Japanese banks win big in Myanmar
Date: Oct 9, 2014
Source: Nikkei Asian Review – by GWEN ROBINSON, Senior Asia editor, Nikkei Asian Review
BANGKOK — After months of speculation, Myanmar on Oct. 1 awarded banking licenses to nine foreign financial institutions, including the three biggest Japanese banks and Australia and New Zealand Banking Group.
The government’s announcement followed more than five decades when the country was closed to foreign lenders. It marks a new phase in Myanmar’s re-engagement with the international community, although the licenses strictly limit the scope of foreign banks’ operations.
The three Japanese banks — Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui Banking Corp. and Mizuho Bank — were among 25 applicants from 12 countries and regions vying for the licenses. The winners were chosen from a shortlist compiled by Roland Berger, a Germany-based consultant appointed to oversee the process.
The five other successful applicants were: Thailand’s Bangkok Bank; Industrial and Commercial Bank of China; Malaysia’s Malayan Banking (Maybank); and Singapore’s Oversea-Chinese Banking Corporation and United Overseas Bank.
French, South Korean, Vietnamese and other Southeast Asian banks missed out despite intense lobbying, as did banks from India, Taiwan and Mauritius.
The government’s Foreign Bank Licensing Committee said its selection was based on “detailed quantitative and qualitative criteria.” By awarding licenses to the Japanese trio, the government signaled its dual emphasis on facilitating foreign investment and assisting domestic banks. Singapore benefited from the strong relationship its banks forged with Myanmar over the decades it was shunned by the West and stymied by sanctions.
“Myanmar has given a significant nod to Japan in the hope of favoring much greater Japanese investment,” said Romain Caillaud, Myanmar director of Vriens & Partners, a Singapore-based consultancy. “Japan has been a large investor as Myanmar has opened its economy, but is still over-shadowed by (South) Korea, and by China and Thailand. The fact that Korean banks were shut out entirely is surprising given the size of Korea’s stake in the country.”
Some local analysts saw the decision to award licenses to all three Japanese applicants as a tacit response to Tokyo’s frustration over losing out on a series of lucrative Myanmar government contracts, including for telecommunications licenses and airport upgrades. Japan has forgiven billions of dollars of debt owed by Myanmar and has launched vast aid programs for the country since the reformist government of President Thein Sein came to power in early 2011.
Japan’s three megabanks are already helping to finance a growing stream of Japanese investment in Myanmar, including new factories, a special economic zone and oil and gas operations. It is understood that the institutions pledged various programs to assist local banks, including the provision of training and, in the case of BTMU, setting up an education institute for banking personnel.