IBK, Myanmar Subsidiary to Launch in January Next Year... 8 Years After Entry

Existing IBK Yangon Office Transformed into IBK Myanmar Corporation
Financial Support for Domestic Companies

[Asia Economy Reporter Kim Min-young] IBK Industrial Bank of Korea is establishing a corporation in Myanmar after 8 years of entry. It is the third overseas corporation following China and Indonesia. It is expected to serve as a foothold for targeting the New Southern region.

According to the financial sector on the 13th, IBK plans to change its existing IBK Yangon office to IBK Myanmar Corporation and launch it in January next year. Earlier in April, it received preliminary approval for corporation establishment from the local central bank, and preparations for the corporate transition are underway. The related matters were reported and approved at the board meeting held last month.

IBK plans to engage in various businesses including corporate finance, personal finance, interbank transactions, and SME consulting. Unlike branches or offices, a corporation can have up to 10 outlets, allowing greater operational flexibility. An IBK official said, “Although there are somewhat inconvenient situations such as quarantine due to COVID-19 for overseas expansion projects, we are actively utilizing technologies such as non-face-to-face video conferences to carry out our work.”

Myanmar borders China, India, Thailand, and others, and is regarded as a strategic key point in the New Southern region connecting the Indian Ocean and the Pacific Ocean. Since 2012, it has recorded an average annual economic growth rate of around 7%, attracting attention as the next-generation global production base following China and Vietnam. Its population is about 54.4 million, similar to South Korea, but with a labor force of about 30 million whose average age is only 27, making it a young country. It is also rich in natural resources.

Currently, about 300 Korean companies have entered Myanmar. A Korean companies-only industrial complex is also being built near the capital Yangon, so the entry of Korean companies and banks is expected to become more active in the future.

Shinhan Bank has been operating a Yangon branch since 2016, and KDB Industrial Bank and KB Kookmin Bank have also received approval for corporation establishment this year and are preparing to operate. NH Nonghyup Bank recently obtained preliminary approval to establish an office in Yangon.

Going forward, IBK is expected to accelerate its entry into the New Southern region. IBK is also promoting the conversion of its Vietnam branch into a corporation in 2022. To support cooperative SMEs due to the increase in overseas expansion of large corporations, it is also in the process of establishing an additional branch in India. Currently, IBK operates 59 outlets in 12 countries, including 2 local corporations in China and Indonesia, 9 branches, and 2 offices.

An IBK official said, “We plan to expand our network focusing on countries where domestic companies are actively entering.” The official added, “We are also seeking diversification of overseas expansion methods such as mergers and acquisitions (M&A) of local banks and equity investments, focusing on regions with high growth potential.”