After more than five decades, foreign banks will again be able to open up branch offices in Myanmar as part of the government’s financial reforms aimed at developing the country’s banking sector. At present, there are 43 foreign banks with representative offices in Myanmar (See graph below).

But they are restricted from conducting any type of financial activities in the country. Their activities are limited to such things as collecting data, studying the local financial scene, and marketing. This will change, however, as Myanmar now plans to issue up to ten foreign bank branch licenses later this month.

In 2011, the Central Bank of Myanmar (“CBM”) began liberalizing and allowing private banks to do foreign exchange currency transactions. Th en, in 2012, the CBM floated the nation’s currency, the kyat, which better facilitated international trade, especially agricultural exports. As of 2013, however, the nation’s 24 banks still had combined assets of only $ 23 billion dollars.

The Myanmar government has long recognized the need for the involvement of foreign banks and foreign investment to help modernize the nation’s financial system. As a growing economy, Myanmar desperately needs access to capital.

Young entrepreneurs and agriculturalists need access to long-term credit in order to open new businesses and farms. Foreign banks would be the logical place to look for a supply of much-needed capital. Local banks, however, have pushed back hard against the CBM’s suggested reforms in the foreign bank licensing law. Indeed, a strong parliamentary committee has been formed to oppose foreign banks operating in Myanmar altogether. And while the effort to forbid foreign banks from operating in Myanmar under any circumstances has failed, the strong lobby efforts have resulted in a very restrictive bank licensing law.