KBank spreads ASEAN wings further with rep office in Myanmar
Kasikornbank yesterday opened a representative office in Myanmar as part of a plan to become an Asian bank by making its presence felt in all 10 Asean countries.KBank senior executive vice president Somkiat Sirichatchai said the Yangon office would enable the bank to get to know the people and the market before expanding the operation into a branch.
"KBank uses the partnership model to become an Asian bank by working with local banks to understand the market, before expanding the business in the mode and timing deemed appropriate," he said.
The bank has 35 business partners in nine countries, besides Myanmar.
It also currently has 11 private-bank partners in Myanmar. "We don't want to limit it to one partner, because we want to draw from the different expertise of each private bank," said first senior vice president Pattanapong Tamsomboon.
Thein Myint, compliance officer and deputy general manager of Cooperative Bank, which is one of the 11 partners, said the bank was ready to offer expertise in retail banking and work with KBank.
Until recent monetary reform in the country, the majority of Myanmar people did not use business transaction services provided by the commercial banks, he said, adding that the presence of foreign banks in the country is "a good sign for the banking sector".
The Myanmar government reformed the monetary system by unifying the official exchange rate and the market-rate system in April last year as part of the effort to open up the country to foreign investors.
Since then, interest in Myanmar has been overwhelming. The streets of downtown Yangon are now jammed with traffic, automated teller machines are sprouting up and hotel room rates have risen threefold on average from two years ago.
Charamporn Jotikasthira, president and chief executive officer of the Stock Exchange of Thailand, said the bourse this week had signed a memorandum of understanding with the Myanmar government to contribute to the country's effort to set up a stock market within three years by providing information and SET experience.
He said the process for setting up a stock exchange in the neighbouring country was fast. Myanmar is set to have a securities law in place within the next two months, whereas Thailand did not have such a law until 11 years after the establishment of the SET.
The Japanese stock market is also supporting Myanmar in terms of the bourse system to be used.
Songpol Chevapanyaroj, executive vice president of KBank, said the bank's representative office would offer both advisory and financial transaction services for investors, especially Thais.
FDI REGIME IN 2 MONTHS
Myanmar is set to finalise its regime for foreign direct investment within two months, which should give more clarity to overseas investors on the rules and regulations for doing business in the once-isolated country, he said.
The most challenging issue for foreign investors is the high cost of starting up a business, he said, citing office rental fees in particular. Just 220 square metres of space in downtown Yangon is now worth US$1 million (Bt30.4 million).
Moreover, the majority of Myanmar people are not familiar with the banking system, with most business transactions carried out in cash.
Currently, borrowers can receive loans up to of a maximum 30 per cent of the guaranteed asset value, while most commercial banks accept only land plots as collateral.
However, Thai investors stand a good chance of expanding into Myanmar due to the long-standing business relationship between the countries. Thailand is now the second-largest investor in the country, after China, and Thai products have been well known in Myanmar for many years.
Maung Maung Lay, vice president of the Federation of Chambers of Commerce and Industry, said the opportunities were nearly unique for Thailand, "which has nurtured a relationship in the commercial sector".
However, challenging issues facing Myanmar in terms of economic reform are communication and the capacity of the people, he said.
Kasikorn Research Centre projects that Myanmar's gross domestic product this year will grow by 6.3 per cent, with exports expanding at about 11 per cent. Major exports include natural gas, textiles and teak wood.
Last year, Myanmar revised its Foreign Investment Law to support investment by overseas interests in the country's economic development, ranging from consumer products to infrastructure projects.
There is substantial room for further development, which is attracting foreign investment from all over the world.