Financial & Banking Reforms in Myanmar

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Center for Management Technology …

Center for Management Technology
2nd Myanmar Investment Summit

Yangon, Union of The Republic of Myanmar
October 17, 2012

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  • 1. CENTER FOR MANAGEMENT TECHNOLOGY 2ND MYANMAR INVESTMENT SUMMITFINANCIAL AND BANKING REFORMS IN MYANMAR YANGON, UNION OF THE REPUBLIC OF MYANMAR OCTOBER 17, 2012 10/8/2012 1
  • 2. FINANCIAL AND BANKING REFORMS IN MYANMAR Presented by Naw Eh Hpaw Deputy Director General Central Bank of Myanmar10/8/2012 2
  • 3. MyanmarMyanmar is situated in South East Asia.An area of 676,577 sq km with a coast line of 2,832 km and theEstimated Population is about 59.13 million.The terrain ranges from the arid plains to cool, sprawling hills, snow-capped mountains, white-sand beaches, lush farmland, hidden valleys and thick virgin forest. 10/8/2012 3
  • 4. Geographical Proximity and Strategic Location Demographic Bonus On the Track for Economic Recovery and Development10/8/2012 4
  • 5. Macroeconomic IndicatorThe growth rate of the real GDP  5.3 % in FY 2011/12 and projected at  6.25% in FY 2012/13Total exports by 28.1 % to US $ 8.42 billionInflation declined to 4 % in FY 2011/12 and is projected to 5.75 % in FY 2012/13 The national poverty incidence  fallen from 32 % to 26 %  four million people escaped from poverty10/8/2012 5
  • 6. Macroeconomic Policy PriorityIt is said that A historic opportunity to jump- start the development process and to boost the living standards but …….A long way to goThe government has adopted appropriate policies and plans in the areas which call for top priority The five-year short-term plan starting from FY 2011/12 to FY 2015/16 Modernization of the financial system Monetary Policy Fiscal Policy10/8/2012 6
  • 7. Liberalization in the Financial SectorCBM encouraged the establishment of the four new private banks as well as the activities of the existing private commercial banks19 domestic private banks with more than 300 branches all over the country and all the banks are in full swing nowReintroduced an interbank foreign exchange market although it has been about 50 years since this market was last allowed to exist10/8/2012 7
  • 8. Liberalization in the Financial Sector ( Continued )Local private banks have been allowed to perform both at home and abroad The remittance of currency from Myanmar citizens working overseas becomes much easier and more reliable than beforeUpgrading the payment system and introduction of online banking systemUnifying the exchange rates while easing the exchange-rate restrictions on current payments and transfers10/8/2012 8
  • 9. A well-defined legal frameworkAmendments to the existing laws  Central Bank of Myanmar Law 1990  Financial Institutions of Myanmar Law 1990,All these amended laws and regulations concerned are to be enacted by the parliamentThe Foreign Exchange Management Law was enacted by the Parliament on August 10, 2012Establishment of foreign exchange business and also the realistic managed float exchange rate10/8/2012 9
  • 10. Monetary policy CBM has implemented a prudent monetary policy framework CBM is to be given the full operational autonomy Interest rate policy Reduced the central bank discount rate from 12 % to 10 % starting since January 1, 2012. Moderated the interest rates for Government Treasury bonds An incentive for the purchases of treasury bonds, which is the essential to phase out deficit monetization and to reduce inflation further10/8/2012 10
