RANGOON — Burma’s Central Bank is expected to submit a new monetary policy during Parliament’s next session, which begins late this month, a lawmaker said.
The Central Bank is currently working on a plan to allow foreign banks to operate in the country, a central part of the government’s reforms to modernize the long-isolated financial sector.
The Bank announced late last year that some foreign banks would be permitted to offer limited financial services during 2014, drawing opposition from local banks fearing they will be edged out by large institutions from overseas.
Phyo Min Thein, a National League for Democracy lawmaker who sits on the Lower House’s financial and monetary committee, told The Irrawaddy on Thursday that the new monetary policy was expected to be submitted during the 10th session of the current Parliament, which begins May 28.
“As far as I know, the Central Bank of Myanmar [CBM] conducted workshops with the World Bank and International Monetary Fund to update Myanmar’s monetary policy, so we expect that in this Parliamentary session,” said Phyo Min Thein.
“They will submit that policy and it might include how they will allow foreign banks in Burma.”
The Central Bank is also working on lending rules, keeping a lid on rising inflation in Burma and how mobile banking will work in the country, all of which may be referred to in the new policy.
Phyo Min Thein said the entry of foreign banks this year depended on the policy being approved by Parliament quickly.
“The Central Bank of Myanmar won’t allow foreign banks to open branches here without an exact monetary policy in Burma, and foreign banks don’t want to open also without any law approved on how they can invest in Burma,” he said.
Officials at the Central Bank could not be reached for comment on Thursday.
The Central Bank has allowed 34 international banks to set up representative offices in Burma, a first step for those wanting to offer financial services in the country.
But the 20 local Burmese banks are concerned that few details have emerged on much freedom foreign banks will have to operate in Burma.
Ye Min Oo, managing director of tycoon Tay Za’s Asia Green Development Bank, said the Central Bank had tried to assuage local bank’s fears.
“The CBM told us no to worry and that they will only allow foreign banks to carry out services in US dollars,” and not in the Burmese currency, the kyat, he said.
“Either way, even if they don’t allow domestic kyat services, human resources problems will soon emerge,” Ye Min Oo said, explaining that local banks are concerned that international banks will poach the most talented personnel in the banking sector.
“When foreign banks come here, they will definitely recruit local labor and they will need at least 60 employees for one bank, so if the government allows 10 foreign banks, they will hire 600 local employees,” he said.
Than Lwin, vice president of Kanbawza Bank, agreed that among Burmese banks the biggest concern about foreign banks entering the market was about the effect they will have on human resources.
“We also need assistance from the government to compete foreign banks, but I’m not afraid competing them,” he said.
Than Lwin welcomed the technical innovations foreign banks could bring to the banking sector, but said the government must be sure to ease them into the market.
“We need similar treatment that can benefit both sides,” he said.