Two banks owned by tycoonsassociated with Myanmar's former military regime will start todo business with U.S. companies and investors in the latestreward for the Southeast Asian country's rapid politicaltransformation.
The U.S. Treasury Department said on Friday it would issue ageneral licence for four of Myanmar's biggest banks -- MyanmaEconomic Bank, Myanma Investment and Commercial Bank, Asia GreenDevelopment Bank and Ayeyarwady Bank -- allowing U.S companiesand citizens to deal with them.
The easing of sanctions on Asia Green Development Bank andAyeyarwady Bank underlines how politically connected capitalistsof the old regime -- whom the United States once castigated --are re-inventing themselves and retaining a strong foothold asforeign investors race to enter Myanmar.
It helps remove uncertainty among U.S. companies overlingering restrictions on their dealings in Myanmar and isexpected to increase the domestic reach of U.S. credit cardfirms Visa and MasterCard.
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The decision was announced ahead of a visit to Myanmar by 50U.S. executives on Monday to explore opportunities in theresource-rich nation, the latest sign of burgeoning foreigncorporate interest in the country of 60 million.
"This announcement will undoubtedly help the furtherdevelopment of the market," Antonio Corro, MasterCard's chiefrepresentative for IndoChina, said in a statement. "We expectthat Myanmar's tourism sector will continue to grow rapidly andso building card acceptance is key."
Washington eased sanctions last July to allow U.S. companiesto invest in and provide financial services to Myanmar, droppingrestrictions on dealing with most Myanmar banks.
Sean Turnell, an expert on Myanmar's economy at Australia'sMacquarie University, said the latest move was significantbecause it would normalize the flow of international funds inand out of Myanmar. But he said the inclusion of formerlyblacklisted Ayeyarwady Bank and Asia Green Development Bank wasa surprise given previous U.S. assurances that they "still hadtheir eye on the worst offenders of the past regime".
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"One of the great anxieties is over the cronyisation of theeconomy -- the fear it will be a fleeting summer and become likeRussia," Turnell said.
"Regime Crony"
Ayeyarwady Bank is owned by Zaw Zaw, who was previouslydescribed by the U.S. Treasury as "a regime crony" andblacklisted under targeted U.S. sanctions four years ago.
The tycoon, whose holdings range from timber and gems toluxury resorts and who benefited handsomely from state privatizations three years ago, told Reuters last year his dreamwas 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 theU.S. Treasury as a "notorious henchman and arms dealer".
U.S. firms will still be barred from forming joint ventureswith the banks. The other two banks granted a general licence onFriday are controlled by the government.
"It is now time for Myanmar and the U.S. to take therelationship to the next level," Tami Overby, vice president forAsia at the U.S. Chamber of Commerce, told a meeting of U.S. andMyanmar business officials in Yangon.
Western countries have suspended most sanctions inrecognition of Myanmar's dramatic political and economic openingsince the new government took power in March 2011.
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Critics say they risk moving too fast, pointing to evidenceof human rights abuses in recent months against Myanmar'sRohingya Muslim minority group and ethnic Kachin rebels engagedin a conflict with the military.
MetLife, Cargill, Fedex, Chevron, General Motors, General Electric, Target, Honeywell and eBay are among theroughly 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 nascentATM network, but only a handful of merchants currently acceptpayment by card. A central bank official who asked not to beidentified told Reuters that only six out of 19 private Myanmarbanks can handle MasterCard and Visa cards at the moment.
"I am sure the recent easing of sanctions will enable theremaining banks to use these cards in the very near future," theofficial said.
Visa, which marked its first point-of-sale transaction inMyanmar last month at a Yangon restaurant, said in a statementto Reuters that decisions to apply for a Visa licence were "upto individual banks."