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II BANKING AND FINANCE IN MYANMAR BANKING AND FINANCE IN MYANMAR III ACKNOWLEDGMENTS This paper was written by Sean Turnell. The author is grateful for comments and suggestions on earlier drafts from Steve Parker, Lynn Salinger, Daniel Swift (USAID), Tocher Mitchell, Bruce Bolnick, Timothy Buehrer, Show Ei Ei Tun, BANKING and other participants in the Economic Reform and Growth Dynamics Study workshop held at the PSDA office in Yangon, Myanmar, on January 13–14, 2016. The author also benefited from useful discussions with Declan McGee AND FINANCE (the United Kingdom’s Department for International Development), from the members of the National League for Democracy’s Economic Committee, and from a wide variety of people in Myanmar’s banking fraternity. IN MYANMAR PRESENT REALITIES, FUTURE POSSIBILITIES PHOTO CREDITS DISCLAIMER The team would like to thank the following for the photos provided. This document is made possible by the support of the American people through the United States Agency for - Jeffrey Barth International Development (USAID). Its contents are the sole responsibility of the author or authors and do not - Soe Zeya Tun necessarily reflect the views of USAID or the United States government. - Tom Cheatham - Asian Development Bank II- World Bank BANKING AND FINANCE IN MYANMAR BANKING AND FINANCE IN MYANMAR III ECONOMIC REFORM AND GROWTH DYNAMICS DISCUSSION PAPER SERIES LIST OF ACRONYMS In 2015, as Myanmar prepared for new elections, the United States Agency AGD Asia Green Development Bank for International Development (USAID) commissioned a set of discussion AML Anti-money laundering papers to review Myanmar’s economic status, benchmark its performance ANZ Australia and New Zealand Banking Group relative to other countries, and identify priority policy reforms, investments, APG Asia/Pacific Group on Money Laundering and institutional innovations to re-establish the country on a new, ASEAN Association of Southeast Asian Nations inclusive growth path. This effort has been led by Nathan Associates under ATM Automatic teller machine the Private Sector Development Activity (PSDA) and the Association AYB Ayeyarwady Bank of Southeast Asian Nations (ASEAN) Connectivity through Trade and CB Co-operative Bank Investment project Economic Reform through ASEAN Integration program. CBM Central Bank of Myanmar CFT Combatting the financing of terrorism Nathan Associates has a long history of providing economic analysis of CHDB Construction and Housing Development Bank the Myanmar economy. Originally headed by the economist Robert R. DFID Department for International Development (U.K.) Nathan, who helped develop the United States’ first national accounts in FATF Financial Action Task Force (OECD) the U.S. Department of Commerce, Nathan Associates was founded in FDB Farmers Development Bank 1946 to provide applied economic analysis services to clients in the United FIL Financial Institutions Law States and around the globe and started working in Burma in 1951 at the FIML Financial Institutions of Myanmar Law request of the U Nu government. The latter sought “advice with respect FIND Financial Inclusion for National Development (World Bank) to various important aspects of the country’s economy and engineering FMI First Myanmar Investment problems and assistance in solving practical operating difficulties.” Nathan FPB First Private Bank Associates worked in Burma until 1959 with two U.S. engineering firms to FRD Financial Regulatory Department, Ministry of Finance deliver this advice, initially with funding from the U.S. Technical Cooperation FY Fiscal year Administration (a predecessor to USAID) and later with direct support GDP Gross domestic product from the Burmese government. GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit In 1953, Nathan Associates, along with the firms of Knappen Tippetts GoM Government of Myanmar Abbett McCarthy Engineers and Pierce Management, delivered to the U GTB Global Treasure Bank Nu government an 8-year economic and social development program. The IBSB Insurance Business Supervisory Board comprehensive plan, “Economic and Engineering Development of Burma,” IFC International Finance Corporation laid out a strategy of economic and administrative policies to stimulate IMF International Monetary Fund growth in agriculture and irrigation, transportation, telecommunications, IT Information technology power, and industry, along with an analysis of the country’s macroeconomic K Myanmar kyat conditions. Unfortunately, what the report called a “golden opportunity” KBZ Kanbawza Bank for rapid growth was lost, as many of the recommendations were set aside LIFT Livelihoods and Food Security Trust Fund due to political developments in the late 1950s and early 1960s. MAB Myanmar Apex Bank MADB Myanmar Agricultural Development Bank The present set of discussion papers is designed to revive the initiative MAP Making Access Possible begun more than 60 years ago, providing a careful analysis of conditions MAPCO Myanmar Agribusiness Public Corporation in Myanmar and recommendations on how the country can accelerate its MCB Myanmar Citizens Bank integration into the global economy and deliver growth and prosperity to MEB Myanmar Economic Bank all of the people of the country. MEC Myanmar Economic Corporation Lynn Salinger, Principal Associate at Nathan Associates, has wled the design MEHL Myanmar Economic Holdings Limited and implementation of the discussion paper series in collaboration with MFI Microfinance institution Steve Parker, Chief of Party of the Private Sector Development Activity, and MFL Microfinance Business Law Tim Buehrer, Chief of Party of the ASEAN Connectivity through Trade and MFSP Mobile financial service providers Investment Project. Daniel Swift has supervised the effort from the U.S. MFTB Myanmar Foreign Trade Bank Agency for International Development Mission to Burma. MICB Myanmar Investment and Commercial Bank IV BANKING AND FINANCE IN MYANMAR BANKING AND FINANCE IN MYANMAR V MMB Myanmar Microfinance Bank MOB Myanmar Oriental Bank CONTENTS MP Member of Parliament MSEC Myanmar Securities Exchange Center Acknowledgment ..................................................................................................... II MSLE Myanmar Small Loans Enterprise List of Acronyms .......................................................................................................V MUFJ Mitsubishi UFJ 1. Introduction ...................................................................................................... 3 NBFI Nonbank financial institution 2. Context ..............................................................................................................5 NGO Nongovernmental organization A Note on Data ............................................................................................... 7 NLD National League for Democracy 3. Central Banking in Myanmar ......................................................................... 9 OECD Organization for Economic Cooperation and Development Independence and the 2013 Central Bank Law ......................................10 PBUB Peoples’ Bank of the Union of Myanmar Evaluating the CBM’s Autonomy.................................................................12 PGMF Pact Global Microfinance Fund Exchange Rate Reforms ................................................................................14 POS Point-of-Sale 4. Structure of Myanmar’s Banking Sector ...................................................19 PSDA Private Sector Development Activity Supervision and Regulation .........................................................................20 RDB Rural Development Bank Reforms and Initiatives .................................................................................22 REER Real effective exchange rate Sanctions ..........................................................................................................25 ROSCA Rotating Credit and Savings Associations Money Laundering Problems Linger ..........................................................26 S Section 5. Individual Bank Profiles .................................................................................29 SAMB State Agricultural Marketing Board State-Owned Banks .......................................................................................29 SDN Specially Designated National Private Banks...................................................................................................31 SEL Securities Exchange Law Semiprivate Banks ..........................................................................................38 SEZ Special economic zone The New Policy Banks ..................................................................................39 SLCM Sohan Lal Commodity Management 6. Mobile Banking and its Possibilities ............................................................43 SEE State economic enterprise 7. The Return of Foreign Banks ......................................................................46 SME Small and medium enterprise Local Opposition and a Restrictive Mandate ..........................................48 SPDC State Peace and Development Council Licensed Foreign Banks ................................................................................49 TFB Tun Foundation Bank Joint Venture Banks? ......................................................................................50 UAB United Amara Bank Second Round of Foreign Bank Entry .......................................................51

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