India looks to set up a bank through JV route in Myanmar.

Naw Pyi Taw: New Delhi is exploring opportunities to set up a bank through the joint venture (JV) route in Myanmar in an attempt to facilitate growth in trade and better economic ties between the two countries, an Indian government official said, speaking on condition of anonymity.

The bank will be jointly owned by state-run banks of the two countries, added this person, who is attending the World Economic Forum here.

Indian banks including State Bank of India, the country’s largest lender, and United Bank of India have evinced interest in starting operations in Myanmar. United Bank of India is already present in the country through a representative office.

“The plan of a bank that will be set up through the joint venture route has been floated. The idea is to be present here. While full-fledged operations in the banking sector (here) may take some time, this is far more easier to do,” added the official.

State Bank of India may be the Indian partner, he added.

A senior State Bank official, who didn’t want to be named, said he was not aware of any specific plan but that “neighbours are always welcome”.

Trade between Myanmar and India in 2012-13 was worth a little over $1.8 billion, of which India’s exports to Myanmar in the last fiscal accounted for $532 million and imports from Myanmar, $1.33 billion.

The two countries have set a target of $3 billion of bilateral trade by 2015. India’s total investments in Myanmar are around $273 million, and the number is expected to rise to $2.6 billion in the next few years. India is Myanmar’s fourth-largest trading partner after Thailand, Singapore and China.

Myanmar’s unsophisticated banking system poses a challenge for any country seeking to do business with the South Asian nation. As Myanmar opens up its $53 billion economy, this is expected to change.

“The banking system is expected to open fully for participation from foreign banks later,” said Matthew Driver, president, Southeast Asia, MasterCard Worldwide.

India, which has a fairly strong banking system, could leverage its expertise to strengthen its neighbour’s banking system as both the countries have inherited common banking laws. India’s interest in Myanmar’s banking sector also stems from the promise of country’s economy growing to $90 billion by 2018.

India is developing the Sittwe port in Myanmar and also wants to set up a special economic zone there, for which it needs land from the government.

Apart from this, the Indian government is also drafting a plan to revive around 300 closed apparel factories here with a $5 million proposed line of credit as part of the proposed initiative, a memorandum of understanding is in the works. “The ministry of textiles is working on the proposal,” said another Indian government official, who also didn’t want to be identified.

In an unrelated development, the Association of Southeast Asian Nations (Asean)-India agreement on trade in services and agreement on investment may be signed in August this year.

Trade between India and Asean was $76.3 billion in 2012-13 and is expected to increase to $100 billion by 2015.

Source : livemint.com