Central Bank of Myanmar vice governor U Set Aung appeared to back off a previously discussed timetable to allow foreign banks in to operate in Myanmar, declining to confirm plans to allow foreign banks to begin operations in 2014.
Foreign banks will be allowed to offer services in Myanmar eventually but the timeline is still being considered, he said at a Union of Myanmar Federation of Chambers of Commerce and Industry (MFCCI) press conference last week.
“The time when foreign banks will be allowed to begin [operating] is still being processed, so at this time I cannot say anything for sure about that,’’ he said in response to a direct question on whether foreign banks could begin operations in 2014.
About 35 foreign banks – including heavyweights such as Standard Charter, ANZ and Bangkok Bank – have established representative offices in Myanmar, though the offices are allowed to engage in only a limited number of activities.
At the end of 2013, central bank officials had said between five and 10 foreign banks would be permitted to operate in Myanmar in 2014.
U Set Aung said the central bank is keen to ensure local banks are not simply outcompeted by foreign banks.
“The Central Bank of Myanmar will only allow restricted licences for foreign banks, meaning foreign banks will not be allowed to offer retail services,” he said. Foreign banks may also be restricted to a small number of branches, which is a regionally accepted practice, he added.
Still, foreign banks will help improve a weak sector of the Myanmar economy, according to U Set Aung.
Some local bankers lauded the central bank’s caution towards allowing foreign competition.
CB Bank managing director U Pe Myint claimed he is not too concerned about foreign banks as they will be prevented from participating in many parts of the retail business, and will instead focus on international banking.
Still, some Myanmar businesspeople said foreign banks would on the whole benefit Myanmar, seeing the introduction of foreign banks as an avenue to improve access to capital.
U Hnin Oo, Myanmar Fishery Federation vice president, said that many small and medium enterprises (SMEs) have trouble securing long-term loans.
“SMEs are disappointed with the central bank’s policy towards foreign banks,” he said. “SMEs cannot grow stronger without adequate loans with lower interest rates from foreign banks.”
“If local banks could provide adequate loans with proper interest rates to businesses, we wouldn’t need foreign banks, but now the government has delayed them,” he said. “With this trend, I think the country’s economy will hardly be able to progress.”
Source Myanmar Times