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April 7, 2020

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Central bank revokes licence of local bank

Theint Mon Soe/The Myanmar Times

The Central Bank of Myanmar announced on 16 March 2020 that it is revoking the banking licence of locally incorporated Asia Yangon Bank Ltd (AYB). The central said in its announcement that the revocation is for “breaching the country’s existing laws” but did not provide any further details on the matter.

The central bank has taken over management of AYB and made arrangements to allow customers who wish to do so to withdraw money their money during normal banking hours.

This only the third time the banking licence of a local bank has been revoked. In 2005, CBM revoked the licenses of Asia Wealth Bank, owned by U Aik Htun, and May Flower Bank, owned by U Kyaw Myint, for allegedly being involved in money laundering.

The directors of AYB are Daw Naing Myo Min Nu, U Myint Swe, U Myo Paing aka U Chain Shein, U San Tin, U Tin Pe and U Tun Win, according to company registration data from the Directorate of Investment and Company Administration (DICA).

AYB, which was founded some 20 years ago is headquartered in Botahtaung, Yangon, and has branches in Bayintnaung, Lewe, Mandalay, Taungoo, Monywa, Magwe, Pathein, Pyay and Minbu.

In July, 2017, the CBM introduced rules requiring banks to submit reports on large debts, amended the way bank liquidity ratios are calculated, changed loans offered by banks to fixed-term loans, and tightened regulations on types of assets banks can hold. Specific guidance was also issued for the qualifications of the members of the board of directors of banks, with banks instructed to adhere to the standards when appointing members to their board of directors.

Source: Myanmar Times

Foreign insurers added more than US$120M to industry

A man carries the baskets in downtown Yangon. Ko Ko Htay/The Myanmar TimesInvestors have channeled some US$120 billion and K60 billion into the Myanmar insurance sector since its liberalisation last year, according to the Myanmar Investment Commission (MIC).

In 2019, the Ministry of Planning, Finance, and Industry granted permission to five wholly foreign life insurance companies and six joint venture life insurance and non-life insurance companies to operate in the domestic insurance market.

During the period, the five wholly foreign life insurance companies – AIA, Chubb, Dai-ichi, Manulife and Prudential – invested a sum totaling US$65 million, according to the MIC. The three joint venture life insurance companies – Capital Taiyo Life, CB Life and GGI Nippon Life- invested US$34 million and around K10 billion.

Meanwhile, the three joint venture non-life insurance companies – AYA Sompo, GGI Tokio Marine and KBZ MS – put in US$26 million and K56 billion.

The insurance sector contributed strongly to total foreign direct investments (FDI) of around US$2.6 billion in fiscal 2019-20. Myanmar is expected to receive a total of US$5.8 billion in FDI this fiscal year, according to the MIC’s estimates.

Source: Myanmar Times

KB Kookmin Bank prepares to expand in Myanmar

Photo: SuppliedKB Kookmin Bank (KB),  South Korea’s largest bank, is preparing to acquire a corporate license permitting it to sell advanced financial products in Myanmar.

The bank plans to introduce new financial instruments and services in retail banking, such as housing and SME finance, corporate finance, including trade finance and infrastructure finance, digital banking and personal banking services.

In addition, KB plans to promote the Korea Myanmar Industrial Complex in Hlegu township, Yangon, to their numerous corporate clients in South Korea and draw them to do business in the industrial zone. With active engagement by KB, which has the largest market share of corporate financial loans among Korean banks, foreign direct investment inflows from Korean companies to Myanmar is expected to increase.

Contributing to Yangon

KB and Yangon region government signed a letter of intent to cooperate for the construction of 60,000 housing units for low-income householders. The bank is currently working on the provision of funds for the project.

Going forward, KB will actively participate in the development of new towns in Yangon and will be involved in the provision of housing finance for Dala township. It is also planning to set up a housing subscription and real estate price information system.

KB is providing convenience welfare facilities and support for migrant workers in South Korea and plans to further expand and develop these services. It also contributed by remodeling an education center for migrant workers in 2018.

Source: Myanmar Times

Businesses lament bank rules on transfers

Photo: Aung Khant/The Myanmar Times

The practice by local banks of only allowing foreign exchange transfers after showing bills of lading is an obstacle for businesses in making trade transactions.

After the amendment of regulations governing the management of foreign exchange transactions in the country, the Central Bank of Myanmar began allowing foreign exchange (forex) transfers by local banks. However, the transfers by local banks are not in line with international practices and this hampers businesses.

