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The push to set up a stock market in Burma by 2015 is falling behind schedule, hit by a shortage of manpower and know-how.
Fundraising demand among companies here is expanding along with the economy, and a stock market would greatly help funnel cash their way. Businesses can turn to banks for loans, but they are often loath to do so because Burmese financial institutions generally have little know-how in managing credit risk and therefore require that real estate be used as collateral.
Without a bourse to supply growth money to companies, Burma’s economy will have a harder time climbing higher.
The Southeast Asian country enacted a securities and exchange law in July to pave the way for the planned stock market. But moves to draw up an ordinance for enforcing the law, which includes specific trading rules, have been stymied. Now it looks like the ordinance, which was supposed to be prepared in 2013, will not be ready until spring.
Currently, the government is working with Japan’s Finance Ministry, Japan Exchange Group and Daiwa Securities Group to create the basic framework for the market, such as clarifying the role of the securities and exchange commission and establishing disclosure rules for listed companies. Last month, Daiwa Securities Group signed an advisory agreement with Burma’s Asia Green Development Bank.
The progress, however, has been slow. “There are only a few officials engaging in practical operations on the Myanmar [Burma] side,” said a Japanese team member involved in the project. Those taking part say the officials generally lack expertise and have a limited knowledge of such basic concepts as insider trading.
Delays in drawing up the trading and other rules will also push back the creation of the entity that operates the exchange, as well as hamper the establishment of brokerages. It is now looking increasingly less likely that the country will have a stock exchange up and running in 2015.
Laos and Cambodia were the first among Southeast Asia’s least-developed countries to set up stock markets. But the sailing has not been smooth for either country.
The Lao Securities Exchange started trading in January 2011. Two state-run companies — Banque Pour Le Commerce Exterieur Lao, a commercial bank, and energy producer and supplier EDL-Generation — went public on that occasion. On 25 December, Lao World, a private exhibition operator, debuted on the exchange in what was the first initial public offering in about three years.
In Laos, it is still customary for business owners to lend funds to each other. Opaque management practices are widespread at government-run companies, which tend to avoid disclosing financial data. The country has gotten caught up in a vicious cycle in which companies are becoming less motivated to go public and investors are therefore losing interest.
The Cambodia Securities Exchange is home to only one listed company.