Myanmar

Myanmar is not known as one of the most environmentally sensitive of nations. Several decades of rapacious generals trashing its forests for fast money has seen to that. Nor is it the cleanest of countries, nor its roads the safest. The Myanmar government admits around 14 people died every day last year in a traffic incident, though the actual number is believed to be much higher. And the government has little money or inclination for public education drives.

Stay in any international-standard hotel in Myanmar and if you pay by credit card, there’s a good chance you’re a customer of Singapore’s UOB Bank. That’s because Myanmar doesn’t have a clearing system to speak of, so Singaporean bankers stepped up. UOB, now run by Loi Kai Cheow, first opened an office in Yangon back in 1994, when the country’s leader Aung San Suu Kyi was under house arrest. And such are UOB’s intimate connections here that many of Myanmar’s banks – such as CB Bank – have ex-UOB staffers on board.

SME – small and medium-sized enterprise – lending is hard going in a country like Myanmar. In a cash economy that doesn’t have an industry-credible credit bureau, mortgages, or reliable legal records on property title and ownership for collateral, lending to anyone – let alone taking a bet on a rising entrepreneur – is tricky at best. Then there’s the generously described ‘informal’ market to compete with. Loan sharks who do have collateral have been known to take out loans from licensed banks at state-set rates, and then lend it on at four times their cost of funds. Add a quixotic central bank to the mix, and it’s a brave firm that fashions itself as a SME-only lender, positioning to support the backbone of any fast-emerging economy.

In 2010, a mobile phone Sim card in Myanmar, one of the world’s poorest countries, cost around $2,000. Today, any mobile user can get connected for around $1, and hook up to a network that went from 7% coverage in 2012, to around 90% today, and much of it at least 3G. As local bankers lament, if only banking reform had moved as briskly as the telco industry in the new Myanmar.

It’s not much of a contest in Myanmar’s CIB space. KBZ outreaches and out-muscles its competitors by some measure here too. Such heft opens doors, and KBZ is the first modern Myanmar bank to venture abroad, with offices in Bangkok, Kuala Lumpur and Singapore to follow Myanmar’s trade routes and diaspora. Beijing and Tokyo will likely be next, then Western financial centres.

KBZ Bank’s competitors like to describe it as a ‘protected species’ in Myanmar banking. They may be right – KBZ’s connections are very tight in the capital Nyapyidaw. It has ties to still powerful members of the former military junta that ran Myanmar for decades.

A year after the country’s new government passed a financial institutions law to modernize a creaking banking system, Yangon’s licensed commercial bankers are still waiting for regulators to implement the reforms and make the system fit for purpose. In the meantime, savvy locals are trying to get on with building a banking industry.