IFC to Help Myanmar Develop a Secured-Transactions Framework

IFC, a member of the World Bank Group, is helping Myanmar’s government to develop a secured-transactions framework that will allow businesses, especially micro, small, and medium enterprises (MSMEs), to access finance by offering movable assets as collateral, IFC said in a statement on 5 November.

This will unlock significant financing for MSMEs, for whom lack of access to finance is a key obstacle to doing business, preventing them from growing, creating jobs, and contributing more to Myanmar’s economy.

Today, access to formal financial services in Myanmar is among the lowest in the world, standing at only 20 percent. According to a World Bank Group survey of 1,000 Myanmar companies, around 92 percent of businesses relied on their own funds for business operations. Businesses in Myanmar can currently raise funds basically only by pledging immovable assets such as land and buildings as security.

“Financial-infrastructure reform is an indispensable aspect of financial inclusion in Myanmar,” said Than Than Swe, Director General of the Central Bank of Myanmar. “Access to finance is very difficult if MSMEs can borrow based only on immovable assets. Myanmar needs a modern system to allow business borrowers to use movable assets such as accounts receivables, inventories, equipment, title documents, and intellectual property as collateral.”

About 80 bankers, donor representatives, and government officials from several ministries concerned—such as the Ministry of Planning and Finance, the Ministry of Industry, and the Union Attorney General’s Office—attended a symposium on secured-transactions reform in Nay Pyi Taw earlier this week. Organized by the Central Bank of Myanmar and IFC, the event is one of a series of activities to promote knowledge and debate on secured-transactions reform in Myanmar.

“A secured-transactions system is critical financial infrastructure for any economy. For Myanmar, this will be the foundation to enable more financing for SMEs, farmers, traders, and infrastructure operators,” said Vikram Kumar, IFC Country Manager in Myanmar. “We are pleased to support the Central Bank of Myanmar and other stakeholders to build up a modern secured-transactions system, leveraging our deep technical knowledge and rich experience from supporting around 50 countries in this field.”

IFC has promoted the concept of movable-assets finance in Myanmar for several years. An ongoing advisory project, funded by the United Kingdom’s Department for International Development, will support preparation and approval of a secured-transactions law, creation of an Internet-based central collateral registry, and initial capacity-building of lenders in structuring and monitoring movable-asset loans.

 

Source: The Mizzima

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