May 1, 2013

Myanmar banks prepare for joint-ventures

Banks in Myanmar are preparing for joint ventures with foreign lenders, even though they will not be allowed until the Central Bank of Myanmar is made independent in 2014, the Myanmar Times reported.

A spokesperson at the deputy director general level of the Central Bank in Nay Pyi Taw said joint ventures would be allowed once the Central Bank Law was enacted by parliament and the bank is made autonomous. However, parliament will not sit again until late June 2013. The spokesperson added that bank officials are already writing the rules and regulations for when the law, which was returned to parliament by the President’s Office for review, is passed by parliament.

“Our rules and regulations need to protect domestic banks but at the same time we need to open up to international banking because our banking sector has been left behind for 50 years,” he said. The Central Bank will approve foreign banks in four stages, he said: representative offices, joint ventures, subsidiaries and wholly owned branches.

The Foreign Investment Law enacted in November 2012 – and later supplemented by rules and regulation – allows foreign companies in some sectors up to 80 per cent.

“When the Central Bank approves joint ventures, the ownership ratio will be up to the companies to determine,” the spokesperson said.

Cooperative Bank (CB) managing director U Pe Myint said some banks, mostly from Asia, have already approached CB to seek joint ventures in preparation for when they are allowed.

A spokesperson for Myanma Apex Bank’s foreign banking department confirmed that the bank has also been approached by foreign partners interested in a tie-up but added that no decisions had been made regarding partners as yet.

Currently, there are 24 representative offices registered with the Central Bank, mostly from Southeast Asian nations but also from Japan, South Korea and India.

Source: Investvine