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 transformation.
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.
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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 normalize 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 privatizations 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.
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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.
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 official said.
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."