Representatives of BIDV and SMIDB sign an agreement on a US$30 million loan in Myanmar on November 19. — Photo Vietnam+

HA NOI (Biz Hub) ─ The Bank for Investment and Development of Viet Nam (BIDV) will lend US$30 million to Myanmar's Small and Medium-sized Industrial Development Bank (SMIDB) over five years.

The two parties signed an agreement in principle on the financing in Myanmar's capital Naypyitaw on November 19.

According to a BIDV press release, SMIDB will use the loan to support small and medium-sized enterprises (SMEs), industrial development and poverty reduction policies of Myanmar.

"At present, Myanmar is making all efforts to meet the development demand of SMEs, through which we support the economic development and industrialisation of our country," said Myanmar's Minister of Industry and SMIDB Chairman U Maung Myint. "This preliminary agreement is a special milestone for our co-operation."

"We have agreed to promptly conclude a capital lending contract in 2014," BIDV Chairman Tran Bac Ha said, adding that the loan will be accompanied by highly preferential terms.

Following a memorandum of understanding inked in June, the two sides have also exchanged experiences on the application of information technology and the implementation of trade finance and foreign exchange services.

Also on November 19, Myanmar's ministry of national planning and economic development granted a licence to BIDV and its partner to establish a financial company, which will provide money deposit-and-transfer services, in Yangon City.

BIDV will hold a 70 per cent stake, while Myanmar's consumer microfinance firm Mahar Bawaga will have a 30 per cent stake in the new institution, named BIDV Finance Company Limited.

BIDV has been chairing the Association of Vietnamese Investors in Myanmar since 2010, following high-level commitments to foster economic ties between the two countries.

According to the press release, Viet Nam currently ranks eighth among 36 nations and territories investing in Myanmar, with its total direct investment value there amounting to more than $600 million. The value of bilateral trade has grown on average by 40 per cent per annum in the last few years, reaching more than $350 million in 2013.

Viet Nam's direct investments in Myanmar are expected to be worth more than $1 billion, and the bilateral trade revenue is expected to be more than $500 million in 2015. ─ VNS