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The Yomiuri Shimbun Officials celebrate the opening of the Yangon Stock Exchange building in December 2015.
The Yomiuri Shimbun
13:47 JST, March 1, 2021
Concern continues to grow among Japanese businesses about Myanmar, where the military staged a coup in February, as the Japanese government and private sector had been supporting the growth of the country’s stock exchange and insurance market.
If the military’s influence on the economy increases further, it could lead to a decline in foreign investment and businesses expanding in Myanmar.
Considering steps
“If the military oppresses the people, we will have to consider whether we should continue our support,” Japan Exchange Group, Inc. (JPX) CEO Akira Kiyota said at a press conference on Feb. 22. “There is a possibility that we may be forced to come to some conclusions.”
The Yangon Stock Exchange is operated as a joint venture between Myanmar and Japan, funded by JPX and Daiwa Institute of Research Ltd., in addition to local banks. The exchange started trading in March 2016.
Myanmar is home to more than 50 million people, providing the potential for a large-scale economy, so the Japanese side expected that the financing needs of companies there would increase in the future.
“The Yangon Stock Exchange project was a symbol of the trust between Japan and Myanmar,” said Seiichiro Sato, chief researcher at Daiwa Institute of Research, who has had experience working in Yangon.
Japan’s Financial Services Agency has been working with the insurance industry and the Japan International Cooperation Agency to develop the insurance market.
Myanmar opened the insurance market to the private sector in 2012. Riding this wave of liberalization, Japan has been cooperating in the development of the Insurance Business Law and rules for the approval of insurance products in Myanmar.
Myanmar is prone to natural disasters such as floods and cyclones, and the number of people who own automobiles is increasing, so interest in insurance is high. Major Japanese insurance companies are also expanding into the country.
Still developing
However, the securities trading and insurance markets are still in the process of developing. At present, six companies are listed on the Yangon Stock Exchange, including banks, a telecommunications company, and an industrial park operator. There are few options for investors. In order to revitalize the market, the ban on trading of listed shares by foreign investors was lifted in March last year.
At present, the insurance market is mainly an insurance business for overseas companies operating in the region, according to a major Japanese insurance company, and has not yet spread to the general public. The challenge is to increase the number of agents and improve the sales network.
A person involved with a Japanese company said: “If Japan pulls out now, Chinese companies will take their place. It will be difficult to do business after the influence of Chinese companies has increased.”
Suspending operations
The operations of some of the Japanese companies that have been doing business in Myanmar have been affected.
In the Thilawa Special Economic Zone on the outskirts of Yangon, about 70 of the 82 Japanese and other foreign companies that had been operating before the coup are continuing to operate, according to Sumitomo Corp.
On Feb. 22, when a large-scale, nationwide strike took place, operations were halted at many companies.
Toyota Motor Corp. has postponed the start of operations at its new plant, which had been scheduled to open at the end of last month.
Due to the spread of the novel coronavirus, All Nippon Airways Co., which has routes between Japan and Myanmar, had planned to operate two flights a week before the coup, but was only able to operate flights last month on Feb. 19 and 26.
According to the Japan External Trade Organization, more than 400 Japanese companies have set up operations in Myanmar and are members of the Japanese Chamber of Commerce and Industry in Myanmar.
“The companies are trying to maintain their operations,” the director of JETRO’s Yangon office said, “while considering the impact of the demonstrations and the safety of their employees.”
