ASEAN Pace | Economy | Southeast Asia
The bank, which was granted a banking license in Myanmar in 2014, said it would pull out due to the “increasing operational complexity” in the country.
Australia’s ANZ Bank has announced it will cease operations in Myanmar in early 2023, the latest international firm to exit due to the economic and political turmoil that followed last February’s coup.
in a brief statement tuesdaythe bank said it had faced “increasing operational complexity” in Myanmar over the past few months and was “working with its institutional clients to transition to alternative banking arrangements.”
“The decision follows careful consideration of local operating conditions,” ANZ international managing director Simon Ireland said in the statement. “Our international network and support for our clients’ trade and capital flows across the region is a critical part of our strategy and will continue to be so for the long term.”
“Increasing operational complexity” is certainly one way of describing how the situation in Myanmar has developed in the nearly two years since the military seized power, ousting the elected National League for Democracy (NLD) government. The coup provoked instant resistance and has caused the series of existing civil conflicts in the country to escalate into a national conflagration.
This has crippled Myanmar’s economy, sinking the value of the kyat, increasing the underground economy and causing a sharp contraction in the country’s gross domestic product. The latest outlook from Fitch Solutions, released this week, forecast the country’s economic growth rate would increase from 0.5 percent this year to 2.5 percent next year, but “this would still leave output at 15 percent.” below where it was before the civil war.
For these reasons, and the formidable public relations challenges of staying in business with the board or its auxiliaries, several international companies have left. Among the largest are oil majors TotalEnergies and Chevron Corp, and Norwegian telecommunications provider Telenor.
In 2014, ANZ became one of the first international banks to receive a banking license from the Central Bank of Myanmar, one of many foreign companies whose arrival symbolized the opening of Myanmar to the world under quasi-civilian rule led by former General Thein. Sein.
The bank’s surprisingly late decision to withdraw from Myanmar comes some three weeks after local advocacy group Justice for Myanmar (JFM) exposed the operations of the bank with Innwa Bank, a subsidiary of the military-owned Myanmar Economic Corporation (MEC) that it described as a “key financial institution of the Myanmar military cartel”, which has been sanctioned by the United States, the European Union and the United Kingdom, and said it had facilitated customer payments to the military junta. He said ANZ was able to do so because of the Australian government’s refusal to sanction the military administration.
It also follows last month’s decision by the Financial Action Task Force (FATF) to add burma to its money laundering and terrorist financing blacklist, along with North Korea and Iran. With this move, the FATF placed Myanmar banks and financial institutions out of the mainstream of the international financial system for the first time, and forced companies that deal with Myanmar citizens or companies, including ANZ, to comply with onerous reporting requirements.
Earlier this week, JFM spokesman Yadanar Maung said the group welcomed ANZ’s decision, but asked the bank to ensure that his departure would not benefit the country’s military ruling caste. “This must involve mitigating and remediating the impact on their staff and ensuring they repatriate all funds, so they don’t leave a windfall for the terrorist military junta,” Yadanar Maung said.
While ANZ’s operations in Myanmar were relatively modest, its withdrawal is perhaps the first indication of the economic impacts that FATF listing could have on the country. like the abc reported this week“The decision means that by early next year no substantial Western banks will remain in the country.”