not fully secure.
• One of the reform plan is to consider the full guarantee process backed up by
Credit Guarantee Corporation (CGC) as adopted in other countries CGC takes full
responsibility and takes action for default payment.
• Myanma Insurance is preparing to set up a Credit Guarantee Corporation,
which could provide credit guarantee to businesses to obtain credit facilities from
financial institutions.
• The Ministry of Planning and Finance has formed a committee responsible for
the drafting of the Credit Guarantee Corporation Law.
Current Status of e-payments
• In order to lessen the handling of currency notes, the Central Bank
of Myanmar encourage to issue debit card and ATMs among the
financial institutions. Later on these network will be linked to ASEAN
payment gateway.
•Myanmar Payment Union (MPU) was organized by state owned and
private banks in 2011. The objective is to upgrade retail payments
from cash-based transactions to card-based, cashless transactions.
• The system is implemented by providing the ATM and POS switching
services among the banks. There is a road map for card issuing and
acquiring process.
• MPU cards have been initially issued in September, 2012. After
2016, more than 1.4 million debit cards had been issued and 1,674
ATMs and 4,072 points of sale terminals have been set up, mainly in
Yangon, Mandalay, and Nay Pyi Taw. As a result, all bank card holders
can withdraw and check their balance and remittance their fund at any
ATM among the banks.
Status of Mobile Banking and Mobile Financial Services
MAB Mobile
3 Myanma Apex Bank 29.4.2015 1.3.2016
Bank
663 Mobile
5 Myanmar Citizen Bank 22.5.2015 11.7.2015
Service
Myawaddy
6 Myawaddy Bank 13.2.2014 1.7.2016
Mobile Bank
i-Banking
2 Cooperative Bank 12.8.2014
i-Banking /
3 Kanbawza Bank 26.2.2015
m-Banking
i-Banking /
5 United Amara Bank 29.5.2015 m-Banking
Mobile Financial Services
CBM
Sr Non – Bank Operation Logo
permission
Digital Money
1 Myanmar Ltd. 28.9.2016 1.1.2017 Wave Money
(Wave Money)
Ooredoo Myanmar
2 26.7.2017 19.9.2017 M-Pitesan
Fintech Ltd
Internet Wallet
3 31.8.2017 7.9.2017 OK $
Myanmar Ltd
Wave Money & OK Money
• An innovative way to transfer money adopted in Myanmar is Wave money
mechanism.
• Wave Money is a joint venture between Telenor and Yoma Bank to provide
accessible, safe and convenient mobile financial services via a nationwide agent
network or via a wave account on your phone. Myanmar clients can receive money
closest wave shop to them.
• MEB conducted pilot scheme for money transfer to pensioners in 2017 and 2018.
MEB plans to have MOU with private service provider.
• MEB also conducted pilot OK$ & Mobile payment pilot scheme with private
company “Internet Wallet Myanmar Ltd. OK$” in 2018 in some regions and states.
• During a survey for digital financial services on 12,000 pensioners in North Dagon
township, only 600 people are able to use Wave Money. “Some are not familiar
with the app. Others don’t want to use,” It is noted.
• Most people are worried about mobile banking and digital financial services, about
their cash disappearing with a single click. A lot of people are using Face book in
mobile phone. But there are very limited number of users of internet.
• Some officials concern about money laundry through wave money transaction.
Conditions of Mobile Banking & Mobile Financial Services
Bank MFS
March
March 2017 March 2018 March 2017
2018
•SMEs entrepreneurs do not know how to use bank services. Even if they know it, they could not take
advantage of suitable financial services products due to limited information available. Directorate of
Industrial Supervision and Inspection (DISI) is now building up Data base for SMEs. DISI started
receiving SMEs cards from on-line application
•Credit reporting system is still lacking and the bank also does not know their credit worthiness.
Evaluation of SMEs performances is difficult due to lack of their financial statement.
•SMEs is the backbone of Myanmar’s economy in terms of number, contribution to employment and
economic output. But it is still stagnant and cannot upgrade in terms of quality and services. This can be
attributed to financing.
•The problem is not the lack of money in the market, but the restrictions that diverts flow of funds away
and limit access to finance to SMEs. It is needed to strengthen Credit Guarantee Scheme, to update
property laws and land registration, to revise property valuation, and excessively cautious banking
regulations, etc..
Way Forward
• Under Public Finance Management Project, MEB is implementing core banking system
since 2015. Private sector is developing this system also.
• The Government has prepared two key guiding documents for the modernization of the
financial system:
• • The Financial Sector Development Strategy (FSDS) 2015–2020
• • The Myanmar Financial Inclusion Roadmap 2015–2020.
• The digital services working group members could be drawn from the private sector, such
as insurance firms, private banks and micro-finance institutions. Such private sector
initiative will allow product by product [one by one] regarding digital finance.
• Banks need technical & operational specialists for risk management.
• There is danger of fraud. Consumer protection is necessary..
• The IT infrastructure and legal framework for e-commerce need to cover interconnection
of telecom and banking services.
• Further steps are necessary to design sound money transfer policies, electronic payment
system and the anti-money laundering policies. Cyber security must be in place.
• Emergence of credit bureau could play its role for facilitating more loan access to SMEs
When credit reporting system is designed and implemented in combination with digital
financing, Myanmar financial sector could scale up SMEs digital financing.
နိဂုံး
• စိုက်ပျိုးချိန်တွင် အရည်အသွေးကောင်းမျိုးစေ့များသည် ဝယ်လို အားများ
မျိုးစေ့စျေးနှုန်းမြင့်မားလာလျှက်ရှိသည်။
• ပဲမျိုးစုံဆိုင်ရာ အရည်အသွေးမြင့်မားစွာထုတ်လုပ်နိုင်ရေးအတွက
ကောင်းမွန်သည့် မျိုးစေ့စနစ်တိုးတက်ဖွံ့ဖြိုးစေရန် နိုင်ငံတက
အဖွဲ့အစည်းများ၊ အစိုးရ နှင့် ပုဂ္ဂလိကအဖွဲ့ အစည်းမျာ
ပူးပေါင်းဆောင်ရွက်ရန် အထူးလိုအပ်လျှက်ရှိပါသည်။