TOKYO—Burma has officially enlisted the Tokyo Stock Exchange and Daiwa Securities Group to help it establish a stock market in the latest step toward reforming the impoverished country’s economy.
The two companies said in a statement they concluded a memorandum of understanding with the Central Bank of Myanmar to share their knowledge and expertise in setting up an exchange. A Daiwa spokesman said on Thursday that the target date for trading to start is 2015.
International investors and tourists have begun pouring into Burma after the military junta ceded power last year to a nominally civilian government that has surprised the world with a series of sweeping political reforms, including releasing prominent political prisoners and allowing democracy icon Aung San Suu Kyi to contest recent parliamentary by-elections.
The Asian Development Bank (ADB) said on Wednesday that Burma’s economy is poised for substantial growth if Western sanctions are lifted and the government continues to permit reforms. Burma earlier this month unshackled its kyat currency from government controls with the introduction of a managed float for the exchange rate.
The country, also called Myanmar, faces enormous challenges after becoming one of the poorest in Asia following nearly a half-century of military rule. The ADB says per capita income is about US $715 per person with about 26 percent living below the poverty line on less than $1.25 per day. Only about 25 percent of people have electricity, and even those supplies are unreliable.
The press release said the planned stock exchange would be Myanmar’s first.
In 1996, Daiwa helped set up a tiny over-the-counter securities exchange, but it trades only two stocks—a forestry company and a bank—and government bonds with hardly any turnover, the Daiwa spokesman said.
“After having supported Myanmar for more than 15 years, we are very happy to help form this new stage of capital market in the country with the TSE and the Myanmar central bank,” Takahashi Fukai, president of Daiwa Institute of Research said in the release.
Japan does not have sanctions on Burma, although it cut most government aid in 2003 after pro-junta thugs attacked Suu Kyi’s motorcade during a political organizing trip and put her under house arrest, which ended last November.
Japan was Burma’s largest aid donor until 2003 and has continued small amounts of humanitarian grass-roots aid in health and education and has also maintained some trade ties since then.
Recent reforms under President Thein Sein has prompted hordes of investors from Japan, South Korea, India, China and Thailand to flow into the largely undeveloped nation that has long been considered one of the last frontiers in Asia. The country is rich in natural resources, including timber, oil, gas and gems.
US and European Union sanctions, however, are holding back Western entrepreneurs. The EU is expected to review its policy on Burma on April 23 and could ease sanctions. Washington’s complex sanctions regime may take more time to change.