Myanmar’s SMEs wary of ASEAN trade bloc

Myanmar factorySmall and medium enterprises (SMEs) in Myanmar are uneasy as 2015 approaches, when the implementation of the ASEAN Economic Community (AEC) is expected to drop barriers to trade in Southeast Asia.

The government and private sector have collaborated on a recently released draft law that would stipulate what constitutes SMEs, part of hurried efforts to ready Myanmar’s stunted economy ahead of the country’s ASEAN chairmanship next year, a role in which it will be expected to lead preparations for the 2015 AEC launch.

Myanmar’s SMEs are largely inexperienced in working outside the country because transactions with foreign companies and customers have traditionally been subcontracted to go-between firms.

“Every small and medium enterprise is afraid of the free trade agreement. They are concerned that they are not in a position to compete,” said Khine Khine Nwe, joint secretary general of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI).

Htun Naing Aung, chairman of Kaung Kyaw Say Engineering Co Ltd and a central executive committee member of the Myanmar Industrial Association, said the underdeveloped state of Myanmar’s SMEs, which are just now considering their global prospects after years of Western economic sanctions, could have far-reaching negative impacts. High domestic interest rates are central to the challenges.

The interest rate set by Myanmar’s Central Bank is 8.5 per cent, while the average short-term loan rate internationally is just 1 per cent, according to the Myanmar Industrial Association.

A spokesperson for the Central Bank defended the benchmark rate, saying the bank had already reduced business loan interest rates from 12 per cent in 2011. She said the high rate was in part set to encourage people to deposit money in interest-earning savings accounts that could then be used to issue more loans.



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Small and medium enterprises (SMEs) in Myanmar are uneasy as 2015 approaches, when the implementation of the ASEAN Economic Community (AEC) is expected to drop barriers to trade in Southeast Asia. The government and private sector have collaborated on a recently released draft law that would stipulate what constitutes SMEs, part of hurried efforts to ready Myanmar’s stunted economy ahead of the country’s ASEAN chairmanship next year, a role in which it will be expected to lead preparations for the 2015 AEC launch. Myanmar's SMEs are largely inexperienced in working outside the country because transactions with foreign companies and customers...

Myanmar factorySmall and medium enterprises (SMEs) in Myanmar are uneasy as 2015 approaches, when the implementation of the ASEAN Economic Community (AEC) is expected to drop barriers to trade in Southeast Asia.

The government and private sector have collaborated on a recently released draft law that would stipulate what constitutes SMEs, part of hurried efforts to ready Myanmar’s stunted economy ahead of the country’s ASEAN chairmanship next year, a role in which it will be expected to lead preparations for the 2015 AEC launch.

Myanmar’s SMEs are largely inexperienced in working outside the country because transactions with foreign companies and customers have traditionally been subcontracted to go-between firms.

“Every small and medium enterprise is afraid of the free trade agreement. They are concerned that they are not in a position to compete,” said Khine Khine Nwe, joint secretary general of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI).

Htun Naing Aung, chairman of Kaung Kyaw Say Engineering Co Ltd and a central executive committee member of the Myanmar Industrial Association, said the underdeveloped state of Myanmar’s SMEs, which are just now considering their global prospects after years of Western economic sanctions, could have far-reaching negative impacts. High domestic interest rates are central to the challenges.

The interest rate set by Myanmar’s Central Bank is 8.5 per cent, while the average short-term loan rate internationally is just 1 per cent, according to the Myanmar Industrial Association.

A spokesperson for the Central Bank defended the benchmark rate, saying the bank had already reduced business loan interest rates from 12 per cent in 2011. She said the high rate was in part set to encourage people to deposit money in interest-earning savings accounts that could then be used to issue more loans.



Support ASEAN news

Investvine has been a consistent voice in ASEAN news for more than a decade. From breaking news to exclusive interviews with key ASEAN leaders, we have brought you factual and engaging reports – the stories that matter, free of charge.

Like many news organisations, we are striving to survive in an age of reduced advertising and biased journalism. Our mission is to rise above today’s challenges and chart tomorrow’s world with clear, dependable reporting.

Support us now with a donation of your choosing. Your contribution will help us shine a light on important ASEAN stories, reach more people and lift the manifold voices of this dynamic, influential region.

$
Personal Info

Donation Total: $10.00

 

 

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