The company said Myanmar needs to focus on preparing for an influx of international visitors, many be hoping to use ATM and credit-card facilities now that international sanctions against the former military state are being eased. As the country continues opening up to the rest of the world, hotels and airports are bustling with visitors, and a further boost is expected next year when it hosts the Southeast Asian Games and a regional World Economic Forum meeting.
"We know from experience that there will be an urgent requirement to provide basic ATM network and point-of-sale terminals for international visitors arriving in Myanmar for business and pleasure—and that is where we will focus first," said Peter Maher, Visa Group country manager for Southeast Asia and Australasia. "The sooner we deliver electronic payments, the sooner Myanmar will benefit from the increased spending."
While noting that credit-card payment machines and ATMs depend heavily on "technical infrastructure," he added that Visa expects visitors to be able to use their internationally issued cards "within a matter of months—not years."
Responding to queries from The Wall Street Journal, MasterCard Worldwide's president for Southeast Asia, Matthew Driver said it, too, is "engaged with the appropriate parties to develop electronic payments" in Myanmar.
Visitors to Myanmar, from ambassadors to representatives of multinational companies, currently have to arm themselves with bundles of cash. Few establishments accept internationally recognized credit and debit cards—a product of decades of stringent economic sanctions against the country.
Visa said it will partner with selected banks to establish training workshops aimed at upgrading banking facilities over the next few months, and has already held one two-day event. It hasn't revealed which banks it is working with, but says they were chosen for "their ability to provide a safe, reliable and quality service."
Though Visa is not setting up an office in Yangon, and though infrastructure concerns mean that ATMs and full-fledged electronic-payment systems remain months away, analysts say the move marks a significant step toward the financial modernization of the once-reclusive country.
"It is a predictable move, but a significant one," said Sean Turnell, a Myanmar expert at Australia's Macquarie University, adding that Visa's market entry would have a "broader significance and heavy psychological effect" for keen investors looking to park their money in the nascent market.
"The local banking sector is fairly primitive," he said. "Right now the first thing Western businessmen notice is that they can't bring their cards with them—it really makes them think that this is another world."
Visa's entry, analysts say, also indicates that the world's largest corporations are taking cautious steps into the market despite hurdles—eager to balance Myanmar's enormous potential with the current uncertainty. Recent weeks have seen firms like PepsiCo Inc. pairing up with local distributors to sell their products in the country of 54 million people.
U.S. Ambassador to Singapore David Adelman last week traveled to Myanmar with a delegation of approximately 20 companies— including advertising giant Omnicom Group Inc. and Caterpillar Inc. –looking for opportunities.
Analysts say that U.S. companies offering financial services face additional scrutiny owing to fears over corruption, money laundering and local partners' links to Myanmar's former military regime.
"The financial sector has always been a lightning rod for criticism with specific sanctions" against many local banks, said Macquarie's Mr. Turnell.
In July, the U.S. government announced a broad easing of Myanmar trade curbs that included a loosening of restrictions on U.S. businesses providing financial services. But Visa noted that it is still "bound by certain legal obligations under prevailing international sanctions."
The U.S. still does not authorize American financial institutions to provide services to Myanmar's Ministry of Defense, armed groups in the country or anyone blocked under the sanctions program against the country, including businessmen with links to Myanmar's former military regime.
A February report by the U.S. Congressional Research Service on U.S. sanctions on Myanmar noted that the USA Patriot Act—legislation designed to prevent terrorism—identified some banks in the country as "primary money-laundering jurisdictions of concern," particularly owing to weak oversight over the banking sector and connection to individuals involved in organized crime.
"Anyone going into Myanmar needs to be alive to the corruption risk," said Kyle Wombolt, a partner at law firm Herbert Smith in Hong Kong, which advises clients entering the market. He added that the legal infrastructure remains complicated for investors and corporations and is unlikely to be reformed in the near future.
"This is a market that no one knows, still," he said.-The Wall Street Journal (August 19, 2012 8:36AM)
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