HOW NEW BANKING REGULATIONS WILL AFFECT FOREIGN EQUITY IN MYANMAR

NEWS

As well as providing a more competitive financial services landscape, the CBM is looking to boost lending, with low credit access posing an obstacle to growth across the economy. Indeed, in the most recent OBG Business Barometer: Myanmar CEO Survey, released in October last year, 83 per cent of CEOs described credit access as “difficult” or “very difficult” Key to improving this is the creation of the country’s first credit bureau, and to this end the central bank awarded the Myanmar Credit Bureau (MCB) a license to collect credit records and provide them to lenders in May last year. Work is ongoing to prepare for the launch of the MCB’s services, and in December the bureau signed a deal to purchase a credit bureau software license from Equifax New Zealand – a provider of credit risk services.

(Source: The Borneo Post Online, April 2, 2019) 

CLICK HERE TO VIEW THE ARTICLE

RESEARCH VIEW

In 2017/18, credit growth cooled as banks transitioned to the new regulatory environment and lending remained concentrated in a few sectors. According to World Bank’s latest statistics, growth in credit to the private sector was 23% in Q4-2017/18, down from 25% in Q3-2017/18. Recent developments suggest that uncertainties in the banking sector led to a further slowdown in lending. The share of credit to agriculture declined from 16% in Q3-2017/18 to 11% in Q1-2018/19. Lending growth remained concentrated, as 68% of new loans in Q1-2018/19 were directed to five sectors: trade, real estate, services, construction, and agriculture. In terms of real estate, one aspect of the new rules that has been billed as offering the most potential for the growth of mortgages is the introduction of unit registration certificates (URCs), which provide evidence of the ownership of individual apartments, similar to what is known as strata titles in other countries. As stipulated in the rules, the person whose name appears on the certificate will be the legal owner of the condo unit and can use the URC as security for a bank loan. However, lingering confusion over the implementation of the rules meant that they have not had a significant impact on the mortgage market in 2018. In the coming years, Colliers sees that the demand for credit will remain strong, and banks could deliver more diversified products to serve their customers. The introduction of term loans helps the banking sector to play a more important role in channeling savings to longer-term loan demand from the various sectors, especially real estate. On the retail banking side, while diversification is still at a very early stage, more banks are likely to start offering mortgage loans with flexible payment terms to finance real estate projects, especially residential developments.

PROPERTY INVESTMENTS NOW MORE CLEAR-CUT FOR FOREIGNERS

NEWS

Property developers and investors have been looking forward to stable regulations and foreign participation in the local real estate sector since the Condominium Law was enacted in 2016 and gradually enforced. Firmer home ownership laws are expected to draw higher volumes of foreign investment, which, in turn, will benefit businesses along the supply chain, from construction to interior design. The 2016 Condominium Law addresses land ownership as well as foreign participation in the local property market. According to the law, foreigners now have the right to own up to 40 percent of the units in a condominium project, while each individual can buy up to 25pc of the units.

(Source: Myanmar Times, April 02,  2019)

CLICK HERE TO VIEW THE ARTICLE

RESEARCH VIEW

In light of the clearer regulations for foreign ownership in Condominium Law, sales and investment in construction sector is expected to pick up its momentum again. Colliers has learnt that only a small share of condominium apartments meets full eligibility standards and the demand for quality condominium units on the back of liberalization in banking sector has yet to materialize. According to the World Bank data, the domestic banking credit growth in construction sector has moderated resulting in an opportunity vacuum for foreign banks that are willing to expand their credit to local developers. Despite the recent downturn, this condo law will revive the interest of all buyers by guaranteeing foreign ownership and creating positive domino effects in both rental and secondary markets. Colliers recommends developers to seek project financing options in collaboration with foreign banks and market their condo units with flexible payment terms.

CASINO OPERATIONS TO BE LEGALISED UNDER NEW GAMBLING LAW


NEWS

Casinos will soon be able to legally operate in Myanmar after the 2018 Gambling Law is enacted in May, replacing the existing 1986 legislation. The new law, which includes recommendations from President U Win Myint, is now in the process of being approved in Parliament, which will resume after Thingyan in April. The updated law was drafted in 2017, after the Ministry of Hotels and Tourism made a request to the Ministry of Home Affairs to allow casinos to operate officially as a service industry for foreigners in selected hotels. These include hotels on islands popular with tourists.

(Source: Myanmar Times, March 31, 2019)

CLICK HERE TO VIEW THE ARTICLE

RESEARCH VIEW

With tourism industry contributing 2.7% of the total GDP and employing over 600,000 people in Myanmar, liberalizing gambling laws will allow hotels and developers to diversify their business strategies and lure more guests and travelers who are inclined to visit casinos, boosting the overall economic growth of the country and bringing in a greater proportion of additional wealth into the local economy. Colliers urge tourism and hospitality industry to take advantage of this opportunity and start rigorous marketing campaigns targeted towards linking casino developments to the wider tourism context.