Myanmar’s fledgeling financial services industry is set to take off, following approval of crucial banking laws that pave the way for 400,000 new jobs in the next two decades.
Some 27 foreign banks with representative offices in Myanmar took a step closer to establishing fully fledged operations after the country’s president, Thein Sein, approved a new law last week granting the central bank autonomous powers.
The new law and the recent lifting of sanctions against Myanmar – with the exception of certain restrictions by the US that remain in place – open the doors for foreign banks to set up joint ventures with local banks in Myanmar. US banks have, since February, been able to open accounts with four banks in Myanmar.
Foreign bank ownership on the cards
Until now, foreign banks were only permitted to open representative offices. Under the newly approved central bank dispensation, they will initially be able to own up to 80% of Myanmar joint ventures, and possibly 100% within a few years.
A number of foreign banks have had a presence in Myanmar for several years, including several Japanese banks, with Japan the largest bilateral lender to Myanmar.
ANZ also recently secured permission to open a representative office in Myanmar, while Standard Chartered returned to its shores after an absence of many years.
There are also a number of Chinese, Thai, Korean, Malaysian and Singaporean banks poised to expand once the rules and regulations governing the new financial services dispensation are published. Exim Bank of India was granted a license for a rep office last month.
Given expectations of a surge in investment into Myanmar, which is rich in natural resources and crying out for infrastructure development, foreign banks will need to gear up for the business. In addition, retail banking facilities are limited – until earlier this year, when international card providers teamed up with local banks to provide some card services, most transactions were restricted to cash.
USD$11 billion industry by 2030
The tiny financial services industry, which is decades behind many of its Asian counterparts in technology and infrastructure, employs only 7,000 people, according to McKinsey Global Institute, as reported by the Seeking Alpha website.
“McKinsey examined the penetration of banking products in the rest of ASEAN and estimate that this sector could contribute over USD$11 billion to GDP in 2030 as well as 400,000 jobs.”
Myanmar’s potential for investment and economic growth, coupled with its under-developed financial services infrastructure, means that foreign banks will need to hire across the board to meet the expected demand for retail, corporate and investment banking. The country’s capital markets will also require staffing up, given plans to launch the Yangon Stock Exchange by 2015.
Foreign banks with Myanmar representative offices
AEON Credit Service Company
Bank for Investment and Development of Vietnam
Bank of Tokyo-Mitsubishi UFJ
Brunei Investment Bank
CIMB Bank Berhad
DBS Bank Ltd.
First Commercial Bank
First Overseas Bank
Krung Thai Bank
Maruhan Japan Bank
Mizuho Corporate Bank
National Bank Ltd
Siam Commercial Bank Public Company Ltd
Sumitomo Mitsui Banking Corporation
United Bank of India
United Overseas Bank Ltd.