JICA to offer two-step loan for SMEs

The Japan International Cooperation Agency (JICA) will disburse a US$40 million loan to small- and medium-sized enterprises (SMEs) through a two-step loan scheme next month, according to the Small and Medium Industrial Development Bank (SMIDB).

Under the scheme, the JICA offers loans to the government and then the government disburses loans to banks. The banks will offer loans to the SMEs.   

“We will take loans from the JICA in May. Then we will disburse these loans to SMEs with an 8.5 per cent interest rate,” said Dr Than Tun, SMIDB’s chairperson. 

The JICA’s loan disbursement would start this month, said Hisao Ando from the JICA’s Myanmar office at a SME business seminar. 

The interest rate for SME loans will be 8.5 per cent while commercial loans will pay 12 per cent. 

Entrepreneurs who want to take loans need to put their immovable properties up as collateral as well as to have recommendations from their regional or state governments.  

“The SMIDB will disburse loans to SMEs with recommendations from their regional or state governments. Loan disbursement is decided by the board of directors,” said Than Tun.  

In 2013, the SMIDB disbursed a Ks10 billion loan, offered by the government to 62 entrepreneurs. This year, the SMIDB will increase its loan disbursement by Ks20 billion. So far Ks8 billion out of the Ks20 billion has been offered to 255 entrepreneurs. The SMIDB offers maximum loans of Ks100 million and a minimum of Ks10 million to entrepreneurs.

According to the Ministry of Industry, there are more than 120,000 registered SMEs across the country, making up 99 per cent of the country’s economy.