US gives banking green light to Myanmar tycoons
YANGON (Reuters) – Two banks owned by tycoons associated with Myanmar’s former military regime will start to do business with US companies and investors in the latest reward for the Southeast Asian country’s rapid political transformation.
The US Treasury Department said on Friday it would issue a general licence for four of Myanmar’s biggest banks – Myanma Economic Bank, Myanma Investment and Commercial Bank, Asia Green Development Bank and Ayeyarwady Bank – allowing US companies and citizens to deal with them.
The easing of sanctions on Asia Green Development Bank and Ayeyarwady Bank underlines how politically-connected capitalists of the old regime – whom the US once castigated – are re-inventing themselves and retaining a strong foothold as foreign investors race to enter the country.
It helps remove uncertainty among US companies over lingering restrictions on their dealings in Myanmar and is expected to increase the domestic reach of US credit card firms Visa and MasterCard.
The decision was announced ahead of a visit to Myanmar by 50 US executives on Monday to explore opportunities in the resource-rich nation, the latest sign of burgeoning foreign corporate interest in the country of 60 million.
Washington eased sanctions last July to allow US companies to invest in and provide financial services to Myanmar, dropping restrictions on dealing with most Myanmar banks.
Sean Turnell, an expert on Myanmar’s economy at Australia’s Macquarie University, said the latest move was significant because it would normalise the flow of international funds in and out of Myanmar. But he said the inclusion of formerly blacklisted Ayeyarwady Bank and Asia Green Development Bank was a surprise given previous US assurances that they “still had their eye on the worst offenders of the past regime.”
“One of the great anxieties is over the cronyisation of the economy – the fear it will be a fleeting summer and become like Russia,” Turnell added.
Ayeyarwady Bank is owned by Zaw Zaw, who was previously described by the US Treasury as “a regime crony” and blacklisted under targeted US sanctions four years ago.
The tycoon, whose holdings range from timber and gems to luxury resorts and who benefited handsomely from state privatisations three years ago, told Reuters last year that his dream was to build Ayeyarwady into an international brand.
Asia Green Development Bank is controlled by Tay Za, Myanmar’s best known tycoon. He was previously sanctioned by the US Treasury as a “notorious henchman and arms dealer.”
US firms will still be barred from forming joint ventures with the banks. The other two banks granted a general licence on Friday are controlled by the government.
Western countries have suspended most sanctions in recognition of Myanmar’s dramatic political and economic opening since the new government took power in March 2011.
Critics say they risk moving too fast, pointing to evidence of human rights abuses in recent months against Myanmar’s Rohingya Muslim minority group and ethnic Kachin rebels engaged in a conflict with the military.
MetLife, Cargill, Fedex, Chevron, General Motors, General Electric, Target, Honeywell and eBay are among the roughly two dozen US companies visiting Myanmar this week.
Visa and MasterCard have already entered the country, partnering with several banks and gaining access to a nascent ATM network, but only a handful of merchants currently accept payment by card. A central bank official who asked not to be identified told Reuters that only six out of 19 private Myanmar banks can handle Master and Visa cards at the moment.
“I am sure the recent easing of sanctions will enable the remaining banks to use these cards in the very near future,” he said.
Visa, which marked its first point-of-sale transaction in Myanmar last month at a Yangon restaurant, said in a statement to Reuters that decisions to apply for a Visa licence were “up to individual banks.”