Myanmar Opens Talks with Thailand on Reciprocal Banking Access

BANGKOK — The central banks of Thailand and Myanmar agreed Sunday to start talks on granting access to designated banks in each other’s markets, marking a small step forward in the financial integration of the Association of Southeast Asian Nations.

For Thailand, Myanmar is the third country to enter bilateral discussions on bank access, following Malaysia and Indonesia; for Myanmar it is a first.

Under the ASEAN Banking Integration Framework, countries can enter into bilateral deals allowing banks that meet certain criteria to become “Qualified ASEAN Banks” that operate in each other’s markets on the same terms as local banks.

“[The] expansion of [a] banking presence through QAB will enable greater efficiency and reduce costs for bankers and customers alike,” Bank of Thailand Gov. Veerathai Santiprabhob told bankers who were in Bangkok for the 21st ASEAN Banking Conference on Monday.

With Myanmar opening up its economy after nearly 50 years of isolation and the ASEAN Economic Community kicking off last year, banks in  Thailand and Myanmar have been growing more active in each other’s markets.

Myanmar’s largest lender, Kanbawza Bank, opened a representative office in Bangkok in August, becoming the first Myanmar bank to venture abroad.

Last year, Thailand’s Bangkok Bankwas among the first of nine banks to be granted a foreign banking license in Myanmar. Other big Thai banks were not granted licenses in the first round, but have opened representative offices in Myanmar in anticipation of the next opportunity.

“It’s good that the Bank of Thailand signed the QAB agreement with Myanmar,” said Predee Daochai, president of Kasikornbank, which now has a representative office in Myanmar. “We would like to open [a bank] there,” he said.

The time frame for the negotiations and details such as the number of banks to be designated QABs have yet to be decided.

While trade and investment have been increasing in the region in the wake of deregulation and elimination of tariffs, “much work remains with regards to financial connectivity” in the region, Veerathai said.

He called on central banks to work on various initiatives underway in the region including the ASEAN Payment Network, which aims to create a single payment platform to reduce the cost of remittances.

Promoting the use of local currencies in cross-border settlement would also facilitate more trade in the region, Veerathai said. Thailand and Malaysia introduced a framework earlier this year allowing banks from the two countries to offer deposit-taking, trade finance and hedging facilities directly in local currencies. Previously, these services were only available through foreign exchange conversions.

Veerathai said Thailand is working to develop local-currency frameworks with other countries as well.


Source: Nikkei Asian Review


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