RANGOON — Private Burmese banks are calling on the country’s Central Bank to be more transparent in plans to grant limited operating licenses to foreign banks next month.
After decades of isolation under a military junta, Burma’s banking sector is opening to foreign competition in a bid to attract foreign investment into the economy.
Executives at local banks are worried that their own operations will be affected by the change, but say they have been unable to prepare because the government has been opaque with its plans. “We only know what’s been reported in the media,” said Than Lwin, vice chairman of Kanbawza (KBZ) Bank.
Earlier this year, Reuters reported that an official document had been sent to more than 30 foreign banks with representative offices in Burma, showing that as many as 10 of them would be granted licenses by the end of September to set up one branch each to provide restricted services, including granting loans to foreign corporates.
But the Central Bank has yet to make a public announcement or send a notice to local banks about the number of foreign banks that will receive licenses and the services they will be allowed to offer.
Local bank executives are concerned foreign competition will create a human resources nightmare by pulling away the best staff.
“The main trouble is we don’t know what they are doing—whether they will allow only one branch or more for foreign banks. If they allow more, it will be a major concern for us,” Than Lwin of KBZ said. “If [foreign banks] are allowed to open branches in other cities, they will definitely recruit our skilled employees, so we need to prepare for this.”
Zaw Lin Htut, a banking expert in Rangoon, said foreign banks would likely recruit wholesale banking experts from local banks. “The human resources problem is no matter for other countries, but for us it’s a big issue,” he said. “We have a very limited number of skilled workers here.”
Chit Khine, chairman of Myanmar Apex Bank, agreed that it would be best from a human resources perspective if foreign banks were limited to operating just one branch.
“That would be no problem. They can bring their expertise from abroad, and Burmese bankers already working overseas can even come back to be employed here. But we still don’t know what the Central Bank will allow—that’s the major difficulty.”
“There will definitely be a salary problem,” he added. “Even if they don’t recruit our labor, their pay scale will be higher.”
The Central Bank could not be reached on Wednesday to confirm reports that it has sent a list to President Thein Sein with foreign banks that have been nominated to receive licenses. Based on recommendations from the World Bank, a minimum paid-in capital of US$75 million will be required by selected foreign banks, according to Reuters.