Myanmar companies told to embrace good corporate practices

MYANMAR companies must embrace corporate governance practices, especially large-sized ones that seek to list and raise funds on the Yangon Stock Exchange (YSX), said experts.

There are more than 200 public companies established under the Myanmar Companies Act, but only six of them are short-listed for the listing, said Htay Chun, a member of the Securities and Exchange Commission of Myanmar (SECM). He noted that these six are being examined whether they meet the listing criteria.

He added that public companies stand a high chance to win new investment through YSX, but that requires an improvement in their corporate governance practices. To him, public companies must have efficient, transparent and auditable management that creates trust and confidence among its shareholders, investors, other stakeholders and all relevant parties. And they also need to prevent systemic risks and crisis, reduce investment risks, and ensure good returns for sustainable growth.

“Improving corporate governance policies and supporting good corporate practice will contribute not only to the development of the companies but also economic efficiency, sustainable growth and financial stability. Companies without good practices will face difficulties for sustainability,” he said at the conference titled “Strengthening Myanmar’s Private Sector Through Good Corporate Governance” last week.

YSX was opened in December but trading is slated to start in March. There are doubts whether the trading could start then. Only temporary securities licences were issued to four securities companies, while there is concern on the quality of listed companies and level of understanding among local investors.


At the event, Serge Pun, chairman of First Myanmar Investment Co and Yoma Bank, said that Myanmar received overwhelming interest from international businesses with a huge pool of working-age population but lost many opportunities due to too little institutional capacity to handle high volume of inflows. He said that Myanmar enters a new era after the election and the political climate is improving, boosting the economy. High growth can be expected and companies with good practices would gain the most over the next five years.

Pun said that a company’s reputation will lead to investor trust and trusted firms will have the ability to do business successfully and profitably. Good reputation would also draw skilled labour, just as how his group appeals to Myanmar natives who grew up overseas and return to their home country.

“Once trust is integrated, then benefits will flow,” he said, adding that FMI would be one of the first firms to list on YSX.

“Opening of YSX marks the modernisation of Myanmar’s economy. We should bring our economy to the global stage as Myanmar might never have such a good opportunity again,” he said.

Bandid Nijathaworn, president and CEO of Thai Institute of Directors Association, said that companies should promote trust from investors to bring in more capital. He said companies needed to promote stakeholders’ clear understanding of its activities and must truly commit to transparency. To him, a firm’s business plan must focus on risk management, attracting skilled staff and training.

“Many successful listed companies in Thailand are family businesses which have been able to adopt good corporate governance practices. I hope Myanmar can do the same thing in the future… It should start with top companies first, and then expand to other companies,” he said.

Chris Razook, International Finance Corporation’s (IFC) corporate governance lead for East Asia Pacific, stressed the need to change people’s mindset. He also backed eliminating bribery, which has been deeply rooted in Myanmar for the past two decades. He said local companies should focus on social and other issues, reduce unnecessary risks, and introduce best practices.


Source: The Nation

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