S'porean banks seek firmer presence

“As Myanmar undergoes industrialisation and urbanisation, there will be more opportunities for Singaporean and Myanmar companies to work together. Banks such as the UOB and OCBC can play a key role to support foreign investment from Singapore into Myanmar,” he said at the United Overseas Bank branch opening ceremony on July 2.
The opening of the UOB and Oversea-Chinese Banking Corp branches on the same day came at a crucial time.
Next year, Singapore and Myanmar will celebrate the 50th anniversary of diplomatic relations. Last year, Singapore was Myanmar’s largest foreign investor, accounting for over half of the FDI in Myanmar. Singapore is also the leading investor in terms of companies, accounting for a quarter of the more than 4,000 foreign firms in Myanmar. In the hospitality sector, Singapore is already the largest investor, and three of the largest international hotels in Yangon are from Singapore.
“If you look around Yangon, the presence of Singaporean companies is visible, and many have been present in Yangon for a long time. This economic partnership is set to grow even further. Many Singaporean companies are interested to participate in the economic transformation of Myanmar. These companies are looking at long-term opportunities across a range of sectors in the country, from infrastructure and manufacturing to hospitality,” he said.
Teo acknowledged that a strong financial sector was key to building a stable and vibrant economy and he saw that Singapore’s banks could contribute to that.
Echoing the politician’s view was the UOB’s extension of loans to two companies. The loan to Cycle & Carriage Automobile Myanmar Co will help fund the building of two showrooms and a service workshop in Yangon.
The bank also provided a loan to System-Bilt Myanmar, to finance the 200-room expansion of the latter’s Summit Parkview hotel in Yangon. In May, a loan contract was signed with Rangoon Excelsior Co Ltd to turn a colonial building into a five-star hotel in Yangon to accommodate the increasing number of tourists.
“Based on our current discussions, we are confident that over US$300 million of investment by reputable companies will come into this county over the next 12 months. This will create jobs and improve infrastructure,” said Ian Wong, the UOB’s head of group strategy and international management.
He added that the potential investors are from Europe and Asia, mostly Hong Kong, Singapore and Thailand.
Wong said that the UOB would mainly support three sectors: hospitality, infrastructure and manufacturing.
Wee Ee Cheong, the UOB’s group deputy chairman and chief executive officer, said that the bank was keen to support sectors that could help create far-reaching and long-term benefits for Myanmar citizens.
“We are excited about Myanmar’s economic prospects, as are our clients from across other continents who are actively investing in the country. Their investments are directed towards meeting Myanmar’s growing urbanisation and industrialisation needs and sustainable economic growth,” said Wee.
OCBC’s focus is placed on power, energy, telecommunications, real estate and logistics sectors, according to its chairman, Ooi Sang Kuang. Aside from much-needed project financing, it also launched a suite of financing, cash management, trade finance, foreign exchange and advisory services to support its corporate customers.
“Since 2011, we have seen strong interest from our corporate customers across our regional network in Asean and Greater China, with several already initiating ventures and projects in Yangon and Mandalay,” he said.
Targeting a firmer presence, OCBC on July 2 signed memoranda of understanding (MoUs) with 10 domestic banks – seven private and three state-owned: Myanma Economic Bank, Myanma Foreign Trade Bank, Myanma Investment and Commercial Bank, Asia Green Development Bank, Ayeryarwady Bank, Co-operative Bank, KBZ Bank, Myanmar Apex Bank, Myanmar Oriental Bank and United Amara Bank.
Under the MoUs, OCBC agrees to assist training and capability-building activities in the areas of cash management, trade finance and treasury solutions. Ooi said that the payment and settlement infrastructure was critical for a well-functioning banking system.
“These 10 banks have been friends and business partners of OCBC for several years, successfully collaborating with us in the areas of training and capability-building to develop financial industry professionals who can help drive the growth of the domestic banking industry. We now bring these collaborative efforts to a new level.”
The UOB’s Wong shares the same view as the OCBC.
“Myanmar has a lot of natural resources. Absolutely, we should make it work in such a way leading to a win-win situation. We cannot do it alone,” he said, adding that the UOB was currently cooperating with more than 10 domestic banks.
Both banks initially injected US$75 million into their Yangon branches, less than Thailand’s Bangkok Bank and Japan-based Bank of Tokyo Mitsubishi UFJ which injected US$200 and US$100 million capital, respectively. Though, they are optimistic about their capacity to bring in quality investments, thanks to their expertise, extensive network and long-term presence in Myanmar.
“From the start, we believed in the potential of Myanmar. We are now witnessing Myanmar’s rapid economic transformation, making it one of the fastest-growing economies in Southeast Asia. Twenty years may seem a long time for some. But we see that our journey has only begun,” the UOB’s Wee said.