The Bank of Tokyo-Mitsubishi UFJ could officially open its branch office as soon as next month, as the firm looks to provide financial services to foreign investors, according to the bank’s chief executive officer for Asia and Oceania, Go Watanabe.
“We are excited to open the branch as soon as possible, maybe even next month, as preparations have finished and we are waiting for final approval from the Central Bank,” he said.
Japanese banks were the big winners in last year’s tender. Nine foreign banks were ultimately selected to receive licences, including all three Japan-based banks that entered the race.
The Bank of Tokyo-Mitsubishi UFJ has had a representative office in Myanmar since 1995 under its precursor.
Staff training and recruitment is finished, while its IT systems are ready, he said in an interview on the sidelines of yesterday’s ASEAN-Myanmar Forum, organised by the Singapore Institute of International Affairs. Mr Watanabe added the purpose of the bank’s local operations is to support financial services to foreign companies operating locally, or domestic banks through long or short-term loans in foreign currency.
“At the moment we are not allowed to make a loan to a domestic company in kyat, so we would provide loans to local banks – for example to Co-operative Bank, our strategic local partner, so they can lend to SMEs,” he said.
The Bank of Tokyo-Mitsubish UFJi will not be providing finance to companies in kyat, but it will support its local partners such as the Co-operative Bank in its lending to local business.
“It is good [to have] cooperation between foreign banks and local industries,” he said.
The bank also plans to provide connectivity between its customers in ASEAN and the rest of the world, and Myanmar, hoping to grow investment in the coming years.
“One of the big missions is our drive to encourage Japanese [investors] to make more investments, but also [investors in] other countries to make more investments in Myanmar,” he said.
The foreign partnerships for Co-operative Bank – which often brands as CB Bank – are still at the early stages, said its managing director U Pe Myint.
It has not held detailed discussion with its foreign partners on areas like interest rates, though the loans will likely not be too cheap, he said.
Authorities have also pointed to strong potential investment levels from Japan.
Myanmar Investment Commission (MIC) secretary U Aung Naing Oo said previously that Japan will be the biggest source of foreign investment by the 2015-16 fiscal year. Japanese investment totalled US$400 million until February 2015, according to MIC’s statistics.
However, mainland China is still the largest historical source of foreign direct investment in the country, having received approval to invest $15 billion in Myanmar since MIC began keeping track, constituting an overall share of 27pc.
Thailand and Singapore are the second- and third-largest sources of investment.
Japanese investment has grown significantly since 2012.
Mr Watanabe said China had invested significantly during the period of economic sanctions.
“Now I think Myanmar has opened the market and country. From now, it is obvious that more investment will come from Japan and increase, even though investment will still continue from China,” he said.
He added the low cost of labour and large population is an opportunity for manufacturers and service providers.
Source: Myanmar Times