Executive Summary of Monthly Economic Development & Outlook Discussions
Tuesday, February 13th, 2018
Introductory discussions centered around the need to build up financial literacy in several areas and thereafter a global stakeholder offered some very specific initiatives and preliminary findings. Thereafter local stakeholders offered a broad overview of the challenges associated with the Insurance sector reform and its underlying process.
A brief overview of both the domain discussions mentioned herein.
1. Financial Literacy Research:
Over the past five years, Myanmar has emerged from economic isolation to become a potential global investment destination. As the country tries to debate and develop economic policies to attract capital, the pace of economic behavior of its population has been moving forward at an encouraging pace with the advances of mobile technology, impacting the very social fabric of the country and its people.
As in any emerging market the growth of the middle class comes more financial products and services. However, in Myanmar, most people’s understanding of recently introduced financial products and services in marketplace, be their new types of saving accounts or credit cards, does not grow in correspondence with their availability and proliferation.
To cope with the new speed of development, it falls upon the banking and finance industry, in conjunction with Myanmar authorities, to educate people on how best to manage their personal finances and how they might benefit from increased digitization of payments.
To this end a global stakeholder has endeavored to understand the perceptions, attitudes and behaviors of Myanmar people when it comes to money, banking and payments. To be released in a few weeks will be a comprehensive study on personal finance to have been conducted nationwide in urban Myanmar. Global stakeholder looks forward to sharing findings and details open publication.
2. Insurance Sector Update:
A local insurance stakeholder Association was recently formed in October 2017 and had its first meeting in Jan 2018. The Association has set up multiple committees to address the different areas of insurance sector reform; Life, non-life, training, re-insurance, etc. The association is represented by CEOs of all the fully-licensed local insurance companies.
Foreign insurance companies (including the 3 insurers granted license in 2015 for operating life, fire and motor policies only in Thilawa Special economic zones) are not members.
Bi-lateral MoUs have been signed between this local stakeholder and international insurance associations (i.e. Malaysia, India, Australia, New Zealand, Japan, Thailand).
Product development and differentiation is desperately needed, however currently the framework is highly controlled by a state-owned company which offers approximately 40 policies to the public.
It used to be the only monopoly insurance company until 2013. Reinsurance can only be done through this incumbent local stakeholder.
The current market consists of 12 private insurers offering 12 policies with fixed policy contract papers, fixed premium and very limited operational scope.
They are currently more than 20 foreign representative offices in Myanmar but none is granted license to fully operate in Myanmar.
Insurance Business Regulatory Board (IBRB) under Ministry of Planning and Finance (MOFP) serves as the supervisor and regulator. The local incumbent used to carry out secretary work for the IBRB. However more recently (2015) the Financial Regulatory Department (FRD) has replaced this local incumbent under IBRB.
The main task ahead that the current Insurance stakeholder association sees itself is to set-up industry guidelines and standards for the industry as a whole.
In addition to a revision of the Insurance Law, which is currently underway, a liberalization plan has already been drafted by local stakeholder at the incumbent company with help of a leading multilateral institution but needs to be approved by a selection committee under Ministry of Planning and Finance (possible target date in March, 2018).
The Insurance discussions triggered a lively discussion between local Insurance stakeholder association and an experiences stakeholder with many years of experience operating in villages across Myanmar who offered to shared their experiences in engagement with the Bottom of the Pyramid Myanmar population. Local Insurance stakeholders thereafter identified Bank branches (distribution network) as also being critical to the role out of insurance products and schemes.
The role of regulation and the separation of banks depositor obligations was not discussed, perhaps a future topic for engagement.
The Discussions thereafter adjourned, with the next monthly Discussion date confirmed for Wednesday, March 07th, 2018.