1 Presented by Myanmar (24-26) May, 2005 Shanghai, P.R. China

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4 Financial Reform in Myanmar Restructured since Necessary amendments were made and new laws were promulgated in Banking, customs and taxation areas. Permitting establishment of domestic private banks. Relaxation on entry of foreign banks. Amendments to the income tax law and profit tax law to allow tax holidays for newly established economic enterprises.

5 BANKING INSTITUTIONS AND DEVELOPMENT The Central Bank Of Myanmar, 4 state- owned banks, 18 domestic banks and a number of foreign banks' rep offices. Initiated the issuance of 3 years and 5 years Treasury Bonds since With a view to initiating the securities market, one state- owned bank has formed a joint venture security firm with Daiwa Institute of research ltd.

6 Banking Policy The CBM takes a banking sector development strategy with three phases. P-1 Promoting the institutional development and skills and efficiency among the domestic banks while foreign banks are allowed to open their rep offices within a medium term. P-2 Permitting domestic banks to run joint venture bank with foreign banks. P-3 Permitting foreign banks to open their branches.

7 PRUDENT SUPERVISION AND REGULATIONS OVER FINANCIAL SYSTEM Banks are closely monitored by the CBM. The Banking Supervisory Committee has been formed since 1998 with a view to analyze the activities of the financial institutions. Supervisory approach is forward looking, primarily risk based, consultative, consistent and in line with BIS core principles.

8 SUPERVISORY ACTIVITIES On-site and Off-site Reviews CAMEL framework Prudential Consultations Weekly/Monthly/quarterly/Annually Reviews Specific Analysis External Audit

9 SUPERVISORY TOOLS Minimum reserve requirements Liquidity Control Capital adequacy Ratio Lending limit Credit control Risk management/Assessment Reports

10 PROBLEMS Lack of Information disclosure Need to reform the state-owned banks and to introduce a prudential framework and effective bank supervision. Recapitalization

11 GRADUAL APPROACH IN FINANCIAL LIBERALIZATION With the assistance of legislative bodies, necessary laws, rules and regulations have been made in order to work competitively with the International financial Institutions. Will promote liberalization of financial services sector in the ASEAN region by enhancing deregulation of financial services and by intensifying negotiations of financial sector liberalization under ASEAN Framework.

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