Standard Chartered opened a representative office in Yangon in February 2013, but current restrictions limit foreign banks’ operations – though reforms to open the sector to international competition have been promised. The Myanmar Times reporter Aung Shin met with Mr Lim Cheng Teck to discuss Myanmar’s financial sector during a period of change. This interview has been edited and condensed.
First of all, what makes you excited about the ASEAN market, as freshly appointed CEO for the region?
ASEAN has exciting opportunities for bankers. It represents a growth market.
Collectively, if you look at ASEAN, it is the third-largest economy in Asia after China and Japan, not just based on size of the economy but its fast growth. This year we expect growth of about 5.3 percent. We are also excited about ASEAN trade flows – at an annual rate of 10.9 or 11pc, it’s a very sizeable trade.
The other thing we are interested in is investment flows. Last year, ASEAN was the single largest recipient of FDI, totaling US$128 billion, more than China received. As a global bank, we can leverage our network advantage. We have been in ASEAN for a long time.
What is Myanmar’s economic outlook?
Growth is strong in Myanmar at 7 to 7.3pc. Even though the base has been smaller, it is stronger growth. We are excited not only about the growth, but also its trend. Growth is in the high single digits, and could possibly be in the double digits [in the future].
How long it will take?
Of course economic growth depends on a few things. We are excited about liberalisation and the reforms that Myanmar has taken. If it continues, you can expect stronger growth. But if the reform agenda, liberalisation agenda, for some reason gets stopped, then growth will be impacted.
Myanmar is largely an agriculture based economy, 70 percent of GDP. Growth in the agricultural sector can be harder because gains in productivity take longer.
So you need basic investment in infrastructure, energy, communication, financial services. There are many many different opportunities in Myanmar.
What do you think of Myanmar’s current financial sector?
I think you need a healthy financial services sector. International players [foreign banks] bring in expertise that we experienced from other markets. We have proven capability in the financial services sector supporting small and medium enterprises. Medium-size enterprises are the backbone of many developing economies … you also need to have well-established rules and regulations. And you also need to promote competition, because competition promotes all different kinds of innovations.
So how are you getting ready for the government’s plans to allow foreign banks?
We are looking forward to the announcement. We are very committed to participating in the Myanmar market because we believe that we have the capability to support economic growth as well as the financial sector. We have established connectivity in ASEAN.
Do you think the AEC [ASEAN Economic Community] is going well?
Some things are going well such as trade. Trade flows freely within ASEAN member countries. I think we have other dimensions to look at. The financial sector is still different among member countries. But I think we all are headed in the right direction.
What competition will you see from foreign banks after the Myanmar government allows it?
First of all, you want to look at the market. It must be opened up in an orderly manner. One good approach is limiting banks. If you allow a large number of banks, it would be chaotic, it won’t provide capacity. You need to go step by step. A number of licences will be ready in the first stage and then other licences after a few years within regulator. We have been here for a long time and can play a very useful role.
What will be the priority once you are allowed to run financial services in Myanmar?
Firstly we need to update infrastructure. We need to train our local staffs. For that we have the advantage of sending them to our well-established markets. Yes, building capacity would be our first priority, and sharing our experience with local banks.
What challenges face foreign banks coming to Myanmar?
Today we all have [representative] offices. But we have limitations, because we are not allowed yet to run other financial services. That limits our ability to participate in the financial services market.
How do you view local banks?
I believe that competition always benefits industry. So you need to have competition with local and international banks.
This will lead to a healthier industry, which of course benefits the community and consumers. Collectively local and international banks promote economic growth.
How would you like to encourage this country in developing its banking sector?
What the government is doing right now to open up and liberalise the financial sector is definitely the right direction.
We are positive there will be further liberalisations in this sector.
Source Myanmar Times