YANGON: Singapore banks OCBC and UOB officially opened branches in Myanmar on Thursday (Jul 2), becoming some of the first foreign banks to set up operations in the emerging economy.
Singapore’s Deputy Prime Minister Teo Chee Hean, who was present at the banks’ opening ceremonies in Yangon, said the economic partnership between the Republic and Myanmar is set to grow further. He added that the banks will contribute to “a new phase of Myanmar’s development”.
“Today, Myanmar is one of the fastest growing economies. With its vast resources and potential in oil and gas, agriculture and fisheries, Myanmar has been referred to as the ‘last frontier market’,” said Mr Teo.
OCBC signed an agreement with 10 state-owned and private commercial banks to offer them training in cash management, trade finance and treasury solutions.
OCBC Yangon started operations earlier this year in April, with a registered capital of US$75 million. Previously, OCBC had branches in Yangon and Lashio until 1963, when foreign banks exited and the country’s banking sector was nationalised after the military junta took control.
“We’ve been busy working to facilitate the inflow of foreign direct investment into many important sectors such as power, energy, telecommunications, real estate and logistics,” said OCBC Chairman Ooi Sang Kuang.
Like OCBC, UOB’s new branch in Yangon is adding to Myanmar’s transition to emerging market. Both will help finance foreign investments into the country.
UOB has said that it is looking at facilitating investments totalling US$300 million over the next 12 months alone. Its clients are investing in factories, hotels, commercial properties, and energy.
“Their investments are directed at meeting Myanmar’s growing urbanisation and industrialisation needs, mainly in infrastructure. One example is power plants. In the past one year we’ve financed two Singapore-based companies in such projects in Myanmar,” said UOB Group CEO Wee Ee Cheong.
The Myanmar economy has seen eight per cent growth a year, bolstered by foreign investors. In two years of opening up, its foreign investments have doubled to US$8 billion in 2014. However, the country’s financial sector is in its infancy, and concerns over changing policies and political uncertainties remain.
But Mr Samuel Tsien, Group CEO of OCBC, said: “We also believe that the policies will ultimately be good for the economy, so even if there are near term challenges we’ll just work through it.”
“The cost of manufacturing in the northern part of Asia has become a bit more punitive over time. So ASEAN including Myanmar should benefit from that flow of investments, manufacturing facilities that will come from North Asia into this part of the world,” added Mr Ian Wong, Managing Director of Group Strategy and International Management at UOB.
Myanmar’s young population of over 50 million people is another compelling point for companies keen to tap its emerging consumer market.
The Singapore banks’ arrival is also expected to support critical infrastructure development in Myanmar, and help lift banking and financial standards.
Source: Channel News Asia