Myanmar Government to Improve Liquidity in the Construction Sector
The Ministry of Planning and Finance has announced to improve the access to capital in the construction sector. At present, Myanmar commercial banks have not funded the winners of government tenders for construction projects. At a recent board meeting, the Construction and Housing Development Bank (CHDB) announced plans to provide unsecured loans to the winning bidders of government projects of up to 50% of the project costs.
The CHDB is a state owned bank established under the Ministry of Construction to develop the construction and urban housing sector which recently has recently received a MMK 30 billion (approximately USD 22 million) loan from the Myanmar Economic Bank to improve liquidity in the construction market.
What it means for you
The unsecured loans, which have a proposed interest rate of 12% per annum will be provided by the CHDB to eligible construction companies. In order to be eligible, the construction company must:
- be a member of the Myanmar Construction Entrepreneurs Association;
- submit a tender to the government;
- provide a certificate to the CHDB setting out the bid premium; and
- meet other CHDB requirements (which have not been made publically available).
As local banks have limited lending capacity and stringent credit requirements, this is a positive move from the government to improve liquidity in the construction sector, focusing initially on government projects. This is a clearly a priority sector for the government as additionally, the Ministry of Planning and Finance has also discussed plans to establish a new development bank within the Central Bank of Myanmar to focus on funding development and infrastructure projects in Myanmar.