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Developing the Developments Bank Interview with Managing Director of Small and Medium Industrial Development Bank (SMIDB)

Name – Sann Maung

Position – Managing Director


MI: How did you start your career as a civil servant and how did you end up in this position as the Managing Director?

I had joined the 22th intake of the Defence Services Academy. I started as a second lieutenant in Navy in 1981. After progressing through various ranks within the navy, until the commander, I moved to SMIDB and became the Managing Director in the Bank.

MI: As the Managing Director of SMIDB, what are you primary responsibilities?

My primary responsibilities are to supervise the operations of bank, manage or handle the training and administrative procedures under chairman’s guidance. In addition, I also act as the secretary to the board of directors of the Bank.

MI: Please tell us briefly about SMIDB.

Under the auspices of the Ministry of Industry (2), it started as a public limited company (former name – Myanmar Industrial Development Bank MIDB) on February 15, 1996. The main objective of the bank is to provide financial assistance to small and medium enterprises (SMEs) in the country, thereby supporting the Government’s economic policy.

MIDB is a mixed institution between commercial Bank and development bank. The board of director changed its name to Small and Medium Industrial Development Bank (SMIDB) in September 2012 for the purpose of focusing on Small and medium-sized enterprises sector.

As the only bank in the country focused on SME, the bank offers subsidized SME loans with very reasonable interest rates to its customers.

MI: What is the biggest challenge SMIDB is facing currently?

Just like other banks in Myanmar, we face challenges on multiple fronts

  1. As real estate market stagnate, SMIDB faces the challenge when collecting debts. We have to focus on decreasing Non-performing Loan (NPL) ratio.
  2. As new techniques have been introvduced within the banking industry, we have to upgrade the bank to keep abreast of other banks
  3.  Banking sector has become more competitive on account of mushrooming member of banks in Myanmar. In addition to 30+ local banks, there are also many foreign banks going to be operating in the country.

MI: How many branches does SMIDB have and how many you expect to open in the near future?

Currently, we have fifteen branches operating and we are going to open three more branches in Taunggyi, Kyautpataung, Myinchan in the coming fiscal year.

MI: What is the bank’s general competitive strategy?

  1. to be more focus on Small and Medium Enterprises, the sector we already specialized in
  2. To cost out, operating with limited branches in key cities.
  3. to increase deposits for long or medium term loans
  4. ) to cooperate internationally
  5. ) to carry out cash flow based lending.

MI: Where does most of the bank’s revenue comes from?

Most of the bank’s revenue comes from loan interests, money transfer service (local, international), foreign banking service, foreign exchange counter, PO (Payment Orders), ATM and Performance Guarantees.

MI: What are your plans to go online banking, mobile or e-banking?

Currently, we are mainly focus on operating the core and fundamental things of online, mobile or electric banking such as building the data centers, upgrading banking network infrastructure and securing the information of customers. When we finish these fundamental things, we will proceed in accordance with the bank’s objectives.

MI: What are the critical success factors for a banking business in Myanmar?

  1. excellent credit analysis
  2. successful credit control
  3. risk management
  4. proficiency of staff

MI: Please tell our readers about SME loan, which lends 5000 Lakhs to each borrower.

The Japanese International Cooperation Agency (JICA) granted loans of Ks5 billion to the SMIDB and SIMDB is lending Ks5 billion to SMEs. We already lent to eleven customers on February 3. Each customer can get a loan of up to Ks500 million with interest rate of 8.5 per cent, including service charges. The duration of loan is five years. To apply for JICA loan, initial requirement is to be a registered company under the Myanmar Company Act.

The objective is to finance the permanent long term assets of the company. In addition, company operation should have started once those assets are on sight.

Assets owned have to be evidenced. These have to be included in the balance sheet. Currently, we are making a second round customer list who will get loans in June. For this time, there will even be a public bank in the list.

MI: How are you and your team trying to meet customers’ expectation?

Following SMIDB’s motto (Safety, Stability and Satisfaction), we focus on providing excellent service to our customers.

MI: What are the main policies that SMIDB has changed or adapted to accommodate Myanmar’s new trend?

We are now starting carry out cash flow based lending.

MI: From the development stand point, what do you think of the biggest challenges facing the bank in the next one-three years?

  1. Trying to get ready for the new financial institutions law that is going to be in place very soon
  2. Many Foreign banks entering into Myanmar
  3.  Myanmar becoming part of ASEAN Economic Community (AEC) in 2017

MI: What are your plans for next five year?

To become a medium-sized bank carrying out sustainable banking operations in Myanmar.

MI: What is the best funding solution for Myanmar SME sector?

For the banks is be able to provide loans with reasonable interest rates and to reduce requirements to secure the loan.

MI: If you could make one major change to any government policy, what would it be?

I would like to reduce the strict policies of Central Bank of Myanmar.

MI: What are your personal hobbies apart from your bank’s responsibilities?

I am interested in doing charity works and some pro bono activities.[/paypal]