Historic and Latest Developments in Myanmar's Banking and Financial Sector was shared to MBF (Master of Banking and Finance) students at the Yangon University of Economics on December 20, 2016 by two GIZ experts.

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ရန္ကုန္စီးပြားေရးတကၠသိုလ္၊
Master of Banking and Finance (MBF) Program
နွင့္
ဂ်ာမန္အျပည္ျပည္ဆိုင္ရာ ပူးေပါင္းေဆာင္ရြက္ေရးေအဂ်င္စီ (GIZ)
ပူးေပါင္းက်င္းပေသာ
Workshop on
“Developments in Myanmar’s Banking and Financial Sector”
by
Om Ki (National Expert, GIZ) &
San Thein (Senior National Expert, GIZ)
December 20, 2016 Yangon University of Economics

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Agenda
1. Structure of Financial Institutions
2. Major Developments in Myanmar’s Financial Liberalization
3. Infrastructure (Major Institutions supporting Financial Sector)
4. General Features of Myanmar Financial Sector
5. Performance of Myanmar Financial Sector
6. Outlook of Financial Sector
7. Major Challenges of Banking Sector
8. Opportunities
20/12/2016 Om Ki and San Thein @ YUE

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Agenda
 Structure of Financial Institutions
 Major Developments in Myanmar’s Financial Liberalization
 Infrastructure (Major Institutions supporting Financial Sector)
 General features of Myanmar Financial Sector
 Performance of Myanmar Financial Sector
 Outlook of Financial Sector
 Major Challenges of Banking Sector
 Opportunities
20/12/2016 Om Ki and San Thein @ YUE

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Structure of Financial Institutions
Banks NBFI Scheduled Institutions
4
24
13
45
State-owned Banks
Commercial Banks
Foreign Banks
Rep Offices
16
1
400
<4000
Finance Cos.
MFSP
Money-changers
(Non-bank MC)
Pawnshops
1
12
3
20
168
77
1
6
3
State-owned MI
Private Insurance
Foreign Ins in SEZ
Rep Offices
MFIs
Cooperative MFIs
(Feb 2016 - MOC)
YSX
Securities Cos.
Listed Cos.
20/12/2016 Om Ki and San Thein @ YUE

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Agenda
 Structure of Financial Institutions
 Major Developments in Myanmar’s Financial Liberalization
 Infrastructure (Major Institutions supporting Financial Sector)
 General features of Myanmar Financial Sector
 Performance of Myanmar Financial Sector
 Outlook of Financial Sector
 Major Challenges of Banking Sector
 Opportunities
20/12/2016 Om Ki and San Thein @ YUE

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Major Developments in Myanmar’s Financial Liberalization
(1990 – 2016)
Timeline Developments in the Banking Sector I
Jul 1990
May 1992
Nov 2011
Apr 2012
Aug 2012
Dec 2012
CBM Law & Financial Institutions of Myanmar Law
Allowed private sector participation in banking (FPB/MCB)
Allowed private banks to engage in foreign banking,
Allowed to join SWIFT and establish correspondent banks
From a fixed to managed floating exchange rate regime,
Market-reflected CBM reference rate introduced by auctioning FX
Foreign Exchange Management Law
Non-bank money-changers allowed (USD, EUR, SGD,THB, MYR)
20/12/2016 Om Ki and San Thein @ YUE

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Major Developments in Myanmar’s Financial Liberalization
(1990 – 2016)
Timeline Developments in the Banking Sector II
Jul 2013
2015 – 2016
1996 - 2016
Jan 2016
Jan 2016
Mar 2016
CBM Law, CBM independence (institutional & functional)
13 foreign banks (mostly from Asia) allowed in the country;
Their functions restricted to wholesale banking
15 Finance Companies (Main functions: Loans & HP)
Financial Institutions Law (A stable and modern banking system)
CBM-Net (RTGS) for large-payment settlement
Regulation on Mobile Financial Services
20/12/2016 Om Ki and San Thein @ YUE

