Korean banks seeking expansion in Myanmar

Industrial Bank of Korea (IBK) CEO Kim Do-jin, right, poses with Myanmar's Ministry of Industry Deputy Minister Min Ye Paing Hein after signing a memorandum of understanding to boost cooperation in supporting SMEs at Lotte Hotel Busan, Nov. 25. Courtesy of IBK

IBK signs MOU with Myanmar's SME authorities

By Lee Kyung-min

Korean lenders are seeking business expansion in Myanmar, a member state of ASEAN emerging as a key growth area under the Moon Jae-in administration's New Southern Policy, Tuesday.

The Association of Southeast Asian Nations (ASEAN) is a regional intergovernmental organization of 10 countries in Southeast Asia.

The Industrial Bank of Korea (IBK) said Tuesday that it formed a business alliance Monday with the Myanmar Small and Medium Enterprises (MSMEs) Development Working Committee.

Under the agreement, the two sides will boost personnel and policy exchanges to foster SMEs. The accord will help Korean and Myanmar firms find business opportunities in each other's countries.

The state-run lender will share experiences and knowhow to help talented individuals in Myanmar develop specialized skills in SME financing among other financial knowledge.

“The economies of Myanmar and Vietnam show the greatest growth potential in ASEAN. We expect our cooperation will lead to economic prosperity and facilitation of the government's new southern policy,” an IBK official said.

This is IBK's latest effort to boost cooperation with Myanmar following the September MOU signed jointly by the bank, Korea Trade-Investment Promotion Agency (KOTRA) and Korea Land & Housing Corp. (LH) to help Korean SMEs enter the Southeast Asian country.

Alongside IBK, Korea Development Bank (KDB) and KB Kookmin Bank, are also seeking to expand business there.

“The approval would essentially mean a green light to almost all banking services at large,” said Jang Yung-shin, an associate research fellow at Korea Institute for International Economic Policy (KIEP).

“Myanmar can become a key area of growth in ASEAN,” he said.

Of the 27 banks operating there, almost half, or 13, are foreign lenders including Korea's Shinhan Bank and three from Japan, according to Jang.

“Commercial and state-run banks see huge growth potential in Myanmar where less than half of the population has bank accounts. More companies moving there from Vietnam is another positive aspect,” he said.

According to data from the Financial Services Commission (FCS), Korean financial firms are operating 22 outlets in Myanmar, the third-largest presence following Vietnam (54) and Indonesia (23).