Thurein Lynn, EMPA-Roll No.67, 17Bt., (28-10-22)

YANGON UNIVERSITY OF ECONOMICS
DEPARTMENT OF APPLIED ECONOMICS

MASTER OF PUBLIC ADMINISTRATION PROGRAMME
CUSTOMER PERCEPTION ON SME LOAN PRODUCTS

IN MYANMAR BANKING SECTOR
THUREIN LYNN
EMPA - 67 (17th BATCH)
OCTOBER, 2022
CUSTOMER PERCEPTION ON SME LOAN PRODUCTS

IN MYANMAR BANKING SECTOR
This thesis submitted in partial fulfillment towards the requirements for the
Master of Public Administration (EMPA) Degree
Supervised by Submitted by
U Khun Maung Gyi Thurein Lynn

Associate Professor Roll No. 67
Yangon University of Economics EMPA 17th Batch
October, 2022
This is to certify that this thesis entitled, “Customer Perception on SME

Loan Products in Myanmar Banking Sector”, submitted as the requirements for the
Degree of Master of Public Administration has been accepted by the Board of
Examiners.
Board of Examiners
--------------------------------
Dr. Khin Thida Nyein
(Chief Examiner)
Pro-Rector
Yangon University of Economics
------------------------------ ------------------------------
Professor Dr. Kyaw Min Htun Dr. Su Su Myat
(External Examiner) (Examiner)
Pro-Rector (Retd) Professor/Head
Yangon University of Economics Department of Applied Economics
Yangon University of Economics
------------------------------ ------------------------------
Daw N Khum Ja Ra U Khun Maung Gyi
(Examiner) (Supervisor)
Associate Professor Associate Professor
Department of Applied Economics Department of Applied Economics
Yangon University of Economics Yangon University of Economics
October, 2022
ABSTRACT
This research study is intended to present the customer perception of SME

loan products in Myanmar banking sector. SMEs can’t succeed without strong and
efficient banks and banking systems which can offer financial assistance to develop
their business. The study's objective is to examine the customer perception on SME
Loan products and to identify the current status of SME loans provided by banks.
Descriptive research method is used to explore the objectives of the study. The type of
survey only applies to business owners and does not include other types of
respondents. According to the survey analysis, the perception of the customer,
information about SME loans is easily accessible, but there is still a need to express
information clearly. Customers' perceptions of the application procedure indicated
that supplying collateral is a significant issue that the many documents that must be
submitted with the application present additional difficulty, and that not obtaining the
requested loan amount is unsatisfying. According to customers' perceptions of the
complete loan process, it takes too long for a customer in need to complete the
evaluation and approval steps required to execute a complete loan. This study found
that the customer's perception of the bank’s customer service is slightly positive.
i
ACKNOWLEDGEMENTS
First of all, I wish to express my heartfelt thanks to the rector and pro-rector of
Yangon University of Economics, including all professors and lecturers, for giving
me an opportunity to complete the EMPA course.
In particular, I would like to show my great appreciation to the rector,
Professor Dr. Tin Tin Htwe, and the pro-rector, Professor Dr. Khin Thida Nyein, for
permitting me to take the course and for the valuable guidelines.
Then I would like to express my special acknowledgement to Professor
Dr. Su Su Myat, Program Director and Head of the Department of Applied
Economics, and all the teachers for sharing their knowledge and experiences.
Additionally, I must express my deep appreciation to my supervisor, Associate
Professor U Khun Mg Gyi.
I am so grateful to learn from those wise guiding stars. Lastly, I'd like to thank
everyone who helped me finish my thesis and apologize that I couldn't name each
person by name. Besides, I am very eager to express my thanks to my classmates and
to those people I forgot to thank.
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TABLE OF CONTENTS
Page
ABSTRACT i
ACKNOWLEDGEMENTS ii
TABLE OF CONTENTS iii
LIST OF TABLES v
LIST OF FIGURES vi
LIST OF ABBREVIATIONS
CHAPTER I INTRODUCTION
1.1 Rationale of the Study 2
1.2 Objectives of the Study 3
1.3 Method of the Study 3
1.5 Scope and Limitation of the Study 3
1.6 Organization of the Study 3
CHAPTER II LITERATURE REVIEW

2.1 Concepts and Definition of Small and Medium Enterprises 4
(SME)
2.2 SMEs and Economic Growth 9
2.3 Customer Perception 12
2.4 Review on Previous Study 14
CHAPTER III BACKGROUND INFORMATION OF SME LOANS

PRODUCTS
3.1 Banking Sector for SME in Myanmar 15
3.2 SME Grant in Myanmar 16
3.3 SME Loans in Myanmar 18
CHAPTER IV SURVEY ANALYSIS

4.1 Research Design 22
4.2 Profile of Respondents 22
4.3 Responses on Awareness of Loan 27
4.4 Customer Perception 29
iii
CHAPTER V CONCLUSION
5.1 Findings and Discussion 35
5.2 Suggestions 37
5.3 Needs for Further Research 38
REFERENCES
APPENDIX
iv
LIST OF TABLES
Table No. Title Page

2.1 Definition of Micro, Small, and Medium Enterprise by IFC 5
2.2 Definition of SMEs before 9 April 2015 5
2.3 Definition of SMEs after 9 April 2015 7
2.4 SME Member in SME Center 9
3.1 Financial Grant from Responsible Business Fund (RBF) 17
Project (by Sector)
3.2 Myanmar Insurance Premium Fee (Payable to Myanmar Insurance) 19
3.3 Criteria for JICA Two-step Loan Project 20
3.4 Types and Amount of Loans 21
4.1 Respondents by Gender 23
4.2 Respondents by Age 23
4.3 Respondents by Education Level 24
4.4 Respondents by Type of Business 24
4.5 Respondents by Business Experience 25
4.6 Respondents on Recourse of Loan 26
4.7 Respondents on Awareness of SME Loan 27
4.8 Respondents by Taking Loan from Banks for Business 28
4.9 Respondents on Awareness of SME Center 29
4.10 Customer Perception on Information Availability 30
4.11 Customer Perception on Applying Process 31
4.12 Customers Perception on Complete Loan Process 32
4.13 Customers Perception on Customer Service of the Bank's 33
Employees
4.14 Summary of Customers Perception on SME Loan 33
v
LIST OF FIGURES
Figure No. Title Page

4.1 Respondents on Awareness of Loan 26
4.2 Respondents on Awareness of SME Loan 27
4.3 Respondents by Taking Loan from Banks for Business 28
4.4 Respondents on Awareness of SME Center 29
4.5 Summary of Customers Perception on SME Loan 34
vi
LIST OF ABBREVIATIONS
CGI Credit Guarantee Insurance

JICA Japan International Cooperation Agency
MEB Myanmar Economic Bank
PFIs Participating Financial Institutions
SMEs Small and Medium Enterprise
SMIDB Small and Medium Industrial Development Bank
vii
viii
CHAPTER I
INTRODUCTION
Among all the economic sectors, the financial services sector plays a pivotal
role in economic development in any country. The least developed nation has reached
an advanced stage of development without a relatively large, sufficiently successful
and reasonably sound financial sector. Not so much progress and development has
been made in the financial sector of Myanmar, which still remains the least developed
of all countries in Southeast Asia and is well behind international standards. The new
private banks and foreign banks, foreign representative offices of more foreign banks
are allowed to open, the stock market has been liberalized, and the insurance market
has also been liberalized. The body of the financial sector gets into shape, so that
requires advancing the ongoing banking system.
For various reasons, Myanmar's banking sector is still left behind by other ASEAN
nations. The one reason which hampers banking development is underdeveloped
technology and internetworking systems that are weaker than in other Asian countries.
Moreover, the restricted rules imposed on banks by the Central Bank’s regulations
serve as a barrier for the development of SME loans. Myanmar's economy is expected
to rise again with the new investment law. But there are some major issues hindering
this transformation, especially in the financial sector. The SME sector plays a key
feature in Myanmar's economic development. The Myanmar economy can be
engineered by the strength of small and medium enterprises. There is no doubt that
development cannot be shaped without a reliable financial source. The absence of
good financial sources for SMEs is a major issue for enhancing national exports. The
Myanmar SME sector is moving with a minuscule link to the banking sector, which
also has difficulty offering financial support to that sector.
There are many issues that impact the development of SME regarding weak
policies' implementation; lack of systematic support, and the strict rule of collateral.
Small and medium businesses require improvement if Myanmar wants to embrace
economic prosperity. Small and medium-sized businesses rely on SME products,
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which are still underdeveloped and should be more easily accessible to people looking
to expand and develop their businesses. SMEs play a vital role in trade promotion and
export, which are important factors of economic development. Therefore, had they
been able to enhance their products for export, it would be more advantageous for
both SMEs themselves and the nation.
SME have helped to create the middle income class in ASEAN countries.
Poverty has been alleviated by creating jobs and consistent economic growth.
Successful SMEs can be seen in countries like Thailand and Vietnam. Myanmar is
required to look into the success of SMEs and how they have achieved it. There are
many issues Myanmar needs to resolve to drive economic growth from SME sectors.
In particular, the gap in SME loans could be filled by the role of the banking sector,
and it can help to build a strong and efficient SME sector.
Successive governments, however, who want to promote Myanmar's
economy, encourage banks and other financial institutions to develop SME products
and try to attract some overseas financial institutions that can support Myanmar's
SME sector with financial and technical advice. Though there are some major positive
changes in the SME sector, there are still huge challenges to be overcome.
1.1 Rationale of the Study

