Following a trip to Yangon to attend a microfinance conference sponsored by the Myanmar government and UNDP, ACLEDA Bank CEO In Channy was happy to learn that his suggestion to set up a microfinance association had been taken up a few days later in the capital city of Naypyidaw.
Attending a conference sponsored by the Myanmar Ministry of Finance and the UNDP on May 9 and 10 earlier this month called Emerging Microfinance Sector in Myanmar, Regional Lessons on Selected Issues, In Channy suggested that in order to have good regulation in Myanmar, they could open direct dialogue between the public and the private sector, like Cambodia had done.
“I said they should form an association of microfinance so they could bring the issues to their counterparts,” In Channy said. “The idea is that Cambodia has good regulation on microfinance, because NBC opened direct dialogue between public and private sector, so we can talk and debate.”
After obtaining a microfinance license for Myanmar in February, ACLEDA Bank now has 448 micro business customers and US$57,000 equivalent in outstanding loans, with 338 accounts and a deposit balance of $16,000 in savings, according to In Channy.
The Myanmar office of ACLEDA Microfinance employs 45 people, including 35 Myanmar staff and 10 Cambodians.
“Next month we plan to send 20 people from Myanmar to train in Cambodia. We will do a six week training, with three weeks in the field,” he said.
There are 142 licensed microfinance enterprises licensed in Myanmar which are local, and two foreign: one ACLEDA and the other Aeon Microfinance.
The Myanmar Microfinance Supervision Enterprise (MMSE) operates under Myanmar’s Ministry of Finance and Revenue which oversees the Central Bank, which in turn regulates commercial banks. MMSE is also under the same ministry, but in a different department.
In Channy sat down for an interview last week, having just returned from his three-day trip to Myanmar.
“My suggestion for microfinance in Myanmar was that to have good regulation we should have direct dialogue with private sector, and I said you should form an association of microfinance, and they can bring issues to their counterparts,” Channy said.
Within Cambodia, In Channy says ACLEDA Bank has grown into the position of market leader because of listening carefully to customers and implementing their suggestions when possible.
“ACLEDA is the largest because we listen to our customers. The customers have provided good suggestions and we care about them and focus on what they need. They advise us to have more financial products, and we introduce new products and services based on customer needs,” he said.
In 2000, ACLEDA had 14 branches and has since expanded to 238.
“The customers asked us to expand to the district level and some districts are remote, so we needed more branches at the commune level. Then we added ATM machines that function 24 hours so people can access their accounts on a daily basis,” In Channy said.
The next service introduced was ACLEDA Unity whereby account holders could use their mobile phones from home to perform funds transfers, check balances, pay suppliers and bills.
“This is the product of listening to the customer and implementing it. In our case we listen, especially if the customer suggests it. We know our customers are working with other banks, and they have ideas and experiences, so they come to us and ask for something. If they can do many things with one bank, rather than deal with more banks, it saves them time.” There are some suggestions, however, that are not accepted and ACLEDA policy is to offer an explanation.
“Listening to the customer and following the suggestion is key to success. What we can accept we accept, what we cannot, we explain why. Our service is quick, convenient and secure. Time is money for us and the customer understands that,” In Channy said.
In Channy said ACLEDA would launch internet banking before the end of the year. Also in the works are VISA credit cards which the bank will begin to issue in the coming weeks.
“Currently we have VISA debit card, but customers want to go international and it is more convenient to use the VISA credit card.”
The strategy is to issue the VISA credit cards to ACLEDA staff first, so they can understand the whole process and then do the public launch.
“At the launching we will issue VISA credit cards to about 300 of our customers.”
In Channy said ACLEDA had injected additional paid up capital of $72.5 million earmarked to finance growth expansion.
“This is to make our ATMs able to accept cash deposits and do inter-account transfers from the ATM machines. The idea is that we want electronic infrastructure to substitute the physical branches especially on public holidays. We have increased the capital to finance our growth.”
ACLEDA has $1.6 billion in deposits, 12.5 per cent of which is foreign currencies reserve which can’t be touched.
