The Burmese parliament has approved a proposed loan of US$300 million from EXIM Bank of China to fund the Cooperative Ministry’s micro-financing projects.
Minister of Cooperatives Kyaw Hsan pledged to parliament that the loan will not be a burden on the country, and said that the Cooperative Ministry was committed to the loan’s repayment – though he did not specify a deadline.
The micro-financing projects – with loans between K100,000 (US$100) to K500,000 (US$500) – will not be available to all citizens in Burma. Minister Kyaw Hsan adds that a selection process will determine candidates’ eligibility according to “necessity”.
The programme is aimed at reducing the poverty level to 16 percent and improving the lives of the rural poor.
However, National League for Democracy MP Khin San Hlaing cautions that the good intentions of the grassroots may be undermined, as loans are not the ideal solution.
Singapore-based Institute of Southeast Asian Studies (ISEAS) published an assessment last year that was discouraging about Burma’s proclivity for cooperative credit as a means of rural development, warning that repayment debt and loan interest will ultimately burden Burma’s farmers, small enterprise proprietors and workers.
The report suggested that Burma needs a functioning financial system for genuine transformational growth and development.