The power of the nation's economy is embodied in the improvement of the
banking sector. SMEs can’t thrive without strong and efficient banks and banking
systems that can offer financial assistance to develop their businesses. It highlights the
importance of financial assistance, which is crucial for achieving substantial
development. But as for the banks, the loans they offer to SMEs are limited and
highly restricted. Most of the time, the loan goes to the rich business rather than the
SMEs in need of capital. But as for the small and medium-sized business people, their
businesses remain the same as they are not able to seek any financial help from the
banks. Though there are some banks delivering financial help to SMEs, some of the
customers who lack that information will be a problem for SMEs loans.
From the banking side as well, there is still some concern about SME loans.
One bitter event with SME loans by the banks was when they faced a huge amount of
unsuccessful loans due to unethical customers. The collateral rule is another restricted
rule that makes it difficult for these small and medium-sized businesses to grow. The
business owners have to show the immoveable property as collateral to the banks if
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they wish to take a loan. This creates a huge problem for those who, despite having an
innovative idea and potential for business success, lack financial support. This is a
major issue for them. There may be many challenges in the process of getting an SME
loan. The study aims to find out consumers' feedback and perspective on banking
loan products.
1.2 Objective of the Study

The objective of the study is to examine customer perceptions on SME loan
products and to identify the current status of SME loans provided by banks.
1.3 Method of the Study

This thesis uses both quantitative and qualitative research methods. This study
is descriptive. The type of information required for this research is mainly primary
and the data was collected from primary sources (personal) interviews by mail and
telephone. The survey forms were distributed to 200 SMEs in YANGON. This
research also used secondary data in order to support the findings.
1.4 Scope and Limitation of the Study

This study was able to survey only in Yangon, even though it was unable to
survey the entire country of Myanmar, and also Myanmar's SME business owners
were selected for the survey. The study observed SME loan products from banks like
SMID, CGI, JICA (TSL), MEB, and KFW that can be officially availed. The study
examined the perception of SME loan products in the Myanmar banking sector. This
perception was highlighted on four dimensions; information availability, application
process, complete loan process, and customer service of the bank's employees.
1.5 Organization of the Study

This study is combined with five chapters. The first chapter is an introductory
chapter, which includes the rationale of the study, objectives of the study, scope and
method of the study, and organization of the study. The Literature describes the
theoretical background of SMEs and customer perception. The third chapter provides
background information of SME loan products in Myanmar's banking sector. The
fourth chapter is survey analysis and the final chapter is the conclusion of the paper.
The chapter five consists of finding and discussion, suggestions and the need for
further research.
3
CHAPTER II
LITERATURE REVIEW
Although Myanmar's banking sector has begun to grow, many important

things remain to do and the SME loan development of banking sectors have been
facing several challenges in many areas compared with ASEAN countries. Banks
support to SME sector is being scarce, and as a result the productivity of SMEs are
being limited. When someone have to encounter the finical affairs, interaction with
banks is modest and they do not rely much on the banks.
2.1 Concepts and Definition of Small and Medium Enterprises (SME)

The geographical locations determined and influenced a creation of a
definition to the SME. As SME are defined differently according to the laws of each
country, specially that it is hard to define what is the micro, small and medium as it
differs from a country to another (Smit & Watkins, 2012).
Definition of SMEs may vary across the world and it may be different on the
geographical of the country and its needs. There are many criteria to define SMEs
such as the number of employees and firm size “small”, “medium”, and “large”.
International Finance Corporation (IFC) and Multilateral Investment Guarantee
Agency (MIGA) defined SMEs as “and enterprise qualifies as a micro, small or
medium enterprise (MSME) if it meets two out of three criteria of the IFC MSME
definition (employees, assets and sales), or if the loan to it falls within the relevant
MSME loan size proxy” as shown in table.
4
Table (2.1) Definition of Micro, Small, and Medium Enterprise By IFC
MSME Loan
IFC MSME Definition
Size Proxy
Indicator
Employees Total Assets Annual Sales Loan size at
(no.) ($) ($) origination
Microenterprise < 10 < 100,000 $100,100 <10,000
Small enterprise 10~49 100,000 ~< $100,000~< <100,000

3,000,000 3,000,000
Medium 50~300 3,000,000~15,0 3,000,000~ <1,000,000 or

enterprise 0S0,000 15,000,000 2,000,000
Source: Data from International Finance Corporation (World Bank Group)
2.1.1 Definition of Small and Medium Enterprises (SME) in Myanmar

The following table provides the official definition of SMEs in Myanmar since
1990, which mostly focuses on the industrial sector. To categorize the various sizes of
Myanmar private enterprises, four criteria are used: the number of employees, capital
investment, production output, and electrical usage. For businesses in the trade and
service sectors as well as cottage and handicraft industries, there is no differentiation
in size. According to the Private Industrial Enterprise Law of 1990's definition of
SMEs, SMEs in Myanmar can be characterized as follows:
Table (2.2) Definition of SMEs before 9 April 2015

No. Category Small Medium
1 Power used (Horse Power) Over 5 H.P 25 to 50 H.P
2 No. of workers 10 to 50 51 to 100
3 Capital investment (Kyat million) Up to 1 Over 1 to 5
4 Production value per year (million) Up to 2.5 Over 2.5 to 5
Source: Data from Ministry of Industry (2020)
5
According to Pour 2006, SME is in proportion to the number of employees
and the value of total fixed asset without the value of land. In 1990, the first SME law
was emerged in Myanmar but the law was just focused in industry sector neglecting
other sector. At that time, all business whether SME or not, were measured by four
criteria number of employees, capital investment, production volume and the use of
and the law excluded enterprise like the trade, service sector and handicraft industries.
The numbers of SME at that time were extremely low, and starting from 2007,
the industry sector has been developed. That was the previous situation of Myanmar
SME sector in 2008 and although SME business is mostly defined by the number of
employee and capital, it is divided by three categories based on the business sector:
manufacturing, service and trade (Pour, 2006). The distinction can be seen clearly
between 1990 law of SME in Myanmar and what Pour defined, additionally SME is
defined in many different ways, according to World Bank, it is said that business
which have no more than 500 employees are included in SME sector, UNIDO states
that a small enterprise has between five and fourteen workers. Thus, the definitions
have some common features like numbers of employees and capital. Table (2.3) is
definition of SMEs after 9 April 2015.
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Table (2.3) Definition of SMEs after 9 April 2015
Sector Item Small Medium

