SINGAPORE — Singapore companies operating in or looking for opportunities in Myanmar will have an easier time navigating the emerging market with the setting up of OCBC and UOB bank branches in Yangon.
The banks’ presence will help Singapore companies make transactions more efficiently in Myanmar, as well as facilitate more foreign direct investments (FDI) into the country that will in turn help to build up its financial structure and economy.
“The licence allows us the scope to facilitate foreign business and joint venture partners, particularly in association with FDIs into the country and working with the domestic banks. These banks need a lot of cooperation with foreign banks to not only uplift their standards individually but more importantly to build the financial structure that is needed for the economy to be viable,” said Mr Linus Goh, OCBC’s head of global commercial banking.
OCBC’s Yangon branch started operations yesterday with registered capital of US$75 million (S$102 million) and around 20 employees, more than half of whom are Myanmar nationals. The branch offers services to commercial customers such as cash management, project financing and capital markets advice.
Customers can also open current and savings accounts denominated in Myanmar kyat, US dollar and Singapore dollar, take up loans and apply for trade and foreign exchange facilities.
OCBC said the Myanmar presence will help it double its revenue from its regional business involving SMEs and mid-cap companies over the next three years.
OCBC and UOB are among the nine foreign banks who received provisional banking licences last October from the Central Bank of Myanmar to prepare for the start of banking operations in the country.
UOB said its Yangon branch is ready and is waiting for regulatory approval to start operations. Services that will be offered include loans to foreign companies expanding into Myanmar, trade facilities to support trade flows into and out of the country, as well as non-credit services such as payments and remittances, deposits and foreign exchange.
“UOB’s business approach for Myanmar is to partner our clients as they invest in industries that the country deems necessary to support its long-term economic growth. For instance, in the energy sector, we have financed several projects over the last one year that help to support the infrastructural needs of the country’s economic transformation,” said Mr Ian Wong, UOB’s managing director for group strategy and international management.
Both banks said more of their clients have expressed interest in investing in Myanmar as the country opens the door to foreign investors after decades of isolation.
A survey released by UOB earlier this month found that one in four Asian enterprises are keen to be part of Myanmar’s economic transformation. In Singapore, about 21 per cent of companies are interested.
Suntec Real Estate Consultants said that the inefficiency of the local banks there adds to the cost of doing business and can be a hindrance to some companies.
“The current financial system is rudimentary. As the local banks have a small capital base, they are unable to facilitate bigger credit lines to support medium-sized enterprises’ expansion. So while the country’s potential for economic expansion is good, the economy is still very much cash-based,” the firm told TODAY.
“Hopefully, day-to-day business operations in Myanmar can be done more efficiently through accounts open with the foreign banks, and transmission of capital in and out of the country can be easier and faster.”
Source: Today Online