Domestic Banks Accelerate Expansion into Myanmar (Comprehensive)

Rapidly Emerging as a Global Production Hub
Active Entry of Domestic Companies
Need for Financial Services Support

IBK to Launch Yangon Office as Corporation in January Next Year
Industrial Bank and Kookmin Bank Also Preparing for Operations

[Asia Economy Reporter Kim Min-young] Domestic banks are accelerating their entry into Myanmar. As Myanmar rapidly emerges as the next-generation global production base following China and Vietnam, domestic companies are actively expanding into the country, leading to an increased pace of support from domestic banks for financial services. Myanmar is expected to become a foothold for targeting the New Southern region.

According to the financial sector on the 13th, IBK Industrial Bank plans to convert its existing IBK Yangon office into IBK Myanmar Corporation in January next year. After receiving preliminary approval for corporate establishment from the local central bank in April, preparations for the corporate conversion are underway. The related matters were reported and approved at the board meeting held last month.

This will be the third overseas corporation following China and Indonesia. IBK Industrial Bank plans to engage in various operations including corporate finance, personal finance, interbank transactions, and consulting for small and medium-sized enterprises. Unlike branches or offices, the corporation can have up to 10 outlets, allowing for greater operational flexibility.

An IBK Industrial Bank official stated, “We plan to expand our network focusing on countries where domestic companies are actively entering,” adding, “We are diversifying our overseas expansion methods, including mergers and acquisitions (M&A) of local banks and equity investments, focusing on regions with high growth potential.”

Myanmar shares borders and maritime boundaries with China, India, and Thailand, and is regarded as a strategic hub in the New Southern region connecting the Indian Ocean and the Pacific Ocean. Since 2012, it has recorded an average annual economic growth rate of around 7%, drawing attention as the next-generation global production base following China and Vietnam. With a population of about 54.4 million, similar to South Korea, Myanmar is a young country with a labor force of approximately 30 million whose average age is only 27. It is also rich in natural resources.

Bird's-eye view of the Myanmar Economic Cooperation Industrial Complex

Currently, about 300 Korean companies have entered Myanmar. A Korean company-exclusive industrial complex is also being developed near the capital Yangon, indicating that the entry of Korean companies and banks is expected to become more active in the future.

Shinhan Bank has been operating its Yangon branch since September 2016, becoming the first Korean bank to open the door to the Myanmar market. The bank mainly provides services such as dollar remittances, import-export settlements, dollar loans, and local currency account openings to Korean companies.

KDB Industrial Bank and KB Kookmin Bank also received corporate establishment approval in April along with IBK Industrial Bank and are preparing to start operations. In particular, KDB Industrial Bank is reopening a branch in the Indochina Peninsula after 22 years since withdrawing its Bangkok branch during the 1998 International Monetary Fund (IMF) foreign exchange crisis. KB Kookmin Bank plans to specialize in housing finance and retail finance, areas of strength, in line with the Myanmar government's policy goals for supplying affordable housing, and will focus on local operations.

NH Nonghyup Bank recently obtained preliminary approval to establish an office in Yangon. It has been operating microfinance loans through its microfinance institution (MFI) corporation ‘Nonghyup Finance Myanmar’ since 2016, and this office establishment will serve as a stepping stone for setting up a bank.

An official from the banking sector said, “Although there are some inconveniences such as quarantine related to overseas expansion projects due to COVID-19, we are actively utilizing technologies such as non-face-to-face video conferences to carry out our work.”

This content was produced with the assistance of AI translation services.