In Myanmar's latest move to open its financial sector, the Southeast Asian nation’s will allow some foreign banks to operate in a limited scope next year.

Currently, foreign banks with representative offices in Myanmar are not allowed to open branches or offer services other than advising clients, Reuters reported on Thursday. A previous, decades-old plan said that the government will eventually allow them to form joint ventures with local banks before opening independent branches.

A senior central bank official said that the government is formulating a plan to speed up the process. A select number of foreign banks could be allowed to begin operations in 2014 in “certain areas of banking services.”

"Since things have changed rapidly with the passage of time, we can't afford to stick to something laid down about 20 years ago if we really want to carry out meaningful reforms," said the official, who requested anonymity because he was not authorized to speak to the media.

There are 34 international banks in Myanmar at the moment, including Standard Chartered PLC (LON:STAN), Bangkok Bank PCL (BKK:BBL), Siam Commercial Bank PCL (BKK:SCB) and Australia and New Zealand Banking Group (ASX:ANZ). Authorities have yet to decide how they would select the banks that will be allowed to operate, Reuters reported.

Foreign banks could also help jump-start economic development by providing access to much-needed financing for corporate clients, according to Khwima Nthara, a senior country economist with the World Bank.

Myanmar’s banking system, much like other sectors, is antiquated due to decades of military authoritarian rule. The reform government that took over in 2011 has embarked on a series of political and economic changes to open the nation to foreign investment.

"I do not doubt the government appreciates the role that foreign banks can play in financing," Nthara said.

"However, the government is right to move slowly in opening up the banking sector," Nthara added.

Imposing limits now could help insulate the fragile economy from future financial shocks that could cause foreign banks to withdraw capital, and which could also give domestic players breathing room even as foreign banks begin to play a bigger role.

"The question is really how best to have them involved so you increase availability of credit, of financing, but also the local banks' capacity is strengthened," Nthara said, according to Reuters