Myanmar central bank promises quick reform

Myanmar faces a host of the challenges as it embarks on the programme of far-reaching reforms aimed at boosting its economic performance, the country’s central bank governor told Emerging Markets.

Speaking on the sidelines of a seminar organized at the annual ADB meeting to discuss the country’s reforms programme, Governor U Than Nyein pointed to three key challenges.

“We have no developed financial markets. We have no developed commodity markets. And we have no developed labour markets,” said Nyein. “We are trying to do all these things, while improving our legal framework and establishing prudent rules and regulations that all other Myanmar governments can follow and build on.”

And there is so much else to do, he added. “For the financial markets, the key is to improve our payment and settlements system. And another key ambition is to improve our regulatory and legislative capacity.

“We are trying to do everything at the same time. So we need a lot of support from the multilateral community and from friendly nations. We need this help more than ever.”

Few countries garnered as much public attention at this year’s ADB conference than a nation that bridges the aspiring and often competing economies of India, China and Thailand.

Myanmar, the largest contiguous country in the whole of Southeast Asia, started truly opening up to the outside world less than two years ago. There are no ATMs in the country – banking transfers have to be settled by counterparties in Singapore, using friendly “travel agents” in Yangon and in second-tier cities. 

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Myanmar is determined to change this. With the aid of the ADB and the International Monetary Fund – the latter is due in Yangon in June and July to gauge and assess the pace of reforms – it is pushing ahead with financial reforms far more aggressive and rapid than any imposed during London’s “Big Bang” in the late 1980s, or in the 1990s in Central and Eastern Europe.

Nyein told Emerging Markets the aim was to get the country’s capital markets in good working order by 2015, the same year it is hoping to relaunch a stock market designed to become home to a host of listed companies. These are the very early stages of process, as the Myanmar officials admit.

The Myanmar Stock Exchange Centre, set up 15 years ago as a joint venture between state-run Myanma Economic Bank and Japan’s Daiwa Securities, boasts just two listed stocks: Myanmar Citizens Bank (MCB) and Forest Products Joint Venture Corporation (FPC), neither of which is actively traded.

“It’s first important to get securities exchange laws pushed through,” Nyein said. “After that, we can start to restructure and rebuild our capital markets.”

Another key aim was to prevent hot-money inflows from flooding into a country unprepared for unpredictable surges of capital inflows. “We don’t have the capacity to deal with volatility,” Nyein said.

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