by Shibani Mahtani, wsj.com - September 16
NAYPYITAW, Myanmar—The International Finance Corp., the World
Bank group's private-sector arm, will provide Myanmar's Yoma
Bank with a $5 million loan to help finance capital-starved
small and medium-sized enterprises in the country.
The loan is the first initiative dedicated to helping smaller
businesses in Myanmar, where local entrepreneurs complain of
being deprived of bank loans and left behind by the country's
economic reforms, which have so far focused on developing
infrastructure and rewriting laws to primarily benefit foreign
Yoma Bank will serve as a "true SME bank," said Serge Pun, a
Myanmar businessman who controls the bank and chairs
Singapore-listed Yoma Strategic Holdings, at a news conference
Friday. The bank will "have to do a lot of risk-taking" but is
ready to start the process of lending right away, he said.
Access to capital is one of the biggest hurdles facing small
businesses in Myanmar, a so-called frontier market whose economy
is largely controlled by conglomerates and the former military
Eric Rose, an attorney with Herzfeld and Rubin P.C. who advises
clients on the country, estimates that 70% of the economy is
connected to businesspeople on the U.S. Treasury Department's
"specially-designated nationals"—a blacklist of cronies linked
to the former military government—or is directly controlled by
the military itself, leaving little room for small businesses.
The IFC may increase the loan to Yoma to $30 million in the next
few years, and is planning similar partnerships with other local
banks, said Vikram Kumar, the IFC's representative in Myanmar,
who announced the partnership on the sidelines of the Myanmar
Global Investment Forum in Naypyitaw.
The IFC aims to boost development by engaging the private sector
and helps finance private entities. It entered Myanmar last
year, when the World Bank Group cancelled debt owed to it by the
Five to 10 banking licenses will be handed out to foreign
lenders in coming weeks, according to Set Aung, deputy governor
of Myanmar's central bank. This has pushed the country's
domestic banks to become more competitive and re-position
themselves to support local businesses, experts say.
Mr. Set Aung said previously that local banks, fearing that they
won't be able to survive the competition, have lobbied for
increased restrictions on the entry of foreign banks.
The partnership announced Friday, though, shows that "if you are
up to international standards, the sky is the limit."
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