Capital (C) Up to MK500 million MK500
Manufacturing million˂C≤MK1,00
0 million
Employee Up to 50 51-300
Revenue per Year
Labor intensive million˂C≤MK1,00
manufacturing 0 million
Revenue per Year
Wholesale million˂C≤MK300
business million
Revenue per Year Up to 100 million MK100million˂C≤
MK300 million
Retail business million˂C≤MK100
million
MK100 million
Services million˂C≤MK200
MK200 million
Capital (C) Up to MK50 million MK500million˂C≤
Other sectors MK100 million
MK100 million
Source: Data from SME Development Agency, Ministry of Industry (2021)
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Before 1990 law was passed, Myanmar government encouraged the private
sector to invest in trading, manufacturing and services, even though SME law was not
specifically developed, some of the laws have been passed to implement market-
oriented economy, after that with the intention of encouraging large, medium and
small scale private industries, the private industrial enterprise law was enacted. Yet, in
pursuit of increasing commodity production and to attract more investment in private
sector, Myanmar citizen investment law was enacted, and then Myanmar invited the
investment from aboard and sought foreign investors to gain mutual benefit for the
sake of that purpose,
Although the union of foreign investment Myanmar foreign law was passed, it
can be seen that there was no particular law to elevate SME sector but a series of law
was enacted to develop Myanmar economy, because it was also due to the fact that
leaders then did not recognize the important of SME and no support was made to that
crucial sector. When the first civilian government was elected in 2010, chances were
made to return that sector and many of foreign organizations came and offered aid.
SME is currently considered as an important element not only for country economy,
but also for political development and creating jobs.
In fact Myanmar had been one of the developed industrious nations in the
world before 1962, and it was the glamorous years for Myanmar when business
booming with a good foundation to become a 'trigger cub of Asia'. But all these
potential were smashed by the political changes.
Nevertheless, there was huge support from the government at that time,
though not in the form of SMEs, but supported with industrial bans and supply of raw
materials to attract investments in private sector.
Investment and Cooperation Department, Directorate of Industrial Supervision
and Inspection under Ministry of Industry has been issued SME Member Cards since
2016 with the aim of collecting information to develop policies and procedures and
plans for promoting MSMEs in Myanmar. In 2019, Online Registration and e-
Payment System Web portal (www.msmewebportal.gov.mm) was implemented and
SMEs in Myanmar can register as SME Member and the Number of recognized SME
Members are as follows.
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Table (2.4) SME Member in SME Center
State/ Region/ Union No. of
No. Small Medium
Territory Enterprise
1 Kachin 764 64 828
2 Kayah 285 75 360
3 Kayin 500 54 554
4 Chin 1876 17 1893
5 Sagaing 2351 411 2762
6 Tanintharyi 1433 76 1509
7 Bago 2778 512 3290
8 Magway 2889 262 3151
9 Mandalay 5478 1303 6781
10 Mon 1085 195 1280
11 Rakhine 913 61 974
12 Yangon 4330 3229 7559
13 Shan 3312 829 4141
14 Ayeyarwady 3059 1208 4267
15 Union Territory
1114 303 1417
Naypyitaw
Total 32167 8599 40766
2.2 SMEs and Economic Growth

Small and Medium Enterprises (SMEs) play a major role in most economies,
particularly in developing countries. SMEs account for the majority of businesses
worldwide and are important contributors to job creation and global economic
development. They represent about 90% of businesses and more than 50% of
employment worldwide. Formal SMEs contribute up to 40% of national income
(GDP) in emerging economies. These numbers are significantly higher when informal
SMEs are included. (World Bank, 2018)
In developed and industrialized nations as well as developing nations, SMEs
continue to be significant. It has been tried to formulate certain policies that enable
the formation and rivalry of small firms making changes in production, selling, and
management in developed countries since the policies seeking to promote
9
employment of small enterprises have been postponed in these 21st-century years.
(Sarıaslan, 1994) SMEs and economic expansion have a powerful connection.
2.2.1 Role of SME in Industrial Development in Myanmar

Myanmar industrial sector have many opportunities as well as barriers in
terms of finance, technology and human recourses. But it has overcome a dark period
and preparing to make a leap into future market potential. Myanmar industrial sector
was not developed due to the lack of proper human resources and technology with the
prior reform process, Myanmar has opened a new door of opportunity to make
improvement in industrial development. Moreover, industrial development is a must
to be carried out and it can bring employment and improve well-being of Myanmar
people. The main obstacle our Myanmar industrial development had been the
strict rules imposed on in private sector and most of the giant and profit making
industry were under the support and management of Ministry of Industry.
Most of the products manufactured in industry were mostly agricultural
products, timber, some machinery for agricultural sector, food and beverage and
marine products, moreover, some-value added goods like garment, furniture,
processed sea foods and vegetable, scans and household appliances were produced.
But as it didn't have competitive advantages to their counterparts due to poor quality,
it could only penetrate the Myanmar market, and neither modern tech-industry
couldn't be founded nor for way to make high-tech products, by reason of not having a
strong finance support and technology support as a main barrier.
Although, government has putting effort to develop industrial sector by
building a good infrastructure, at present some of the project are still in its paper
work, and as a first big step to, foreign investment law has been enacted and
persuaded foreign direct investment and joint venture. One of the prominent
industrial zones is Thilawa in which most of the Japanese companies in jointing with
Myanmar business men, have invested in the zone, founding some of the industries
and this is a very good sign for Myanmar industrial development. In addition, there
are several other industrial zones in which many if the exist, most of its production
range on garment, food and beverage, home appliances and so on. Therefore, these
zones have to be developed furthermore and will be huge support for national
economy. Nonetheless all these targets couldn't be achieved without the SME
banking loan support will be a huge aid for them.
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2.2.2 The Importance of SME in Economic Development
SME must be situated throughout Myanmar as it can bring jobs opportunities
so that can reduce internal migration preventing urbanization. (The Mirror Daily
newspaper) Most of Myanmar citizens are residing in rural areas and it is important
that these places have good resources like education, business situation, safety and
other opportunities. If residents have good job opportunities at their neighborhood,
there will be not only no further urbanization but also enjoying their own
opportunities at their habitation and hence SEM sector has to develop to create that
situation.
As SME are the engine driver of Myanmar economy and to have a
sustainable development in these sectors, it is a most to update SME development
policies law and rules and regulations. Our country needs to emphasize to downsize
the barriers, good capital flow, educating and encouraging enterprise and information
sharing and networking. Moreover, it also needs to involve in international supply
chain.
In Myanmar economy, SME account for nearly ninety percent of business in
the country, and it is also high in SME employment reaching up to 70% workforce
which is playing a crucial role in developing Socio-economic development of
Myanmar. To develop SME sector, government should help not only to drive it but
also need consistent support from textural in term of finance and technology. Earlier,
there were few government institutions like Myanmar Economic Bank (MEB),
Myanmar Investment Commercial Bank (MIBC) and Myanmar Industrial
Development Bank (MIDB) which provide loans to some of the SME and the rules
were usually restricted and not any individual is eligible to apply loan.
Starting from 2008, the numbers of micro finance organization came in; they
mainly target small business like venders, shop keepers and some other form of small
business. Those who membership in those organizations has privilege to get a loan
from them which somehow support their business. Currently, there are also big
organizations like JICA, IFC, and ADB which are supporting SME loans to SME
business with the cooperation of Banks. These are key steps in making SME business
sector develop.
Many of the sectors can be improved if SME business sector is developed, and
its effect is enormous. Not just in terms of economy, but also social and environment
as well, therefore the industry sector most of all, need to be developed. The
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production of goods, from raw materials to value-added goods, to have an efficient
production and perform well in competitive world, needs financial support especially
to SME sector. There are many businesses which are not able to produce value-added
goods due to scarcity of finance, and if these type of business ventures are supported,
they can expand their market not just Myanmar but oversea as well and these
businesses will create more job opportunities and improvement in the life of them.
Myanmar, compared to other ASEAN nations development, is desperately low
in industry, and is an agricultures nation on which its economy is greatly depended,
therefore these two sectors need to grow and Myanmar should go partly to
improvement in both sectors, those who are in need of finance help. If these sectors
are going to improve, the nation economy will go upward, thus if mainly depend upon
how government is trying as they much as they can improve financial law and
institutions. Lately credit guarantee scheme is set up and committees and law are
formed. Among these things, implementation part is very important and need to carry
it out successfully. Moreover, the system all the rules and regulation have to be in
consistent and efficient to be able to flourish SME sector.
2.3 Customer Perception

