SMEs look to Myanmar as internationalisation gathers steam

Newly opened Myanmar presents a golden opportunity for small and medium-sized businesses; and foreign banks like OCBC Bank, which are established in the country, can assist in cultivating the cross-border dynamic.

For many, Myanmar still presents a world of unknowns. The southeast Asian country is a frontier market with vast potential, and it is ready to embrace the outside world. With its need for infrastructure, hospitals and the like, opportunities abound for companies eager to enter.

“Myanmar is an attractive country that is growing economically,” says Tan Chor Sen, head of international, global commercial banking at OCBC Bank. “Because it opened up fairly recently, there are many untapped opportunities.”

Like many of its neighbours, Myanmar is growing. Its population is young, and its middle class has nearly doubled since 2012 with its income expected to grow at double-digit rates over the next five years. This demands higher-quality resources, such as schools and medical centres – and foreign players can fill the gaps.

Myanmar’s government has already loosened its policies on foreign investment. For instance, the 2018 Myanmar Companies Law allows companies to retain classification as a Myanmar entity while having up to 35% foreign ownership. In addition, operating licences can be acquired more easily now in Yangon and additional accommodative policies are expected.

Foreign SMEs can take this opportunity to build in Myanmar and enter joint ventures with local players. Foreign banks – such as Singapore’s OCBC Bank, which has been in Myanmar on and off since the 1920s – are in an ideal position to assist in this cross-border growth.

For example, OCBC Bank provided financing for Aryu International Hospital, a 200-bed private hospital and medical diagnosis centre, that commenced operations in Yangon in 2018. The hospital is a joint venture between Myanmar conglomerate Ga Mone Pwint and Thai multinational healthcare group, Thonburi Healthcare. Likewise, the bank has granted working capital to Okkar Thiri, one of the largest medical equipment suppliers in Myanmar.

Seizing opportunities of all sizes

“In today’s world, where connectivity, communication and mobility are here, we are seeing, especially in Singapore, a lot of companies – from day one – ready to be international,” says Tan. Web platforms allow companies to source in one country and sell in another, or to have support teams stationed remotely.

Even in a frontier market like Myanmar, digitalization is catching on. OCBC Bank’s internet and mobile banking customers have grown by 30% over the past two years and it has digitalized its client processes to make SME access to loans and other transactions easier and faster – something drawn into sharp focus with the outbreak of Covid-19.

But while the bank embraces a future-focused approach – even issuing Myanmar’s first green loan of $44 million this February – it hasn’t neglected the more traditional, relationship-based elements of business. Last year, the bank organized a two-day mission in Yangon for its regional customers from Singapore, Malaysia and Hong Kong, to get first-hand insights into Myanmar.

OCBC Bank’s business strategy has also involved setting up a China Business Desk to ease the transition for Chinese companies. In addition, the bank has a Myanmar Business Desk dedicated to local businesses, and is also adept at supporting other multinational companies and its network customers to enter Myanmar.

“Our set-up is not just to support multinational companies,” says Tan. “We are able to finance SMEs going either onshore or offshore, because we know them.”

The bank’s long history in Myanmar has been advantageous too. Because the country was closed to foreign banks until 2015, OCBC Bank’s historic presence in Myanmar gives it added credibility and better access to local companies. The government and central bank have also been open to discussions and advice from the bank.

All this has led to the bank winning Asiamoney’s award for best international bank for the third straight year.

Tan notes that Myanmar is increasingly willing to work with its neighbours. “The government is fully aware that the growth of the country is not just dependent on Myanmar corporations, but also on foreign companies coming into the country,” he says.

He points to Chinese president Xi Jinping’s visit in January as a positive sign of the relationships to come, and Myanmar’s willingness to embrace them. Already players from countries including China, South Korea, Japan and Singapore have actively engaged Myanmar, and the expected China-Myanmar economic corridor will increase the flow of investments and funnel money to new projects that will require workers, goods and services – suggesting that for those wanting to get ahead of the competition, the time is now.