by Min Tint
THE union government plans to launch a Credit Guarantee Insurance (CGI) System to allow small and medium enterprises to get loans from banks without giving collateral.
The CGI system, which was implemented two years ago, will reimburse banks when borrowers cannot pay back loans, said Deputy Minister for Finance and Revenue U Maung Maung Thein at a press conference on 5 December in Yangon.
“Although the system was implemented two years ago, it has yet to become popular among the banks,” said the deputy minister.
Although most banks have not shown interest, the CGI system has drawn attention from small and medium enterprises, he added.
The system is jointly implemented by the Industrial Supervision and Inspection Department under the Ministry of Industry and the Small and Medium Enterprises Development Department and Myanmar Insurance under the Ministry of Finance and Revenue.
Small and medium businesses have obtained loans against immoveable properties from the Small and Medium Industrial Development Bank.
Small businesses with no immoveable properties have reported experiencing difficulties getting loans from banks.
Under the CGI system, the government will provide full protection to banks that give loans to small and medium businesses without immoveable properties.
To develop small and medium businesses in the country, the government has set a budget of K5 billion in December, 2012, and K5 billion in July, 2013, giving loans to 62 businesses through the SMIDB.
In March last year, the government allocated a budget of K20 billion, and so far, 355 businesses across the country have been received more than K10 billion in loans.