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ACLEDA bank profiting in Myanmar

Six months after ACLEDA bank launched a microfinance institution (MFI) in Myanmar, the number of clients has outpaced predictions by more than fourfold as Cambodia’s biggest bank cashes in on growing loan demand in a developing industry.

In Channy, president and CEO of ACLEDA, said yesterday that at the end of August, ACLEDA MFI Myanmar counted 2,782 active borrowing customers, much higher than an expected amount of roughly 600.
The MFI has $251,000 in outstanding loans, Channy said.

“The loan demand over there is high, it’s very high,” he said, adding that loans are given to micro businesses and are mostly used for trade, such as the buying and selling of groceries or clothes.

ACLEDA is not the only bank seizing the opportunity to do business in a country emerging from decades of military rule. Last year, the Cambodian branch of Japanese-owned Maruhan Bank opened a representative office in Myanmar. A few months ago, in June, Australia and New Zealand Banking Group Ltd did the same.

Representative offices are often the way that banks test the waters in emerging markets before establishing a branch.

In September of last year, MasterCard was the first international payments network to issue a licence to a Myanmar bank, setting the stage for cards to be accepted in the cash-dominated economy.

Bun Mony, president of the Cambodia Microfinance Association, said yesterday that he doesn’t expect other Cambodian MFIs to follow ACLEDA’s lead and head over to Myanmar, “because most of them, they focus more on the Cambodian market.”

“They are starting to develop. But for me I see one constraint of the policy.”

According to Mony, in order to protect the poor, the Myanmar government caps the interest rate at which MFIs can give out loans. He said that MFI funds are from investors, so if MFIs can’t profit, interest will dry up.

“Even though there are MFIs already [in Myanmar], those MFIs cannot grow because there is no investment,” he said.

Bloomberg reported earlier this month that Tokyo Stock Exchange Group Inc and Daiwa Securities Group Inc were chosen last year to help Myanmar set up a stock exchange.

However, due to delays in setting the legal framework in place, Myanmar is running behind schedule for a 2015 launch.

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