Slow entry of foreign banks hinders SME growth

 

Some SME businessmen say that they have to brace for more expenses and time in running their businesses, including money transactions with foreign countries, and that they have difficulty obtaining loans.

“Local banks are not benefitting the people most of the time. People will rely on any bank that gives convenient service. Now, it is not easy to take out loans for a business extension and the interest is high - it is like pulling down fresh entrepreneurs who want to risk starting a business. Moreover, if we pay for advertising our businesses on social networks like Facebook, we have to subscribe abroad. It takes longer to complete a business transaction,” said a young man who started his own business.

Currently, some of the large international banks have opened their representative offices in Myanmar.

“It is difficult to say when international banks will be given the full right to operate because it is part of the government’s decision. But it is important for the relevant people to get together and discuss the case further,” said Mr. TatsuroNonaka, chief representative at the Yangon office of the Mizuho bank.

He added that they are concerned over the likely delay of Japan’s inflow of investments into Myanmar because they have not received permission for banking.

“As Japanese businessmen might need to take out foreign cash loans, we are worried that the delay in our banking will hinder Japan investment,” Nonaka said.

“Foreign banks will not directly compete with local banks; instead they will help make Myanmar’s banking system better. Not giving working permits to foreign banks will make things worse instead of better,” said an officer of a bank which came to open an office.

In a related development, Thailand’s based Kasikornbank is committed to opening a branch in Myanmar once the licence is extended.

Nuttaphong Visitkichakarn, an executive from the Thai bank, said it has proposed the plan to the government, adding that the bank also has plans to cooperate with local partners if it is not allowed to operate as a standalone.

“As there are many Myanmar migrant workers in Thailand, we’re planning to expand our services such as remittance for their convenience,” said Nuttaphong.

The Central Bank of Myanmar has recently announced that there will be three steps for foreign banks to begin their services in the country; firstly to open their representative offices, secondly to establish a joint venture with local partners and finally to open their own branches.

The vice chairman of the central bank said recently that there will be no heavy impact on the local private banks as there will be limits for foreign banks operating in Myanmar in accordance with regional rules.

Economists say millions of dollars have been remitted to Myanmar each year as there are more than two million Myanmar migrant workers in Thailand.