Interview: U Kyaw Win
What advances are still needed in the financial sector to promote economic growth?
U KYAW WIN: Myanmar faces a series of challenges, which include creating social welfare, assuring economic stability, increasing integration with global markets and improving human capacity. On top of these things, developing the financial sector is critical to promoting economic growth.
Fortunately, the government has managed to attract foreign investment into agriculture, manufacturing, industry and banking, to name but a few sectors. Yet challenges still remain within the finance industry. Myanmar’s institutional capacity lags significantly behind its neighbours, and more reforms are needed to generate long-term benefits for the financial sector and the wider economy.
Concerning the relationship between the financial sector and the allocation of the government’s budget, the Ministry of Planning and Finance uses sustainable fiscal measures to keep the deficit to less than 5% of GDP. However, economic risk and public financial management methods still need to improve, and public investment is a top priority.
What role do you expect foreign lenders to play in the development of Myanmar’s banking sector?
KYAW WIN: In the age of globalisation, no country can stand alone. As you can imagine, the financial sector in Myanmar is in an early stage of development. There is a large and untapped market for foreign investors, including foreign lenders. They can participate in providing financial services and establishing economic infrastructure, including the rollout of technology and digital platforms for innovative products. I see local financial service providers working together with foreign investors by sharing technical knowhow, networks and resources in a unified manner. Since 2013 the Central Bank of Myanmar has granted licences to 13 foreign banks to open their branches in the country. Encouraging foreign banks to take part in the development of Myanmar’s interbank market is a vital step towards deepening the capacity of the financial sector and increasing cooperation between foreign and domestic banks. In addition, small and medium-sized enterprises (SMEs) need improved access to credit in order to contribute to Myanmar’s positive and sustainable economic growth, and the development of the banking sector.
How can improvements in credit provision and tax collection assist with business development?
KYAW WIN: As a result of decades of sanctions, Myanmar finds itself economically behind other nations in the region. The growth of the banking sector was constrained by limitations in trade and service transactions with global markets. Therefore, development of the credit segment is needed to spur economic development. In order to achieve this, we need to develop a protected credit information system that will improve transparency and assist in advancing accounting standards within the nation.
Moving forward, long-term financial instruments are critical for the development of local businesses. Likewise payment and settlement facilities will create a more enticing investment climate due to a sound banking environment. We can expect that this will, in turn, lead to greater efficiency in the private sector. Furthermore, under the Ministry of Planning and Finance, Myanmar Economic Bank is trying to improve access to credit by offering more annual and term loans to local businesses. This includes promoting a lending scheme for SMEs.
Some of the tax collection priorities include identifying corporate income taxes and capital gains taxes for non-resident foreigners, reducing personal income tax rates for foreigners from a flat rate to a progressive rate, enhancing allowances for spouses and children, and developing the tax regulations.
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