Business owners attending the ceremony marking the formation of a team of Myanmar’s entrepreneurs expressed that they fear collapse of construction businesses if banks are to demand payment for loans at the end of September 2019.
While nothing has been officially declared, businesses are hearing rumors that the government may put it into action soon.
The chairperson for the team Khin Shwe said at the event itself, held on August 22 at the Taw Win Garden Hotel, that “It can’t rightly be said that the economy is going down. Just the other day the State Counsellor herself said that we are the one with the most growth in South-East Asia. If they (banks) are going to do it, it will create a lot of trouble for businesses. All layers of business will be affected in a domino, eventually reaching down to trouble for trucks delivering sand, rocks and others.”
General Secretary Myo Myint of the Myanmar Construction Entrepreneurs Federation (MCEF) echoed the same sentiment, claiming that it may lead to collapse of many businesses.
He says that most major construction operations are in danger if the government decides to act upon demanding payment from loans taken from both public and private banks.
“It will be good if 40 or 50 percent of big players can pay back the money but otherwise, it will be a crisis for the industry.”
Myo Myint went on to explain that while the loan has to be paid eventually, a rushed demand will cause nothing but trouble, especially in light of the sluggish construction sector that can be seen in affordable housing projects.
“I can give an example with the government’s efforts in making affordable housing projects. These have been going on since the previous administration under the Plinth-Area Estimate (PAE) system and general costs have been climbing. The dollar rising also mean that all construction materials imported are more expensive. Under the PAE system and without cost for land at a rate of 100 to 120 Lakhs per apartment isn’t selling. And the payment system isn’t even a one time payment.”
According to 2017-2017 fiscal year report, local banks have provided the most amount of loans toward property and buildings with 77 per cent of the total - which comes up to over Ks 15,357 billions.
Amongst it are over Ks 2958 billion for construction, over Ks 2921 billion for livestock and agriculture, over Ks 2160 billion for manufacturing, over Ks 275 billion for transportation, over Ks 2301 billion for service, over Ks 35 billion for housing loans, over Ks 26 billion for SMEs and over Ks 2650 billion combined for the rest of the sectors.
