Does Myanmar’s banking sector need a regulatory paradigm shift?

Presented by ANU College of Asia & the Pacific

Presently, Myanmar has a small banking industry with advanced financial technologies still under development. It is under-pressure from global regulatory institutions. Corruption in the Myanmar banking sector is systematic and pervasive, due to political and economic constraints stemming from 60 years of authoritarian rule.

Myanmar has both opportunities and obstacles to catch up in its economic development by installing integrity infrastructure and professional standards in its banking industry and by building financial inclusion for its citizens (80% of whom currently have no access to banking services).

In this PhD mid-term review seminar, Naing Ko Ko analyzes the latest challenges and obstacles for the Myanmar banking sector, and how best to strengthen the integrity infrastructure and ethical safeguards for its domestic banking.

As the key regulator and supervisor, the Central Bank of Myanmar (CBM) has became the culprit that is blamed by all international and domestic policy and decision-makers. In fact is the CBM also suffers from a lack of economic regulatory techniques, human capacity, and the know-how and management techniques appropriate for a central bank. From a regulatory perspective, the CBM became an independent institution after legislative reform in 2013.

The 2016 Myanmar Financial Institutions Law (FIL 2016) officially ushered in a prudential regulatory framework. Clauses and articles of the FIL 2016 are mostly in line with the international Basel I and II regulatory frameworks. However, compliance, enforcement and practical and professional business practices have not been robustly implemented under either the 2016 FIL or the earlier 1992 financial regulations.

Of Myanmar's 25 domestic banks, only 3 satisfy the capital requirements of the the Basel accords and could be regarded as performing well within the existing legal and regulatory framework. The sector comprises those 25 domestic banks (private and policy banks), 4 state-owned banks, 9 foreign banks and 47 foreign bank and financial institution representative offices.

About the Speaker

Naing has worked on the Thai-Burma border in the areas of political reforms including democracy, human rights, national reconciliation and economic development. For more than 10 years, he collaborated with the UN agencies, state and non-state-activists and intellectuals. His advocacy work with exiled Burmese political coalitions took him all around the world to meet with key global decision makers. He was an intern of the European Parliament and has been promoting democracy and national reconciliation for Burma on the global stage. New Zealand accepted Naing as a UN-sponsored refugee in 2007.

Naing's applied field experience took him to the Australia Parliament to work with Ms. Janelle Saffin, a Federal Member of Parliament of Australia, where he gained work experience in policy-formulation, decision-making and other peaceful foreign and trade policy initiatives of the democratic system.

For more information, visit his RegNet profile.