Myanmar’s shadow National Unity Government (NUG) has announced the soft launch of its Spring Development Bank (SDB), an online bank that aims to serve the needs of the anti-regime resistance movement, dubbed the Spring Revolution.
At a press conference held last Thursday, Tin Tun Naing, the NUG’s minister of planning, finance and investment, said that the SDB—Myanmar’s first digital bank—would be operational from July 22.
He said that plans to create the bank began seven months ago as part of a strategy to cut off the flow of money into the junta’s banking system and to raise funds for the Spring Revolution.
“As this is a revolution that seeks to eradicate all of the systems of the dictatorship in Myanmar, I believe we can make this bank successful through our revolutionary spirit,” said Tin Tun Naing.
He also said that a mobile app for the bank would be available on the Google Play Store and Apple App Store by the end of August.
Bank structure and capital
The SDB was established with an initial investment of US$500,000 provided by the NUG itself. Its license was issued by the NUG’s Interim Central Bank. It will be placed under the ownership of a company established overseas.
The Interim Central Bank, which was established on June 1, is chaired by Tin Tun Naing. His deputy at the Ministry of Planning, Finance and Investment (MPFI), Min Zayar Oo, is vice-chair, and Dr. Johnny Ahtang and Aung Paing are board members.
On June 13, the NUG appointed Australian economist Sean Turnell, who worked as economic adviser to ousted leader Aung San Suu Kyi until his arrest in February 2021, as a special adviser to the Interim Central Bank. He was released from junta custody and deported from Myanmar last November as part of an amnesty.
The SDB is made up of nine departments and will be staffed by 50 people with experience in the financial and digital industries. In accordance with its regulations, its board of directors will include two members from the MPFI, at least one economic expert appointed by the ministry, and a member of the bank’s ownership or an expert and an independent director.
The initial shares will be issued and sold twice—once for account holders and a second time for institutional investors. The company established by the NUG will own a 51 percent stake in the bank and the general public will have 49 percent ownership rights, according to SDB establishment regulations released on July 18.
The total number of shares is set at 100 billion, with each share priced at $0.0001, according to the bank regulations.
During the trial phase, the bank will allow customers to open accounts in Myanmar kyat, Singapore dollars, US dollars, and Thai baht. Initially, it aims to establish a network of 100 agents and serve 1,000 users. Within six months, the target is to expand its services to reach 100,000 users, and within a year, the bank aims to serve 500,000 users.
The NUG plans to use Myanmar’s foreign reserves of $1.3 billion, frozen by the US government since the military seized power in a coup two and a half years ago, as collateral for the establishment of the SDB.
In an interview with Myanmar Now conducted over a week ago, Tin Tun Naing disclosed that negotiations with the US government were underway to gain access to these frozen foreign reserves.
To establish a domestic bank in Myanmar, 20 billion kyat in capital is required, and this amount must be deposited in the Central Bank without the right to use it for banking operations. The NUG is contemplating a similar approach by considering the frozen dollars as collateral in the United States while operating the bank.
“This money is our money. I don’t think they will have any objection to the fact that this money will be designated as capital for the guarantee of our bank. They will not oppose it. According to the existing laws, there are only two options: freeze and release,” said Tin Tun Naing.
As the number of bank users grows and the bank’s value increases, 49 percent of the shares will be offered for sale up to three times to both revolution supporters and investors. The document outlining SDB’s establishment indicates that the total investment is expected to reach $160 million.
Following its establishment, the bank plans to accept bank deposits at an attractive interest rate. It anticipates receiving deposits amounting to $5 million per month, resulting in $30 million within six months. Eighty percent of these funds will be allocated towards supporting the anti-junta revolution.
The primary goal of the SDB is to establish itself as the central financial hub for all revolutionary fundraising efforts. It will aspire to consolidate all existing funding programs under its umbrella, providing a unified platform for financial support.
Technology and service
NUG officials said that only the last four digits of users’ National Registration Card numbers will be requested when opening a bank account at the SDB, so it will be safe to use.
Operating online with the motto “Real Bank, Real Freedom,” SDB sets itself apart from traditional banks by harnessing the power of blockchain technology, according to Kelvin, the bank’s spokesperson and managing executive officer.
