Private and state banks in Myanmar have once again begun offering letters of credit (L/Cs), raising hopes the country's trade finance operations are reviving.

The country's central bank has also issued a notification that all branches of foreign banks now have the right to provide financing and other banking services to local businesses.

Any trade or project finance by international banks in Myanmar had hitherto been arranged offshore, typically by opening L/Cs through brokers.

L/C providers

Banks offering L/Cs and authorised to handle foreign currency accounts include Ayeyarwady, Asia Green Development, Co-operative, Myanma Apex and Myanmar Oriental.

More banks are expected to follow suit and offer L/Cs, including international banks after the country's central bank said earlier this month that all branches of foreign banks now have the right to provide financing and other banking services to local businesses.

Private advantage

Co-operative Bank's managing director, U Pe Myint, said the bank just started offering L/Cs and will extend its range of banking operations in the future.

He added that private banks would charge clients no more for L/Cs than state-owned banks such as Myanma Investment and Commercial Bank and Myanma Foreign Trade Bank.

Competitive edge

Both state-owned banks charge fees equivalent to US$30 for export L/Cs and US$50-1500 for import L/Cs depending on the type and quantity of commodity said U Pe Myint.

He reckons that private banks have fewer procedures to follow and could be more competitive than state-owned banks in the L/C market.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.