YANGON (AFP) - The first foreign bank to operate in Myanmar for decades officially opened the doors of its Yangon branch Wednesday, the latest government bid to attract foreign investment in the emergent nation.
Myanmar's quasi-civilian administration, which replaced a military regime in 2011, is trying to modernise the country's creaking banking system to increase capital flows to local businesses and spur foreign investment, particularly in the nascent special economic zones.
Central Bank governor Kyaw Kyaw Maung described the opening of Japan's Bank of Tokyo-Mitsubishi UFJ (BTMU) on Wednesday as a "new milestone", adding he hoped that it would strengthen the economy through increased investment and business financing.
BTMU said the Yangon branch would provide "full banking services, including deposits, loans, and foreign exchange, to foreign companies and domestic banks operating in Myanmar".
Japan's largest bank, along with Sumitomo Mitsui Banking Corporation (SMBC) of Japan and Singapore's Oversea-Chinese Banking Corporation (OCBC), were earlier this month given approval to begin operations.
OCBC, which is due to open its branch Thursday, said earlier this month it had already seen a "significant increase in queries from both new and existing customers keen to tap on the immense growth opportunities in Myanmar".
OCBC operated in Myanmar for four decades until 1963.
But the country's military rulers, who seized power in 1962, nationalised all banks as they embarked on socialist policies that would send the economy into precipitous decline for nearly half a century.
Local people remain deeply suspicious of the banking system and many deal only in cash.
Authorities have implemented sweeping political and economic changes in recent years that have seen most international sanctions lifted and created a surge of interest from foreign businesses eager to stake a claim in the new frontier market.
Central bank vice-governor Set Aung told parliament last June that foreign banks would be subject to a range of restrictions to protect local lenders.
The foreign lenders would be required to hold at least US$75 million (S$100.79 million), restricted to opening only one branch each and not be allowed into the retail banking sector, he said.
A further six foreign banks from the Asia-Pacific region, that were also granted preliminary approval in October, are expected to go through the process of finalising their licences within months.