Licensing proceeding despite opposition

Speaking on the sidelines of the Myanmar Banking and Business Development Conference 2014 in Yangon this week, he said that 25 banks had been shortlisted to vie for licences to operate in Myanmar.
 “The licensing committee is now evaluating RSP [requests for proposal] responses from the selected banks. The preliminary licence approval will be announced by September. We hope to award five to 10 licences as planned. Licences are expected to help grow our banking industry and the interbank market,” Set Aung said.
 The preliminary approval will be followed by an intervening period in which operations have to be set up. Within the intervening period, licence recipients need to fulfill commitments made in the RSP as well as take all necessary measures to ensure functional banking operation from day one of business, a July 15 statement from central bank said.
 “We have been making steady progress in the last three years and with the Central Bank gaining independence last year, we have officially reached a significant milestone in our reform journey. In order to continually develop our banking sector, I would like to call upon the leading authorities, most influential voices and the brightest minds of the region to gather to discuss the opportunities and challenges we are facing today,” Set Aung said in his opening speech at the July 15-16 conference. 
 Chua Wee Phong, chairman of conference organiser Sphere Conferences, said that a further increase in business transactions and investments is expected following the granting of five to 10 banking licences to the foreign banks in September.
 Local bankers do not share his view.
 The strongest opposition came from Sein Maung, chairman of both the Myanmar Banks Association and First Private Bank.
 “If we compare foreign banks to local banks, capitalisation is a huge gap. Moreover, in terms of skills and scope, we cannot be competitive with them. We are not ready yet. We are in the process of building institutions. Without these prerequisites, we cannot go ahead. So my advice is to move gradually step by step. That is a pragmatic action,” Sein Maung said.
 “I think it is a bit premature. If they are committed to make it work, it works. The problem is how to make that happen. So, we don’t know clearly what would be the terms and conditions for the licensing of foreign banks. We are worried how the central bank will regulate and supervise the operations of these foreign banks effectively,” he added.
 “I wonder whether the central bank has sufficient human capacity or switch-on capacity. Even now, the central bank could not effectively regulate local banks. Why rush? That is my point. I recognise the potential contribution of foreign banks. But we need to work together,” he said.
 Sein Maung suggested allowing subsidiaries or joint ventures instead of allowing foreign banks to open branches in the country.
 “The advantage from our perspective of a JV is that we can learn from them – their skills, their experience. Again, foreign partners usually want to have a majority of shares. Why do they want to dominate?” he asked.
“They’re coming in to make money, not because they love this country. There will be no free lunch. So be careful! One day, if things go wrong, who will take responsibility?” Sein Maung said, adding that there are a lot of enforcing factors, and awarding the licences may have plenty of political and economic consequences.