Feb. 6, 2014
By Matt Rusling
Borderless caught up with US-ASEAN Business Council’s Director of Myanmar Affairs Anthony Nelson, who briefed us on Myanmar’s plans to allow foreign banks to beef up their presence and what that means for foreign investors.
While a number of foreign banks are already in the newly-opened Southeast Asian nation, they have been forbidden from doing much more than offering consultation to their clients. But this year the country is expected to ease restrictions and eventually allow foreign banks to undertake joint ventures with local banks.
“(Allowing foreign banks to ramp up activities in Myanmar) has the potential to make an investment there a little bit less risky,” he told Borderless.
“Because you can deal with known parties that you maybe already deal with and you avoid having to concentrate just on one of the four Burmese banks that are available to U.S. companies,” he said.
Banks based in Thailand and Singapore are likely to be among the first to enter Myanmar or ramp up their activities from their established rep offices, he said.
But whether banks will balk at coming to Myanmar due to perceived risks remains unknown.
“We’d have to wait and see what the actual implementation laws look like and what the first experiences that people have are,” he said.
“We’ll have to wait and see what the experience the early adopters have is,” he said, but billed as a positive sign that the World Bank is advising Myanmar on financial reform.
In general, much work needs to be done in the financial services sector, which needs to update regulations around insurance and other areas, but Myanmar has taken some important steps to clean up its financial system with last year’s move to separate the Finance Ministry and the central bank, he said.
Decades of military rule and Western sanctions devastated the country’s banks, but the European Union and other nations have lifted sanctions after the country began its transition toward more democracy.
The U.S. has lightened sanctions and the U.S. Treasury Department has granted a general license to Ayeyarwady Bank, Myanma Investment and Commercial Bank, Asia Green Development Bank and Myanma Economic Bank.
While they remain on the SDN list — a list of individuals, groups, and entities subject to economic sanctions by the U.S – the license allows them to deal with U.S. companies. Still, the U.S. has left the sanctions laws on the books, giving Washington leverage should Myanmar start to backslide on reforms, Reuters reported.
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