Based on a Memorandum of Understanding (MoU) between the Myanmar (Burma) government and Kasikorn Bank, the bank will train businesspeople on a variety of industry practices and help them to get access to small business loans. The program, which will eventually include several large cities, is being launched in Mon State’s Mawlamyine and Tanintharyi Region’s Myeik, according to the SME Development Department’s Deputy Director, Daw Aye Aye Win.

 “Myanmar and Thailand are neighbors, and border trade between our two countries is really key, so we’re first implementing the MoU in two border cities, Mawlamyine and Myeik. We’re going to begin working with SMEs in Mawlamyine this coming May,” she said.

At a signing ceremony held on March 30 at the Emerald Palace Hotel in Myanmar’s capital Nay Pyi Taw, Daw Aye Aye Win told reporters that SMEs need support to help them become competitive in international markets. She said that the K Bank training would teach businesses about business structure, accounting techniques, taxes, marketing, human resources, finance, and how to establish credit.

“The SMEs in this country have few assets and generally have trouble offering collateral when pursuing loans. In many cases they also do not systematically document their business plans, which also makes it hard to access credit. So our aim in signing this MoU is to build the SMEs’ capacity,” said the Deputy Director.

She added that SMEs need the opportunity to build the economic foundations for their success, which will allow them to promote themselves and improve their production techniques and the quality of their products.

Nai Hu, a salt producer and an executive at a salt-producers trade group, appreciates the need for the program.

“Without access to credit we cannot effectively manage our prices. As it stands, we are forced to take whatever price a buyer offers because we need the cash. If we had better access to loans we would be able to sell when the price is good, which would benefit us and the bank,” he said.

The Ministry of Industry already subsidizes loans to SMEs through the Small and Medium Industrial Development Bank. But Nai Hu, says he does not use that bank’s services because of onerous documentation that it requires. To apply, he would have to show his company’s registration documents from a variety of government entities, his tax receipts for the last three years and a deed for his business.

“Under the previous U Thein Sein government we were told that, if we had all the appropriate documents, we could borrow at any bank that has a relationship with the government. But when we tried, they never lent us money,” he said.

So even as the leader of the salt industry group, Nai Hu did not apply for loans from the SMID bank, and he says that few other Mon State salt producers did either. Nonetheless, he says that a salt business generally needs 200-500 lakhs ($14,700-$36,800) of credit every year to operate. Salt production is a major industry in Mon State, with more than 70 companies and over 3,000 acres producing 31,536 metric tons of salt last year, accounting for 20% of Myanmar’s salt production.

Myanmar’s SMEs are regulated under the 2015 Small and Medium Enterprise Development Law which classifies them by investment capital, workforce and cash flow. However compliance with the law is far from universal.

“SMEs in Mon State generally do not comply with the SME law, so we need to work to get them compliant,” said Dr. Aung Naing Oo, Deputy Speaker of the Mon State Hluttaw (parliament).

The business environment in Mon State is characterized by a large number of small and medium businesses, with most people employed in agriculture, rubber and salt production, and fisheries. Many of the state’s businesses are also oriented towards Thailand, just across the border.