I was in Yangon most of this week for my monthly trips as a part-time financial consultant to a microfinance company which I started from Jan this year. My designation was the ALCO (Asset & Liability Committee) Chairman.
This opportunity came along when my ex-colleague became the CEO in Jul 2017. He thought that I could add value to his company because of my Treasury experience and the similar work I had done with him from 2014 to 2016 in Cambodia and Myanmar in our previous company that was linked to a sovereign wealth fund.
We had started from scratch 2 microfinance companies in Phnom Penh and Yangon with a local partner. These Joint Ventures provided the strength of robust parentage and technical expertise gained from previous experience from similar setups. We had plug and play operational systems which were refined from our projects in Indonesia, China and India. Most of us in the HQ office were ex-bankers who brought our global banking experience into this operational investment setup.
The company which I joined this year was already 4 years old and had not broken even yet. The owners had decided that a change in management was required and hence the new team was put in place. My friend became the new CEO in the middle of last year. He had the experience to know what was required to make it successful. He identified the many gaps there were missing and needed to be corrected and strengthened to put the company into shape before growth can happen.
On my end, I set about to map out the ALCO process to help institute discipline and structure to allow for strategic planning to happen. The monthly meetings were difficult at the beginning and took a bit of selling to convince the senior management on its effectiveness since they never had it before.
Slowly but surely, we begin to identify bottlenecks and issues that were impeding the progress of the company. Some were simple to correct once they were identified and after getting the buy-in of everyone. Others took longer to change as we thrashed out the issues over the monthly ALCO meetings and separate offline discussions.
The first part of the year was to get the house in order. One of the main initiatives was to amend/implement policies which were inadequate or missing. The other was to benchmark ourselves to the market to see where we were and where we want to go. Once a benchmark competitor was targeted, we seek to learn from it and how we can be like them. Risks within the portfolio were also identified and action plans put in place to mitigate them. Silos within the senior management team were also vigorously torn down. We had to generate more teamwork and instil best practices that were good for the company.
Myanmar is a relatively young country on the global stage as it had shut itself from the rest of the world for more than 50 years. It had only opened up in recent years, since 2015. Prior to that, it was a backward country that had military police spying on its citizens in a totalitarian regime. Within a few short years, it has achieved a lot. Everyone has a smartphone now whereas a SIM card used to cost USD1,000+ a few years ago and you can only get it via a lottery system… The people have tasted what the world has to offer and there is no going back to the old ways.
Talent was and still is in short supply. Most people have never been exposed to a professionally run commercial setup and even office politics was new to them. There was an exodus of Myanmar nationals seeking work overseas for years and some are now looking to return back to the motherland except that the discrepancy in pay is still quite wide compared to what they can get outside of the country.
We had to assume that most of the local management team had no idea of best practices and therefore needed baby steps to educate them accordingly. Given that the CEO, COO and independent advisors (myself and another ex-colleague who joined us in May) are foreigners, we had to help nurture and mould behaviours for the good of the company while being culturally sensitive.
As luck would have it, we secured our first lending facility by Apr and we challenged the team to grow the business in Q3. We were pleasantly surprised that demand was very good and managed to grow the loan portfolio by more than 100% in a short time. Our parent company was also supportive and injected more capital.
Just last month, we finally confirmed a new minority equity partner. They are the arm of the World Bank that has been actively investing in Myanmar. This is a great boost to us as it sets the stage for better things ahead. With such strong parentage now, we can now leverage our capital to attract more lending facilities. Our 32 existing branches in the rural areas are also able to effectively gather more target clients and our strengthened infrastructure is ready to do much more.
We had arranged to meet a number of foreign banks operating in Yangon during my trip this week. The central bank had also recently removed the barrier between local and foreign companies working together to provide facilities to each other. This was an opportune time for us to bang our drums and signal to foreign parties that we are a good partner to work with in this changing landscape.
I am very bullish about our business into 2019. In a matter of a year, we have shown and proven to ourselves that the ambitious goals we had set were achievable. We are now almost 1 year ahead of our original 5 years plan. The senior management team is energized to face new challenges and it is a very rewarding and warm feeling for me to know that I had participated in this journey with them.
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