Myanmar’s Stock Exchange: Open For Business And Soon To Foreign Investors

…Still, Myanmar had no market infrastructure to speak with, so Daiwa brought in the Japan Exchange Group as a partner, while the Japanese Ministry of Finance helped the Myanmar government draft up a new law to set up the creation of the bourse. According to Masutomo, JPX’s interest in Myanmar was due partly to the fact the Korean Stock Exchange, which had helped set up the Lao and Cambodian exchanges, was so ahead of them in the region.

Today, however, the Lao and Cambodian bourses are seen as a cautionary tale of what the Burmese exchange could become. Skeptics argue that YSX will likely mimic the fate of its neighbors, which both failed to take off after debuting to much acclaim. Each now holds less than 5 stocks.

For T. F. Rhoden, an independent researcher and doctoral candidate at Northern Illinois University, the comparison is misguided, as Myanmar’s population of 54 million people gives it a potential depth of domestic investors that’s much more comparable to Vietnam than Laos or Cambodia. In addition, Myanmar’s $64 billion economy is over three times the size of its smaller neighbors.

The more important lesson from the Lao and Cambodian exchanges is that their failure to enforce strong disclosure procedures and regulation destroyed their credibility. For emerging markets — whether in Asia or elsewhere — the need for international standards of accounting and disclosure is more than ever crucial.

The Yangon Stock Exchange has tried to push for higher standards by asking applicants to appoint compliance officers and set up systems to prevent insider trading, but without stringent regulation of the capital market, it likely won’t be enough.

“The two companies that have listed so far are… [click here to continue to read full text]

*Originally published in Forbes by Fanny Potkin; photo image credit via WTOP. Unless otherwise stated, all posts on this website are under Creative Commons licence.

white-compass-rose-th

No Burmese Returning: Economics Across Myanmar-Thailand Border

Abstract

As Myanmar’s national politics change from a military authoritarian regime toward civilian rule, this paper seeks to understand whether Burmese emigrants abroad are starting to return home. By placing the specific case study of net migration flows across the Myanmar-Thailand land border into a larger study of all of net migration flows across all other land borders around the globe, a comparison can be made as to the direction and the amount of these net migration flows. We argue that, regardless of the political situation, when surveying the top large-scale net migration flows of over 350,000 people, fairly simple economic indicators help us to predict that, ceteris paribus, the direction of any net migration flow will move from poorer to wealthier country. Material differences in wealth, however, do not help to predict the amount of that net migration flow. We conclude that because of prevailing magnitudes of material difference between Myanmar and Thailand, we see nothing that suggests that Burmese migrants have started to return home in any large numbers.

Keywords: Myanmar-Thailand border, Burmese migration, Myanmar, land border, migration, Burmese economy, Thai economy.

Introduction & Background

For the Myanmar-Thailand border, the direction of net migration flows has been going one way since at least the 1980s; whether these migrants have been economic immigrants or political refugees, year after year, more Burmese have been living in Thailand then Thais living in Myanmar. Yet, if we follow the news in Southeast Asia today, a new trend appears to be surfacing whereby everyone these days seems to be going to Myanmar. Over the past year, current and former heads of government such as Barak Obama, Tony Blair, Manmohan Singh, Shinzo Abe, and David Cameron, as well as European Commission President José Barroso have visited. In 2013, Myanmar had its first high-profile tech company visit by Executive Chairman Eric Schmidt of Google Inc. The nonprofit Institute of International Education facilitated nine American universities recently in sending representatives to Myanmar to inquire upon exchange opportunities for faculty and students in the future. Multilateral organizations and foreign government officials reestablishing diplomatic relations, also have been streaming into Myanmar. Accordingly, international weekly seat capacity for all airlines flying into Myanmar has doubled from around 40,000 a week in August 2012 to over 80,000 a week by January 2013 to meet the new demand. All this activity represents a dramatic reversal from years past.

For decades, the Burmese government made it fairly difficult for foreigners to travel to, or do business in, Myanmar. And after the military regime failed to respect the outcome of elections in 1991, many foreigners eschewed Myanmar altogether. Traveling there risked the wrath of critics of the country’s ruling generals, particularly by those activists working for a regime change. These critics urged maximum isolation of the regime as a means of putting pressure on the generals to release political prisoners, negotiate with ethnic minorities, and hold free and fair elections. However, the regime launched radical changes in 2003 with its “road map to democracy”. In consequence, as the regime has delivered on allowing national elections in the last few years, outsiders are scrambling to get into Myanmar. If foreigners are now flocking to get into Myanmar, what about the Burmese? Until very recently, Myanmar was not only a country many outsiders avoided, but one in which insiders were spilling out in great numbers and in particular into Thailand. Now that so many foreigners want to get into Burma, will this mean that the Burmese will feel less of an urgent need to get out? Could the direction of net migration across the Myanmar-Thailand border have reversed, or at the very least slowed down?

Myanmar remains an extremely poor country with few economic opportunities for local employment. For political reasons, but economic ones as well, the Burmese… [click here to continue to read full text]

*Originally published in International Journal of East Asian Students of Thammasat University, Thailand, by T. F. Rhoden and D. Unger; photo credit goes to Rohan Radheya via The Diplomat. Unless otherwise stated, all posts on this website are under Creative Commons licence. 

white-compass-rose-th

Myanmar Needs to Forgive Tax Dodgers

Whether motivated by greed or virtue, granting a one-time tax transparency amnesty to past evaders will help the country’s economic and political transformation.

With the new Yangon Stock Exchange (YSX) set to open in less than five months, now is good time to reflect on, not just the political liberalisation of Myanmar away from military authoritarianism and towards democratisation, but also on the evolution of the economic sphere.