  • 11. Fiscal Policy• Reduce the unproductive expenditure but also prioritize the policy toward social responsibility such as education, health and social protection• Fiscal decentralization process and sub-national budgets was first separated from the Union budget• Appropriate reforms to tax policy and tax administration• Fiscal deficit was 4.8 % in FY 2011/12 and is also projected at 3.8 % for FY 2012/1310/8/2012 11
  • 12. Threats and Challenges1) Special Interest Groups2) Imbalance in the Community3) Transparency, Accountability and Reliability10/8/2012 12
  • 13. Economic Outlook• Modernizing Myanmar’s economy has been looked upon as a process of removing impediments to growth• By encouraging all inclusive political process as well as enabling economic environment• Reassuring the financial system development and liberalizing trade and foreign direct investment further• Delivering the expectations with sustainable development by consolidating the macroeconomic stability measures such as the exchange rate unification scheme, the attempt to fiscal discipline and a series of liberalizing policies.10/8/2012 13
  • 14. 10/8/2012 14
  • 15. 10/8/2012 15
  • 16. InflationGDP (FY 2011-12) US$ 54.03 billion (MMK 45,928,000 million )GDP (PPP) US$ 82.72 billion (MMK 45,928,000 million )10/8/2012 16
  • 17. 10/8/2012 17
  • 18. % per annum 10 30 40 60 70 -10 20 50 010/8/2012 2000 Jan 2000 Jul 2001 Jan 2001 Jul 2002 Jan 2002 Jul 2003 Jan 2003 Jul 2004 Jan 2004 Jul 2005 Jan 2005 Jul 2006 Jan 2006 Jul Source: IMF, International Financial Statistics 2007 Jan 2007 Jul 2008 Jan 2008 Jul 2009 Jan Spread 2009 Jul Deposit Rate Lending Rate 2010 Jan 2010 Jul Trends of Interest Rates in Myanmar: 2011 Jan Consumer Price Index 2011 Jul Spread Reduced to 3% from 5% in Sep 201118
  • 19. Trade Balance in Myanmar (FY 1991-2001) Fiscal Year Export Imports Trade Balance 1991-92 430.6 842.3 -411.7 1992-93 590.7 1,010.2 -419.5 1993-94 695.6 1,301.7 -606.1 1994-95 917.4 1,487.8 -570.4 1995-96 934.4 1,830.8 -896.4 1996-97 929.9 1,945.8 -1,015.9 1997-98 1,010.8 2,160.4 -1,149.6 1998-99 1,113.1 2,431.4 -1,318.3 1999-00 1,353.4 2,365.7 -1,012.3 2000-01 1,838.2 2,064.6 -226.4 2001-02 2,484.8 2,304.4 180.410/8/2012 19
  • 20. Trade Balance in Myanmar (FY 2002-2010) Fiscal Year Export Imports Trade Balance 2002-03 2,727.5 2,101.5 626.0 2003-04 2,780.8 1,998.7 782.1 2004-05 2,902.4 1,805.0 1,097.4 2005-06 3,531.1 1,815.1 1,716.0 2006-07 5,202.7 2,687.6 2,515.1 2007-08 6,363.4 3,076.3 3,287.1 2008-09 6,735.8 4,089.0 2,646.8 2009-10 7,568.6 4,186.3 3,382.3 2010-11 8,856.0 6,403.7 2,452.310/8/2012 20
  • 21. Trade Balance in Myanmar (FY 2002-2010) (Kyats in million )10,000.0 9,000.0 8,000.0 7,000.0 6,000.0 5,000.0 Export 4,000.0 Imports Trade Balance 3,000.0 2,000.0 1,000.0 0.010/8/2012 21
  • 22. • System of National Accounts10/8/2012 22
  • 23. 10/8/2012 23
  • 24. အသက် (၁၅) နှစ်နှင်အထက် လုပ်သားအင်အားပါဝင်မှုနှုန်း ့ (၁၉၇၃ ခုနှစ- ၂၀၀၇ ခုနှစ) ် ် ရာခိုင်နှုန်း 90.0 80.0 70.0 ၁၉၇၃ 60.0 ၁၉၈၃ 50.0 40.0 ၂၀၀၁ 30.0 ၂၀၀၇ 20.0 10.0 0.0 ၁၅-၁၉ ၂၀-၂၄ ၂၅-၂၉ ၃၀-၃၄ ၃၅-၃၉ ၄၀-၄၄ ၄၅-၄၉ ၅၀-၅၄ ၅၅-၅၉ ၆၀-၆၄ ၆၅+ အသက်10/8/2012 24
  • 25. 7060 62.8 64 63.9 58.2504030 32.5 27.2 24.3 24.92010 12.9 11.1 8.9 9.30 1973 1983 2001 2007 1973 1983 2001 2007 1973 1983 2001 2007 လယ်ယာသားငါးကဏ္ဍ စက်မှုကဏ္ဍ ဝန်ဆောင်မှုကဏ္ဍ10/8/2012 25
  • 26.  ၂၀၁၁ ခုနစ်၊ ဇူလငလကုန်အထိ နိုင်ငံပပါင်း(၃၁) နိုင်ငံမှလုပငန်း စုစပပါင်း ှ ို ် ် ု (၄၅၄)ခု ရင်းနှီးှမုပ်နှလျှက်ရိှရာ အပမရိကန် ပေါ်လာ သန်းပပါင်း ံ (၃၆,၀၇၁.၈၈၈) ရှပါ သည်။ိ ရင်းနှီးှမုပ်နှံမှုကဏ္ဍ(၁၂)ခုတင် လျှပစစ်ကဏ္ဍမှ ၄၀.၂၈%၊ ပရနံနှင့်သဘာဝ ွ ် ဓါတ်ပငွ့ကဏ္ဍမှ ၃၈.၃%၊ သတ္တ ုကဏ္ဍ မှ ၇.၇၅% တို့ှဖင့် ဦးပောင်လျှက် ရှိပါ သည်။ နိုငငံအပနဖင့် တရုတ်ှပည်သ့ူ သမ္မတနိုငငံသည် ၂၆.၆၂% ှဖင့် ပထမ၊ ထိုင်း ် ှ ် နိုင်ငံသည် ၂၆.၅၃%ှဖင့် ေုတိယ၊ ပောင်ပကာင်သည် ၁၇.၄၉% ှဖင့် တတိယ ပနရာတွငရပါသည်။ ် ှိ အာေီယနုငငံများမှ ံ ိ ် ရင်းနှီးှမုပ်နှမပမာဏမှာ ံ ှု အပမရိကန်ပေါ်လာ သန်းပပါင်း (၁၂၇၇၅.၆၅၆) ရှပါသည်။ ိ10/8/2012 26