Myanmar is running behind schedule
for starting a stock exchange by 2015 after delays in getting
the legal framework in place, said an executive at Japan
Exchange Group Inc. (8697), which is assisting on the project.
“We’re pressed for time,” Koichiro Miyahara, senior
executive officer at Japan Exchange, said in an interview in
Tokyo on Aug. 27. He said the late approval of a capital markets
bill has delayed the project, and it’s up to the Myanmar
government as to how fast it can set up related organizations
such as a securities regulator.
Japan Exchange’s predecessor Tokyo Stock Exchange Group
Inc. and Daiwa Securities Group Inc. (8601) were chosen last year to
help Myanmar set up a stock exchange as the Southeast Asian
nation opens itself from decades of isolation and military rule.
Companies from Coca-Cola Co. to Unilever Plc. are investing in
the country of 64 million people after the U.S. eased economic
sanctions last year.
“Like any other modern economy, Myanmar needs a capital
market to allow companies to raise funds,” said Moe Thuzar, a
Singapore-based research fellow at the Institute of Southeast
Asian Studies. “It is more important to ensure that appropriate
regulatory and operational infrastructure is in place” rather
than meet an arbitrary deadline, she said.
Passed Law
Myanmar President Thein Sein signed the Securities Exchange
Law on July 31. The legislation sets rules that include the
establishment and operation of a securities regulator to oversee
trading activity.
Miyahara, who is in charge of Japan Exchange’s contribution
to the project, said he had expected the bill to be passed at
the start of 2013 and the delay will shorten the time for
developing the bourse by about a year. His company will make
“every effort” to complete the work on time, he said.
Regulations still need to be developed under the law to
outline how the exchange will function, Maung Maung, director
general at the Central Bank of Myanmar, said in a phone
interview yesterday. The government will begin working on
infrastructure such as buildings and software for the bourse
next year and it will begin operating in 2015, Deputy Finance
Minister Maung Maung Thein said at a briefing on Aug. 23.
Japan Exchange and Daiwa’s research unit, both based in
Tokyo, have completed a report on the framework for the
exchange, including plans for its functions and system
infrastructure, Miyahara, 56, said. They will submit the
document to the Myanmar government this month, he added.
Investor Interest
The Securities Exchange Law doesn’t say whether foreigners
will be allowed to trade on the bourse.
Jim Rogers, chairman of Rogers Holdings in Singapore, and
Mark Mobius, executive chairman of Templeton Emerging Markets
Group, are among investors who see opportunities in the country
over time.
“It’ll take time for Myanmar, but Myanmar definitely is
going to get more and more investment,” mainly in
infrastructure, Mobius, who manages $53 billion, said in an
interview on July 29. He has indirectly invested in the nation
through companies listed in Singapore and Thailand.
About eight companies may be listed when the exchange
opens, according to Shigeto Inami, managing director of Myanmar
Securities Exchange Centre, a joint venture between state-owned
Myanma Economic Bank and Daiwa Institute of Research Ltd., a
unit of Japan’s second-largest brokerage. Two stocks are
currently traded over the counter at the center, making them
candidates to list on the new bourse, Inami said.
Cambodia, Laos
Those companies are Myanmar Citizens Bank Ltd. and Forest
Products Joint Venture Corp. Soe Thein, an executive director at
the center, declined to comment on the performance of the two
stocks in the over-the-counter market or whether the semi-government institutions are candidates for listing.
Other frontier Southeast Asian economies have opened stock
exchanges in recent years, with mixed results. Trading on the
Cambodia Securities Exchange began last year and it currently
has one company listed, according to its website. The two-stock
Laos Composite Index (LSXC) has risen 30 percent since its bourse
started trading in January 2011. It slipped 0.1 percent at 9:41
a.m. in Vientiane.
“If you look at Cambodia and Laos, the stock exchanges
haven’t been a great success,” said Thura Soe Paing, managing
director of All Myanmar Investment Partners, a Yangon-based
investment and business advisory company. “What I hope an
establishment of a stock exchange will drive forward is the
development and installation of business standards.”
Japan Exchange, which itself listed in Tokyo in January
following the merger of Tokyo Stock Exchange and Osaka
Securities Exchange Co., expects the Myanmar project will enable
it to export its expertise elsewhere, Miyauchi said.
Toshiba, KDDI
“We’d like to maximize our experience and know-how to work
with countries that are thinking about setting up stock
exchanges,” said Miyahara.
Other Japanese companies are working on the Myanmar
project. Toshiba Corp. (6502) and KDDI Corp. (9433) won an order from Daiwa
Research to supply a data center for the exchange, Tokyo-based
Toshiba said on July 3.
President Thein Sein has allowed more political freedom and
loosened economic controls since coming to power two years ago.
Assuming his government maintains momentum on policy reform, the
economy will expand 6.5 percent in the year ending March 2014
and 6.7 percent in the following fiscal year, the Asian
Development Bank forecast in April.
Phone Network
One area where Thein Sein has already moved to modernize
the economy is in telecommunications. In June, Norway’s Telenor
ASA (TEL) and Ooredoo QSC of Qatar won licenses to expand the
country’s telecommunications network, beating nine other
bidders. The government went ahead with the award even after
parliamentarians tried to delay the decision.
A stock exchange with a strong securities regulator would
help to improve corporate governance in a country that remains
plagued by corruption. Myanmar is ranked 172 out of 176 nations
in Transparency International’s 2012 corruption index.
“I hope Myanmar corporates know that it is a painful
process to list and what will be required of them with regards
to reporting, transparency and accountability,” said Thura Soe
Paing of All Myanmar Investment. “It will be worth it in the
long run.”
To contact the reporters on this story:
Takako Taniguchi in Tokyo at
ttaniguchi4@bloomberg.net;
Kyaw Thu in Bangkok at
kthu1@bloomberg.net
To contact the editor responsible for this story:
Chitra Somayaji at
csomayaji@bloomberg.net
source: BusinessWeek
No comments:
Post a Comment