Tuesday, August 14, 2012

Japan to help Burma create a securities and exchange law

Tuesday, 14 August 2012 14:21 Than Htike Oo

Rangoon (Mizzima) - The Policy Research Institute of Japan and Central Bank of Myanmar will sign a Memorandum of Understanding (MOU) on Tuesday to create a Myanmar Securities and Exchange Law, said an official of the Central Bank of Myanmar.

Maung Maung Win, right, the deputy governor of the Central Bank of Myanmar Photo: GRG Banking

Maung Maung Win, the deputy governor of CBM, said the law would govern the workings of the Burmese stock exchange, which will be brought up to international standards by 2015.

Hidemi Kimura, the PRI director of the Office of International Research and Cooperation, said, "We hope to start cooperation as soon as possible after the signing. We have already formed a working group from our side.”

The Tokyo Stock Exchange and Daiwa Institute signed an MOU with CBM on May 29 to provide technical and human resource development assistance to establish a Burmese stock exchange that meets international standards.

A draft of the Securities and Exchange Law was published in The Mirror, the government daily newspaper, on August 11.

On May 31, Mizzima reported that an agreement on technical aid has been signed between the Central Bank of Myanmar and the Daiwa Research Institute and Tokyo Stock Exchange of Japan.

Minister of Finance and Revenue Hla Tun, who is also chairman of the Capital Market Development Committee, said Burma would establish a stock exchange by 2015 under a blue print set out by the committee.

To provide for listed companies on the stock exchange, Burma has allowed the set-up of public companies in a bid to develop the market economy. The Directorate of Investment and Companies will encourage the public to invest their savings and capital in appropriate business sectors.

According to the directorate, the seed capital for public companies is set to be at least 500 million kyat (about US$ 625,000), according to reports.

Entities seeking to become public companies must have at least seven initial holders, sell unlimited shares to the public, be an economically sustainable business and employ skilled labor.

Many Japanese and foreign investors believe that the envisioned stock market will open up numerous business opportunities in the future, although many obstacles remain.

Experts have pointed out that after five decades of isolation from the global community, the move to an up-to-date economy will be fraught with problems. The IMF is currently working with the government in an effort to bring its financial system up to basic international standards.

The plan to set up a stock market by 2015 comes during the same year as the Association of Southeast Asian Nations plans to integrate the region’s economies to create the Asean Economic Community, in which trade barriers will be dropped or reduced.

Meanwhile, the Tokyo bourse is expecting future benefits by helping Burma to open its stock exchange, the Japan Times said in early May.

“We hope our support will lead to more active trade on our exchange,” spokesman Naoya Takahashi was quoted as saying. For example, he said the TSE hopes to build a broader tie-up with Burma’s stock exchange by listing financial products on each other's markets or exchanging stock price information.

“For TSE, it is a long-term story, rather than a short-term business chance,” Takahashi told the newspaper.

Daiwa will be in charge of helping the country nurture a capital market through various measures, including the training of the stock exchange's workforce and giving advice to set up the IT systems necessary in the securities business, the article said. TSE will also help establish rules and standards to operate a stock exchange.

Daiwa said the company's approach to the country dates back to the early 1990s, which led to Daiwa's official contract with the country to help set up the Myanmar Securities Exchange Center Co., an over-the-counter stock market, in 1996.

The company said it would use its experiences at the MSEC to create the new stock exchange. Currently, at the MSEC only the shares of two companies are traded.

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