Customer perception is the opinions, feelings, and beliefs customers have
about your brand. It plays an important role in building customer loyalty and retention
as well as brand reputation and awareness (Stella Inabo,2022)
Customer perception is a “Process during which an individual acquires
knowledge about the environment and interprets the information according to his/her
needs, requirements and attitudes.” – as defined by F.G. Crane and T.K. Klarke
(1994), G.D. Harrell, G.L. Frazier (1998).
According to Walters et al. (1989), who further clarify on the concept, every
perception entails a person who interprets a thing, event, or relation through their
senses. This item, event, or relation may be referred to as the percept. Van der Walt
(1991) adds that perception takes place when sensory receptors receive inputs through
the brain, encode and categorize them, and give specific meanings to them given on
the individual's frame of reference. A person's frame of reference comprises of all of
his previously held experiences, beliefs, likes, dislikes, inclinations, feelings, and
other psychological reactions of undetermined origin.
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2.3.1 Brand Awareness
The term brand has been defined by many scholars and in a lot of different
ways. Kapferer (2004) even states that every “expert comes up with his or her own
definition, or nuance to the definition.” (Kapferer J, 2004, p. 9). This paper will use
the definition of Riley & Chernatony, (1998) according to whom a brand is a sum of
all its components.
According to MacDonald & Sharp, (2000), brand awareness is the key to a
brand’s success since given the choice of many brands, a consumer is more likely to
choose the brand he/she has the most awareness of, often ignoring the price points and
characteristics of other options available. However, it is worth noting that brand
awareness has different definitions according to different authors. Percy & Rossister,
(1987) definition would be used, according to them, brand awareness is not related
only to whether or not the consumer can recognize the name of a brand, but also the
strength of the details that a consumer remembers about a brand even after firstly
becoming acquainted with (Percy & Rossister, 1987). Much in the same manner,
Aaker, (1996), says “Awareness refers to the strength of a brand’s presence in the
consumer’s mind” (Aaker, 1996, p. 10). According to Keller, (2001), building brand
awareness ensures that the customer knows which category of products the brand
competes in, which consequently helps build more brand equity. In order for the
brand awareness to be explained better, the author has introduced the Customer-based
Brand Equity Model (Keller, 2001). The model has 6 blocks that correspond to
different information about the brand (Keller, 2001). Salience refers to the general
place of the brand in consumers’ minds, Imagery refers to the image the brand has
built for itself, Performance is concerned with the actual use of the product, Feelings
refers to the emotional response the brand evokes in the consumer, Judgments focus
on the personal evaluations of the consumers regarding the brand, and finally
Resonance focuses on the relationships the brand has with the consumers (Keller,
2001). In addition, Romaniuk, Sharp, & Paech, (2004), stress the fact that consumers
use their own memories of a brand when choosing a product even when all the option
are readily available in front of them. According to (Aaker, 1996) as well, familiarity
makes a consumer trust and prefer a brand even if they had not have any previous
experience of their own with it.
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2.4 Review on Previous Studies
Thein Zaw Tun (2019), MBF Thesis in Myanmar, “Customer Perception on
retail loans of UAB bank” The study found that all service providers must know how
and to what extent their customers will be satisfied with the goods or services they are
offering or providing by monitoring customer perceptions of the quality of the
services and products. The researcher learnt Thin Thin Khaing (2018), MBF Thesis in
Myanmar, Challenges of JICA Two-step loan Practices for SMEs. According to the
survey, the major challenges for JICA SME TSL financing requirements is real estate
collateral and major challenges for cost of funding is movable fees under insurance
fees.
Eaindar Oo (2019), MBF Thesis in Myanmar, Customer attitude towards SME
banking service of KANBAWZA Bank” found that bank should open One Stop SME
Banking Centre not only in downtown area of Yangon but also in outermost area of
Yangon, therefore all bank need to open SME banking center all outermost area of
cities.
Nataliia Kravchenko (2011), Master of Arts Colorado State University Fort
Collins, Colorado, “Determinants of small business lending” the study found that the
importance of economic regional factors when dealing with SME lending. Through
understanding the influence of these factors on small business lending, economists
can develop effective practices that will support SME growth. In turn, this will
encourage regional economic development and middle class society.
14
CHAPTER III
BACKGROUND INFORMATION OF SME LOANS PRODUCTS
3.1 Banking Sector for SME in Myanmar

The economy of Myanmar is making a series of progress in different sectors in
the areas of construction, manufacturing, and service sectors. In some of these areas,
major foreign capital investment can be seen. But the roles of small and medium
enterprises play an important role in Myanmar's cultural economy.
A bank's role as a major player in the financier market contributes
significantly to the implementation of a successful SME sector. With the amendment
of the bank and financial institutions law, there are a series of reforms taking place in
Myanmar's banking sector. The former aims to strengthen the central bank's functions
in monetary and financial stability. The aim is to more transparently regulate and
supervise banks and non-bank financial institutions.
The increasing number of banks is also a sign of good progress for Myanmar.
One of the main banks which plays an important role in financing SMEs in Myanmar
is the Small and Medium Industrial Development Bank (SMIDB) established in
1996.
3.1.1 Policy and Regulation in Myanmar

A number of ministries, including the Ministry of Industry, the Ministry of
Cooperatives, the Ministry of Commerce, the Ministry of Planning and Finance, the
Ministry of Agriculture and Irrigation, and the Ministry of Science and Technology,
are developing policies and paths to support the SME sector in order to develop the
SME sector.
The national level central committee and the working committee were formed
in January 2013. Under the supervision of the president and vice president, these two
committees have formulated national SME development policies and legal
frameworks. These committees issued nine thematic groups, namely business
initiative, access to finance, market penetration, access to information and research,
human resources development, SME related laws and regulations, cluster
development, monitoring and evaluation, and standardizing and implementation. With
being in charge of the working committee as secretor, a new SME law was drafted
15
and a subcommittee was set up purposefully to create major progress in SME policies
through cooperation and collaboration with other line ministries.
The ministry of industry established the central department of SME
development in 2012 to be responsible for SME policies and development. It has
opened its branches, numbering 15 in 14 states and 35 sub-ranches, whose main job is
to gather information on SME and improve coordination among ministries. To further
support the SME sector, the government enacted SME development laws and
established SME development agency and SME development funding. Human
resources, technology development and innovation, financial resources, infrastructure
development, market access, appropriate taxation, and a conducive business
environment are the seven areas targeted for development, according to the law.
The SME agency is responsible for implementing areas to make SME more
accessible, effective, and consistent. The Asian (ASEAN) economic community,
AEC was launched in 2015. This event will help upgrade SME businesses and
enhance access to finance and markets. Moreover, it will give them the opportunity to
expand their SME participation in domestic and global production networks. The
scope of Myanmar SME includes 19 industrial zones, 6 new industrial zones and 3
special economic zones operating in Myanmar.
For the development of SMEs in Myanmar, the Central Committee on SME
Development was organized in 2016, and the Working Committee on SME
Development was organized in 2017. Under the supervision of the Working
Committee, the SME Agency, Evaluation and Reporting body, and Fund Management
body were organized to support MSMEs.
Regional SME Action Plans were developed and implemented in states and regions
by the Central SME Agency in collaboration with regional MSME Agencies,
according to ASEAN Strategic (2016-2025).
In current situation, the Central Committee and Working Committee on SME
development have been organized in 2021, and three supporting bodies shall be
organized soon.
3.2 SME Grant in Myanmar

Grants are a form of financial help that is not repaid, but recipients still need to
adhere to the rules specified by the institution that provided them. For example, hiring
a technical consultant or a technology company.
16
The RBF is a part of the Danish-Myanmar Country Program (2016-2020). RBF
is "Challenge Fund" which aims to "increase the competitiveness and responsible
behavior of Myanmar enterprises" by providing partial grants to SMEs for the
implementation of innovative projects in the following 7 eligible areas: Energy
Efficiency; Water Use Efficiency; Waste Treatment and Recycling; Occupational
Safety & Health (OSH); Food Safety; Managerial & Supervisory Skills; Practical &
Technical Skills. Selected businesses will receive a grant between 60% and 80 % of
the value of their project. The Directorate of Industrial Supervision and Inspection
under the Ministry of Industry has been implementing this project in collaboration and
cooperation with RBF Myanmar.
The RBF Board has approved financial grants to 595 MSME entrepreneurs for
645 projects in seven sectors. Of these, 192 projects have not been implemented in
accordance with the terms of the proposal. As of 2021, financial grants have been
provided for 453 projects as follows:
Table (3.1) Financial Grant from Responsible Business Fund (RBF)

Project (by Sector)
Total Disbursement
Sr. Sector Amount
No; of Project
(MMK Million)
1 Energy Efficiency 106 4,987.248
2 Water use Efficiency 25 1,022.668

3 Waste treatment and Recycling; 136 4,558.517
4 Occupational Safety & Health (OSH) 56 1,278.754
5 Food Safety 99 2,737.575
6 Managerial & Supervisory Skills 9 150.102
7 Practical & Technical Skills 22 125.932
Total 453 14,860.797

