Jul 22, 2011

Banking sector liberalization brings about more private banks in Myanmar

Myanmar's liberalization of banking sector has brought about four more private banks in operation in the country, making the total number of private banks in the country to 19.

The four new private banks are Asia Green, Myanma Apex Bank, United Amera and Ayeyarwaddy, respectively owned by four giant entrepreneurs -- U Tay Za (Htoo trading company group), U Zaw Zaw (Max Myanmar Co. Ltd), U Nay Aung (IGE) and U Chit Khine (Ayedin Co. Ltd).

Each of the four new private banks plans to open 50 branch banks across Myanmar after starting business in Nay Pyi Taw.

The addition of the 200 branch banks of the four new banks will bring the total number of private branch banks in the country in 2011 to 440.

Previously, there were 15 private banks with 240 branch banks in operation in Myanmar before the four new banks came into being, 13 of which are based in the former capital city of Yangon.

Private banks were once nationalized in Myanmar in 1963 during the previous government but after the country started to adopt the market-oriented economic system in late 1988, private banks were allowed to operate again since 1992.

There are four state banks in Myanmar which are all governed by the government's Central Bank.

Myanmar's liberalization of banking sector is also attracting more foreign bankers' engagement. A famous Thai bank -- the Kasikorn Bank is seeking to open a branch bank in Myanmar by August this year and about 150 skilled bank staff are being sent to the country in preparation for the move.

Myanmar version will be added to the ATM machine of the bank along with English version to facilitate banking operation.

The bank is mainly aimed at offering services for planned special economic zones such as Thai-invested Dawei deep sea-port in southern Tanintharyi region.

Earlier, the Exim Bank of Thailand and the Singapore-based United Overseas Bank (UOB) had opened representative offices in Myanmar in a preparatory move to open their branch banks in Myanmar.

In a negotiation made between the Thai commerce ministry delegation and its Myanmar counterpart in Nay Pyi Taw in January this year, the two sides reached an agreement for Thai banks to jointly operate with two Myanmar foreign exchange banks in settlement of payment to boost trade flow between the two countries.

The two Myanmar state banks are Myanmar Investment and Commercial Bank and Myanmar Foreign Trade Bank.

In case of payment in U.S. dollar, banks of the two countries will inter-link and have it settled, while according to the agreement of Ayeyawaddy-Chaophraya-Mekong Economic Cooperation Strategy (ACMECS), the two sides will use their own currencies.

ACMECS comprises Cambodia, Laos, Myanmar, Thailand and Vietnam.

Currently, transaction in border trade between Myanmar and Thailand is currently done with the use of Thai Baht and Myanmar Kyat.

Border trade department officials revealed that the volume of illegal trade is three or four times more than legal trade. They urged for curbing such phenomena.

In border trading with neighboring China and India, Myanmar not only uses in-cash payment system but also use settlement through banks.

Meanwhile, the Bank for Investment and Development of Vietnam ( BIDV) has opened a representative office in Yangon in April 2010, prompting more Vietnamese bankers to seek more investment opportunities in Myanmar.

Moreover, two unidentified Indonesian banks are also planning to open offices in Myanmar to help promote bilateral trade relations between Indonesia and Myanmar.

As part of their efforts to boost bilateral economic and trade cooperation, Myanmar and Indonesia have sought direct trade link and direct banking transaction.

Moreover, the Ministry of Finance and Revenue of Myanmar and the Export-Import Bank of China signed some loan agreements in January this year, including the one on renminbi financing for mutual beneficial cooperation, a master facility agreement and the buyer credit loan agreement for Nay Pyi Taw international Airport project-2 between the Myanmar Foreign Trade Bank and the Chinese bank.

Source: Xinhua