TOKYO -- Daiwa Securities Group will launch microfinance services in Myanmar through a joint venture, diversifying its portfolio there to tap the growing economy.
Microfinancing is a way to lift low-income earners out of poverty by providing tiny loans to those who have no access to formal banking services so they can start their own business and become more financially independent.
The Japanese brokerage will form a joint venture with local conglomerate OK Myanmar, investing hundreds of millions of yen through investment unit Daiwa PI Partners. Daiwa will dispatch a few officials to the venture and use the microloan marketing channels of OK Myanmar.
Daiwa believes the new business will be highly profitable, given the interest rate cap of 28% in Myanmar. The company will be following in the footsteps of other Japanese players such as retail giant Aeon Group that are already on the Southeast Asian country's microfinancing scene.
The latest move is another indicator of Daiwa's stepped-up efforts in Myanmar. The Japanese group has set up a joint brokerage with a local financial institution and invested in the Yangon Stock Exchange when it opened in 2015. It also established a venture- capital fund with Japanese partner Taiyo Life Insurance this summer.
Launching the new microfinancing business will also likely attract the interest of socially conscious investors.