Article / 02 September 2014 at 3:11 GMT

Stone-age Myanmar stumbles from dictatorship to dynamism

Business writer and editor
  • This is hardly a trader's paradise, with just two untradeable shares on offer
  • It resembles eastern Europe in the early 1990s - there will be cowboys
  • However, outside interest is enormous and growth is very high

By Adam Courtenay

If you want to see an emerging market which hasn’t even emerged yet, take a trip to Myanmar. It’s arguable, from an economic perspective, as to whether it’s passed the pupate stage. Take the stock exchange. The Myanmar Securities Exchange Centre, located in the capital of Yangon, only has two tradeable stocks and even these are rarely traded.

A 2011 Reuters report states that the exchange had no trading floor, and had eight employees who handled over-the-counter transactions and manually updated share prices, using a whiteboard, a marker pen and a stencil whenever a freak customer dropped by. The locals don’t even know there is a stock exchange and even state-owned enterprises have reportedly refused to list. A trader’s paradise it is not.


Starting from scratch: Myanmar is determined to build new infrastructure: Photo: Thinkstock

Like so many emerging markets, the former military dictatorship which opened up to the world in 2011 has a “not for widows and orphans” label stamped all over it.


It’s difficult to imagine a country of 65 million people anywhere today whose population at large has been starved of the internet. But then again, this is a country where only 4% of the country has a bank account. It’s just as hard to think of any state – especially one within a continent where technology is king – where mobile phone uptake is only really just beginning.

As I write, Myanmar is “discovering” the internet en masse and is only now turning on its very first affordable mobile phones, says Phil Morle, chief executive of Pollenizer, a start-up accelerator which has become active in this nascent market.

“Because of the political situation there, it has been impossible to effect the changes before now,” Morle says. “Before August, it cost $1,500 to get a SIM card, maybe 1% of the population had internet and less than 5% had access to a mobile phone. Now people can buy a SIM card for $2 and the internet market is opening up for 3G.”

Last year the government deregulated Myanmar’s telecom industry and with the awarding of licences to two international telcos – Norway’s Telenor and Ooredoo Myanmar – the country turned a digital corner. Both companies are now rolling out their 3G networks. Morle describes the country in the way people once spoke about the Eastern Bloc in the early 1990s. You can see the foreign interests move into Yangon and other parts of Myanmar before your very eyes.

“You can sit in a hotel lobby and see a guy from Germany speaking to a guy in Japan about a deal for a tall building they’re about to build. Things are moving very fast,” Morle says.

And then last week one of Australia’s big four banks, the ANZ Bank, said it was fully committed to securing a banking licence in Myanmar, where it has had a representative office since June last year. ANZ is Australia’s most active bank in Asia and has established operations in most Asian nations as part of its “super regional” strategy.

Banks on the move

It is not alone in wanting to get in. Myanmar is a resource-rich country willing to spend money on development. Japan’s Nikkei Asian Review reported recently that 25 banks have applied for licences including Japanese giants such as Mitsubishi UFJ, Mizuho, and Sumitomo Mitsui, along with Thailand’s Bangkok Bank, Singapore’s United Overseas Bank and Malaysia’s CIMB Group Holdings.

The government has initiated a broad array of reforms: unifying the exchange rate, improving monetary policy, increasing tax collection, reorienting public expenditure toward social and physical infrastructure, improving the business and investment climate and liberalising agriculture and trade.

As for the stock exchange, traders will have to wait for the new one slated to be opened in 2015. That is expected to have just eight companies listing when trading opens. It’s hardly a smorgasboard, but the smart money is already there. One of the emerging market gurus of the past 30 years, Templeton’s Mark Mobius, believes it will receive significant investment, gravitating towards the burgeoning infrastructure sector. A Bloomberg report said Mobius was already indirectly invested through companies listed in Singapore and Thailand.

If more proof were needed of the potential, look at the latest company formation stats. The Asia Development Bank says business confidence has markedly improved, as evidenced by a rapid increase in new business registrations, which exceeded 5,000 in the 10 months to January 2013. The ADB says registrations of new foreign-owned businesses rose to 375. Private sector credit maintained a rapid growth pace of 46% in FY2013.  The economy is forecast to post growth of 7.8% in 2014 and 2015, benefiting from rising investment and improved business confidence.

Worth thinking about? Please avoid if you are a widow or orphan trader. But given the level of interest from some of the big money players, Myanmar is an opportunity for investors to get on the inside early.

-- Edited by Robert Ryan

Adam Courtenay
is a business writer and editor with


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