YANGON - Myanmar will set up its first-ever stock exchange by early next year - much sooner than expected - a job described by its deputy finance minister as "herculean" but most critical in terms of unlocking capital for private-sector companies.
And the key challenge is for the bourse to attract enough interest, investment and public trust to develop into an engine of the economy, finance industry analysts say.
A capital markets Bill is currently in Parliament and is expected to be passed before the end of next month. Thereafter, rules and regulations will be written, officials told a conference here on banking and finance organised by Singapore- based Sphere Conferences.
Explained Deputy Finance Minister Maung Maung Thein: "If we want to raise our economy we need the finance. Government financing is not enough. With the set-up of the capital market... the private sector (can) mobilise finance. It is extremely important."
He said the stock market would start with local companies and allow foreign firms to list later.
Yangon-based Mr David Proctor, chairman of the consultancy group Consilium, said the key issue was whether there would be enough liquidity at the outset to get the market off to a good start.
"Realistically I don't think there will be enough liquidity," he told The Straits Times on the sidelines of the conference. "What we will see, though, is a lot of interest from local companies to use it as a source to raise capital. And that means a lot of education required for local investors."
Also, as officials admitted freely, they are hampered by a dearth of trained talent to run key capital and financial market institutions, and a lack of public trust.
"We do not have sufficient knowledge about world financial markets even at the present time… and a lack of technical expertise is another hurdle," said Ms Naw Eh Hpaw, head of foreign exchange management at the Central Bank of Myanmar.
Trust is also an issue. One phenomenon of long-isolated Myanmar has been an almost total lack of modern investment options.
Money was thus largely invested in real estate and gold. Last October, the central bank had to step in to stem a run on the nation's largest bank Kanbawza, triggered by an unfounded rumour that its chairman had been arrested.
"The most important thing is to build up people's trust, to encourage the public, and the private sector (to) invest," Ms Naw Eh Hpaw said.
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