Myanmar’s banking sector, long one of the weakest links in the former pariah state, is expected to have one of the highest growth rates in Asia after it allows foreign banks to begin operations in early 2014. The country is experiencing explosive growth (6.9 percent in the medium term, and rising, according to the World Bank) compared to its neighbors (5.2 percent, and falling), with rising household incomes, and foreign direct investment growth of 50 percent year-over-year. Moreover, Myanmar reports a substantial rise in volume and price of exports, both in commodities and manufactured goods such as gas, rice, garments, etc.
In marked contrast, Myanmar’s internal banking services have had an extremely low penetration in this country of over 60 million. This means there is tremendous growth potential that is just beginning to be realized. According to the World Bank, domestic lending has again risen in excess of 50 percent in the past year, down slightly from over 60 percent the year before. The current government has undertaken a number of reforms designed to unify exchange rates and stabilize the currency. The World Bank has stated that the setting up of a Kyat managed float exchange rate system in 2012, the creation of a relatively independent Central Bank, as well as “licensing of new banks, expansion of branch networks, the broadening of eligible collateral to include key agricultural export goods, and doubling of the loan ceiling to farmers,” are likely to have a pronounced impact on the Myanmar population’s access to capital and banking services.