17
3.3 SME Loans in Myanmar
3.3.1 SME Loan from SMIDB
Previously known as the Myanmar Industrial Development Bank, the Small
and Medium Enterprise Development Bank (SME-Development Bank) was
established (MID Bank). It was established in 1996 and started operating until 2010 as
a semi-government bank. In 2010, the bank underwent a reorganization to become a
public bank that operates independently. The bank's board of directors, who were
chosen by the bank's shareholders, changed the name of the institution to SMID bank.
Change the name by May 2019, under the requirements agreed to by the Small and
Medium Enterprise Development Bank. By offering financial and non-financial
services to SMEs, the bank aims to serve as a development financial institution that
nurtures and meets the special needs of small and medium-sized businesses (SMEs).
A SME-CFB loan is a type of credit that is primarily focused on the
profitability and cash flow of an enterprise, based on collateral. As part of the SME -
CFB LOAN (Cash Flow-Based Loan) program, the Small and Medium Enterprise
Development Bank (SME Bank) intends to offer loans to the manufacturing,
livestock, and agricultural sectors.
The activities that promote import and export will be given priority among the
above sectors because they help the country ’s economic growth. In order to ensure
that sector growth is transparent and that there is a level 1 and level 2, the loans will
also be distributed at each level as they are not lending year-round. As a result, it's
critical that your SME adhere to the following five criteria:
1. Agriculture Sector (rice, maize); Livestock (fish, shrimp, crab, chicken, dairy
cow); Must be Myanmar nationals between 20- and 60-years old working in
the manufacturing (food, consumer and clothing) sectors.
2. The business field must have two or more years of business experience, and
the loan application must be at least one year in continuous operation.
3. Must have SME membership card.
4. The loan amount required to apply must not exceed 30 million MMK.
5. The purpose of the loan must be detailed.
The interest rate of SME-CFB loan is 12% and bank service fee is 1% for one
year. Loan term is 9 Months to 12 Months.
18
3.3.2 SME-Credit Guarantee Insurance Loan (SME CGI Loan)
One of the SME loans is the CGI loan, which is especially for SME
development provided by Myanmar Insurance and CB Bank, and can apply without
collateral and the maximum loan amount is 20 million MMK. If it needs more than 20
million MMK, it can apply for the required amount with collateral by a business plan
that has been approved by CB Bank. Collateral-free loans of up to a maximum loan
amount of 20 million MMK and the payment period is one year. There are six steps to
apply for an SME CGI loan. Those are: customers must apply for the SME
recommendation letter and SME registration card from the SME Development Center,
SME Development Center issues the SME recommendation letter and SME
registration card to customers, Customers apply for the SME CGI loan at a private
bank. The private bank applies for the Credit Guarantee Insurance (CGI) from
Myanmar Insurance and Myanmar Insurance certifies the loan applications. The
interest rate of the SME CGI Loan is 10% p.a. (payable to CB Bank).
Table (3.2) Myanmar Insurance Premium Fee (Payable to Myanmar Insurance)

Loan Year 1 Year 2 Year 3 and above
With Collateral 2% 1.5% 1%
Without Collateral 3% 2.5% 2%
Source: Ministry of Planning and Finance (2020)
3.3.3 JICA Two Step Loan (TSL)

Most registered businesses in Myanmar are micro, small and medium
enterprises (MSMEs), which make up 99% of the whole sector, and can provide more
employment and income to people as they develop more and more.
Therefore, JICA (ODA) Loan, which is SME Two-Step Loan Project funded
by JICA, is providing loans to MSMEs sector by MEB, Executive Agency (EA).
Although any MSMEs that meet the requirements of the Small and Medium-sized
Enterprises Law (2015) are eligible to apply for the JICA (ODA) SME two-step loan
project, certain sectors must be excluded, such as real estate, finance and insurance,
precious metal dealing, bars and pubs, amusement, entertainment (except for tourism),
weapons, ammunition, any other sectors harmful to social stability (as determined by
the Working Committee), and farmers eligible for borrowing from Myanmar
Agricultural Bank. In the other fact, we have to consider about the criteria of the JICA
two-step loan project as following Table (3.3).
19
Table (3.3) Criteria for JICA Two-step Loan Project
No. Criteria for JICA Two-step Loan Project

1 Loan limit for each sub-loan maximum (500) million MMK
2 Criteria for using loan maximum 80% for fixed capital
3 interest rate From minimum 5.5% to maximum 10%
depends on the collateral
4 loan term from 1 year to 5 years
Source: Private Banks (2020)
The loan can be applied for in those banks during Phase 1.They are SME-
Development Bank (SMEDB), Myanmar Apex Bank (MAB), Myanmar Citizen Bank
(MCB), Ayeyarwady Bank (AYA), Kanbawza Bank (KBZ), and Co-operation Bank
(CB).
The loan for Phase 2 may be available in those banks. They are Myanmar
Apex Bank (MAB), Myanmar Citizen Bank (MCB), Ayeyarwady Bank (AYA),
Kanbawza Bank (KBZ), Co-operative Bank (CB), UAB Bank (UAB), First Private
Bank (FPB), Naypyitaw Development Bank (NDB), Myanmar Economic Bank
(MEB), and Myanmar Oriental Bank (MOB).
3.3.4 MEB LOAN

Public deposit MEB MSME loans are available from public deposit through
Myanmar Economic Bank. MEB focuses its offering primarily on production,
manufacturing, export promotion, import substitution, recycling and energy saving,
technical base production and servicing. The maximum loan limit is 500 million.
Depending upon the collateral, its interest rate varies from 6.5% to 11.5%. Customers
can get a minimum of 6.5% with immovable collateral, 8.5% to 11.5% with
machinery collateral, and 7% to 9% for ease collateral. The loan period is 3 to 5
years.. The necessary documents for MSME Loan are
o Application letter
o Business Plan
o Collateral
o MSME member card, recommendation letter
o Business valid License and Tax Receipts
o Financial Statement for three fiscal years
20
3.3.5 KFW LOAN
KFW is an organization especially devoted to aid for infrastructure and human
resources development, like the vocational training program, Rural Development
Programme (RDP), Railway Workshop (Ywataung), and Rural Electrification
Programme (REP), but also plans to help the SME sector by a grant to support Euro
15.3 million in SME loans from Myanmar's banking sector.
As the development of small and medium-sized enterprises (SMEs) is a key to
employment opportunities and better living standards, it's needed to provide adequate
and demand-oriented financing opportunities for SMEs. So, on behalf of the German
Federal Government, KfW Development Bank supports the formal banking sector in
Myanmar, where SMEs are typically unable to meet these requirements, by providing
funding and building capacity of relevant financial institutions, thereby developing
the SME sector.
Ministry of Planning and Finance selects a suitable bank among all partner
banks according to collaboration with KfW following a multi-phase analysis and
selection process.
The first phase of the SME Lending Programme includes a refinancing facility and an
accompanying measure to strengthen the institutional capacity and lending activities
of Co-Operative Bank Ltd. (CB Bank). In addition, Myanmar Apex Bank is the
second financial institution partner in the next phase.
Table (3.4) Types and Amount of Loans
Number of Amount
Sr. Type of Loan
MSME (million Kyat)
1 SMIDB 456 20638.000
2 CGI Loan 964 17581.200
3 JICA Two-step Loan (Phase I) 518 114828.480
4 JICA Two-step Loan (Phase II) 1430 217238.700
5 MEB Loan 336 2569700
6 KfW Loan 284 21189.380
7 RBF Grant 513 16431.640
Total 4501 433607.397

21
CHAPTER IV
SURVEY ANALYSIS
4.1 Research Design

This chapter analyses the findings from the research. The customer feedback
perceptions for SME loan products in Myanmar's banking sector are mainly based on
the primary data collected through survey questionnaires. A Simple Random
Sampling (SRS) method was used in this survey. A sample of 200 respondents was
selected from the SME in the Yangon region. But only 197 out of 200 customers
responded to the questionnaires.
This section explains in detail the methodology and procedures followed in analyzing
consumer perceptions of SME loans. A descriptive method has been used to support
quantitative measurement and analysis. Data was collected through a questionnaire,
constructed as a key tool in the study. The structured questionnaire was specially
designed for this study and consists of three parts. The first part of the questionnaire
contains key information about the sample demographics. The second part addresses
some questions about the practice of SME loans. The final section covers 16
statements on customer perceptions of SME loans. In this final section, every question
has five different answers according to the Likert Scale, which consists of five
degrees (Strongly Disagree, Disagree, Neutral, Agree, and Strongly Agree). The
research sample was selected by a simple random sampling method. Collect key data
by sending questions to random customers through MSMEs in Yangon. based on the
collected primary and secondary data, and a discussion is made as well.
4.2 Profile of Respondents

Demographic Profile of Respondents
The profile of respondents includes gender, age, education level, type of
business, and business experience in which they are involved.
22
4.2.1 Respondents by Gender
The gender (male and female) in the sample is shown in table (4.1). According
to table (4.1), the majority of all respondents are male, and they expressed 150
respondents, while 47 respondents are female. As a result, male respondents account
for 76% of the sample, while female respondents account for 24%. It shows that in
Myanmar, men are leading the family or business and they prefer outgoing jobs.
Table (4.1) Respondents by Gender

Gender Frequency Percent
Male 150 76%
Female 47 24%
Total 197 100%
Source: Survey Data
4.2.2 Respondents by Age