SDB will offer fundamental banking services, including money transfers, payments, foreign currency exchange, gold savings, fixed deposits, and loans. Additionally, users will have the opportunity to purchase NUG treasury bonds, NUG housing apartments, and other fundraising products through the bank’s platform.
Users can deposit money via bank agents, USDT Stablecoin cryptocurrency, and Visa and Master cards. The bank also plans to accept fixed deposits from one month to one year and pay an interest rate of up to 11 percent.
“Creative solutions related to bank savings are also ready to be served by our bank,” Kelvin said.
In his interview with Myanmar Now earlier this month, Tin Tun Naing said that because it is a digital bank, the location of SDB’s headquarters is not important. He added that reports that a headquarters would be opened in East Timor were only speculation.
He said the NUG intends to operate the bank in compliance with both domestic and foreign financial regulations. Emphasising that the bank will be owned by the revolutionary government, he expressed confidence that this approach would avoid situations in which international governments might impose sanctions.
To what extent can it be achieved?
The establishment of the bank is closely linked to international recognition of the NUG, and as the revolution has dragged on with the flow of funds, doubts have arisen about whether the SDB would ever actually be realised.
Moe Chan, the founder of Burma Point, a New York-based group that is active in Myanmar issues, said that despite the NUG’s constant requests since the coup, it was impossible for it to access Myanmar’s frozen foreign reserves.
“We must carefully assess it from both legal and practical standpoints, taking into account accountability and the existence of a practical government mechanism,” he said.
“In establishing a legal bank that will be connected to the international financial system, it is important that the capital and deposits be white money, and they need to think how they can ensure the operating income of Spring Development Bank is white money,” he added.
“What the international community is most worried about is the issue of white money and black money. We have to think about it. The question arises how do we determine whether the money is white or black? Who will define it? Who is the authority responsible for making such definitions?”
The NUG’s deputy foreign minister, Moe Zaw Oo, has confirmed that despite their persistent efforts to retrieve the foreign reserves, which exceed $1 billion, to finance the bank, their attempts have yet to yield results.
However, Tin Tun Naing highlighted that even though the United States has not permitted direct use of the foreign reserves, it firmly believe that this money rightfully belongs to the people of Myanmar. Therefore it has been determined that it can be kept as capital and collateral of the SDB.
“The issue of accessing this is important both in terms of bilateral relations and in terms of our integration with them for the revolution,” he said.
While the NUG’s plan to operate a bank is encouraging for the revolution, a financial expert, who spoke on condition of anonymity, pointed out that the many processes behind a bank’s operations, including cash flow, can be confusing.
He noted that currently, donors from across the country are giving money in various forms, so no one can track the financial transactions, and if they use the SDB, it is like collecting information, which could be dangerous if it is leaked.
“There are many situations in which this will complicate problems more than it solves them. In my opinion, I don’t want them to do this. If they do, the identities of those who work for the government and those who volunteer in it and the donors will be put at risk,” he said.
However, Tin Tun Naing said that the NUG has conducted many fundraising programs and that there has been hardly any information leakage. So he said he can guarantee the security of bank users’ information.
Burma Point founder Moe Chan said that the establishment of the bank is a long-term project, and this raises questions about how long the revolution is expected to last.
“Does this mean the revolution will continue in the long term? Or will it be over in the short term? They can’t answer this. First, they said it would last a year. They said it would be over next year. Now, they say it will be over only after we get federal democracy. So there are many things to think about again,” he said.
Until now, the NUG has raised revenue through such methods as taxation, the sales of treasury bonds, the sale of real estate in the possession of the military, inviting pre-investment for revolutionary projects, NUG Pay operations, and the sale of Spring Lottery tickets.
According to Tin Tun Naing, as of the middle of this year, the revenue from all of the NUG’s fundraising programs has come to about $150 million.
NUG Pay, a secure digital payment system, has gained more than 28,000 users in the year since its launch on July 1, 2022. It says that it has a cash flow of more than 15 billion kyat ($7 million) and that the total value of transactions conducted so far is more than 312 billion kyat ($148 million). The SDB will also be linked with NUG Pay.
At a cabinet meeting held on May 16, NUG Acting President Duwa Lashi La said the Spring Development Bank needs to be a financial pillar that will strengthen the revolutionary stamina and financial security of the people.
“It will be good for the revolution as well. And it will be a fair system that benefits the citizens as well,” said Duwa Lashi La.