Quarterly Business Magazine

Without Access to Direct Loans from Foreign Banks, Local Entrepreneurs Worry about Interest Rates

Posted :
Thursday, September 25, 2014

Yangon - According to local entrepreneurs, local businesses in need of capitals will not be able to obtain low-interest loans from foreign banks since the latters are forbidden from lending directly to local businesses. Instead, they have to rely on local banks, which in turn borrow from their foreign counterparts.

“With the local banks as middlemen, loan interests will not go down much,” said U Ko Ko Htwe, President of Taw Win Family Co., Ltd.

A selected number of foreign banks in Myanmar will receive banking license this months, and their operation scope will include corporate banking with local banks only.

While foreign banks can lend to foreign businesses in Myanmar, they will not be allowed to offer any banking service that local banks are currently providing.

“The demand for loans is very high in Myanmar, so changes can happen in the lending market,” said U Kyaw Soe Min, Assistant Executive Director at Myanmar Apex Bank.

Meanwhile, Myanmar banks are wondering whether foreign banks will provide a lump sum amount of loans to them or only the amount that local businesses are demanding.

“Personally, I welcome the arrival of foreign banks—even though there are middlemen. Allowing them to work directly with local businesses will be another step,” said U Myat Thin Aung, Chairman of Hlaing Tharyar Industrial Zone.

Currently, foreign banks are allowed to open representative offices in Myanmar. Only some of them will be given licenses to operate branches.

Powered by Drupal