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10/8/2012 1
CENTER FOR MANAGEMENT TECHNOLOGY
2ND MYANMAR INVESTMENT SUMMIT
FINANCIAL AND BANKING REFORMS IN MYANMAR
YANGON, UNION OF THE REPUBLIC OF MYANMAR
OCTOBER 17, 2012
10/8/2012 2
FINANCIAL AND BANKING REFORMS IN MYANMAR
Presented by
Naw Eh Hpaw
Deputy Director General
Central Bank of Myanmar
10/8/2012 3
Myanmar
Myanmar is situated in South East Asia.
An area of 676,577 sq km with a coast line of 2,832 km and the Estimated Population is about 59.13 million.
The terrain ranges from the arid plains to cool, sprawling
hills, snow-capped mountains, white-sand beaches, lush
farmland, hidden valleys and thick virgin forest.
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Geographical Proximity and Strategic Location
Demographic Bonus
On the Track for Economic Recovery and Development
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Macroeconomic Indicator The growth rate of the real GDP
5.3 % in FY 2011/12 and projected at
6.25% in FY 2012/13
Total exports by 28.1 % to US $ 8.42 billion
Inflation declined to 4 % in FY 2011/12 and is projected to 5.75 % in FY 2012/13
The national poverty incidence
fallen from 32 % to 26 %
four million people escaped from poverty
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Macroeconomic Policy Priority It is said that A historic opportunity to jump-
start the development process and to boost the living standards but …….A long way to go
The government has adopted appropriate policies and plans in the areas which call for top priority
The five-year short-term plan starting from FY 2011/12 to FY 2015/16
Modernization of the financial system
Monetary Policy
Fiscal Policy
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Liberalization in the Financial Sector
CBM encouraged the establishment of the four new private banks as well as the activities of the existing private commercial banks
19 domestic private banks with more than 300 branches all over the country and all the banks are in full swing now
Reintroduced an interbank foreign exchange market although it has been about 50 years since this market was last allowed to exist
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Liberalization in the Financial Sector
( Continued )
Local private banks have been allowed to perform both at home and abroad
The remittance of currency from Myanmar citizens working overseas becomes much easier and more reliable than before
Upgrading the payment system and introduction of online banking system
Unifying the exchange rates while easing the exchange-rate restrictions on current payments and transfers
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A well-defined legal framework Amendments to the existing laws
Central Bank of Myanmar Law 1990
Financial Institutions of Myanmar Law 1990,
All these amended laws and regulations concerned are to be enacted by the parliament
The Foreign Exchange Management Law was enacted by the Parliament on August 10, 2012
Establishment of foreign exchange business and also the realistic managed float exchange rate
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Monetary policy CBM has implemented a prudent monetary
policy framework
CBM is to be given the full operational autonomy
Interest rate policy Reduced the central bank discount rate from 12 % to
10 % starting since January 1, 2012.
Moderated the interest rates for Government Treasury bonds
An incentive for the purchases of treasury bonds, which is the essential to phase out deficit monetization and to reduce inflation further
10/8/2012 11
Fiscal Policy • Reduce the unproductive expenditure but also
prioritize the policy toward social responsibility such as education, health and social protection
• Fiscal decentralization process and sub-national budgets was first separated from the Union budget
• Appropriate reforms to tax policy and tax administration
• Fiscal deficit was 4.8 % in FY 2011/12 and is also projected at 3.8 % for FY 2012/13
10/8/2012 12
Threats and Challenges
1) Special Interest Groups
2) Imbalance in the Community
3) Transparency, Accountability and Reliability
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Economic Outlook • Modernizing Myanmar’s economy has been looked
upon as a process of removing impediments to growth
• By encouraging all inclusive political process as well as enabling economic environment
• Reassuring the financial system development and liberalizing trade and foreign direct investment further
• Delivering the expectations with sustainable development by consolidating the macroeconomic stability measures such as the exchange rate unification scheme, the attempt to fiscal discipline and a series of liberalizing policies.
