Big banks rushing to Myanmar

By Yi Whan-woo

Major Korean banks are rushing to launch businesses in Myanmar in order to tap into new revenue sources in the rapidly-growing market.

Last week, Shinhan Bank joined Hana Bank and Woori Bank, which opened their first offices in the Southeast Asian country in October 2012. KB Kookmin Bank also applied for business approval in January from the quasi-civilian Myanmarese government that has sought economic transformation since it took power in 2011.

Among state-run banks, the Industrial Bank of Korea will set up an office there on April 29. The Korea Development Bank (KDB) is scheduled to launch its operation in June.

All the Korean banks will be located in Yangon, Myanmar’s former capital and its most populated city where some 1,000 Koreans live. Large Korean firms such as POSCO and Daewoo International, and other small- and medium-sized companies run offices or plants there.

The banks expect to run active businesses for profit, although their strategies will vary.

“We plan to initiate services for our companies and people in Yangon,” said Woori Bank, the country’s largest bank by assets. It set up office in Myanmar on Oct. 25, 2012.

“We’ll then expand our services to the rest of Myanmar that has a growing demand for financial investment to develop abundant natural resources, such as natural gas and oil.”

Hana Bank, which opened its office on Oct. 26, echoed a similar view.

“The goal of our Yangon office is to provide high-quality financial services to our companies,” it said in a statement. “The financial market in Myanmar is not favorable at the moment, but we see potential from its natural resources and low-labor costs that can replace China and Vietnam in the near future.”

The move by banks came after Myanmarese President Thein Sein undertook economic and political reforms that persuaded Western countries including the United States to lift sanctions. Since then, a number of international firms from the U.S., Europe, Japan and others have sought to enter Myanmar.

The Southeast Asian government also introduced several policies based on market and capitalist models, including a new foreign investment law adopted in November of last year.

Under this law, foreign banks are only allowed to conduct market research and are prohibited from providing services, such as savings and loans.

But it is anticipated that joint ventures between foreigners and Myanmarese citizens or the government will be permitted from the second half this year at the earliest. The overseas banks are also expected to be allowed to own 100 percent of businesses without the need for a local partner, despite restrictions in some areas.