He Bi Qing, CEO, ICBC Yangon : Interview

Interview : He Bi Qing

What steps can the banking sector take to accelerate digital transformation?

HE BI QING: The rapid development of China’s e-commerce over the past 10 years led to the introduction of mobile payment methods. In turn, the shift away from card and cash payments has produced some challenges for the banking sector. First, a large amount of funds flow to e-commerce platforms and sometimes remain sealed within those platforms. Second, traditional banks may find it challenging to compete with the services offered by e-commerce and mobile payment methods.

In response to these challenges, Chinese banks have implemented some effective solutions. For example, ICBC has prioritised improving customer satisfaction. As a result, the bank focuses on reforming its procedures, strengthening bank management and optimising customer experience. Lastly, Myanmar must take steps to increase the diversity of its products. The banking sector should also strengthen cooperation with thirdparty e-commerce platforms.

What strategy should the Central Bank of Myanmar (CBM) follow to ensure sustainable growth?

HE: Myanmar’s government is currently prioritising sound integration with the global financial industry, which will likely further the development of the financial sector. The market entry of foreign banks will increase diversity and bring advanced expertise into the financial services market, and the presence of foreign participants will expand competition.

An undesirable consequence of this is the increasing pressure it will place on local banks. Nevertheless, we must aim for globalisation to boost the economy. To ensure that growth remains sustainable, the CBM needs to work on the further advancement and development of risk-control practices and regulations. This can be achieved through enhancing communication with other central banks around the world, with added emphasis on those with advanced financial services.

How can Myanmar learn from China’s financial services sector to develop a competitive economy?

HE: China’s economy has developed rapidly since 1978, and a key catalyst for this development has been its financial services reforms. In being able to emulate China’s success, there are four key targets that Myanmar should aim to achieve. First, Myanmar needs to accelerate its integration with the global financial industry and facilitate the development of a more transparent and efficient corporate governance structure. Second, we must promote the listing of commercial financial institutions, which would contribute to a more transparent framework and strengthen public supervision and market development. Increasing the credibility of Myanmar’s financial institutions may also help attract international investors. Third, it is essential to boost the banking sector, as sound economic development depends on the financial support of banks and other financial institutions. Lastly, we must improve risk-control assessments and financial supervision. All of these factors contribute to ongoing economic stability and development in the country.

To what extent can Myanmar rely on foreign loans, and what is the risk of falling into a debt trap?

HE: Foreign loans could be instrumental in helping Myanmar raise funds for specific development projects. With regard to the risk of falling into a debt trap, whether a country is over-financed can be assessed by assessing the ratio of that country’s external debt to GDP. According to figures published by the IMF, Myanmar’s external debt in 2018 was projected to reach approximately $11bn, which equates to a ratio of 14.5% of GDP and places the country’s debt far below the international reference average of 20-30%.

This indicates that the foreign loans raised by Myanmar are now within a reasonable limit. The current amount of external debt does not suggest that the country is currently at risk of falling into a debt trap.