Japanese securities company Daiwa Securities Co pioneered an attempt to develop a stock market in Myanmar by leading its affiliate Daiwa Institute of Research to sign a memorandum with the Myanmar government in 1993.
In three years, the institute founded a joint securities company with a Myanmar state-run bank there.
In 2010, the Tokyo Stock Exchange joined Daiwa to prepare for the opening of a stock exchange in Myanmar.
"Myanmar has great potential," said Ryota Sugishita, who is in charge of Asian business development at the institute, citing prosperous farming and diligent people in that country.
Myanmar had accelerated its democratisation since its shift to civilian rule in 2011 and was called the last Asian frontier because of its large population, above 60 million, and cheap labour costs.
Myanmar had already enacted a securities and exchange law in cooperation with Japan's Finance Ministry. The Myanmar government was set to create a securities and exchange commission by this summer before launching the stock exchange next year.
However, staff procurement was not progressing smoothly, another Daiwa official said.
Daiwa has trained mid-career government officials since around 2011, while the Japanese Financial Services Agency has dispatched officials to Myanmar.
"But the trained officials may not necessarily take jobs at the planned stock exchange," the Daiwa official said, noting that workers in Myanmar predominantly view government jobs as better than private-sector jobs, including those at the exchange.
In addition to the personnel procurement problem, stock exchange planners face a challenge to develop a computerised trading system.
Another tough problem is how to motivate Myanmar companies to list on the stock exchange.
South Korea helped Laos and Cambodia open stock exchanges in 2011 and 2012. But only a few companies are listed each on these exchanges now.
Companies that go public on a stock exchange must disclose their financial details. "Many companies choose to remain private rather than becoming transparent to go public," a stock market source said.
Daiwa has proposed a system for listed companies to enjoy some tax benefits.
The Japanese side is willing to help Myanmar open the stock exchange even while shouldering relevant costs in a bid to allow Japanese companies to expand into that country more easily.
"It may be easier for Japanese companies to expand into foreign markets with legal and administrative systems close to those in Japan," a senior FSA official said. "It's a chance for us to share Asian energy."
source: Bangkok Post