William Min introduces the SME and MFI sectors in Myanmar. There are 120,000 unregistered SMEs and 620,000 registered SMEs in Myanmar. Agriculture, industry, and services contribute 37%, 21.3%, and 41.6% respectively to the economy. Main challenges for SME financing include capacity constraints, collateral constraints, and interest rates. The JICA two-step loan program provides funds to SMEs through MEB and banks at interest rates of 4% and 8.5% respectively, up to 5 years and 100 million MMK. Excluded sectors are farmers, real estate, finance, precious metals, bars, and weapons. MFI loan sizes are currently capped at

1. William Min
AYA Bank
Introduction to SME and MFI Sectors
in
Myanmar

2. How do you define SME?

4. 120,000 Unregistered SMEs (17%)
620,000 Registered SMEs (83%)
Agriculture contributed to 37%, industry 21.3% and services
41.6%

5. Main Challenges in SME Financing
• Capacity constraints
• Collateral constraints
• Interest Rate

6. • Two-steps Loan from JICA
• MEB disburse the funds at 4% per annum and Banks provide loans
at 8.5% per annum.
• Loan Tenor is up to 5 years
• Up to 100mil MMK per SME (SME Definition according to SME
Development Law 2015)
• Focus on SME’s capital investment: Eligible investment are fixed
assets (e.g. machinery, equipment, factory building). Purchase of
land and land rights is not eligible.
• Initial working capital portion can’t exceed 20% of the loan principal
and must be related to the fixed asset purchase.
• Collateral-based lending with the requirement of normal loan
security documents

7. Excluded Sectors
• Farmers
• Real Estate
• Finance & Insurance
• Precious Metal Dealing
• Bars & Pubs
• Amusement & Entertainment, except Tourism
• Weapons & Ammunition

8. • UNCDF estimates this demand to be EUR 942 million, with an
existing MFI lending portfolio of EUR 111.2 million (GIZ 2015)
• Currently, MFI loan size is capped at 5 million MMK with the
potential to go up to 10 million MMK in the near future.
• CBM controls the banks, the Ministry of Cooperatives controls the
co-operatives MFIs, and the Financial Supervisory
Department(Ministry of Finance) controls the MFIs.
• MFIs have very low NPL rate of less than 1%

9. Market Segmentation

10. DAWN International (dawn.com.mm)
Subsidiary of Accion International, headquartered in
U.S.
Present in 32 countries
70,000 clients and MMK 10.2 billion in loan portfolio, in 20
branches.
BRAC Myanmar (brac.net)
Headquartered in Bangaladesh since 1974.
Present in 12 countries
As of October 2015, USD 2,371,600 has been disbursed,
reaching 12,100 people.

11. Thank you!