Myanmar is embarking on the first comprehensive audit of stateowned banks in decades, part of a push to modernize the financial system and tackle risks to the nations rapid economic growth. Myanmar is the next host for the upcoming southeast asian games in 20, driving the need for key infrastructure improvements in airports, tourism, international banking and telecommunications. Of course, for this to work for banks to attract adequate capital in the first place and thereafter. Central banking trusted intelligence on the worlds. Collection of papers on myanmars financial sector giz. As a result, th e role of bank supervision becomes dominant for improvement of banking sector stability. The financial sector of myanmar is made up of stateowned banks, private banks, finance companies and representative offices of foreign banks. It started with a decline in the trust for private financial institutions following the collapse of small financial enterprises and proliferating rumors about the liquidity of major private banks. Banks play a fundamental role in the transformation of market economies.
There is one stateowned insurance company in myanmar and 12 private insurance companies were licensed in 20. Statebanks dominate with 50 percent of banking sector assets and accounting for the majority of bank branches. He demonstrates a relationship among the increase in competition, the decline in bank charter values, and the increase in bank failures. Current situation and challenges for the banking sector 1. Consultations are being held on a proposed new country partnership framework to support myanmars development priorities. This pestle analysis highlights key factors affecting the banking industry. Developing myanmars finance sector to support rapid, inclusive, and sustainable economic growth the financial sector is the lifeblood of any economy and its smooth and efficient functioning is central to strong economic growth and development. Developing myanmars finance sector to support rapid, inclusive.
Assessment is stability and confidence in the sector delivered primarily through mandated improvements in asset quality and balance sheet strength. According with the new government, was formed on march30, 2011, central bank of myanmar have to become independently to laid down the policies. The central bank of myanmar has become an independent financial institution after the new central bank of myanmar law was enacted in the year 20. Reform of myanmar s banking sector began in 2011 when the government permitted private banks to conduct foreign exchange transactions and set up atms across the country. Myanmars bankingassetstogdp ratio of 49% is the lowest among asean peers.
Myanmars banking sector in transition current status and. The fourth section discusses the value of myanmars financial. Myanmar the next asian telecommunications greenfield. The department of finance and accounting at silesian university, school of business administration in karvina holds a traditional meeting of academic and business professionals in the area of finance and banking.
These licenses will allow the banks to participate in services which were previo\ usly restricted in. Central to myanmars economic development is the reform of its finance sector and specifically its banking sector. The mem is a product of the world banks myanmar office and was prepared by a team led. Pdf mobile banking adoption among customers within. Opportunities and challenges greater regional cooperation can unlock the growth potential arising from increased trade and crossborder investment. Other colleagues, including wei zhang, djauhari sitorus, ashraf bin arshad, mohamed rozani. Myanmars macroeconomic data from 2000 to 2010, summarized in table 1, confirm this. The chart above illustrates the rising and falling levels of. Strengthening myanmars banking sector is key to economic growth. But its subservient to many factors, particularly to the government and the economy.
Monetary policy and foreign exchange about the asian. International banking and financial stability international banking as a risksharing scheme ideally, stabilizing the local credit supply in a local crisis but if host country financial systems are not capable of handling such flows fuel credit booms ending up in busts the global financial crisis revealed a number of country and. Giz supported the drafting of laws via technical advice to law makers, facilitating comments and translations, and exposing regulators to international. Cbmnet is a centralized, realtime interbank fund and securities settlement system, established through an earlier grant aid in 20 to develop ict system for central banking in myanmar. The opportunities and risks of investing in myanmar. Myanmars financial sector a challenging environment for. There are 48 foreign bank representative offices, and nine foreign bank branches were issued limited licenses in 2015. Myanmar, branded by the international monetary fund as asias final frontier has a population of 60 million and a growing gdp per capita at 7 to 8% annually. The central bank is the sole supervisor of myanmars private banking sector in relation to licensing, regulation and enforcement.
Some countries lack systemic banking crisis resilience imf report. First, due to the above mentioned periods of observed banking system instability instead of banking system crises we develop a continuous and forwardlooking stability indicator for the german banking system. Banks are unable to behave independently and must provide services based on specific laws that affect their growth and offerings. Xavier vives argues that while competition is not responsible for fragility in banking, there are tradeoffs between competition and stability. It is estimated that the big three receive twothirds of deposits, provide twothirds of loans and operate over half of all bank branches in myanmar. Banking stability, market structure and financial system in emerging countries 3 more risk actions through reductions in capital and increases in asset risk. On october 1, the central bank of myanmar \cbm\ granted nine foreign banks their first operating licences issued as part of a move to liberalise myanmar s banking sector. The three sections provide an overview of the countrys economy and financial sector, as well as analyses and observations made in the domestic and foreign banking sector. Over the last four years, the myanmar banking sector has seen assets grow by about. Over the last four years, the myanmar banking sector has seen assets grow by about 22 percent annually, so that in march 2016, the. Nigerias banking sector maintains stability and growth.
