Saturday, 17 November 2012 12:41

Monetary experts expect lower interest rate

Category: Uncategorised Published on Saturday, 17 November 2012 19:28 Written by Kyaw Zeya Translated by Thida linn As the inflation rate in Myanmar has now decreased by less than three per cent, the banking experts are expecting a decline of lower interest rates. As the inflation rate in Myanmar has now decreased by less than three per cent, the banking experts are expecting a decline of lower interest rates. Dr Khin San Yi, deputy minister for the National Planning and Economic Development, told the Parliament on November 5 that the inflation rate in Myanmar is now 2.82 per cent in 2011-2012 fiscal year. The Central Bank of Myanmar has currently set the interest rate for bank loans at 10 per cent, but the minimum deposit rate is 8 per cent while the maximum loan rate is 13 per cent in the country. The former vice-president of the Central Bank of Myanmar in September said that it is impossible to decrease interest rate because of the countrys inflation rate is 5 per cent. In the 2010-2011 financial year, the inflation rate was over eight percent. Now, the inflation rate is around three percent so the bank loans should be lower. The current interest rate should be lower

again without exceeding the inflation rate. (The Central Bank) should reset the deposit rate to 6 percent and lending rate to 11 percent, said a member of the National Economic and Social Advisory Council, who requested not be named. Since the civilian government took office, it has lowered the bank interest rates in September, 2011 and January, 2012. Local industrialists are also suggesting that the interest rate should be reduced to be able to compete with foreign businesses in the country. Taking advantages on the gap of interest rate between Myanmar and their countries, businesspersons mostly from Singapore and Thailand take out loans from their countries and save the money in Myanmar banks. Foreign businesspersons are taking advantages on the gap of interest rates over 10 to 15 years as Myanmar has higher interest rate than neighbouring countries, said Than Lwin, Advisor(2) of Ministry of Finance and Revenue. The favourable conditions for the foreign businesspersons are the interest rate, long-term tax holiday which local businesspersons cannot enjoy, infrastructural and manufacturing sectors, and the qualities of their products which can penetrate into the international market. Some banking experts pointed out that these situations could damage the manufacturing sector of the country. Aye Aye Win, deputy director of Ministry of Industry, said that it is expected that the government will reduce the loan interest rate from 13 per cent to 8.5 per cent for the local entrepreneurs to compete their products with those of ASEAN countries.