SMEs need to for­malise their busi­ness: ex­perts

The Myanmar Times - - Front Page - My­at­noeoo@mm­times.com MYAT NOE OO

In­dus­try in­sid­ers say that small busi­ness is the back­bone of the coun­try and any new pol­icy should en­cour­age greater for­mal­i­sa­tion, like train­ing for ac­count­ing and busi­ness reg­is­tra­tion.

WITH the govern­ment seek­ing deeper engagement with busi­ness lead­ers in Nay Pyi Taw this week­end at a work­shop to gain in­put into the coun­try’s eco­nomic pol­icy, Myan­mar’s small and medium en­ter­prises are hop­ing for a pol­icy that en­cour­ages greater for­mal­i­sa­tion of the sec­tor, in­dus­try sources say.

Some 90 per­cent of busi­nesses in Myan­mar are SMEs, yet only about 50,000 busi­nesses are reg­is­tered with the SME devel­op­ment de­part­ment, ac­cord­ing to govern­ment fig­ures.

U Myint Zaw, chair of Ground So­lu­tion Devel­op­ment, a com­pany that of­fers small busi­ness train­ing, said that the ma­jor­ity of SMEs are un­reg­is­tered and lack for­mal pro­ce­dures, like cor­rect ac­count­ing pro­cess­ing and an un­der­stand­ing of mar­ket­ing.

“Busi­ness­men at Myan­mar SMEs do not act within a le­gal frame­work and need to sup­port to move from in­for­mal to for­mal busi­nesses,” he said. They need help with net­work­ing and de­vel­op­ing proper forms of ad­min­is­tra­tion. This is im­por­tant if SMEs are to de­velop.”

Train­ing sup­port to up­grade their busi­ness skills is needed, he said. But one of the great­est chal­lenges ef­fect­ing SMEs was ac­cess to fi­nance at a rea­son­able rate, U Myint Zaw said.

Bank loan rates are cur­rently at 13pc, he said. And while there were cheaper loan op­tions avail­able through a Ja­panese-funded SME loan pro­gram with some banks, SMEs needed to be trained up on the re­quire­ments for ac­cess­ing these loans, in­clud­ing ap­ply­ing for a busi­ness li­cence, he added.

The govern­ment an­nounced last week that it was plan­ning a work­shop in Nay Pyi Taw on Oc­to­ber 22, where busi­ness lead­ers are been in­vited to pro­vide in­put into the govern­ment’s eco­nomic pol­icy. A 12-point plan was re­leased in July, but many in the busi­ness com­mu­nity have been wait­ing on a more de­tailed pol­icy.

U Myint Zaw said the new pol­icy needed to deepen op­por­tu­ni­ties for SMEs to en­gage more broadly with the busi­ness com­mu­nity. He pointed to India where the cham­ber of com­merce was a strong sup­port sys­tem for the SME com­mu­nity.

SMEs could be a great source of en­trepreneur­ship but they need more sup­port, such as sta­ble elec­tric­ity, as it is costly to have to reg­u­larly switch to a gen­er­a­tor, to bring their ideas to life said Ma Tin Myat Htet, the client ser­vice di­rec­tor at AZURI Cre­ative, a fullser­vice ad­ver­tis­ing firm that works with many SMEs.

‘’I don’t know about the new pol­icy but we need bet­ter-qual­ity in­fra­struc­ture, as cur­rently it makes things very costly for busi­nesses,” she said.

A lack of skilled work­ers was also a con­cern when try­ing to re­main com­pet­i­tive with a rise in for­eign di­rect in­vest­ment ex­pected, she added.

“We face dif­fi­cul­ties with our staff,” she said. “We can’t af­ford large salaries, so peo­ple come and learn from us and then they move to a big or­gan­i­sa­tion that can af­ford to pay more.”

For many at the mi­cro end of the scale, the coun­try’s small­est busi­nesses need greater ac­cess to fi­nance in order to grow.

“We can’t ac­cess SME loans be­cause you need to of­fer prop­erty as col­lat­eral and we don’t have that,” said U Thant Zin, a Yan­gon fruit trader. “And loans from peo­ple out­side of the banks are very ex­pen­sive.”

Photo: Staff

A small-busi­ness owner pack­ages goods at her shopfront in Yan­gon.

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