Taiwanese banks expand into ASEAN markets after tax increase
By Kathryn Chiu, The China Post
July 15, 2014, 12:00 am TWN
TAIPEI, Taiwan -- As the business tax rate on banking and insurance sectors increases to 5 percent in the second half, an increasing number of Taiwanese banks have recently been forging ahead toward the Association of Southeast Asian Nations (ASEAN) market.
Draft amendments to business tax law proposed by the Executive Yuan on March 13 2014 were passed by the Legislature and came into effect on July 1st. The business tax rate on core business revenues of the banking and insurance sectors has been increased to 5 percent from 2 percent, adding to the pressure on the banking sector in the already crowded Taiwan market.
United Evening News reported that the island's banks are planning to switch their development focus to other areas of Southeast Asia. Reportedly, underdeveloped Myanmar and Laos are the favored countries.
Some Taiwanese banks intend to expand operations to Laos this year. Cathay United Bank (國泰世華銀行) has already received approval to establish a branch in Vientiane and First Bank (第一銀行) followed closely with approval of its own application by the Financial Supervisory Commission (FSC).
Hua Nan Bank (華南銀行) is assessing the possibility of setting up a representative office in Yangon, Myanmar and Bank of Taiwan (台灣銀行) is considering the feasibility of a representative office in Mumbai, India.
More Banks to Land in Myanmar
Loal media recently reported that three Taiwanese banks, namely First Bank, E. Sun Bank (玉山銀行) and Cathay United Bank, will likely be the first foreign investors to tap the financial market in Myanmar with the country reportedly soon to allow foreign banks to set up branches.
The FSC recently approved the applications from the said three banks for establishing branches in Myanmar and ratified Taishin International Bank (台新銀行) to set up a representative office.
In addition, FSC has already allowed four other Taiwanese banks to set up new offices in Myanmar, including Mega International Commercial Bank (兆豐國際), CTBC Bank (中信銀), Shin Kong Commercial Bank (新光銀行), and Bank of Taiwan.
Jean Chiu, deputy director-general of FSC's Banking Bureau, earlier told the United Daily News that Myanmar has in recent years gradually opened door to foreign investors as its political and economic situations improve.
The country is attractive to foreign investors, with more than 60 foreign banks reportedly on the waiting list to open branches.
Chiu suggests Taiwanese banks should target Taiwanese enterprises in Myanmar first, which is believed to help both Taiwanese banks and enterprises reinforce their strength in Southeast Asia as the country is an ASEAN member.