Myanmar’s financial sector welcomed new faces this year – international banks opened their first branches, the stock exchange welcomed its first firms and there are joint-ventures on the horizon for the insurance sector in 2017.
Taiwanese firm E.SUN Commercial Bank, South Korea’s Shinhan Bank, Bank for Investment and Development of Vietnam and State Bank of India all opened branches in 2016 after winning a second round of license applications that began the previous year.
Myanmar now has 13 foreign banks operating branches, which each required US$75 million in initial capital. A report by Roland Berger published in September estimated that foreign banks accounted for 47 percent of total banking equity in Myanmar. That estimate used a dollar exchange rate of K1190 to estimate the dollar value of local and state-bank’s equity capital. With the kyat’s subsequent slide to over K1360, Roland Berger’s estimates would mean foreign banks now account for fully half of banking equity capital.
Unlike the banking sector, Myanmar’s insurance industry remains entirely local. But that is expected to change next year. The finance ministry’s Financial Regulation Department told The Myanmar Times that the government will allow international firms into the market in 2017, as part of a liberalisation roadmap.
There are over 20 foreign firms with representative offices but other than three Japanese firms granted permission to operate in the Thilawa special economic zone – Tokio Marine & Nichido Fire Insurance, Sampo Japan Insurance and Mitsui Sumitomo Insurance – none have been allowed to open branches.
The liberalisation roadmap will lay out how foreign insurers should allowed into the market. Representatives from international firms will also sit on a new Myanmar insurance association, which U Soe Win Thant, general manager of Global World Insurance Company, thinks will be in place in February.