Myanmar to Establish New Credit Law to Support Small Business Finance

The objective of the law is to support the provision of finance to micro, small and medium enterprises (MSMEs) by enabling the creation of a credit guarantee company to guarantee credit to these enterprises. It will also allow participating financial institutions to spread credit risk and provide unsecured loans.

“Whether or not a guarantee is provided, the state-backed Credit Guarantee Corporation can function as an intermediary organization between the borrower and the lender. The Credit Guarantee Company, on behalf of the borrower, will give the lender a guarantee for a loan. the borrower then pays a specified premium rate to the Credit Guarantee Corporation, ” U Thant Sin said.

Once the Credit Guarantee Company Bill is completed, it will be submitted to the Pyidaungsu Hluttaw.

Even though the Burmese private sector is dominated by MSMEs, many of them are unable to access appropriate funds for growth. Stimulated by the COVID-19 epidemic, authorities have taken several measures to ease the borrowing process for this segment of the economy since the start of the year.

These include the launch of a KK 100 billion government fund for small businesses as well as businesses in the tourism and garment manufacturing sectors. The Central Bank of Myanmar also cut interest rates by 1.5%.

However, these measures have not been sufficient to support the struggling economy, as many MSMEs are still unable to qualify for access to finance.

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