Customers' feedback and perceptions depend on their age levels. There are
five levels of age groups. It is found that among 197 respondents, most of them are
aged between 36 and 50 years old and represent 42.2%. The second largest age group
is between 51 to 65 years old and presents 26.4%, then 22.3% between 21 to 35 years,
8.6% at 65 years and above, and 0.5% less than 20 years. As a result, the majority of
customers who run the businesses are mature enough to do business. The analysis of
the age level is shown in table (4.2).
Table (4.2) Respondents by Age
Age Frequency Percent
1- 20 years 1 0.5%
21-35 years 44 22.3%
36-50 years 83 42.2%
51-65 years 57 26.4%
65 years and above 12 8.6%
Total 197 100%
Source: Survey Data
23
4.2.3 Respondents by Education Level
The respondents expressed their education level. The educational levels of
respondents are classified into four groups; high school level, graduated bachelor's
degree, and master's degree. The result of the survey states that 15.22% of
respondents are high school holders, 77.18% of respondents are graduated Bachelor's
degree holders, and 7.6% of respondents are Master's degree holders. The term "high
school level" refers to both students who completed the 10th grade in Myanmar and
went on to attend college but did not continue their education and worked in business,
as well as students who failed the 10th grade exam but were just involved in business
activity. The results state that almost all the respondents are graduated people. The
results are shown in Table (4.3).
Table (4.3) Respondents by Education Level
Education Frequency Percent

High school 30 15.22%
Graduated bachelor Degree 152 77.18%
Master degree 15 7.60%
Total 197 100%
Source: Survey Data
4.2.4 Respondents by Type of business

All the respondents were asked about their type, into which they were classified
into four groups. There are manufacturing, service, sales, and others. According to
survey results, 40.61% are working in manufacturing, followed by 31.48% are services,
15.43% sales, and 12.48% others. Another term for handicrafts, distribution, furniture,
trailers, M&E repair, and so on. The results are shown in Table (4.4).
Table (4.4) Respondents by Type of Business
Type of Business Frequency Percent

Manufacturing 80 40.61%
Sale 30 15.43%
Service 62 31.48%
Other 25 12.48
Total 197 100%
Source: Survey Data
24
4.2.5 Respondents by Business Experience
The respondents were asked about their business experience, which is
categorized into five groups; under I year, 1 to 5 years, 6 to 10 years, 11 to 15 years,
and 15 years and above. The results of the survey show that 7.03% of the respondents
have less than a year of business experience, 25.85% 1 to 5 years, 14.72% 6 to 10
years, 19.46% 11 to 15 years, and 32.94% have more than 15 years of business
experience. The results are shown in Table (4.5).
Table (4.5) Respondents by Business Experience

Business Experience Frequency Percent
Under 1 years 13 6.57%
1-5 years 58 29.42%
6-10 years 29 14.70%
11-15 years 36 18.27%
15year and above 61 31.04%
Total 197 100.00%
Source: Survey Data
4.3 Responses on Awareness of Loan

4.3.1 Respondents on source of Loan
The question is about how they seek additional investment for their
business. The questions are categorized into six groups. It is shown that only 46.70%
of people take loans from the bank, 5.58% use their own money as capital, 25.89% of
business people borrow from relatives, business partners, and close friends. Some
approach to lenders, gold pawn shops, and little microfinance groups for the necessary
funding, so the other is 5% in table. According to the results, business people mostly
rely on the banking sector if they need capital for their business. The results are
shown in Table (4.6).
25
Table (4.6) Respondents on Source of Loan
Where do you take the loan if you need additional
Frequency Percent
investment for business?
Bank loan 127 64.46
Use our own money as capital 11 5.58
Borrow from relatives, business partners and close friends 54 27.42
Create money issuing shares - -
Other 5 2.54
Total 197 100.00
Source: Survey Data
Figure (4.1) Respondents on Recourse of Loan

70
60
50
40
30
Sourse of loans
20 %
10
0
Bank loan Use our own Borrow from Create Other
money as relatives, money
capital business issuing
partners and shares
close friends
Source: Table (4.6)
4.3.2 Respondents on Awareness of SME Loan products

All respondents were asked whether they knew about SME loan products or
not. It is found that 89.34% of respondents know about it and another 10.66% do not
know what an SME loan product is. The results are shown in Table (4.7).
26
Table (4.7) Responses on Awareness of SME Loan
Do you know SME loan product? Frequency Percent
Yes 166 89.34%
No 31 10.66%
Total 197 100%
Source: Survey Data
Figure (4.2) Respondents on Awareness of SME Loan
Source: Table (4.7)
4.3.3 Frequency of Taking Loan from Banks

The question is concerned with how many times they have taken loans from
banks for their business. According to the survey results, 35.53% do not take a bank
loan, 15.23% once, 30.46% twice, 16.24% three times, and 2.54% four times or more.
The majority of Myanmar businesspeople are familiar with bank services.
27
Table (4.8) Frequency of Taking Loan from Banks
Have your ever taken loan from banks

Frequency Percent
for your business?
No 70 35.53
One time 30 15.23
Two time 60 30.46
Three time 32 16.24
four time and Above 5 2.54
Total 197 100.0
Source: Survey Data
Figure (4.3) Frequency of Taking Loan from Banks
Frequency
3.05
14.72 15.74
No
one time
Two time
three time
30.96
35.53 above four time
Source: Table (4.8)
4.3.4 Responses on Awareness of SME Center

All respondents were questioned about their familiarity with the SME Center
under the Ministry of Industry and the advantages of being an SME member. It was
discovered that 81.21 percent of respondents are aware of SME center and are aware
that they can obtain information on SME loans and SME center services such as
capacity building program, technology promotion, market promotion, and advisory
services; however, 18.79% are unaware of SME center.
28
Table (4.9) Responses on Awareness of SME Center
Do you know about services of SME Center? Frequency Percent
Yes 160 81.21%
No 37 18.79%
Total 197 100%
Source: Survey Data
Figure (4.4 ) Respondents on Awareness of SME Center
18.84%
Yes
No
71.06%
Source: Table (4.9)
4.4 Customer Perception

The sampled customer perceptions of the SME loan are presented in this
section. Customers' perceptions of information accessibility, applying process,
complete loan process, bank’ employee customer service, and the loan process factor
are the four dimensions that are listed. The researcher examined 127 respondents in
total to analyze how consumers responded to SME loans.
According to the Likert Scale, which has a total of five degrees, each question
has an option of five answers (Strongly Disagree, Disagree, Neutral, Agree, and
Strongly Agree). The following tables show the results according to their levels of
perception through four dimensions.
4.4.1 Customer Perception on Information Availability

Information about loan products is easily available on social media (Facebook,
TV, magazines, and newspapers), with a mean score of 4.05. The data indicates that
29
customers clearly acquired the information and requirements for SME loans through
SME centers, so they should continue the current procedure. Customers clearly have
difficulty understanding the information, as seen by the mean score of 2.51 for how
easily they can understand information on SME loan products. As a result, they are
unable to decide what products will best suit their desires. Thus, information about
loan products needed to be understandable to everyone.
The survey result is 3.54, which is higher than the neutral level. Some
customers who were confused about information are going directly to the banks and
acquiring clear facts; and they get what they want. The survey result is 3.57.
Table (4.10) Customer Perception on Information Availability

No Statement Mean Std. Dev
1 SME loan products information are easy to get 4.05 0.73
via social media (facebook), TV, Magazine,
Newspaper
2 SME loan products information are easy to 2.51 0.97
understand
3 SME loan requirements and information are 3.54 0.98
clearly obtained from SME centers.
4 When customers are uncomfortable with the 3.57 0.86
information and requirements of SME loans,
banks are aware and able to help them about
loan information
Overall Mean 3.42
Source: Survey Data
4.4.2 Customer Perception on the application Process

There is only one available loan, the CGI loan, that can be applied without
collateral among the SME loans offered by banks. Hence, it can be clearly seen that
collateral is a major restriction for customers who want to apply for SME loans
because of that survey result. Continuously, the survey showed that customers could
not get the required loan amount based upon the analysis result of 2.06.
Not necessary a lot document for loan application according to the survey is
2.46. Therefore, that result showed that customers were disappointed about a lot of
30
documents, and some of them even did not have knowledge of the required
documents.
After that, the questions for the application and loan decision making took a
short time to show that 2.4, a near-disagree level. So, taking a long time for decision-
making also depresses the SME loan applicant.
Table (4.11) Customer Perception on Applying Process

No Statement Mean Std. Dev
1 Collateral is not Restriction 2.04 0.91
2 Availability of desired loan amount 2.06 0.88
3 Not necessary a lot document for loan application 2.46 0.65
4 Applying and loan decision-making take short 2.40 0.98
time
Overall Mean 2.24
Source: Survey Data
4.4.3 Customers' Perception on the Complete Loan Process

