UOB has a “strong pipeline” of projects set to follow its loan to a hotel development this week. The deal marked the first onshore loan by a foreign bank in Myanmar, according to company representatives.
Singapore-based UOB received permission to open its Yangon branch for May 4, and announced the loan to Rangoon Excelsior in a press conference on May 6.
The bank has had a representative office in Yangon since 1994, making it the foreign bank with the second-longest continuous presence in Myanmar, behind Singaporean rival DBS. UOB was declared one of nine winners of a foreign bank licence last year, and its Yangon branch is now up and running.
The bank is working on “a strong pipeline of deals”, said UOB country manager Harry Loh in an exclusive interview on May 6.
“We are not only bringing investors from Singapore into Myanmar, we are in fact bringing investors from [places such as] Hong Kong, China and Thailand, into this part of the world,” he said.
Its first onshore loan is to Rangoon Excelsior, a French-Myanmar joint venture, to refurbish a Yangon hotel at the corner of Bo Soon Pat and Merchant streets. UOB did not disclose the terms of the loan.
Mr Loh said that while he acknowledged the introduction of foreign banks had met some local opposition, the foreign banks will complement the local banks well, and will focus on supporting FDI into the country.
“UOB will be supporting the foreign investors here, supporting their expansion in the country,” he said.
“And all this will indirectly help to contribute to growth because it will create more jobs and boost incomes and create more employment.”
UOB will also collaborate with local banks, through areas such as knowledge sharing. It has held seminars for local banks in areas like risk management, project financing and trade financing.
Three other foreign banks have opened their Myanmar branches already, and they are pursuing different approaches toward partnership with local banks. Some of the foreign banks have zeroed in on one of a handful of the stronger local banks as partners, while others like UOB aim to work with all the local banks on a case-by-case basis.
Mr Loh said that by restricting potential partnerships, a foreign bank is restricting potential opportunities. In areas such as trade financing, the local banks already have their existing clients.
The nine foreign banks coming to Myanmar, including UOB, are limited to one branch and cannot conduct retail business or directly finance Myanmar companies, though they can work with international companies and local banks.
In any market there are always laws and regulations, said Mr Loh.
“We will definitely play a very significant role to capture [the] FDI opportunity which the Myanmar Investment Commission has even estimated crossing US$5 billion this year. So [there’s] already a huge potential for us, and we will focus on that,” he said.
Mr Loh added UOB does not consider itself to be just a Singaporean bank, pointing out it has a strong regional presence, with existing locations in 8 of the 10 ASEAN member countries.
Asked about challenges the bank faced, Mr Loh said UOB is keen to see the new Financial Institutions Law in place. With the foreign banks coming in, there is a need for laws to be spelled more clearly.
“We’re very glad that they’ve done this, and we’re looking forward to it so a lot of things will be much clearer,” he said.
Mr Loh also highlighted improvements to skilled labour as important for the financial sector. UOB has launched a scholarship program in partnership with the University of Yangon and with the Yangon University of Economics.
Singapore ambassador to Myanmar Robert Chua also welcomed the branch’s opening in a speech at a separate launch event.
“I believe that UOB together with the other Singapore bank OCBC will contribute to the development of Myanmar’s banking sector and support foreign investments in Myanmar’s growing economy,” he said.
Source: Myanmar Times