Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), a state-owned bank of Vietnam officially opened its branch in Yangon, Myanmar, with a paid-in-capital of $85 million.
“The bank wants to work with foreign companies and customers that have a direct business in Myanmar, especially for Vietnamese investors as well as those that have a close relationship like Laos, Cambodia, Thailand, Korea, Russia and Cheque Republic,” said Dang Hai Nha, CEO of the Yangon Brach of BIDV.
The bank can lend upto $17 million to customers and can open only one point of transaction according to Myanmar’s licensing rules. BIDV’s transaction point will be in Yangon’s special economic zone.
BIDV received the license from the Central Bank of Myanmar on June 30 after receiving approved for commencement of banking operations in March.
There are 10 foreign bank branches operating in the Myanmar, which was The Bank of Toyo-Mitsubishi UFJ Ltd was the first foreign bank to open a branch in April 2015. License rules in the country allow foreign banks to provide credit to companies and local banking institutions but prohibit from engaging in retail banking and direct lending in local currency.
Myanmar has become the latest opportunity for fast growth in the region. The US has eased much of its sanctions following the transition of power from the military to a democratically elected government. As a result, the nation is posed to witness a surge in foreign investments. The The Asian Development Bank has predicted that economic growth will be higher than 8 per cent this year and in 2017, the highest rate in Asia. The government is also planning to amend laws to make it easier for foreign companies to invest.
“BIDV has had past experiences in countries similar to Vietnam. We can draw lessons from those, and have a suitable development strategy for Myanmar,” Nha told DEALSTREETASIA. BIDV had first opened its office in 2010 in Yangon. Since then, the bank has grown to $300 million in assets to become one of the top five foreign banks in the country. It has also been active in microfinance, insurance and consultancy services.
On July 31, the bank signed credit agreements with outstanding Vietnamese investors in Myanmar including Vietnam Airlines Myanmar Branch, FPT Myanmar, an IT company, and Antaco Myanmar, that does construction.
Some of the foreign banks that have a branch in Myanmar are The Bank of Tokyo-Mitsubishi UFJ Ltd, Overseas-Chinese Banking Corporation Ltd, Sumitomo Mitsui Banking Corporation, United Overseas Bank Ltd, Bangkok Bank Public Company Ltd, Industrial and Commercial Bank of China, Malayan Banking Berhad (Maybank), Mizuho Bank Limited, Australia and New Zeland Banking Group Ltd and BIDV.
Approved foreign investment rose 18.4 percent to $9.48 billion in the year ending March 31, 2016, compared to 2015, according to the country’s Directorate of Investment and Company Administration.