Asian com­pa­nies eye MFI growth in Myan­mar

Thai-listed firm Group Lease has bought a ma­jor­ity stake in BG Mi­cro­fi­nance Myan­mar, with plans to in­vest al­most US$7 mil­lion into the busi­ness and ramp up the num­ber of branches. Korean credit card firm Shin­han Card, mean­while, is pre­par­ing to start its

The Myanmar Times - - Front Page - HTINN LYNN AUNG htin­lyn­naung@mm­ STEVE GIL­MORE s.gil­more@mm­

Two firms have an­nounced ex­pan­sion plans for the mi­cro­fi­nance sec­tor, with a Thai firm buy­ing a ma­jor­ity stake in BG Mi­cro­fi­nance Myan­mar, and a Korean firm pre­par­ing to start ser­vices.

GROUP Lease has bought al­most 72 per­cent of BG Mi­cro­fi­nance from Sri Lankan fi­nan­cial group Com­mer­cial Credit & Fi­nance, which will hold the other 28pc.

The Sri Lankan group set up BG Mi­cro­fi­nance in 2014 and re­ceived a per­ma­nent li­cence in 2015. The lender has 9800 cus­tomers and a port­fo­lio of group loans – to groups of five in­di­vid­u­als – amount­ing to around US$1.5 mil­lion, GL said.

But GL chair Mit­suji Konoshita said that Sri Lankan au­thor­ity restric­tions on cap­i­tal out­flows from that coun­try had pre­vented BG Mi­cro­fi­nance from in­creas­ing its port­fo­lio, which Mr Mit­suji is ex­pect­ing to reach $30 mil­lion to $40 mil­lion in the year fol­low­ing GL’s ac­qui­si­tion.

He ex­pects monthly prof­its to in­crease dra­mat­i­cally from $20,000 a month to $200,000, which will be made pos­si­ble through “ef­fec­tive high in­ter­est rates”, GL said.

GL will in­ject $6.8 mil­lion into BG Mi­cro­fi­nance and in­crease the num­ber of branches from four to 12, ac­cord­ing to the firm’s an­nounce­ment. The ac­qui­si­tion is pend­ing a due dili­gence re­view of BG Mi­cro­fi­nance, which Mr Mit­suji ex­pects to be fin­ished shortly.

Shin­han Fi­nance Group is also pre­par­ing to pour in­vest­ment into Myan­mar’s fi­nan­cial in­dus­try, Wi Sung Ho, chair of sis­ter firm Shin­han Card, told The Myan­mar Times.

Shin­han Card is pre­par­ing to roll out mi­cro­fi­nance ser­vices in Septem­ber, and Shin­han Bank is pre­par­ing to open a branch in Oc­to­ber after win­ning a li­cence ear­lier this year. The mi­cro­fi­nance busi­ness will start in Hlaing Thar­yar, In­sein, Shwe Pyi Thar and Min­gal­adon town­ships in Yan­gon Re­gion and two town­ships in Bago Re­gion.

Shin­han Card man­ag­ing di­rec­tor Kim Tae Jung said the ar­eas were those in which the firm had per­mis­sion to op­er­ate, but it is hop­ing to ex­tend ser­vices to Nay Pyi Taw and Man­dalay later on. The firm will lend up to K3 bil­lion this year ($2.5 mil­lion), and more in com­ing years, he added.

Any­one in em­ploy­ment can ap­ply for a one-year K300,000 loan with an an­nual in­ter­est rate of 30 per­cent, he said, adding that the firm will also is­sue group loans. Cus­tomers will be able to ap­ply for loans di­rectly at the com­pany, which will be dis­persed in cash. But Shin­han Card is plan­ning to part­ner with lo­cal banks and of­fered a card-based sys­tem for re­ceiv­ing loans fur­ther down the road.

Myan­mar’s reg­u­la­tor has is­sued Shin­han Card a one-year tem­po­rary li­cence for mi­cro­fi­nance, and will de­cide whether to pro­vide a per­ma­nent li­cence based on quar­terly anal­y­sis of the Korean lender’s op­er­a­tions.

“We’ll de­cide on a per­ma­nent li­cence based on how the firm im­proves ba­sic so­cial con­di­tions for peo­ple,” said U Wai Than, as­sis­tant di­rec­tor of the Fi­nan­cial Reg­u­la­tory Depart­ment.

The depart­ment has granted li­cences to 166 or­ga­ni­za­tions to pro­vide mi­cro­fi­nance ser­vice through­out Myan­mar of which 78 are based in Yan­gon Re­gion.

Photo: Staff

An at­ten­dant makes tea at a tea shop. Mi­cro­fi­nance can help pro­vide fund­ing to en­trepreneurs and small busi­nesses.

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