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Major Developments in Myanmar’s Financial Liberalization
(1990– 2016)
Timeline Developments in Other Major Sectors
Jul 2013
Aug 2014
Dec 2015
Jan 2015
Sep 2016
Capital market
Securities and Exchange Law
SECM formed to establish YSX
YSX opened
T-bill auctioning (investment, monetary management & financing)
T-bond auctioning (…………….ditto ……………….)
Nov 2011
Mar 2016
Microfinance
Microfinance Business Law
168 licensed MFIs with 23 Int’l cos., and 5 INGOs
Jul 1993
Jun 1996
Nov 2012
May 2013
Insurance
Myanma Insurance Law
Insurance Business Law
Started opening insurance sector to the private
12 private insurance companies licensed
20/12/2016 Om Ki and San Thein @ YUE

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Agenda
 Structure of Financial Institutions
 Major Developments in Myanmar’s Financial Liberalization
 Infrastructure (Major Institutions supporting Financial
Sector)
 General features of Myanmar Financial Sector
 Performance of Myanmar Financial Sector
 Outlook of Financial Sector
 Major Challenges of Banking Sector
 Opportunities
20/12/2016 Om Ki and San Thein @ YUE

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Infrastructure
(Major institutions supporting Financial Sector)
 CBM (regulation & supervision)
 MBA (an association of local bankers)
 MIB (a quasi-department within MBA)
 MPU (National Payment Switch)
 YUE (Offer 3-year Master of Banking and Finance)
20/12/2016 Om Ki and San Thein @ YUE

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Infrastructure
(Major Institutions supporting Financial Sector)
 SECM (Regulatory Body for Securities Market)
 YSX (Implementing Body)
 MOPF/FRD (regulation & supervision) Insurance & Microfinance
 MI (Implementing authority)
 City Development Committee (regulation & supervision) for
pawnshops
20/12/2016 Om Ki and San Thein @ YUE

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Agenda
 Structure of Financial Institutions
 Major Developments in Myanmar’s Financial Liberalization
 Infrastructure (Major Institutions supporting Financial Sector)
 General Features of Myanmar Financial Sector
 Performance of Myanmar Financial Sector
 Outlook of Financial Sector
 Major Challenges of Banking Sector
 Opportunities
20/12/2016 Om Ki and San Thein @ YUE

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General Features of Myanmar Financial Sector I
 Myanmar’s formal financial sector is dominated by banking sector
(About 90% of all financial sector assets in March 2016)
 The formal banking system is small compared to other countries
Myanmar: 28 banks with USD 32 bn (Total assets)
Vietnam: 40 with USD 261 bn
Thailand: 19 with USD 481 bn
Malaysia: 59 with USD 549 bn
20/12/2016 Om Ki and San Thein @ YUE

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General Features of Myanmar Financial Sector II
 Prevalence of informal Loans (FinScope 2013, UNCDF)
Formal Credit: 18% of Population (Banks, MFIs & Pawnshops)
Informal Credit: 29% (Informal moneylenders, Family & Friends)
 Payment system is largely cash-based
 Rural population have limited access to financial services
20/12/2016 Om Ki and San Thein @ YUE

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General Features of Myanmar Financial Sector III
 YSX is at its initial stage
 No active secondary market for T-bonds and T-bills
 No Credit Bureau
 Weak in promoting Credit Guarantee Scheme
 Low insurance awareness
 Limited IT system development
20/12/2016 Om Ki and San Thein @ YUE

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Agenda
 Structure of Financial Institutions
 Major Developments in Myanmar’s Financial Liberalization
 Infrastructure (Major Institutions supporting Financial Sector)
 General features of Myanmar Financial Sector
 Performance of Myanmar Financial Sector
 Outlook of Financial Sector
 Major Challenges of Banking Sector
 Opportunities
20/12/2016 Om Ki and San Thein @ YUE

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Performance (Financial Intermediation)
12.32
16.21
24.59
30.15
32.46
4.83
7.54
10.86
14.59
17.90
2010/11 2011/12 2012/13 2013/14 2014/15
Loans and Deposits (% of GDP)
Deposit
Loan
20/12/2016 Om Ki and San Thein @ YUE

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Performance (Financial Intermediation)
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
Malaysia Thailand Vietnam Cambodia Philippines Indonesia Myanmar
Domestic Credit to the Private Sector (% of GDP)
2014
2015
20/12/2016 Om Ki and San Thein @ YUE

