Myanmar to grant more foreign bank licences

Construction work along Yangon's main road with the Sule Pagoda in the background. Myanmar's banking services are still limited as the economy emerges from isolation.
Construction work along Yangon's main road with the Sule Pagoda in the background. Myanmar's banking services are still limited as the economy emerges from isolation.PHOTO: AGENCE FRANCE-PRESSE

Bid to attract more investments from abroad; banks in countries already given licences not eligible

YANGON • Myanmar will open a second round of foreign bank licensing early next year, its central bank said, in the hope of attracting further foreign investment into an economy emerging from five decades of military rule and isolation.

Banks from countries that have already been granted licences - Australia, Japan, Malaysia, China, Singapore, and Thailand - will not be eligible for the new licences.

New licences will instead be given to "additional neighbouring and important trading-partner economies", the central bank said.

The move to raise the number of foreign players in Myanmar's nascent banking sector follows

the successful granting of nine licences last year, although restrictions remain on what services foreign banks can offer to the nation of 51 million.

Banking services are still limited, and the domestic industry is dominated by financial institutions with ties to the former military regime.

Foreign direct investment in Myanmar reached US$3.58 billion (S$5 billion) in the first seven months of the fiscal year, according to data from the Directorate of Investment and Company Administration.

There are hopes a government led by Ms Aung San Suu Kyi's National League for Democracy, which won by a landslide in the country's Nov 8 elections and will take power next year, will attract more investment to the country.

"Encouraged by this success, the Central Bank of Myanmar will initiate a second round of foreign bank licensing early 2016 aimed at welcoming new foreign banks from additional neighbouring and important trading-partner economies," the central bank said in a statement on its website on Monday.

The central bank did not specify how many licences would be granted. It did say banks would be able to provide wholesale onshore banking through a branch office.

Among the winners of licences last year were ANZ Banking Group, Australia's fourth-largest lender by assets, Thailand's Bangkok Bank and the banking units of Japan's Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group.

Banks looking to obtain licences next year will need to have a representative office in Myanmar or be in the process of establishing one.

REUTERS

A version of this article appeared in the print edition of The Straits Times on December 16, 2015, with the headline 'Myanmar to grant more foreign bank licences'. Print Edition | Subscribe