IF Myanmar hopes to maintain its growth momentum, there needs to be more collaboration among the central bank, local banks and foreign entrants, financial experts said during a panel discussion last week.
Sein Maung, chairman of First Private Bank and vice president of the Myanmar Banks Association (MBA), said foreign banks should provide more training for local banks and the central bank should seek the opinions of local banks before making further steps in liberalising the financial sector.
“We have to go a very long way, as it is just the beginning of a long journey,” he told the Myanmar Banking and Finance Conference 2015.
“We can buy the latest software but we cannot buy skills and knowledge. Foreign banks should share their knowledge with us and transfer their skills. The central bank should have a strategy for local banks on how to cooperate with foreign banks,” he said.
Sein Maung added that only a few foreign banks offer capacity building programmes and intensive training for local banks through a mechanism introduced by the association.
He noted that due to the current state of Myanmar’s infrastructure, education and capacity, the local banks cannot compete with foreign players.
“The issue here is how we can cooperate. In terms of skills and knowledge, we are expecting a lot from foreign banks. I would like to recommend working together in terms of a joint venture so that we can work together and learn from them at the same time,” he said.
Sin S Lim, group executive of Singapore’s DBS Bank, told the conference he opposed the idea of joint ventures because they may lead to scandals in the event of financial problems or if there are disagreements between parties.
He said allowing foreign banks to open branches is better for the market, as it brings new technologies, expertise and wider sources of customers. “Only one branch will not cover everything. So, there are many areas in which foreign banks can cooperate with local banks. And we can hire local people and teach them. I am sure it is much better than joint ventures,” Lim said. With the entry of foreign players, he said, banks in Myanmar will compete and complement each other more than ever before, which is a better situation for customers. “Unless you accept the competition, you will never reach the next level,” he said.
The DBS executive said that improving infrastructure is of paramount importance at this stage. The central bank needs to be more transparent so that it can easily maintain the nation’s financial stability. Besides, he sees mobile banking as potentially the most popular form of banking in the near future, given the rapidly increasing mobile penetration after the telecoms sector reforms.
Hal G Bosher, special adviser to the chairman and CEO of locally owned Yoma Bank, also supports enhanced liberalisation if Myanmar really wishes to grow further.
“Myanmar has so many opportunities when compared to some African countries. Entry of foreign banks will help the environment become more customer-oriented. It brings both competition and collaboration. We need to take national inclusion into serious consideration. At the same time, local banks have a lot of work to do, such as structural modernisation and upgrading technology,” Bosher told the conference.
Local banks must adapt their strategies, he said. They have a better understanding of the local market, something foreign banks cannot buy. Aside from embracing new technology, they only need confidence.
“Local banks should be very confident in what they can do. Here, the key is the government policy.
Chang-Ken Lee, president of Taiwan’s Cathay United Bank, said it is sometimes kind of give and take if you want a new system. “Foreign banks will also need reliable local partners to share risks and solutions. They can bring the latest IT systems and help local banks to move quickly,” Lee said.
Source: The Nation