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Performance (Financial Inclusion)
Access to basic financial services is low
o 20% of adults in Myanmar use commercial bank and other formal
(non-bank) products
(UNCDF: FinScope 2013)
o In 2014, 23% of adults in Myanmar had access to an account in a
financial institution
(31% in Vietnam, 78% in Thailand, and 81% in Malaysia)
(WBG: 2016 Financing the Future)
20/12/2016 Om Ki and San Thein @ YUE

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Global Views on
Myanmar’s Financial Sector Performance
 World Bank (2016) : Doing Business 2017
Ease of Doing Business rank: 170 out of 190 economies
Indicator 5 (Of 10): Getting Credit: 175 out of 190 economies
 World Economic Forum (2015): Global Competitiveness Report 2015-2016
Global Competitiveness Index rank: 131 out of 140 economies
Pillar No. 8 (Of 12): Financial Market Development: 138 out of 140 economies
Ease of Access to Loans (4 of 8):140 out of 140 economies
20/12/2016 Om Ki and San Thein @ YUE

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Agenda
 Structure of Financial Institutions
 Major Developments in Myanmar’s Financial Liberalization
 Infrastructure (Major Institutions supporting Financial Sector)
 General features of Myanmar Financial Sector
 Performance of Myanmar Financial Sector
 Outlook of Financial Sector
 Major Challenges of Banking Sector
 Opportunities
20/12/2016 Om Ki and San Thein @ YUE

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Outlook (Banking Sector)
 Bank management (Corporate governance) & Accounting system
(IFRS)
 Facilitations and new products
 More trade financing
 More loans to SME and agriculture sector
 New products with competitive prices
 From risk averse to risk appetite
 FinTech penetration & Digital Payment systems
 Active interbank market
 Reforms of state-owned banks
20/12/2016 Om Ki and San Thein @ YUE

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Outlook (Capital market)
 Sound Management & Accounting Standard
 Active secondary market
 A good venue for investment & fund raising (Equity & Debt)
20/12/2016 Om Ki and San Thein @ YUE

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Outlook (Insurance)
 New Insurance Law expected
 Liberalization of insurance sector
 Entry of foreign insurance companies
20/12/2016 Om Ki and San Thein @ YUE

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Outlook (Microfinance)
 More effective contribution of MFIs to poverty alleviation
 Promotion of financial inclusion
 Expansion of formal financial sector
20/12/2016 Om Ki and San Thein @ YUE

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Agenda
 Structure of Financial Institutions
 Major Developments in Myanmar’s Financial Liberalization
 Infrastructure (Major Institutions supporting Financial Sector)
 General features of Myanmar Financial Sector
 Performance of Myanmar Financial Sector
 Outlook of Financial Sector
 Major Challenges of Banking Sector
 Opportunities
20/12/2016 Om Ki and San Thein @ YUE

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Major Challenges of Banking Sector
 Well-sequenced and carefully-managed implementation of FI Law
 The development of human resources
 The development of technology and infrastructure
 The gaining of public trust
20/12/2016 Om Ki and San Thein @ YUE

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Agenda
 Structure of Financial Institutions
 Major Developments in Myanmar’s Financial Liberalization
 Infrastructure (Major Institutions supporting Financial Sector)
 General features of Myanmar Financial Sector
 Performance of Myanmar Financial Sector
 Outlook of Financial Sector
 Major Challenges of Banking Sector
 Opportunities
20/12/2016 Om Ki and San Thein @ YUE

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Opportunities
 US Sanctions lifted & GSP granted
 Investment Law promulgated (70-year land lease, Tax incentives:
3-7 years tax holiday, Non-nationalization, Repatriation of profits...)
 Many development partners helping the country
 Necessary reforms are taking place
 Potential markets between China, India and ASEAN
 Rule of law under the democratic government
20/12/2016 Om Ki and San Thein @ YUE

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Downloadable Links to
our GIZ Flagship Banking Report
 “Myanmar’s Financial Sector: A Challenging Environment
for Banks (3rd Edition, 2016)”
 https://www.giz.de/en/downloads/giz2016-en-Banking_Report.pdf
 “Myanmar’s Financial Sector: A Challenging Environment
for Banks (2015)”
 https://www.giz.de/en/downloads/giz2015-en-myanmar-financial-sector.pdf
20/12/2016 Om Ki and San Thein @ YUE

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Thank you for your kind attention!
San Thein (san.thein@giz.de) &
Salai Om Ki (om.ki@giz.de)
20/12/2016 Om Ki and San Thein @ YUE