“The more you increase your savings, it can help on the liquidity side, however you need to increase your paid up capital to improve your solvency so you can grow.
“We are doing a lot to finance our growth domestically and internationally in Laos and Myanmar,” In Channy said. “We have expanded our ATM machines to a total of 162 and we will increase that number to 220 by the end of the year.”
He’s pleased that the 220 ACLEDA ATM machines will outnumber the total 196 districts of Cambodia.
Also expanding are ACLEDA’s Point of Sale (POS) terminals, which now number 900 and will expand to 1,000 by the end of the year.
“In our long term plan we want to have 8,000 POS terminals,” In Channy said.
In Laos, ACLEDA now has 700 people, 32 branches and offices, with an expansion plan for an additional 10 branches this year, bringing the total to 42.
“As a private bank, we are the biggest in Laos and we have achieved more than we expected, especially in the area of capacity building. We built a strong team with 12 Cambodian experts to help our colleagues there. We have sent eight Cambodian experts already and by the end of this year, only three ACLEDA staff members in Laos will be Cambodian because our transfer was handled successfully.”
In Channy said ACLEDA’s Laos operation very profitable both in monetary terms and in the training of experts through technology transfer. There’s also a good relationship with the regulator in Laos, because of a dialogue through a banking association, just like in Myanmar.
When the ACLEDA team met with Myanmar officials at the first microfinance meeting, they shared experiences of how they became successful in a meeting with people from Bangladesh and Indonesia along with the Myanmar people.
“Myanmar is open to suggestions and they like to listen. We explained what we wanted to do in Myanmar and I could see that in Myanmar was open to debate. When I returned to Cambodia, I got feedback from colleagues who got invited to meet in Naypyidaw to establish the microfinance association. This is a big step for them. It was after just one meeting and they did that,” he said.
In his speech to the Myanmar microfinance officials, In Channy said microfinance should not be limited in terms of loan size, but would grow with the customer from the first cycle of $100, the second $200 and the next one maybe $1,000. In Channy told the Myanmar group that microfinance should be regulated by the central bank, which has professional expertise and that the government should open a dialogue with the private sector, through an association of microfinance institutions so they could improve the laws and regulations.
He was delighted to learn that just such an associate was created by that weekend.
“Myanmar agreed to establish an association of microfinance at the meeting of May 23 in Naypyidaw,” In Channy said.
Here in Cambodia, ACLEDA has 320,000 active borrowing customers, the majority of whom are Cambodians. The total Khmer Riel currency holdings of all the banks in Cambodia amounts to US$270 million, of which ACLEDA holds US$56 million, making it the largest depositor of Khmer Riel in Cambodia, according to In Channy.
“We have more Khmer Riel than anybody because we have offices and branches in the rural areas, and normally their income is generated in local currency and they place their deposits in local currency.”
Khmer Riel deposits at ACLEDA Bank earn 7.5 per cent interest while US dollar deposits earn five per cent.
In Channy said the future looks very positive for Cambodia and ACLEDA Bank.
“Loans and deposits grew 7 per cent during the first quarter of this year,” he said.
As for challenges in the marketplace, In Channy said there’s increasing competition among commercial banks on bigger loans.
“Many bank come and all of them work in the upper segment, so it is challenging, but challenging on the bigger loans.”
In addition to his position as CEO of ACLEDA Bank, In Channy also serves as co-chair of the working group on Banking and Finance, with his counterpart from the National Bank of Cambodia.
“So far there is an interbank facility and we are working with the NBC to develop the interbank market and the NBC expects to have it done by June.”
In Channy said the importance of the interbank facility and market is to enable bank banks to deposit their surplus liquidity in other banks.
“The importance of this is to use the surplus liquidity in individual banks, so if the other bank has surplus liquidity, they can place with other banks. Now they can do it, but we want the law to regulate and protect when we place it with the other bank. The working group discussed this with NBC and they said they expected to have it done in the first half of 2013.”