Myanmar SMEs Urge Suu Kyi to Ease COVID-19 Loan Policies

A lacquerware business in Bagan.
Photo: The Irrawaddy / Aung Kyaw Htet

Myanmar’s small and medium-sized enterprises (SMEs) affected
by the pandemic need the government to relax its COVID-19 loan
policies in order to help businesses thrive, according to industry

Speaking with State Counselor Daw Aung San Suu Kyi on Tuesday,
Daw Win Win Tint, managing director of retail giant City Mart
Holdings, said small businesses are facing difficulties around
lending rules and regulations for the government’s loan

Much of the government’s COVID-19 relief requires that
businesses repay loans in just one year.

“Those rules and regulations are out of reach for retail
businesses. I would like to request [the government] consider
it,” Daw Win Win Tint said.

Myanmar State Counselor Daw Aung San Suu Kyi held a talk on
Tuesday about the effects of COVID-19 on trade with Daw Win Win
Tint, Deputy Minister of Commerce U Aung Htoo and Daw Thet Su Htay,
owner of a small local business that makes natural plum and
tamarind syrup.

Daw Thet Su Htay said local SMEs are badly affected by COVID-19,
facing layoffs and a significant decline in income. However, she
said they don’t apply for the government loan program due to the
short loan repayment period stipulated by the program.

“Because we don’t know when businesses will be able to
operate normally, the loan repayment period is too short,” said
Daw Thet Su Htay.

“[Business owners] are concerned: what if their business
can’t operate well? The loan [deadline] would add an extra burden
for them. Because of these concerns, businesses are not applying
for loans [from the government],” she added.

In late March, thegovernment
set up a 100-billion
-kyat (US$71.3 million) COVID-19 fund for
local businesses, particularly SMEs and the garment, manufacturing
and hotel-and-tourism sectors. The fund offers one-year loans at a
1 percent interest rate. The government’s COVID-19 Economic
Relief Plan (CERP) also committed to increasing the size of the
fund to 200-500 billion kyats, depending on the market response, by
the end of 2020.

In June, the Japan
International Cooperation Agency (JICA)
 also announced
emergency loans worth 5 billion yen (around US$46 million) to
assist businesses in Myanmar hit by the coronavirus pandemic. JICA
said the loans will be low-interest and will support SMEs to
continue operations despite the severe economic situation caused by

But Daw Thet Su Htay said businesses are also facing
difficulties with the criteria for Japan’s loan program,
especially around the collateral it requires from loan

“There are a lot of criteria, so it is totally inaccessible
for small businesses,†she said.

She stressed that many small businesses are unable to submit
loan applications as they do not have an ownership certificate for
valuable property.

Since late January, the COVID-19 outbreak has hit Myanmar’s
tourism, border trade and export sectors, causing massive losses
for producers, exporters and workers. Airlines and hotels in the
country have suffered losses due to travel restrictions.

Daw Win Win Tint said even though businesses for essential
products run normally, other non-food retailers, including clothing
businesses, have been badly hit by the pandemic.

She said that despite some COVID-19 restrictions ending, the
demand for non-food products has continued to decline.
“[Businesses selling non-food products] are facing a lot of
difficulties. We have seen sales decline by 80 percent compared
with last year.â€

A nationwide survey by the Asia Foundation on the impacts of
COVID-19 on Myanmar businesses
also revealed
 that nearly two-thirds of businesses expect to
face cash flow problems, putting their survival at risk as
government emergency loans have reached only a fraction of
businesses so far.

Daw Aung San Suu Kyi said Tuesday that the government is trying
to keep trade alive as much as possible, but the government has to
consider the risks of COVID-19.

“We want to run all ‘business as usual’ but on the other
hand, we have to be aware all the time that the next wave [of
COVID-19] could hit us badly if we make rash decisions [to ease
restrictions],†she said.

She said she wanted to assure SMEs that the government will
consider their situation and make amendments to the loan program to
ease their difficulties in obtaining loans. “In terms of loans,
[the government] will look into it—to make things easy,†the
State Counselor said.

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Myanmar SMEs Urge Suu Kyi to Ease COVID-19 Loan Policies

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Myanmar SMEs Urge Suu Kyi to Ease COVID-19 Loan