There are analysis procedures for loan organization, assessment, and approval
processes to be completed for a complete loan. Those procedures take too long for a
customer who needs urgent capital, and they can miss their business opportunities.
Therefore, it is not strange that the result of the relevant question is 2.29.
It may appear that financing institutions can only provide a limited amount of
knowledge for SMEs to complete document processes for SME loans required by
banks. That is why the result of PFIs constantly can provide strong indications for
SME loans on time as well as banking is 2.25.
Taking a bank loan is a long time from application to completion. Hence It
was an impatiently long period for a customer who needed urgent capital, and it is just
a waste of time from the customer's perspective. As mentioned above, they can miss
many opportunities for a long time. Therefore, they showed their disagreement with
answer "2.22" to the "SME loans from banks take no longer time to obtain" question.
Finally, they get their applied loans in difficulty and that is why they gave their
answer "2.72" as disagree to the fourth question, "Completed loan application without
any difficulties".
31
Table (4.12) Customers’ Perception on Complete Loan Process
No. Statement Mean Std. Dev

1 The loan organization, assessment, and approval 2.29 0.99
procedures are easily to accomplish.
2 PFIs constantly can provide strong indications 2.25 0.98
for SME loans on time as well as banking
knowledge.
3 SME loans from banks take no longer to obtain. 2.22 0.99
4 Completed loan application without any 2.72 0.9
difficulties
Total 2.37
Source: Survey Data
4.4.4 Customers' Perception on Customer Service by the Bank's Employees

It is clear from the figure below that bank staff have a some of requirements
related to SME loans. The table below illustrates that bank employees have significant
needs when it comes to SME loans. Although bank employees know their bank
processes, the mean score is only 2.76, which indicates a lack of ability to pay
attention to the requirements of each customer with their business knowledge. Given
that the bank employees' positive relationships with customers have the greatest mean
score, 3.64, so their communication skills are satisfied customers. Moreover, mean
score 3.4 indicated that bank employees pay individualized attention to customers.
This practice needs to be maintained. However, the bank's employees can not consult
appropriate financial solutions for each type of organization.
32
Table (4.13) Customers Perception on Customer Service of the Bank's
Employees
No. Statement Mean Std. Dev
1 Bank's employees are good at communicating with 3.64 0.99
the customers, showing concern.
2 Bank's employees are skilled in both business sectors 2.76 0.98
and banking practices.
3 Bank's employees can consult appropriate financial 2.70 0.99
solutions for each type of organization.
4 Customers receive individualized attention from 3.40 0.98
Bank's employees
Overall Mean 3.1278
Source: Survey Data
4.5.5 Summary of Customers Perception on SME loan

The table (4.14) shows that overall mean of Customers Perception on SME
loan, customer Perception on Information Availability is highest ranking with mean
score is 3.42 which mean that related ministry, association, banks should to try many
things for SME loan and lowest ranking is 2.24, Customer Perception on Applying
Process. In regards to the total average mean value is 2.79 and overall mean score
from each perception.
Table (4.14) Summary of Customers Perception on SME Loan

No Factors Mean
1 Customer Perception on Information Availability 3.42
2 Customer Perception Toward the Application Process 2.24
3 Customers' Perception on the Complete Loan Process 2.37
4 Customers receive individualized attention from Bank's employees 3.12
Employees
Bank's Employees Overall Mean 2.79
Source: Survey Data
33
Figure (4.5) Summary of Customers Perception on SME Loan
3.5
2.5
1.5
0.5
0
Information Applying Process Complete Loan Customer Service of
Availability Process the Bank's
Employees
34
CHAPTER V
CONCLUSION
This chapter consists of the parts such as findings and discussion, suggestion
and recommendation and the need for future research.
5.1 Findings and Discussion

This study has been conducted with the objectives of identifying the SME
loans provided by banks and examining customer perception of SME loans. To meet
this objective of research, a survey was conducted targeting business people
(MSMEs). The questionnaire is divided into three sections: customer profile
information, general information, and customer perception of SME Loans.Based on
the results from the analysis of customers' demographic information, it is found that
men are leading in the market and most of the people are educated due to the survey's
finding that 77.18% of respondents are graduates.
As a result, the majority of customers who run the businesses are mature
enough to do business because most of the businessmen are between 36 and 50 years
old. The most prominent business in Myanmar is manufacturing, and many of the
respondents are doing it. The second most prominent business is service, and the third
is the sales industry.
There are some people who take loans from non-banking sectors like relatives,
close friends, and business partners for their working capital and additional capital
requirements. And some people are using their own capital for business
improvement.
The majority of respondents are aware of the SME centers set up by the
Ministry of Industry and the offerings they provide. In addition, almost 80% of them
are aware of SME loan programs. Some people do not apply for the SME loan
because only 65% of bank loan applicants are aware of it. Some people who apply for
loans at banks only receive one loan; nevertheless, some also receive two or three.
It is simple to find information on loaned items. Through SME centers and
35
banks, customers clearly get the requirements and information for SME loans.
Customers, however, clearly struggle to understand the information. Therefore,
information on loan products needs to be clear to everyone.
Collateral is a significant barrier for consumers who wish to apply for SME
loans, and they may not be able to obtain the necessary loan amount. Among the SME
loans that banks offer, only one, the CGI loan, can be requested without any form of
collateral.
Customers expressed dissatisfaction with the number of documents needed for the
application procedure, and some even claimed not to be aware of the necessary
paperwork. The applicant for a SME loan becomes depressed when decisions take a
long time.
The evaluation and approval procedures needed to execute a complete loan
take too long for a customer in need of quick cash. Only a limited amount of the
knowledge needed by SMEs to finish the documentation procedures for SME loans
required by banks may be provided by PFIs. The complete application and approval
process for a bank loan takes a lot of time. Hence From the point of view of a
customer who needs urgent financing, the wait was extremely long, and from their
point of view, it was just a waste of time.
Customers are satisfied with bank employees' communication abilities and
their individualized attention to each customer. The bank's employees, however, are
unable to consult suitable financial solutions for each sort of business. Although bank
workers are knowledgeable about bank procedures, they show a lack of capacity to
use their business skills to pay attention to the needs of each customer.
There are some requirements for bank employees when it comes to SME loans.
It is discovered that some of the respondents rely on the non-banking sector; there are
also a few reasons behind it. One of the reasons is that it just takes the minimum
amount of time to acquire the loan and able to request the amount of money they
want. Additionally, there aren't many restrictions on collateral; all that's needed are
gold, jewels, and vehicles rather than land or buildings, which are generally used as
collateral. For these reasons, they are tying loans to the non-banking sector. In fact,
many business owners obtain loans for their capital requirements from informal
sources such as close friends or relatives, as well as some money lenders, at a high
interest rate.
Despite the fact that they can get loans from banks with low interest rates, few
36
people rely on the non-banking sector. According to the questionnaire, one of the
hardest things about taking a bank loan is collateral; a loan is only accessible to
business people who have land that is used to offer collateral. The land price in our
country is very high, and many people can not afford to buy land. This is a really huge
problem for start-up people who do not possess any land at all to offer collateral to the
bank. On the other hand, they do need more capital for expanding their own business
and penetrating the market.
Another problematic reason is being delayed. When they need urgent financial
support, the banks cannot provide it at the time they want. From their perception, it is
learned that the rules and regulations for the loan process are a little confusing. From
the perspective of some business people, they are not good at maintaining financial
data, and some don’t know how to do these things, and they have trouble submitting
their own business plan.
It is also found that over 90 percent of respondents know about SME banking
loan products, but nearly 35.53 percent do not want to apply for the SME loan
because they do not understand how to approach the loan process, and some don’t
want to contact banks as it is not certain they can get the amount of money they want.
Small and medium-sized businesses are interested in SME banking loans
because they want to borrow money from banks at low interest rates and in a safe
way.
The SME development center tries to create a proper channel where business people
can gain information about SME loan products and the requirements needed to
be prepared to be able to access them. According to the acquired data as well,
according to the law and regulations, only SME members have the right to apply for
SME loans.
There are entrepreneur and business owners who need additional capital to
extend their business and make ready for increasing export and future economic
growth of Myanmar. In fact, the need for SME loans in Myanmar is really high and
people need to know how they can get access to them.
5.2 Suggestions
The development of SMEs is highly dependent on the banking sector and
financial services. So, for the further improvement of SME loans provided by banks,
some of the feedback and perceptions from customers should be included as
37
recommendations.
• To have more access to SME loan products, the rule of collateral should be
relaxed. In countries where SME loan products are successful, there is no
collateral for some people who want to take a loan. Although few people are
aware of credit grantee insurance (CGI), those who are are working hard to
obtain it.
• The banks should ease some of the restrictive rules and regulations for SME
loan products. (e.g. some of the unnecessary paper work needs to be reduced
and the complicated loan procedures that can confuse customers should be
fixed.)
• The banks should work to improve the skills and business knowledge of their
employees so that they can hire qualified loan staff who can answer questions
from customers and tell them about services related to SME loan products.
The information should be set and clearly announced. It is recommended to
create a public communication channel like Viber, FB pages, etc., between
customers and banks. The banks should share information more widely and
reach more customers. The information announced on bulletin should be clear
for customers and to the point.
• SME loan centers should be launched for SME loan products so that they have
easy access to apply for loans.
• Almost all the banks should create SME loan products, make them more
accessible, and promote the products in the market.
• Moreover, the government should even plan to have a detailed target and
strategy of how many SMEs have to be provided year by year and strive to
achieve this goal.
5.3 Need for Further Research

