By Aung Hla Tun
YANGON Feb 25 Two banks owned by tycoons
associated with Myanmar's former military regime will start to
do business with U.S. companies and investors in the latest
reward for the Southeast Asian country's rapid political
The U.S. Treasury Department said on Friday it would issue a
general licence for four of Myanmar's biggest banks -- Myanma
Economic Bank, Myanma Investment and Commercial Bank, Asia Green
Development Bank and Ayeyarwady Bank -- allowing U.S companies
and citizens to deal with them.
The easing of sanctions on Asia Green Development Bank and
Ayeyarwady Bank underlines how politically connected capitalists
of the old regime -- whom the United States once castigated --
are re-inventing themselves and retaining a strong foothold as
foreign investors race to enter Myanmar.
It helps remove uncertainty among U.S. companies over
lingering restrictions on their dealings in Myanmar and is
expected to increase the domestic reach of U.S. credit card
firms Visa Inc and MasterCard Inc.
The decision was announced ahead of a visit to Myanmar by 50
U.S. executives on Monday to explore opportunities in the
resource-rich nation, the latest sign of burgeoning foreign
corporate interest in the country of 60 million.
"This announcement will undoubtedly help the further
development of the market," Antonio Corro, MasterCard's chief
representative for IndoChina, said in a statement. "We expect
that Myanmar's tourism sector will continue to grow rapidly and
so building card acceptance is key."
Washington eased sanctions last July to allow U.S. companies
to invest in and provide financial services to Myanmar, dropping
restrictions on dealing with most Myanmar banks.
Sean Turnell, an expert on Myanmar's economy at Australia's
Macquarie University, said the latest move was significant
because it would normalise the flow of international funds in
and out of Myanmar. But he said the inclusion of formerly
blacklisted Ayeyarwady Bank and Asia Green Development Bank was
a surprise given previous U.S. assurances that they "still had
their eye on the worst offenders of the past regime".
"One of the great anxieties is over the cronyisation of the
economy -- the fear it will be a fleeting summer and become like
Russia," Turnell said.
Ayeyarwady Bank is owned by Zaw Zaw, who was previously
described by the U.S. Treasury as "a regime crony" and
blacklisted under targeted U.S. sanctions four years ago.
The tycoon, whose holdings range from timber and gems to
luxury resorts and who benefited handsomely from state
privatisations three years ago, told Reuters last year his dream
was to build Ayeyarwady into an international brand.
Asia Green Development Bank is controlled by Tay Za,
Myanmar's best-known tycoon. He was previously sanctioned by the
U.S. Treasury as a "notorious henchman and arms dealer".
U.S. firms will still be barred from forming joint ventures
with the banks. The other two banks granted a general licence on
Friday are controlled by the government.
"It is now time for Myanmar and the U.S. to take the
relationship to the next level," Tami Overby, vice president for
Asia at the U.S. Chamber of Commerce, told a meeting of U.S. and
Myanmar business officials in Yangon.
Western countries have suspended most sanctions in
recognition of Myanmar's dramatic political and economic opening
since the new government took power in March 2011.
Critics say they risk moving too fast, pointing to evidence
of human rights abuses in recent months against Myanmar's
Rohingya Muslim minority group and ethnic Kachin rebels engaged
in a conflict with the military.
MetLife, Cargill, Fedex, Chevron
, General Motors, General Electric, Target
, Honeywell and eBay are among the
roughly two dozen U.S. companies visiting Myanmar this week.
Visa and MasterCard have already entered the country,
partnering with several banks and gaining access to a nascent
ATM network, but only a handful of merchants currently accept
payment by card. A central bank official who asked not to be
identified told Reuters that only six out of 19 private Myanmar
banks can handle MasterCard and Visa cards at the moment.
"I am sure the recent easing of sanctions will enable the
remaining banks to use these cards in the very near future," the
Visa, which marked its first point-of-sale transaction in
Myanmar last month at a Yangon restaurant, said in a statement
to Reuters that decisions to apply for a Visa licence were "up
to individual banks."