As most of the local businesspeople are making payments for trade via Singaporean banks, only these banks are getting the benefits from service charges.

Local banks say that the requirement is based on CBM instructions.

Foreign Exchange Management Law was enacted in in 2012 and amended on December 15, 2015. The amendment states that citizens in and out of the country will have to follow the CBM’s instructions for transporting gold, foreign currency and jewellery in or out of the country.

Source: Myanmar Times

Building blocks for bancassurance set to grow in Myanmar

Ko Ko Htay/The Myanmar Times

The Ministry of Finance, Planning, and Industry’s Financial Regulatory Department has approved a plan by two insurance joint ventures to offer bancassurance products under a pilot project following the liberalisation of the insurance industry in Myanmar.

KBZ MS is a joint venture insurance company between between IKBZ Insurance and Japanese insurer MSI, while AYASOMPO is a joint venture between AYA Myanmar, and Japanese insurer Sompo. Bancassurance is the selling of life assurance and other insurance products and services by banking institutions.

Since the liberalisation of the market in 2019, some local insurers along with their foreign partners have been considering bancassurance as another option to serve the country’s insurance needs.

Based on 2016 analysis by The Foundation for the Advancement of Life and Insurance Around the World, the distribution share of bancassurance in selected countries represents 42.2 percent, and given the recent growth of bancassurance, the distribution share might converge to 50pc in the future, according to research commissioned by local insurer KBZ MS.

 This means that the total bancassurance channel in Myanmar could grow to K2 trillion (US$1.3 billion) if applied to the total projected insurance market in Myanmar by 2029. During its launch in December 2019, KBZ MS shared that its strategy for this year will focus on building new acquisition channels such as an extensive network for bancassurance and also recruitment and training of financial advisers.

The pilot project shows that Myanmar bancassurance even in its initial stages can produce figures of 10 policies per sales person per month compared to AXA Mandiri of Indonesia which set the best in region with 8-10 monthly polices sold per branch per month.

Bancassurance is an exciting new channel for banks in Myanmar that can generate significant incremental income and in the next five year.

Source: Myanmar Times

 

 

CBM set to reduce interest rates if needed

Thiri Lu/The Myanmar Times

The Central Bank of Myanmar (CBM) may consider reducing interest rates to better align with high inflation rates should the need occur.

The current bank interest rate is 10percent while the minimum deposit rate is set at 8pc and maximum secured lending rate at 13pc.

Some MPs pointed out that lending rates should be reduced to make loans more affordable for local businesses. They added that easier access to funding would facilitate business growth and make local companies more competitive both domestically and internationally.

U Soe Min said that while interest rate policies helped to drive the economies of financially-developed countries, Myanmar’s economy has yet to reach the same level. For example, lowering interest rates at this time may not help the economy but increase non-performing loans, contribute to inflation, and destabilise the economy. It’s important to take these points into account.

Vice governor U Soe Min had previously said in previous Hluttaw sessions that the CBM would not reduce interest rates as at current levels, the rates were set within a reasonable range.

Source: Myanmar Times

Number of 24-hour ABC convenience stores to reach 300 in two years

Image result for 24-hour ABC convenience storesThe ABC Group plans to increase the number of 24-hour convenience stores it operates across the country to 300 in two years. Small and medium enterprises will play a pivotal role in the expansion of ABC convenience stores.

At present, SMEs are still struggling to grow in Myanmar. ABC convenience stores will allow SMEs to sell their products using special offers. Our retail business is expecting to expand the number of outlets to 300 in two years across the country. The operator will cooperate with SMEs. Some products from SMEs are of good quality, but the enterprises do not know how to penetrate the market.

ABC convenience stores are located in Yangon, Mandalay, Nay Pyi Taw, and other big towns. The food suppliers for ABC stores are based in Mawlamyine, Myingyan, Heho, Kyaukpadaung, and other cities. The food products are sold in line with the rules.

SMEs wishing to place their products in the stores are required to have an SME license and FDA certification. After obtaining an FDA certificate, the enterprises can tie up with ABC stores to sell products. The products can be sold under their logo or the ABC logo, according to ABC Convenience. 

Source: The Global New Light of Myanmar

MIBS and TASL Announced Key Partnership Unveiling World-Class Cyber Security Solutions for Businesses Worldwide

Photo: Supplied

Mascon International Business Services (MIBS) collaborates with Tata Advanced Systems Limited (TASL), to harness the vast scope of cyber security Solutions in the B2B market in India and neighbouring countries and to establish a wide spectrum of services and solutions in the cyber security domain, and promote measures to curb cyber intrusions.

