“We will give priority to 13 existing permitted banks by allowing them to expand their services to include import trade financing. Previously, trade financing was allowed only for export purposes. So, by allowing foreign banks to finance both exports and imports, banks will be able to provide the full suite of trade financing services,” he said.

The move comes after the CBM first allowed foreign banks to provide export financing in December last year. 

In Myanmar, foreign banks have so far only been allowed to provide accounts for exporters. But there are now plans in place for the CBM to also allow importers to open accounts at foreign banks. The plans also include allowing the banks to expand their services, U Win Thaw said.

“It is a good policy as this will encourage more foreign currency to enter the market. With more money circulating in the economy, inflation can also be checked,” Dr. Maung Maung Lay, vice chair of Union of Myanmar Federation of Chamber of Commerce and Industries (UMFCCI) told The Myanmar Times.

Import trade financing will facilitate trade and help to keep the price of imported products such as petrol under control, he added.

While the foreign banks will not lend easily and might extend loans only to reliable import firms, the move to allow two-way trade financing is nonetheless an opportunity for growth in the banking sector and economic expansion, Dr. Maung Maung Lay said.

Currently, foreign banks operating in Myanmar are not permitted to provide banking services such as savings accounts and loans. The CBM allows them to provide only export financing and wholesale banking services. 

As the CBM relaxes more of its regulations, the foreign banks will eventually be able to provide retail banking services, U Win Thaw said.

In the future, equal treatment will be given to foreign banks and local private banks, he added.

The CBM is responding to foreign banks’ requests for licenses to provide more services and is now reviewing whether it should be allowed. However, no decision has yet been made.

“We have a plan to allow more foreign banks to participate in the economy but we haven’t fixed the time,” he said.

There are currently 13 foreign banks allowed to operate in the country. More will be permitted to open branches in the country as the economy expands.