161220 powerpoint presentation at yue (om ki & san thein)

ရနကနစးပြားေရးတကသလ၊Master of Banking and Finance (MBF) Program

နငဂာမနအျပညျပညဆငရာ ပးေပါငးေဆာငရြကေရးေအဂငစ (GIZ)

ပးေပါငးကငးပေသာ

Workshop on

“Developments in Myanmar’s Banking and Financial Sector”

by

Om Ki (National Expert, GIZ) &

San Thein (Senior National Expert, GIZ)

December 20, 2016 Yangon University of Economics

Agenda

1. Structure of Financial Institutions

2. Major Developments in Myanmar’s Financial Liberalization

3. Infrastructure (Major Institutions supporting Financial Sector)

4. General Features of Myanmar Financial Sector

5. Performance of Myanmar Financial Sector

6. Outlook of Financial Sector

7. Major Challenges of Banking Sector

8. Opportunities

20/12/2016 Om Ki and San Thein @ YUE

Agenda

Structure of Financial Institutions Major Developments in Myanmar’s Financial Liberalization

Infrastructure (Major Institutions supporting Financial Sector)

General features of Myanmar Financial Sector

Performance of Myanmar Financial Sector

Outlook of Financial Sector

Major Challenges of Banking Sector

Opportunities


Structure of Financial Institutions

Banks NBFI Scheduled Institutions

4

24

13

45

State-owned Banks

Commercial Banks

Foreign Banks

Rep Offices

16

1

400

<4000

Finance Cos.

MFSP

Money-changers

(Non-bank MC)

Pawnshops

1

12

3

20

168

77

1

6

3

State-owned MI

Private Insurance

Foreign Ins in SEZ

Rep Offices

MFIs

Cooperative MFIs

(Feb 2016 - MOC)

YSX

Securities Cos.

Listed Cos.


Agenda


Major Developments in Myanmar’s Financial Liberalization






Opportunities


Major Developments in Myanmar’s Financial Liberalization (1990 – 2016)

Timeline Developments in the Banking Sector I

Jul 1990

May 1992

Nov 2011

Apr 2012

Aug 2012

Dec 2012

CBM Law & Financial Institutions of Myanmar Law

Allowed private sector participation in banking (FPB/MCB)

Allowed private banks to engage in foreign banking,

Allowed to join SWIFT and establish correspondent banks

From a fixed to managed floating exchange rate regime,

Market-reflected CBM reference rate introduced by auctioning FX

Foreign Exchange Management Law

Non-bank money-changers allowed (USD, EUR, SGD,THB, MYR)


Major Developments in Myanmar’s Financial Liberalization (1990 – 2016)

Timeline Developments in the Banking Sector II

Jul 2013

2015 – 2016

1996 - 2016

Jan 2016

Jan 2016

Mar 2016

CBM Law, CBM independence (institutional & functional)

13 foreign banks (mostly from Asia) allowed in the country;

Their functions restricted to wholesale banking

15 Finance Companies (Main functions: Loans & HP)

Financial Institutions Law (A stable and modern banking system)

CBM-Net (RTGS) for large-payment settlement

Regulation on Mobile Financial Services



(1990– 2016)

Timeline Developments in Other Major Sectors

Jul 2013

Aug 2014

Dec 2015

Jan 2015

Sep 2016

Capital market

Securities and Exchange Law

SECM formed to establish YSX

YSX opened

T-bill auctioning (investment, monetary management & financing)

T-bond auctioning (…………….ditto ……………….)

Nov 2011

Mar 2016

Microfinance

Microfinance Business Law

168 licensed MFIs with 23 Int’l cos., and 5 INGOs

Jul 1993

Jun 1996

Nov 2012

May 2013

Insurance

Myanma Insurance Law

Insurance Business Law

Started opening insurance sector to the private

12 private insurance companies licensed20/12/2016 Om Ki and San Thein @ YUE

Agenda








Opportunities


Infrastructure

(Major institutions supporting Financial Sector)

CBM (regulation & supervision)

MBA (an association of local bankers)

MIB (a quasi-department within MBA)

MPU (National Payment Switch)

YUE (Offer 3-year Master of Banking and Finance)


Infrastructure

(Major Institutions supporting Financial Sector)

SECM (Regulatory Body for Securities Market)

YSX (Implementing Body)

MOPF/FRD (regulation & supervision) Insurance & Microfinance

MI (Implementing authority)

