Bank to finance the refurbishment of a new hotel in Yangon
United Overseas Bank Group (UOB) today announced that it is offering onshore financing to Rangoon Excelsior Company Limited, a French-Myanmar joint venture, for it to refurbish a new hotel in Yangon.
This is the first onshore loan announced by a foreign bank in Myanmar since the country awarded foreign bank licenses to nine international banks in October 2014.
UOB, which opens its Yangon branch this week, will focus on providing corporate loans, trade and project financing and cash management solutions to its regional and global companies expanding into Myanmar. The Bank will support clients investing in industries that will help the long-term economic growth of the country.
Mr Ian Wong, Managing Director and Head of Strategy and International Management, UOB Group said the hospitality sector has been identified by UOB as one of the key industries the Bank will focus on as it expands its business in Myanmar.
“The financing of a new hotel in Yangon is in line with our approach of supporting businesses that are helping to drive the development of Myanmar. As tourism is expected to be a main contributor of new jobs in Myanmar over the next decade, we are keen to partner companies such as Rangoon Excelsior in helping to build the necessary tourism infrastructure to support the growth of this sector,” Mr Wong said.
According to the McKinsey Global Institute, the hospitality sector is expected to contribute US$14.1 billion to Myanmar’s Gross Domestic Product by 2030, up from US$0.6 billion in 2010, making it one of the fastest-growing sectors in the country.
The loan for Rangoon Excelsior will help the company finance the refurbishment of a former colonial building in downtown Yangon into a five-storey hotel. Ms Su Su Tin, Managing Director of Rangoon Excelsior said the new hotel will cater to the increasing number of international tourists in Myanmar who are attracted by the country’s rich cultural heritage and natural attractions.
“This is a significant milestone for us and UOB has been instrumental to this project. As Myanmar transforms economically, we hope this hotel project can help preserve a piece of Yangon’s history for the tourists and the people of Myanmar. For us, Myanmar is a long-term investment and we hope to be able to work closely with UOB as we expand our business in the country,” Ms Su Su Tin said.
Supporting strong foreign direct investment into Myanmar
UOB expects to provide several more onshore loans within the first month of its Yangon branch opening for its regional and multinational clients from across the Bank’s network in sectors such as manufacturing, hospitality and infrastructure. These loans will help finance the set-up of factories, retail shops and hotels.
Mr Wong said the strongest interest in Myanmar is coming from its clients in Hong Kong, Singapore and Thailand. This is in line with findings from the UOB Asian Enterprise Report 2014 which shows that businesses from Hong Kong are the keenest to expand into Myanmar (31 per cent), followed by those in Thailand (28 per cent), mainland China (26 per cent), and Singapore (21 per cent).
“Since the opening up of Myanmar’s economy two years ago, we are seeing many of our clients’ interests in Myanmar turning into real investment. In our pipeline of deals, we have foreign direct investment coming from various regions, from Asia to Europe. This shows that Myanmar is becoming part of the expansion and investment plans of Asian and global companies,” Mr Wong said.
Companies that are interested to expand into Myanmar can draw on the strengths of UOB’s Foreign Direct Investment (FDI) Advisory Unit which provides companies with access to UOB’s full suite of corporate banking products and long-established regional network.
UOB is the only bank in Asia to have established nine dedicated FDI Advisory Units across the region to help companies realise their regional ambitions across markets. In 2013, UOB became the first foreign bank to establish a Foreign Direct Investment Advisory Unit in Myanmar to help its clients explore business opportunities in the country.
6 May 2015
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