The economic outlook has weakened with risks to stability rising. Myanmars financial system now comprises 4 state banks, 22. The 2003 banking crisis of myanmar was a major bank run in private banking that hit myanmar burma in february 2003. The financial sector in myanmar its banking sector, the central bank, microfinance is functioning way below its potential. Competition and stability in banking addresses the critical relationships between competition, regulation, and stability, and the implications of coordinating banking regulations with competition policies. Progress on an interbank payments system has begun, but check clearing between banks is still manual. It also contributes towards a large number of employment, and provides necessary funds to various economic agents to enjoy sustainable economic growth. Central bank of myanmar needs to enact monetary policy independently to control the price stability in domestic market and to preserve the internal and external value of the myanmar currency the kyat. Myanmar is in the midst of a dramatic political and economic transition. The consumer market is relatively young and offers great potential for suppliers of basic goods and services. Macrofinancial spillovers from banking sector restructuring may be severe if banks delay recapitalization. Myanmar oriental bank was established in 1993 and is owned and run by and for the chinese community in myanmar.
Myanmar s banking assetstogdp ratio of 49% is the lowest among asean peers. The impact from the rakhine crisis is depressing foreign investor sentiment and donor financing. Reform of myanmars banking sector began in 2011 when the government permitted private banks to conduct foreign exchange transactions and set up atms across the country. Since the political reforms of 2011, the banks and financial institutions law of. Second, this study explores the proposition that banking stability insolvency in ssa is not only a function of the regulatory environment, but also of macroeconomic and institutional factors thereby embracing the recent view on the need for a macroprudential approach to banking. The cbm is in the process of implementing its three main objectivesmonetary stability, financial stem stability as well as payments and settlement system development. Asset quality issues continue to hinder the sector, but banks have found avenues outside of lending activities to expand their balance sheets. Strengthening myanmars banking sector is key to economic. Owned by chit khaing as part of the eden group, the bank has 20 branches and is rapidly modernizing its operations.
Services means the banking services provided by the bank from time to time to the customer. Myanmar wants to modernize its banking system bloomberg. Growth in aggregate demand was supported by stable consumption. For the creation of a stable financial system and efficient banking sector, corporate governance adjustments have been set as a high priority for the structural reform in myanmar. Postelection investment stability in myanmar is unclear. Home international conference on finance and banking. A new banking law license allows 19 domestic private banks to operate and permits 32 foreign banks to open representative offices in myanmar. In oecd report bank competition and financial stability it was stated that structural and nonstructural measures of competition are found to be both positively and negatively associated with financial stability, depending on the country analyzed and the. Financial sector reforms, competition and banking system. Myanmar has announced the date for its historic elections, ending months of. Myanmars banking sector the financial system plays a significant role in the development of a countrys economy. Despite the challenges to nigerias economy, many of the countrys banks enjoyed healthy revenue and asset growth in 2016.
The project will upgrade the functioning of central bank of myanmar financial network system cbmnet. For norges bank as a central bank, the biggest challenge will be to maintain focus on its core functions while the responsibility for managing the oil fund increases in scale and complexity. Lei system should be improved and made compulsory for more types of financial data klaas knot. Banking and financial sector development bfsd in myanmar. Myanmars annual gross domestic product gdp growth from 2000 to 2010 averaged 4. The human capital index hci database provides data at the country level for each of the components of the human capital index as well as for the overall index, disaggregated by gender. Myanmars financial system is undergoing a rapid transformation. Central banks should focus on financial stability mandate not green qe, says deputy general manager. This paper presents broad outlines of a reform strategy to.
Business is advised to adopt a longterm perspective. It may, over time, look like the manager of the one of the worlds largest single pools of financial assets trying to run a central bank on the side. The legal and regulatory framework in myanmars banking and financial sector was significantly improved by passing of a revised myanmar accountancy law in 2015 and a new banking law in 2016. Myanmars banking sector in transition overdrafts fearing a recurrence of the 2003 myanmar banking crisis, the central bank of myanmar cbm started imposing various restrictions on the banking sector in 2005, the most severe being directive no. Wider use of leis will improve stability, says dnb president. Myanmars financial sector supporting the countrys economic. The main reason for that seems to be that it is being held back. There are a total of 31 local banks and foreign branched banks in myanmar.
Growth rebounded in 201718, led by exports and a recovery in agriculture, but is losing momentum. In 2012, the government approved the foreign exchange management law, followed by the enactment of the central bank of myanmar cbm law in 20. Second, this study explores the proposition that banking stabilityinsolvency in ssa is not only a function of the regulatory environment, but also of macroeconomic and institutional factors thereby embracing the recent view on the need for a macroprudential approach to banking. Myanmar in 2012, when we started our financial sector engagement, and myanmar today seem like two different worlds. Central bank of myanmar extensively engaged in monetary. Three selected myanmar banks are currently being supported by giz in the development of tailor. Myanmar is strategically located between the regions two economic giants, the prc and india, which are home to over 2. The central bank of myanmar has also allowed 11 out of a. Banking sector reforms in myanmar asean business news. Banking stability, market structure and financial system. Competitionstability relationship in the banking sector. Myanmar apex bank is the fourth and last of the four crony banks that received their banking licenses in 2010. Myanmars economy continues to show resilience despite the ongoing global slowdown and domestic uncertainties.