Yangon Stock Exchange looks for Belt and Road boost
Reforms to rules around foreign investment are gradually preparing the ground for greater economic co-operation between China and Myanmar
The Yangon Stock Exchange, launched in December 2015, expects to enjoy indirect benefits from China’s Belt and Road Initiative as more Sino-Myanmar joint ventures are set up and demand for capital increases.
“China is a major economic and trade partner with Myanmar. Myanmar’s enterprises need to grow together with their Chinese counterparts,” said Thet Htun Oo, the exchange’s Executive Senior Manager, in an interview with Asia Times.
When Myanmar companies reach sufficient size, they will go public and raise capital for future expansion, he said. This trend will create new opportunities for the Yangon Stock Exchange.
“Under the Belt and Road Initiative, both Myanmar and China share the same interests and will benefit from market developments in both countries,” is the view of Htay Chun, a commission member of the Securities and Exchange Commission under Myanmar’s Ministry of Planning and Finance.
He said Myanmar will also seek to cooperate with Hong Kong, which offers a financial platform for Belt and Road projects.
“Hong Kong cannot cannot do it alone; [neither can] China. We need to understand each other and cooperate together,” he said.
Myanmar’s financial sector can also learn a lot from Hong Kong, which – with its advanced technology and world-class infrastructure – is a leading player in global financial markets, he added.
Htun Oo and Htay Chun were attending the first Belt and Road International Financial Cooperation Summit, which was jointly organized by the Belt & Road International Financial Cooperation Annual Conference, the Dashun Foundation and Hong Kong Financial Assets Management Ltd, in Hong Kong on September 4.
In 2012, Myanmar’s government introduced a new Foreign Investment Law, and in 2013 new investment rules for foreign enterprises. Together, these make it clearer how foreign firms can operate in the country and enjoy tax exemptions and other benefits.
As of July 31, there were a total of 191 Chinese enterprises in Myanmar, with approved accumulated investments of US$19 billion, making China the largest foreign investor in the country, according to the Myanmar Investment Commission.
Singapore ranked second with US$17.9 billion of investment, and Thailand third, with US$11 billion. Hong Kong, which was previously the second largest investor in Myanmar after China during the 2010-11 fiscal year, ranked fourth with US$7.7 billion.
“There is a very long history between Myanmar and China. Our diplomatic relations are very good,” Htun Oo said. “In many major national and international events, China defended Myanmar. That’s a very good sign.”
Last month, 420,000 Rohingya Muslims fled to neighboring Bangladesh from the western region of Myanmar after the government triggered military action against Rohingya insurgents.
On September 11, Zeid Ra‘ad al-Hussein, the United Nations High Commissioner for Human Rights, told the UN Human Rights Council in Geneva that the situation in Rohingya was a “textbook example of ethnic cleansing.”
Last Monday, Chinese Foreign Minister Wang Yi said in a meeting with the United Nations Secretary General Antonio Guterres that China supports efforts by the Myanmar government to protect its national security and opposes recent violent attacks in the country’s Rakhine state.
On Tuesday, Myanmar leader Aung San Suu Kyi said in a speech that the Myanmar government needed time to find out “what the real problems are” in Rakhine state, while anyone found to have broken the law would be punished.
A new Companies Act
While foreign investors are allowed to enter Myanmar’s markets, they don’t enjoy the right to buy shares in locally listed firms, according to the Myanmar Companies Act, which was launched in 1914. Foreign firms also cannot list on the Yangon Stock Exchange.
“Some provisions of the Myanmar Companies Act are out of date and not in line with the current situation,” said Htay Chun. “A new law has already been drafted and is pending approval in parliament.”
On January 5, a new Myanmar Companies Act gained approval at a government cabinet meeting and was submitted to parliament the following day. If passed, the new act will see reforms to how companies are regulated and allow foreign investment onto the Yangon Stock Exchange. Oo says the act will hopefully be passed by the end of this year.
The Yangon Stock Exchange first opened in December 2015. In March of last year, First Myanmar Investment Co., Ltd. (FMI) became the first company to go public in the country. It was followed by Myanmar Thilawa SEZ Holdings Public Ltd in May and Myanmar Citizens Bank Ltd in August.
In January this year, First Private Bank Ltd (FPB), founded in 1992 by U Sein Maung, a former Ministry of Finance official, also saw its shares debut on the exchange.
Oo confirmed that all four companies listed on Yangon Stock Exchange are local firms. He said a hydropower generator and a telecoms infrastructure company would also have their initial public offerings by the end of this year.
“If an IPO candidate is engaging in banking, energy or construction business, the Securities and Exchange Commission will give it a higher priority,” Htay Chun said. “What we are now focusing on is infrastructure development in our country.”