This study has found customers' feedback and perceptions on SME loan
products. It also comes to light, according to feedback and perception, that the
development of SMEs is mostly dependent on the availability of SMEs loans.
The coverage of this research has got its own limitations. The research can't
defect all the feedback and perspectives of customers. In future studies, it should
focus on geographic views not only in the Yangon region but also other states and
38
regions in Myanmar.
In the future, much research related to customers should be conducted, such as
feedback and perception on the financial services provided by banks in Myanmar as a
whole. In the future, more banks should seek ways and approaches to promote
customer participation and how the banks can offer help to more SMEs in terms of
financial services.
39
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WEBSITES
http://dx.doi.org/10.2307/41165845
http://www.industry.com.mm
http://www.sciedu.ca/afr
http://www.worldbank.org
https://asean.org/wp-content/uploads/2012/05/2.-Final-Report-Developing-an-
ASEAN-Benchmark-for-SME-Credit-Rating-Methodology.pdf
https://kipdf.com/small-medium-enterprises-development-policies-in
myanmar_5b1308fe7f8b9a69248b456b.html
https://meral.edu.mm/record/1193/files/Thazin%20Han%20(EMPA%2058%20).pdf
https://openknowledge.worldbank.org/bitstream/handle/10986/32536/World-Bank-
Group-Support-for-Small-and-Medium-Enterprises-A-Synthesis-of-Evaluative-
Findings.txt?sequence=6
https://portales.bancochile.cl/uploads/000/037/529/4d77f192-8fd2-499d-a71f-
7a6b90a151dd/original/Sustainability_Financing_Framework_BCH_SUST_VF2_003
_.pdf
https://www.econstor.eu/bitstream/10419/252277/1/1788469135.pdf
https://www.ifc.org/wps/wcm/connect/c4f5237c-a5a2-4bab-816b-
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ome
https://www.zendesk.com/blog/simple-guide-customer-perception/
APPENDIX
Survey Questionnaires
I am Thurein Lynn, student in Master of Public Administration Programme, Yangon

University of Economic. I am currently trying to get my Mater Thesis in this fields of
“CUSTOMER PERCEPTION ON SME LOAN PRODUCTS IN MYANMAR
BANKING SECTOR”. I do appreciate; if you could care complete my questionnaire.
Your honest opinion might help me to implement this dissertation. Please note that all
your answers are completely Confidential. No one will see your individual answers.
Thurein Lynn
EMPA - 67
(17th Batch)
Section 1
Demographic Information
Name ............................. (Optional)

1.Sex
o Male
o Female
2. Age
o 1- 20
o 21-35
o 36-50
o 51-65
o 65 years and above
3. Education
High school
Bachelor
Master
Others................
4. Type of Business or Enterprise Trading
o Manufacturing
o Sale
o Service
o others...................
5. Business experience – Under 1 1 -5 6 to 10 11 -15 above 15 years
Section 2
General Information
6. Where do you take the loan if you need additional investment for business?
• Bank loan
• Use our own money as capital
• Borrow from relatives, business partners and close friends
• Create money issuing shares
• Other
7. Do you know SME loan product?
Yes No
8. Have your ever taken loan from banks for your business?
No One time Two time Three Times Four Times Above four time
9. Do you know about services of SME Center under Ministry of Industry?
Yes No
Section 3
Strongly Disagree (SD) = 1, Disagree (D) = 2, Neutral (N) = 3, Agree (A) = 4,

Strongly Agree (SA) = 5
Customer Perception on on Information Availability

No Using the scale above (1-5) please tick the levels of 1 2 3 4 5
agreement in each of the items below with regards to
the customer Perception.
10 SME loan products information are easy to get via
social media (facebook), TV, Magazine,
Newspaper
11 SME loan products information are easy to
understand
12 SME loan requirements and information are
clearly obtained from SME centers.
13 When customers are uncomfortable with the
information and requirements of SME loans, banks
are aware and able to help them about loan
information
Customer Perception on Applying Process

No Customer Perception on Information factor 1 2 3 4 5
14 Collateral is not Restriction
15 Availability of desired loan amount
16 Not necessary a lot document for loan application
17 Applying and loan decision-making take short time

Customers Perception on Complete Loan Process
No The loan organization, assessment, and approval 1 2 3 4 5
18 PFIs constantly can provide strong indications
for SME loans on time as well as banking
knowledge.
19 SME loans from banks take no longer to obtain.
20 Completed loan application without any
difficulties
21 The loan organization, assessment, and approval
Customers Perception on on Customer Service of the

Bank's Employees
No Bank's employees are good at communicating 1 2 3 4 5
with the customers, showing concern.
22 Bank's employees are skilled in both business
sectors and banking practices.
23 Bank's employees can consult appropriate
financial solutions for each type of organization.
24 Customers receive individualized attention from
Bank's employees
25 Bank's employees are good at communicating
with the customers, showing concern.
Thank you for kindly cooperation with me

Thurein Lynn, EMPA-Roll No.67, 17Bt., (28-10-22)

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YANGON UNIVERSITY OF ECONOMICS

DEPARTMENT OF APPLIED ECONOMICS

CUSTOMER PERCEPTION ON SME LOAN PRODUCTS

CUSTOMER PERCEPTION ON SME LOAN PRODUCTS

U Khun Maung Gyi Thurein Lynn

This is to certify that this thesis entitled, “Customer Perception on SME

This research study is intended to present the customer perception of SME

CHAPTER II LITERATURE REVIEW

CHAPTER III BACKGROUND INFORMATION OF SME LOANS

CHAPTER IV SURVEY ANALYSIS

Table No. Title Page

Figure No. Title Page

CGI Credit Guarantee Insurance

1.1 Rationale of the Study

1.2 Objective of the Study

1.3 Method of the Study

1.4 Scope and Limitation of the Study

1.5 Organization of the Study

Although Myanmar's banking sector has begun to grow, many important

2.1 Concepts and Definition of Small and Medium Enterprises (SME)

Microenterprise < 10 < 100,000 $100,100 <10,000

Small enterprise 10~49 100,000 ~< $100,000~< <100,000

Medium 50~300 3,000,000~15,0 3,000,000~ <1,000,000 or

Source: Data from International Finance Corporation (World Bank Group)

2.1.1 Definition of Small and Medium Enterprises (SME) in Myanmar

Table (2.2) Definition of SMEs before 9 April 2015

Sector Item Small Medium

2.2 SMEs and Economic Growth

2.2.1 Role of SME in Industrial Development in Myanmar

2.3 Customer Perception

3.1 Banking Sector for SME in Myanmar

3.1.1 Policy and Regulation in Myanmar

3.2 SME Grant in Myanmar

Table (3.1) Financial Grant from Responsible Business Fund (RBF)

2 Water use Efficiency 25 1,022.668

Total 453 14,860.797

Table (3.2) Myanmar Insurance Premium Fee (Payable to Myanmar Insurance)

3.3.3 JICA Two Step Loan (TSL)

No. Criteria for JICA Two-step Loan Project

3.3.4 MEB LOAN

2 CGI Loan 964 17581.200

3 JICA Two-step Loan (Phase I) 518 114828.480

4 JICA Two-step Loan (Phase II) 1430 217238.700

5 MEB Loan 336 2569700

6 KfW Loan 284 21189.380

7 RBF Grant 513 16431.640

Total 4501 433607.397

4.1 Research Design

4.2 Profile of Respondents

Table (4.1) Respondents by Gender

4.2.2 Respondents by Age

Table (4.3) Respondents by Education Level

Education Frequency Percent

4.2.4 Respondents by Type of business

Table (4.4) Respondents by Type of Business

Type of Business Frequency Percent

Table (4.5) Respondents by Business Experience

Under 1 years 13 6.57%

1-5 years 58 29.42%

6-10 years 29 14.70%

11-15 years 36 18.27%

15year and above 61 31.04%

Total 197 100.00%