Banking Sector Accelerates Myanmar Entry... Industrial, Corporate, and Kookmin Banks Step Up Efforts

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[Asia Economy Reporter Park Sun-mi] Domestic banks are accelerating their entry into Myanmar despite the challenging circumstances caused by the spread of COVID-19.

On the 8th, the Korea Development Bank (KDB) opened a branch in Yangon, Myanmar, to support the government's New Southern Policy and expand its business base in Southeast Asia. Despite difficulties in preparing to open the branch due to the spread of COVID-19, it has been only nine months since the bank received preliminary approval from Myanmar's financial authorities in April last year.

Through the Yangon branch, KDB plans to support Korean companies entering Myanmar and participate in local infrastructure expansion projects. Additionally, KDB intends to transfer its accumulated development finance expertise, including risk management and SME support measures, to Myanmar's financial authorities, playing a catalytic role in the mutual development between Korea and Myanmar.

IBK Industrial Bank also received final approval from the Central Bank of Myanmar to establish a local corporation on the 30th of last month and plans to officially launch 'IBK Myanmar Bank' and begin full-scale operations this month.

IBK Myanmar Bank will be able to handle most of the services provided by local banks, including corporate, personal, and foreign exchange transactions. It will serve not only Korean companies operating in Myanmar but also local companies. The bank plans to gradually expand its business scope from focusing on Korean companies in Myanmar to local companies and retail banking.

Based on IBK's unique SME finance capabilities, the bank aims to provide products and services tailored to local characteristics, developing into a top-tier bank leading SME finance in Myanmar. It also plans to actively cooperate with the government's New Southern Policy to contribute to revitalizing economic cooperation and economic development between the two countries.

KB Kookmin Bank is also establishing a local corporation in Myanmar. Last month, Kookmin Bank obtained final approval from the Central Bank of Myanmar to establish a local corporation.

With the establishment of the local corporation, the bank will be able to conduct corporate and retail banking operations without restrictions within Myanmar. Since opening its Myanmar office in 2013, Kookmin Bank has maintained a collaborative relationship by signing a business partnership with the Myanmar Housing Development Bank in 2014 and conducting nine workshops to strengthen capabilities in housing finance and IT sectors.

In 2017, the bank signed a tripartite memorandum of understanding (MOU) with the Myanmar Ministry of Construction and the Housing Development Bank to establish a cooperative system. In the same year, it established a microfinance institution and has opened 21 branches to provide financial services aimed at improving housing conditions for low-income groups.

Although Myanmar's financial infrastructure is still weak, hundreds of Korean companies have entered the market, and with market liberalization and continuous improvements in investment conditions, domestic banks are expected to continue expanding their presence. Moreover, with an average annual economic growth rate of 7-8% and borders with China, India, and Thailand, Myanmar has high growth potential and is considered a strategic hub in the New Southern region.

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