For­eign in­vest­ments in lo­cal banks to be re­viewed by CBM

The Myanmar Times - - Business - HTIN LYNN AUNG htin­lyn­naung@mm­

FOR­EIGN in­vestors plan­ning to in­vest in domestic banks will still be re­quired to seek ap­proval from the Cen­tral Bank of Myan­mar (CBM) to do so, U Soe Thien, vice gover­nor of the cen­tral bank, told The Myan­mar Times yes­ter­day.

“Ac­cord­ing to the law, all firms are in­cluded un­der the 35 per­cent thresh­old. But, be­ing fi­nan­cial in­sti­tu­tions, lo­cal banks will need to sub­mit the amount of for­eign in­vest­ment re­ceived and other terms to the CBM,” U Soe Thein said.

“Each in­vest­ment will be re­viewed on a case-by-case ba­sis and ap­proved only if ap­pro­pri­ate,” he said.

This is de­spite a new reg­u­la­tion in the Myan­mar Com­pa­nies Law per­mit­ting for­eign­ers to take stakes of up to 35pc in all lo­cal com­pa­nies. The law will be en­forced on Au­gust 1 af­ter re­ceiv­ing pres­i­den­tial ap­proval in De­cem­ber.

The new law is ex­pected to yield promis­ing op­por­tu­ni­ties for lo­cal banks, which lack cap­i­tal in­vest­ments and re­serves when com­pared to for­eign banks.

“Backed by for­eign in­vest­ments al­low­able un­der the law, lo­cal banks will be able to ex­pand their ser­vices and grow fur­ther in the coun­try,” said bank­ing ser­vices ex­pert U Than Lwin.

“If for­eign­ers are al­lowed to in­vest, the weaker banks can re­po­si­tion them­selves into stronger en­ti­ties,” he said. “But the banks inviting for­eign in­vest­ments must also en­sure that their cap­i­tal re­serves are well sup­ported.”

Nev­er­the­less, as the bank­ing sec­tor is an im­por­tant part of the na­tional fi­nan­cial sys­tem, hav­ing the CBM reg­u­lat­ing and over­see­ing all for­eign in­vest­ments in the sec­tor is ap­pro­pri­ate, U Than Lwin said.

Ex­clud­ing the state-owned banks, the CBM has to date per­mit­ted a to­tal of 29 pri­vate lo­cal banks to op­er­ate in Myan­mar. Of the 29, five were given ap­proval in May. Among the banks are First Pri­vate Bank and Myan­mar Cit­i­zens Bank, which are listed on the Yan­gon Stock Ex­change.

“The Com­pa­nies Law is advantageous for every­one. But with the CBM re­view­ing each in­vest­ment in­di­vid­u­ally, we will have to ob­serve the sit­u­a­tion when the law comes into ef­fect,” said U Myint Zaw, Se­nior Gen­eral Man­ager of First Pri­vate Bank.

Photo: The Myan­mar Times

CBM vice gover­nor U Soe Thein said for­eign in­vest­ments in lo­cal banks will be re­viewd on a case-by-case ba­sis.

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