MPs dis­cuss re­forms to loss-mak­ing Myan­mar Eco­nomic Bank

The Myanmar Times - - Business - SWAN YE HTUT swanye­htut@mm­times.com

THE coun­try’s largest state-owned bank has been loss-mak­ing since 1988 and re­forms are nec­es­sary to help it be­come prof­itable again, par­lia­ment heard on Au­gust 23.

Myan­mar Eco­nomic Bank (MEB), which be­gan oper­a­tions in 1976, has a man­date to lend at sub­sidised rates to other state banks, co­op­er­a­tives and state-owned en­ter­prises.

It makes a loss be­cause it lends money at a lower rate than it pays on de­posits, U Maung Maung Win, deputy min­is­ter for plan­ning and fi­nance told the Pyi­daungsu Hlut­taw.

“The main rea­son the bank’s losses are in­creas­ing is be­cause it has to lend at a dis­counted rate. Its de­posits are grow­ing an­nu­ally be­cause it is a cred­i­ble bank, but it can­not ex­tend more loans to bal­ance this out,” he said, adding that the bank has too much liq­uid­ity.

“If the bank lends more when­ever its de­posits grow, the qual­ity of its loan book would de­crease and we would also have to pay se­ri­ous at­ten­tion to de­faulted loans.”

The deputy min­is­ter was speak­ing dur­ing a par­lia­men­tary dis­cus­sion of the Pub­lic Ac­count Joint Com­mit­tee re­port on the Union Bud­get Law for 2016-17.

U Khin Cho (NLD; Hlaingbwe) said MEB de­pends on re­mit­tance fees and in­ter­est paid on agri­cul­tural loans dis­bursed to Myan­mar Agri­cul­tural De­vel­op­ment Bank.

In fis­cal year 2015-16 MEB lent K800 bil­lion to MADB at 4 per­cent in­ter­est, while pay­ing 8pc on de­posits.

There are lim­its on the amount of money MEB can lend to the pri­vate sec­tor [at the com­mer­cial rate of 13pc], so it does not re­ceive much in­ter­est from that,” said U Khin Cho.

“Lib­er­al­is­ing the rules to al­low MEB to dis­burse pri­vate sec­tor loans could help it to earn more in­come. More­over, if it can pro­vide more re­mit­tance ser­vices, more peo­ple will de­pend on the bank, lead­ing to higher earn­ings.”

Amyotha Hlut­taw MP U Ye Htut (NLD; Sa­gaing 5) said the MEB had been loss-mak­ing since 1988 and its loss this fis­cal year so far was K10.643 bil­lion.

“In the mean­time, lo­cal com­mer­cial banks are get­ting in­ter­na­tional awards for mak­ing large prof­its,” he said, adding that the gov­ern­ment needs to work out where the bank is mak­ing a loss and try to rem­edy the sit­u­a­tion as quickly as pos­si­ble.

The deputy plan­ning and fi­nance min­is­ter pointed out that Myan­mar Eco­nomic Bank is a 100pc sta­te­owned fi­nan­cial in­sti­tu­tion and “the old­est and strong­est bank in Myan­mar”. If it was run like a com­mer­cial bank, it would be com­pet­i­tive, he said.

“But it also has to of­fer ser­vices as the rep­re­sen­ta­tive bank of the gov­ern­ment. While pro­vid­ing a bank­ing ser­vice to the peo­ple, it also must take re­spon­si­bil­ity for all gov­ern­ment de­part­ments and the salaries of re­tired civil ser­vants and mil­i­tary mem­bers.

“It also has to dis­burse loans at a sub­sidised rate for de­vel­op­ment andto pro­vide for­eign cur­rency ser­vices for gov­ern­ment de­part­ments. Pri­vate banks do not have to do th­ese tasks.”

The gov­ern­ment will come up with a “proper ap­proach” to re­struc­ture the bank to stem its losses, he added.

– Trans­la­tion by Thiri Min Htun

‘It must take re­spon­si­bil­ity for all gov­ern­ment de­part­ments.’

U Maung Maung Win Min­istry of Plan­ning and Fi­nance

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