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Japan Firms to Help Establish Stock Exchange in Myanmar
From the Wall Street Journal of Tue, 23 Dec 2014 07:15:15 EST
Japanese firms have entered into a joint venture with a state-owned Myanmar bank to help establish the nation's first stock exchange. Shown, a pedestrian walks past an advertisement at the Myanmar Centre Plaza construction site in Yangon in October.
Japanese firms have entered into a joint venture with a state-owned Myanmar bank to help establish the nation's first stock exchange. Shown, a pedestrian walks past an advertisement at the Myanmar Centre Plaza construction site in Yangon in October. European Pressphoto Agency

Japan’s Daiwa Securities Group Inc., its research arm and Japan Exchange Group Inc. said Tuesday they signed a joint-venture agreement with Myanma Economic Bank to establish Myanmar’s first-ever stock exchange in Yangon.

The deal is the latest tangible sign that plans for Yangon’s stock exchange, which the government aims to have up and running by October 2015, are moving forward.

Japan Exchange Group and Daiwa Institute of Research would “continue to contribute to the development of Myanmar’s capital market and the expansion and deepening of economic relations between Japan and Myanmar through the establishment of Yangon Stock Exchange,” the companies and Myanmar’s state-owned bank said in a joint statement.

The deal followed an agreement signed in May 2012 between Daiwa Securities and the Tokyo Stock Exchange to help set up the exchange after Myanmar began opening up the previous year following nearly five decades of military rule.

In November, the former headquarters of Myawaddy Bank in Yangon was chosen to house the stock exchange. Building renovations will be finished by June or July, according to Myanmar’s deputy finance minister, Maung Maung Thein, in preparation for the exchange’s launch.

Despite the progress, analysts have said they remain skeptical that the timeline for the exchange is achievable, given the multiple delays in overhauling Myanmar’s once military-dominated financial system.

In a note to clients earlier this month, political risk consultancy Vriens & Partners wrote that “serious doubts remain as to whether the stock exchange will be ready to move forward” by mid-2015. The consultancy also said that “questions remain around technical know-how” required to set up the exchange.

Still, prominent Myanmar-based companies are lining up to be part of the exchange’s launch, hoping to inject much needed capital into their enterprises. Among these is Air Bagan, a carrier that—along with its founder, local businessman Tay Za—remains on the U.S. Treasury Department’s Specially Designated Nationals list, which prevents U.S. companies from doing business with the company. Air Bagan representatives have said its inclusion on the list, which includes about 200 Myanmar businesses and individuals, has been a major obstacle to attracting more foreign investment.

First Myanmar Investments, led by local businessman Serge Pun, said in November that it also hoped to be among the first to list on the exchange and had already signed a letter of engagement with Daiwa Securities to prepare for listing.

The joint venture is also further proof of Japan’s keen interest in Myanmar. The move is part of Japan’s continuing attempt to modernize the Southeast Asian country’s lagging financial sector and inject much-needed technical skill. In October, Myanmar awarded operating licenses to foreign lenders--every Japanese bank that applied received one.

Tokyo is using official aid and private-sector investments to beef up its presence in Southeast Asia, a move in part aimed at providing a counterbalance to China’s growing clout in the region.

Since taking office in late 2012, Prime Minister Shinzo Abe has repeatedly traveled to the region, accompanied by large delegations of corporate executives. Japan’s financial regulators and top bankers have also visited Myanmar over the past year.

Last December, Mr. Abe pledged ¥63 billion ($573 million) in fresh aid to the country to help the development of major industrial zones. This year, Tokyo extended ¥10 billion in aid to develop infrastructure and lift standards of living in Myanmar’s conflict-plagued ethnic-minority areas.

Such support from the government has encouraged Japanese companies to increase investments in Myanmar, a resource-rich country burdened by poor infrastructure. The trend is aided by companies’ desire to diversify their operations away from China amid lingering political tensions between Tokyo and Beijing.

Write to Alexander Martin at and Shibani Mahtani at

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