A japanese firm has been granted the first licence to a foreign company to run insurance in Myanmar.
The temporary licence issue on May 25 restricts Sompo Japan Nipponkoa insurance to Thilawa special economic zone. Company representatives say it will aim to provide services appropriate for investors building up facilities such as factories, warehouses and office buildings on the zone.
“Our first product to be delivered shall be an insurance that covers construction works, namely Contractor’s All Risk insurance,” said Keiji Okada, chief representative of Sompo’s Yangon Office.
As the construction work is completed, it will gradually shift to products such as fire, marine cargo, liability and accident insurance, he said.
“We are ready to operate. Whenever clients in Thilawa SEZ require [it], we can serve them.”
Last year, the government announced plans to allow foreign insurance companies to do business in the special economic zones. It has also said the door will be opened in the future to foreign insurance in some form across the country, though no firm plans have been set.
Deputy finance minister Dr Maung Maung Thein said Sompo was chosen first due to its strong track record. It has had a Myanmar representative office for two decades and is one of the largest insurance companies in Japan, with a large total capital.
Sompo’s Keiji Okada also said the Yangon was the firm’s first foreign office – not New York or London – when it set up outside of Japan in 1942.
Dr Maung Maung Thein said it important the insurance companies have regional experience. Another requirement for insurance companies aiming to receive licences to work on the SEZs is that they must already be operating in two other ASEAN countries.
“We are concerned that some inferior-quality companies will try to do business in Myanmar,” he said.
Sompo has submitted US$30,000 for a licence fee to Myanmar Investment and Commercial Bank, and will have to make $10,000 annual payments.
One other foreign company has also submitted the $30,000 licence fee, though its name has not yet been publically revealed, he said.
The Ministry of Finance plans to issue more licences in the future, and has distributed its criteria to the foreign representative offices on how to apply for business licences. One of the stumbling blocks is the requirement to have had a local representative office for three years.
“We’ve sent out our criteria and let them know that we will issue licences in the future if they meet it,” he said.
Dr Maung Maung Thein said Japanese companies in particular are interested in licences to operate on Thilawa, which has strong Japanese government and corporate backing.
Tokio Marine & Nichido Fire, Mitsui Sumitomo and Sompo Japan have all applied for a licence. “Among them, Sompo has finished all the paperwork, submitted the fee and is in line with the ministry’s criteria. So, it has been granted the first licence,” he said.
Sompo’s initial licence is for six months, after which the Ministry of Finance will consider granting a permanent licence.
“We granted temporary licences to watch their performance,” he said. “We will consider their performance before granting a permanent licence.”
There are currently 16 foreign insurance representative offices in Myanmar, though one more internatioal-scale player is set to be added on May 30.
Source - Myanmar Times< /a >