Foreign banks will be permitted by the Central Bank of Myanmar (CBM) to provide export financing services.
The move, which aims to help local export businesses gain access to working capital, was announced Monday by the CBM and welcomed by the business community.
“In the trading sector, the local banks are not able to provide sufficient financing services to help businesses in the sector. However, we will have to wait and see whether the foreign banks provide assistance when we have goods in our hands or when the purchase order arrives from foreign countries,” said U Ngwe Tun, who runs the Genius coffee production business distributing to both local and international markets.
Meanwhile, foreign banks wanting to provide other banking services related to export financing will still need approval from the CBM, according to the statement.
“It is difficult to guess to what extent foreign banks can provide such services. As of now, the foreign banks are still at the approval seeking stage. We have to wait and see when the CBM will approve them giving such services,” said U Tun Aye, chairman of Myanmar Fisheries Products Processors and Exporters Association.
The CBM has so far allowed 49 foreign banks to provide export financing services. Among them, 21 have started doing so.
However, the foreign banks are still not allowed to provide retail banking services such as saving accounts, local money transfers and extending loans to the local entrepreneurs.
Currently, export financing will be allowed under the wholesale banking business. “It is a very good move by the CBM. The local entrepreneurs need export financing and also trade financing for temporary working capital. By approving these services, it will be a lot more convenient for import and export entrepreneurs,” said Dr Soe Tun, deputy chair of Myanmar Rice Federation.
Even though some local banks now provide trade financing services, the amount of finances are insufficient to make an impact.