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10/8/2012 15
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Inflation
GDP (FY 2011-12) US$ 54.03 billion (MMK 45,928,000 million )
GDP (PPP) US$ 82.72 billion (MMK 45,928,000 million )
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10/8/2012 18
-10
0
10
20
30
40
50
60
70
20
00
Jan
20
00
Jul
20
01
Jan
20
01
Jul
20
02
Jan
20
02
Jul
20
03
Jan
20
03
Jul
20
04
Jan
20
04
Jul
20
05
Jan
20
05
Jul
20
06
Jan
20
06
Jul
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Jan
20
07
Jul
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08
Jan
20
08
Jul
20
09
Jan
20
09
Jul
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10
Jan
20
10
Jul
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11
Jan
20
11
Jul
% p
er
ann
um
Consumer Price Index
Lending Rate
Deposit Rate
Spread
Trends of Interest Rates in Myanmar: Spread Reduced to 3% from 5% in Sep 2011
Source: IMF, International Financial Statistics
10/8/2012 19
Trade Balance in Myanmar (FY 1991-2001)
Fiscal Year Export Imports Trade Balance
1991-92 430.6 842.3 -411.7
1992-93 590.7 1,010.2 -419.5
1993-94 695.6 1,301.7 -606.1
1994-95 917.4 1,487.8 -570.4
1995-96 934.4 1,830.8 -896.4
1996-97 929.9 1,945.8 -1,015.9
1997-98 1,010.8 2,160.4 -1,149.6
1998-99 1,113.1 2,431.4 -1,318.3
1999-00 1,353.4 2,365.7 -1,012.3
2000-01 1,838.2 2,064.6 -226.4
2001-02 2,484.8 2,304.4 180.4
10/8/2012 20
Trade Balance in Myanmar (FY 2002-2010)
Fiscal Year Export Imports Trade Balance
2002-03 2,727.5 2,101.5 626.0
2003-04 2,780.8 1,998.7 782.1
2004-05 2,902.4 1,805.0 1,097.4
2005-06 3,531.1 1,815.1 1,716.0
2006-07 5,202.7 2,687.6 2,515.1
2007-08 6,363.4 3,076.3 3,287.1
2008-09 6,735.8 4,089.0 2,646.8
2009-10 7,568.6 4,186.3 3,382.3
2010-11 8,856.0 6,403.7 2,452.3
10/8/2012 21
0.0
1,000.0
2,000.0
3,000.0
4,000.0
5,000.0
6,000.0
7,000.0
8,000.0
9,000.0
10,000.0
Export
Imports
Trade Balance
Trade Balance in Myanmar (FY 2002-2010)
(Kyats in million )
10/8/2012 22
• System of National Accounts
10/8/2012 23
10/8/2012 24
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
၁၅-၁၉ ၂၀-၂၄ ၂၅-၂၉ ၃၀-၃၄ ၃၅-၃၉ ၄၀-၄၄ ၄၅-၄၉ ၅၀-၅၄ ၅၅-၅၉ ၆၀-၆၄ ၆၅+
ရာခငနနး
အသက
၁၉၇၃
၁၉၈၃
၂၀၀၁
၂၀၀၇
အသက (၁၅) နစနငအထက လပသားအငအားပါဝငမနနး (၁၉၇၃ ခနစ- ၂၀၀၇ ခနစ)
10/8/2012 25
62.8 64 63.9
58.2
12.9 11.1
8.9 9.3
24.3 24.9 27.2
32.5
0
10
20
30
40
50
60
70
1973 1983 2001 2007 1973 1983 2001 2007 1973 1983 2001 2007
လယယာသားငါးကဏဍ စကမကဏဍ ဝနဆောငမကဏဍ
10/8/2012 26
၂၀၁၁ ခနစ၊ ဇလငလကနအထ နငငပပါငး(၃၁) နငငမလပငနး စစပပါငး (၄၅၄)ခ ရငးနးမ ပနလျကရရာ အပမရကန ပေါလာ သနးပပါငး (၃၆,၀၇၁.၈၈၈) ရပါ သည။
ရငးနးမ ပနမကဏဍ(၁၂)ခတင လျပစစကဏဍမ ၄၀.၂၈%၊ ပရနနငသဘာဝ ဓါတပငကဏဍမ ၃၈.၃%၊ သတတ ကဏဍ မ ၇.၇၅% တဖ င ဦးပောငလျက ရပါ သည။
နငငအပနဖ င တရတပ ညသသမမတနငငသည ၂၆.၆၂% ဖ င ပထမ၊ ထငး နငငသည ၂၆.၅၃% ဖ င ေတယ၊ ပောငပကာငသည ၁၇.၄၉% ဖ င တတယ ပနရာတငရပါသည။
အာေယနငငများမ ရငးနးမ ပနမပမာဏမာ အပမရကနပေါလာ သနးပပါငး (၁၂၇၇၅.၆၅၆) ရပါသည။