Bangkok Bank reveals challenges of operating in Myanmar

AFTER A YEAR of operating a branch in Myanmar, Bangkok Bank says it has learned that it has to put more effort into doing business there than in other countries because the long isolation of Myanmar in the past means there are few examples of how foreign companies there resolve problems. BBL had operated a representative office in Myanmar for 19 years. It then became the only Thai bank to win a foreign banking licence, together with eight other banks, in October 2014. It officially opened a branch in Yangon on June 2, 2015.

Chaiyarit Anuchitworawong, executive vice president for international banking, told The Nation that BBL’s experience of doing business in other countries where it has a footprint had been different than in Myanmar, because those countries’ economies had not been isolated for a long time.

“We can acquire information from other countries and do what other foreign businesses did. In Myanmar, even if we can understand the regulations [written in Burmese script], we are not sure what we are able to do, such as seizing collateral from borrowers if they default,” he said.

Legal process

“As a foreign bank, we have worried over how long the legal process is before we can seize collateral from borrowers. The bank used to ask a local law firm, but it was also not sure if the bank could sue defaulting borrowers or not.

“Local law firms sometimes are confused by what we ask them because they don’t have much experience in solving such problems. The bank therefore has to more cautious in the lending process, making sure enough time is spent on assessing creditworthiness,” he said.

Before Myanmar opened up its economy, there were few foreign companies doing business there, so the bank doesn’t have examples of how obstructions are resolved, unlike in other countries where it has been able to learn how to deal with barriers to doing business. Myanmar is therefore a bigger challenge than the other 14 markets where BBL has footprints. However, the authorities are aware of this and are attempting to make clearer regulations to improve the ease of doing business, Chaiyarit said.

According to the World Bank’s “Doing Business 2016” data, Myanmar’s ease-of-doing-business ranking is 167 out of 189 economies. The ranking improved from No 177 in “Doing Business 2015” data.

Chaiyarit said that even though Myanmar was posing a lot of challenges, the bank had found a lot of opportunities as well.

“We are happy with our performance in Myanmar because we began from zero, and therefore we can grow a lot in all transactions included lending. We have set credit lines for several foreign clients that are actively doing business in Myanmar,” he said.

The bank is in talks with many foreign investors including Thai corporates because after opening its economy, Myanmar is investing a lot in infrastructure and utilities to serve the massive business inflows, he said.

Apart from greater consumption of its 60 million people and rich resources that attract investment, the government requires investment in power plants and telecommunications towers, both of which are the focus of Thai companies.

Having a branch in Myanmar enables BBL to service Thai customers and multinationals from Taiwan, mainland China and Hong Kong that have been referred from the bank’s branches in those markets.

Non-Thai companies are running manufacturing and other businesses that have concession contracts from the government, such as utilities and ports, he said.

Chaiyarit said having a representative office for 19 years, even though it could not conduct financial transactions, was an asset, as it was able to collect data and assist bank executives and clients who wanted to explore opportunities in Myanmar.

Those data also helped BBL to assess what were opportunities and what were risks.


Source: The Nation

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