As part of the Myanmar government’s reform efforts, foreign banks may be able to enter the country and engage in majority-owned joint ventures with local banks as early as April.
The government issued a number of regulations last week regarding foreign investment, but detailed banking and finance reforms are established in legislation that is set to be debated in parliament and in regulations currently being drafted, Financial Times reports.
Under the current proposal, foreign banks will be permitted ownership of up to 80 percent of a joint venture with local banks, and, after a period of time, possibly two years, the foreign bank would be authorized to establish wholly owned subsidiaries.
“Essentially, such reforms are further recognition by the state of the private sector as an engine of growth,” U Win Aung, the head of Myanmar business group UMFCCI that supports liberal investment reforms, said, according to Financial Times . “These changes aim to create a sustainable economy and build a modern, prosperous nation in the shortest timeframe possible.”
More than 20 banks have opened offices in the south-central city of Yangon. Standard Chartered, a U.K. bank, became the first western bank to open shop in Myanmar after it set up a representative office last week.
The new foreign investment rules issued by the Ministry for National Planning and Economic Development clarify issues regarding land leasing and usage by foreign investors, transfer of shares, employment and repatriation of funds, and mortgages and subleasing. The rules also shored up construction regulations, which warn that investment approval may be withdrawn if projects are not finished on schedule, Financial Times reports.
After a recent decision by the Paris Club of creditor nations and international financial institutions to write down, restructure or cancel the nation’s $11.3 billion-plus debt, Myanmar President Thein Sein ordered the restructuring of his cabinet to support his “third wave” of reforms, which could also lead to the restructuring of key departments in energy, finance, the central bank and agriculture. Sein has replaced one minister and added five deputy ministers.