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The first foreign bank to operate in Burma for decades officially opened the doors of its Rangoon branch on Wednesday, the latest government attempt to attract more foreign investment to the emergent nation.
Burma’s quasi-civilian administration, which replaced a military regime in 2011, is trying to modernise the creaking banking system to increase capital flows to local businesses and to spur investment, particularly in the nascent special economic zones, to ease poverty.
Approved foreign investment stood at just over $8 billion in the 2014/15 fiscal year, nearly double the $4.1 billion a year earlier, according to official figures published in state media Wednesday.
Central Bank governor Kyaw Kyaw Maung described the opening of Japan’s Bank of Tokyo-Mitsubishi UFJ (BTMU) on Wednesday as a “new milestone”, adding he hoped that it would strengthen the economy by providing more investment and business financing.
BTMU said the Yangon [Rangoon] branch would provide “full banking services, including deposits, loans, and foreign exchange, to foreign companies and domestic banks operating in Myanmar [Burma]”.
Japan’s largest bank, along with Sumitomo Mitsui Banking Corporation (SMBC) of Japan and Singapore’s Oversea-Chinese Banking Corporation (OCBC), were earlier this month given approval to begin operations.
OCBC, which is due to open its branch Thursday, said earlier this month it had already seen a “significant increase in queries from both new and existing customers keen to tap on the immense growth opportunities in Myanmar”.
OCBC operated in Myanmar for four decades until 1963.
But the country’s military rulers, who seized power in 1962, nationalised all banks as they embarked on socialist policies that would send the economy into precipitous decline for nearly half a century.
Local people remain deeply suspicious of the banking system and many deal only in cash.
Authorities have implemented sweeping political and economic changes in recent years that have seen most Western sanctions lifted, opening up the country to new streams of international investment.
China remains the country’s lead investor, accounting for US $14.7 billion of the $54.23 billion in foreign investment since 1988, according to the Global New Light of Myanmar on Wednesday.
Singapore was the country’s second largest investor, with $8.5 billion in the same period.
Both countries were the main foreign investors before Western sanctions were lifted.
In the last fiscal year up to March the oil and gas sector topped the list of foreign investments with $3.2 billion approved, the report added.
That was followed by $1.68 billion in the transport and communication sector and $1.5 billion in manufacturing.
The World Bank has said firms cite access to finance as the main obstacle to doing business in Myanmar.
Central Bank vice-governor Set Aung told parliament last June that foreign banks would be subject to a range of restrictions to protect local lenders.
The foreign lenders would be required to hold at least $75 million, restricted to opening only one branch each and not be allowed into the retail banking sector, he said.
A further six foreign banks from the Asia-Pacific region, that were also granted preliminary approval in October, are expected to go through the process of finalising their licences within months.