YANGON -- More consumers in urban Myanmar are taking out loans to buy electronics, cars, even homes.
A purple logo -- that of Japan's Aeon Financial Service, a provider of small loans to consumers who pay back the money in installments -- is becoming easy to spot at one Yangon shopping center, especially at appliance and cellphone stores.
Aeon Microfinance (Myanmar) received a license to provide small loans in 2013. It now has 630 affiliated stores, more than triple the 200 it had in 2016. About 70% of its borrowers use the service to buy cellphones.
Previously, cash was the only payment option in Myanmar, even when buying a home. Now nearly every Myanmar citizen who works for a company is eligible to take out a small loan, according to an Aeon Microfinance representative.
One 40-year-old father who bought his child a cellphone with a loan said he likes the convenience of not having to pay for expensive items all at once.
Aeon's customers repay their loans over periods of up to two years at a monthly interest rate of 1.4%.
The company representative said many stores experienced 50% sales jumps after adopting the purple logo.
Myanmar's per capita gross domestic product is $1,298, but the output of the country's factories and service sector is growing 7% to 9% a year, even after price fluctuations, giving an increasing number of workers a more stable income option than farming.
Auto loans have also come to Myanmar. Japan's Suzuki Motor, which owns the largest share of the country's new car market, has partnered with AYA Bank to offer seven-year auto loans. Previously, most car loans in Myanmar were for five years. The new option is an effort to reduce borrowers' monthly payment burden.
In recent years, sales of new cars have been almost doubling. This is partly due to the spread of dealer- and bank-provided loans. Non-Suzuki car dealers are teaming up with banks to provide auto loans.
Previously, used cars dominated Myanmar's auto market.
As for buying a home, Myanmar citizens used to have no choice but to use cash -- all up front. Now major banks are providing home loans that can be repaid over 15 to 25 years. Homebuyers usually make down payments of 30% of the purchase amount.
Borrowers in Myanmar used to have to pay back home loans in one to three years.
Now that a credit market is establishing itself in Myanmar, banks will have to take care to properly screen loan applicants and not place too much emphasis on quick earnings boosts.