MIBS aims to provide foundational capabilities and operational discipline to protect the value of sensitive client information. Born from the legacy of 35-year old parent company MASCON, today MIBS is a trusted partner for some of the largest public and private enterprises across Myanmar. To counter increasing global cyber security threats across modern enterprises, MIBS exclusive partnership aspires to safeguard the digitally connected world with its highly intuitive solutions.

MIBS will add solutions to its cyber security offerings powered by TASL and ensure its existing and potential customers will receive endpoint cyber safe environments. MIBS will enhance the modern market with solutions enabling trustworthy preventions, greater visibility, vital detections and even discovering sophisticated mitigation threats to identify and prevent security breaches swiftly. The partnership with TASL aims to leverage a stronger protection with better control over critical assets vital to Business to Business (B2B) segment, like users’ details and data.

Three platforms offered by MIBS (supported by TASL), namely Cyber Intel, Cyber Secure and Cyber Assurance unify vulnerability management, surface attack analysis, cyber risk management, fraud & risk intelligence services and much more. The wide range of solutions illustrates leading choice for endpoint security to maintain IT hygiene and proactive risk hunting.

Source: Myanmar Times

Frontiir selected to bring internet to Yangon’s ‘New City’ development

The Yangon government launches the New Yangon Development Company (NYDC) in 2018. Nyan Zay Htet/The Myanmar Times

The Yangon “New City” megaproject’s developer has selected Myanmar ICT firm Frontiir to build a network bringing internet services to the area.

The New Yangon Development Company (NYDC), announced the tender result, a year after it called for an Expression of Interest. Frontiir was chosen among a total of 13 submissions.

Frontiir, a homegrown Myanmar firm, has operated Myanmar Net since 2013, and is a major service provider serving as many as 1.3 million users in the country. It received an additional US$30 million of funding from private equity fund manager Delta Capital last September.

The New City scheme, led by Yangon Chief Minister U Phyo Min Thein and launched in March 2018, aims to build an industrial and urban area on the west of Yangon city, covering a landmass twice the size of Singapore. Described by Serge Pun as Myanmar’s answer to Shenzhen, its target is to attract US$1.5 billion (K2.83 trillion) investment for its first phase. Thai PTT Group and India’s Indraprastha Gas Limited and Gail Consortium were selected by NYDC to supply and distribute power and natural gas respectively.

The feasibility of the scheme is in doubt due to climate change risks. Critics question whether designing a new city to withstand only a 90cm sea level rise makes economic sense at a time when many coastal cities in Asia are investing heavily in flood defences or moving inland. Global sea levels could rise by two metres by the end of this century.

The NYDC responded that a separate tendering would be set up through a special “Swiss Challenge” method. The project proposal is currently awaiting the approval of the Attorney General office in Nay Pyi Taw.

During Xi Jinping’s historic Myanmar visit at the start of this year, the two countries signed a Letter of Intent regarding the proposal, reflecting Beijing’s support for the scheme. New City is widely seen as a part of China’s flagship Belt and Road Initiative, though its strategic importance pales in comparison to Kyaukphyu deep-sea port in central Rakhine and railway and road connectivity between Yunnan and western Myanmar.

Source: Myanmar Times

New Housing Insurance Package offers 14 types of coverage

Myanma Insurance and the Ministry of Planning, Finance and Industry and Shin Ye Htut Group jointly launched a Housing Insurance Package (HIP).

Myanma Insurance arranged this Housing Insurance Package as part of efforts to underpin the Union government’s low-cost and affordable housing projects.

Low-cost and affordable apartments can be bought on installment, with loan periods ranging from 10 to 30 years, in accordance with the policy of the banks. Sometimes, a buyer may die or become disabled before paying back the entire loan taken from a bank. Besides, a natural disaster can strike anytime. Myanma Insurance have arranged the Housing Insurance Package to provide insurance to people to protect them from financial losses caused by 14 disasters that are mostly seen in Myanmar.

Myanma Insurance’s HIP covers 14 insurances, including fire, lightning strike, explosion, plane crash, earthquake, storm, flood, damage, damage to water tank and water pipe, damage caused by uprooting of trees, fire and smoke, burglary, broken window. It also offers two types of premiums: budget premium and non-budget premium.

Source: The Global New Light of Myanmar

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Thae Oo Myintzu
MMRD Insight—Editor
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