By: DailyForex.com
Myanmar (formerly Burma), is the latest country to open its own stock exchange. The new exchange will be launched on Wednesday and is a further step in the pariah state’s recovery. The country has, of late, been showing continued growth in foreign inflows and has introduced a new pro-business type government.
Myanmar is a Southeast Asian nation of more than 100 ethnic groups, bordering India, Bangladesh, China, Laos and Thailand. Yangon (formerly Rangoon), the country's largest city.
The Yangon Stock Exchange (YSX) was founded, at a cost of $24 million by the state-owned Myanmar Economic Bank, Daiwa Securities and Japan Exchange Group, a company that operates the Tokyo Stock Exchange.
In last month’s national election, Aung San Suu Kyi’s party, the National League for Democracy (NLD) party, won a majority of 70 percent in parliament, ending half a century of dominance by the military. Suu Kyi, a 70-year-old Nobel peace prize winner who is barred from becoming president herself because of her son’s British citizenship said she will choose the President once the parliament meets for the first time in February.
Attempts by her National League for Democracy (NLD) to amend the relevant article in the constitution and allow her to take on the position of President have been rebuffed but she is still able to stand as head of her government. Myanmar’s former dictator, 82-year old Than Shwe, kept Suu Kyi under house arrest for most of his 19 years in power but he has not been seen in public since transferring power in 2011 to a reformist, quasi-civilian government run by his loyalists. The November defeat by the NLD of the ruling party formed by Than Shwe has been interpreted as both a public mandate for Aung San Suu Kyi and a protest vote against the military’s political power.
Strong Growth
The Southeast Asian country is growing fast. It is endowed with rich energy, mining and agriculture resources, but it continues to be plagued by tremendous poverty. The Asian Development Bank (ADB) estimates that the economy grew 7.8 percent in fiscal 2013-14 and 8.5 percent in 2014-15.
Myanmar struggled for years under British colonial rule and saw scant foreign investment under a military dictatorship. Its economy improved considerably since 2012 when Thein Sein, a former general sought help from technocrats and financial institutions and has been attracting foreign direct investment (FDI) on a scale Myanmar has never seen.
The $8.1 billion FDI recorded for 2014-2015 is a staggering 25 times the $329.6 million received in 2009/2010, the year before the military ceded power. Inflation has been rising, reaching nearly 10% in the 12 months to July 2015. An official at the Ministry of National Planning and Economic Development predicts its FDI target for this fiscal year will be $6 billion. And according to economist Khin Maung Nyo,
now that the elections are over and the transition looks to be moving along smoothly, the GDP growth target is certainly reachable.
A report posted in October of this year pointed to some additional economic developments in Mynamar Agricultural output picked up in fiscal year 2014/2015 after two years of sluggish growth, and manufacturing and industry outputs (gas in particular) have also been strong.
The floods in July 2015 are likely to affect the main rice crop this year though the extent of the damage is not clear. Between January and August 2015, the exchange rate depreciated by around 20% due to a stronger US Dollar, a growing current account deficit and slowing foreign investment inflows.
The report also pointed out areas that will need strengthening if economic growth is to continue. More progress in macro-structural reforms such as strengthening the business environment, modernizing the banking sector and financial services, and strengthening public debt management are a few areas that will need to be focused on. In addition, there is a need to address short-term macroeconomic challenges in order to maintain exchange rate flexibility as well as monetary and fiscal policy discipline.