The Central Bank of Myanmar (CBM) issued Directive 6/2018 on 8 November 2018, allowing foreign bank branches to provide financing and other banking services to local companies, in cooperation with foreign companies and local or foreign financial institutions. Although not yet clearly stipulated, we can expect clarifications in the near future on what constitutes “other banking services”.

The CBM is reported to have made this change to existing rules in order to increase access to finance for local businesses. Previously, foreign banks were only permitted to lend to foreign enterprises in foreign currencies (subjected to other restrictions).

The CBM has clarified in local press that foreign banks will be able to provide financing and other related banking services in foreign currency as well as in Myanmar Kyats. The Deputy Governor of the CBM also noted that the CBM expects foreign banks to mainly provide foreign currency to local businesses, particularly to finance trade, which would in turn support the country’s trade sector. The interest rates for loans in foreign currencies will not be fixed, and can be transacted based on market rate.

It should be noted that foreign banks cannot hold security over immovable properties and other assets with restricted ownership rights, and the CBM still does not allow foreign bank branches to offer retail banking services. Nevertheless, this is a good step forward to improve the business environment and a much welcomed one.