City Development Committee (regulation & supervision) for pawnshops


Agenda




General Features of Myanmar Financial Sector




Opportunities


General Features of Myanmar Financial Sector I

Myanmar’s formal financial sector is dominated by banking sector

(About 90% of all financial sector assets in March 2016)

The formal banking system is small compared to other countries

Myanmar: 28 banks with USD 32 bn (Total assets)

Vietnam: 40 with USD 261 bn

Thailand: 19 with USD 481 bn

Malaysia: 59 with USD 549 bn


General Features of Myanmar Financial Sector II

Prevalence of informal Loans (FinScope 2013, UNCDF)

Formal Credit: 18% of Population (Banks, MFIs & Pawnshops)

Informal Credit: 29% (Informal moneylenders, Family & Friends)

Payment system is largely cash-based

Rural population have limited access to financial services


General Features of Myanmar Financial Sector III

YSX is at its initial stage

No active secondary market for T-bonds and T-bills

No Credit Bureau

Weak in promoting Credit Guarantee Scheme

Low insurance awareness

Limited IT system development


Agenda








Opportunities


Performance (Financial Intermediation)

12.32

16.21

24.59

30.15

32.46

4.83

7.54

10.86

14.59

17.90

2010/11 2011/12 2012/13 2013/14 2014/15

Loans and Deposits (% of GDP)

Deposit

Loan


Performance (Financial Intermediation)

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

Malaysia Thailand Vietnam Cambodia Philippines Indonesia Myanmar

Domestic Credit to the Private Sector (% of GDP)

2014

2015


Performance (Financial Inclusion)

Access to basic financial services is low

o 20% of adults in Myanmar use commercial bank and other formal

(non-bank) products

(UNCDF: FinScope 2013)

o In 2014, 23% of adults in Myanmar had access to an account in a

financial institution

(31% in Vietnam, 78% in Thailand, and 81% in Malaysia)

(WBG: 2016 Financing the Future)


Global Views on

Myanmar’s Financial Sector Performance

World Bank (2016) : Doing Business 2017

Ease of Doing Business rank: 170 out of 190 economies

Indicator 5 (Of 10): Getting Credit: 175 out of 190 economies

World Economic Forum (2015): Global Competitiveness Report 2015-2016

Global Competitiveness Index rank: 131 out of 140 economies

Pillar No. 8 (Of 12): Financial Market Development: 138 out of 140 economies

Ease of Access to Loans (4 of 8):140 out of 140 economies


Agenda






Outlook of Financial Sector Major Challenges of Banking Sector

Opportunities


Outlook (Banking Sector)

Bank management (Corporate governance) & Accounting system

(IFRS)

Facilitations and new products

More trade financing

More loans to SME and agriculture sector

New products with competitive prices

From risk averse to risk appetite

FinTech penetration & Digital Payment systems

Active interbank market

Reforms of state-owned banks


Outlook (Capital market)

Sound Management & Accounting Standard

Active secondary market

A good venue for investment & fund raising (Equity & Debt)


Outlook (Insurance)

New Insurance Law expected

Liberalization of insurance sector

Entry of foreign insurance companies


Outlook (Microfinance)

More effective contribution of MFIs to poverty alleviation

Promotion of financial inclusion

Expansion of formal financial sector


Agenda







Major Challenges of Banking Sector Opportunities



Well-sequenced and carefully-managed implementation of FI Law

The development of human resources

The development of technology and infrastructure

The gaining of public trust


Agenda








Opportunities


Opportunities

US Sanctions lifted & GSP granted

Investment Law promulgated (70-year land lease, Tax incentives:

3-7 years tax holiday, Non-nationalization, Repatriation of profits...)

Many development partners helping the country

Necessary reforms are taking place

Potential markets between China, India and ASEAN

Rule of law under the democratic government


Downloadable Links to

our GIZ Flagship Banking Report

“Myanmar’s Financial Sector: A Challenging Environment

for Banks (3rd Edition, 2016)”

https://www.giz.de/en/downloads/giz2016-en-Banking_Report.pdf

“Myanmar’s Financial Sector: A Challenging Environment

for Banks (2015)”

https://www.giz.de/en/downloads/giz2015-en-myanmar-financial-sector.pdf


https://www.giz.de/en/downloads/giz2016-en-Banking_Report.pdf

https://www.giz.de/en/downloads/giz2015-en-myanmar-financial-sector.pdf

Thank you for your kind attention!

San Thein ([email protected]) &

Salai Om Ki ([email protected])


mailto:[email protected]

mailto:[email protected]

161220 powerpoint presentation at yue (om ki & san thein)

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