The Co-operative Bank (CB) has become the first bank in Myanmar to sign up for the Asian Development Bank (ADB)’s trade finance programme, weeks after it was rolled out to the country.
CB will now be able to draw on ADB guarantees for trade finance loans totalling US$12mn, which will be especially geared towards the local SME market.
The ADB has also combined with Swiss Re and International Enterprise (IE) Singapore to support their trade finance programme in Myanmar, as the country looks to continue to grow its presence on the international trade scene.
Winfried Wicklein, ADB country director in Myanmar, tells GTR that there are currently three state banks and state commercial banks – out of a banking network that totals 27 – offering trade finance services, but that it is still a nascent and underdeveloped market.
“There are significant barriers to the growth of trade finance: collateralisation requirements for customers and banks, the lack of foreign currency availability and lingering uncertainties regarding the effects of OFAC policy on US bank financing in Myanmar,” he says.
“Current capacity within the system will in the short to medium-term soon be insufficient to meet Myanmar’s growing needs in infrastructure development, urbanisation and agricultural support. Importers and exporters will need new markets in which to buy and sell. The banking system can help meet these future requirements by developing its trade finance product base and marketing techniques.”
Commercial banks have also been making moves to enter the Myanmar market. Maybank of Malaysia and Mizuho of Japan opened branches in the country in August, following Bank of Tokyo-Mitsubishi UFJ (BTMU), United Overseas Bank, Oversea-Chinese Banking Corporation, Sumitomo Mitsui Banking Corporation (SMBC), Bangkok Bank Public Company and Industrial and Commercial Bank of China (ICBC) in being granted banking licenses by the Myanmar Central Bank.
In September, Yoma Bank of Myanmar teamed up with ICBC to facilitate the flow of trade finance between the two countries. The deal will see ICBC – the world’s largest bank by assets – provide loans to clients in its neighbouring countries via Yoma, and will also allow the local bank to use direct remittance services with ICBC.