And in particular, increased transparency.

A successful national bourse requires more than a modicum of transparency. “Transparency” itself can mean more than one thing. Openness to outside investigation, whether it be a corporation’s financial statements or a government bureau’s budget, can be a good thing or a bad thing depending on the situation.

However, I argue that there is more good to be had — that is, not just more economic efficiency or effectiveness, but genuine honesty in the development process — if something like a “tax transparency amnesty” for domestic businesses in Myanmar were promulgated by a democratically elected parliament.

We all understand that “politics” and “money” often intersect, particularly at the commanding heights of a national state. Some manifestations of the politics-money nexus are useful whilst others are more than a little depressing; but there is one avatar in particular that is a scourge on Myanmar’s political economy. A tax transparency amnesty could prove analgesic to that still lingering sick-man of Myanmar’s economy: the crony capitalist.

If cronyism between government and businesses is one type of economic activity that could use a dose of transparency, Thomas Fuller’s recent piece in the New York Times is a dismal reminder of another kind of less-than-ideal investor-backing for some of Myanmar’s corporate entities. Illicit trading of items like poppy (now often as methamphetamine), timber, and precious stones are hidden on the former balance sheets of more than a few companies. A tax transparency amnesty could prove useful here as well, helping to highlight wealth and income that is more or less clean (though underreported in the past), whilst also reasserting the illegality of some commercial goods.

But what exactly is a “tax transparency amnesty” and how would it work?

A tax transparency amnesty would be a one-time opportunity for businesses and individuals to declare past hidden income or wealth for an agreed upon fee. Regardless of where the funds came from, all money in the system would be declared white: everyone would get a clean set of books.

The one-time fee would probably be a… [click here to continue to read full text]

*Originally published in New Mandala by T. F. Rhoden; photo credit goes to Dustin Main. Unless otherwise stated, all posts on this website are under Creative Commons licence. white-compass-rose-th

Myanmar’s Military Still Hold the Purse Strings

The release of the official list of Myanmar’s 1,000 top taxpayers for 2013-2014 shows the wealthiest are still overwhelmingly tied to the old guard of military cronyism and elite government corruption. Many are on the US government’s blacklist.

The list, released by the Internal Revenue Department (IRD) of the Ministry of Finance in December, is an indication of how much – or how little –progress the Burmese political economy has made in terms of the separation between civilian versus military investment in Myanmar’s highest grossing companies. The reporting process remains frustratingly opaque to investors.

Despite the move away from military authoritarianism toward more democratic institutions in government in the political sphere, a similar move away from military-tied businesses which either have ties to or a part of the military toward completely independent trade, investment, and entrepreneurship in the economic sphere has yet to really begin.

The three public companies along with top taxpayers on the Internal Revenue Department lists serve to highlight the continued challenge of transparency and continued involvement of investments tied to military families.

For example, AGD Bank is part of the Htoo Group of companies, which has included at various times numerous other subsidiaries like Air Bagan, Htoo Wood Products, Elite Tech IT Services, Htoo Trading, and many others. The chairman of this conglomerate is U Tay Za, well known for his ties to the military elite, particularly Than Shwe, the former general who headed the junta from 1992 to 2011.

Both U Tay Za as an individual and his portfolio of companies are blacklisted by the United States government. For better or worse, this designation ends up trickling down to Htoo Group’s 30,000- odd employees and illustrates how cronyism at the highest levels becomes a system-wide problem affecting the middle and lower classes.

In fact, a comparison of the… [click here to continue to read full text]

*Originally published in Asia Sentinel by T. F. Rhoden; photo credits for image used in post appear on New Mandala. Unless otherwise stated, all posts on this website are under Creative Commons licence. 

white-compass-rose-th

Thailand’s Oligarchs Are Fighting

I want to believe that those who have taken to the street recently in Bangkok really do wish at heart to simply have a political system that is free from the influence of money. Or maybe we should say extreme amounts of wealth, like an ultra-extreme amount of wealth available only to the—not the top 1 percent—but the top .01 percent, top .001 percent, and, empirically speaking, really the top .0001 percent of Thailand’s 67 million people.

The influence of extreme inequalities of material wealth on national politics is a very good reason for those who work in salaried, white-collar professions in Bangkok to protest en masse. Honestly, the influence of extreme wealth on politics is a good reason for anyone to protest. And so, we should acknowledge that those on the street right now are acting of their own volition, correct? All of us have friends and colleagues who, whether we agree with them or not, are part of this protest, people whom we respect. We can acknowledge their passion. If this is a passion stirred by the direct consequences of extreme material wealth—the most salient example of this in Thai national politics being former PM Thaksin Shinawatra—then it is a legitimate passion, and more importantly, a legitimate reason to protest.

When political equality is hampered by economic inequality, can Thailand still have a liberal democracy? I wonder if this is at the heart of the problem. Does Thailand have something like a national oligarchy that is affecting, whether negatively or positively, some political outcomes? Does it make sense to ask if, casually speaking, the presence of a robust Thai oligarchy after Thaksin’s emergence on the national stage has conditioned, constrained, shaped, or some other way constituted the various events leading up to the 2006 coup, the crackdown of red-shirted protesters in 2010, the national elections in 2011, and the current round of protests in a way that if there were no Thai oligarchy would quite simply have not have occurred? Does Jeffery A. Winters’ thesis in his 2011 book Oligarchy apply to national case of Thailand as well?

PM Yingluck has made a public statement saying that… [click here to continue to read full text]

*Originally published in New Mandala by T. F. Rhoden; all other written and photo credits appear on New Mandala. Unless otherwise stated, all posts on this website are under Creative Commons licence. 

white-compass-rose-th