March 19, 2014 00:00 By Khine Kyaw MYANMAR ELEVEN 2,012 Viewed
The Yangon Stock Exchange will be opened by the end of 2015 as scheduled despite emerging challenges along the preparation stage, said an official at a recent seminar.
While optimistic about the schedule, experts in the industry voiced that the country is yet to accomplish many more actions than just having the exchange open its doors, to ensure the full benefits to Myanmar companies.
Maung Maung Thein, Deputy Minister for Finance, at a recent seminar insisted that the Myanmar government would not change the target launch date despite some challenges.
"Some say that it is impossible. I don't exactly know why they say that. Our target is just to launch the capital market. We don't expect too much. It is out of the question for us to compete with international (capital) markets," Maung Maung Thein said at a recent seminar.
"We don't expect a perfect market. If I expect a perfect market, everyone will say I am crazy. But I believe that the first step is the most important for the long journey. It is just the very beginning of
the very long journey."
The deputy minister admitted that the preparation period is too short compared to the long list of must-do things, ranging from the drafting of the securities and exchange law to forming a joint venture, which will operate the stock exchange. After that, the authorities will need to select the right location for the exchange, and the target building would need renovation. At the same time, personnel training is a priority while local companies must be educated on the stock market.
Monthly seminars and workshops are being planned.
Personally, he believed that the exchange would benefit companies and investors.
"To very strong companies, if they are listed on the stock exchange and sell the shares, it will be better than borrowing money from banks. With the proceeds, they can expand their businesses more than ever before. On the other hand, those with some savings can make more money by investing in the capital market."
He also mentioned that the establishment of the stock exchange is necessary for the country's economic growth because it can create new employment opportunities crucial for a nation which was isolated under military dictatorship for decades.
Thet Tun Oo, deputy director at Myanmar Securities Exchange Centre Co Ltd, noted that investors, companies and the stock exchange play a pivotal role in a country's economic system and sustainable development.
"I believe the stock exchange can help the government get more tax income, while it can help create job opportunities," he said in a separate interview. MSEC, in cooperation with Japan's Daiwa Institute of Research, operates an over-the-counter market, where only two stocks are being traded.
To him, an urgent task for the government is to establish good governance and educate potential investors, aside from proper regulations and investment incentives.
Shigeto Kashiwazaki, managing director at the Daiwa Institute of Research, also warned that a capital market won't be in place without three key pillars - the regulatory body, the stock exchange and listed companies.
Suan Teck Kin, a senior economist at Singapore's United Overseas Bank, also told Myanmar Eleven that bank industry liberalisation is crucial. Foreign banks should be allowed to offer services, which will lead to greater competition. A strong banking sector is important for the establishment of the capital market, he said.
The stock exchange concept was first conceived in 2012, with help from Japan Exchange and Daiwa Securities. In July 2013, President Thein Sein approved the Securities and Exchange law, to sets rules that include the establishment and operation of a securities regulator to oversee trading activity.
To Bloomberg, Koichiro Miyahara, senior executive officer at Japan Exchange, said the bill was expected to be passed at the start of 2013. He noted that 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.