Firms face financial accuracy issues ahead of bourse launch

Myanmar companies might not be ready for the scheduled launch of the country’s stock exchange in 2015, officials and experts are warning. The lack of transparency and accounting efficiency on the part of firms wishing to develop initial public offerings could contribute to the slowdown of the much-anticipated launch, they say.

Last month, officials developing the exchange said they were facing delays due to being unable to get a legal framework up and running.

Even with an operational stock exchange, firms are still a long way from being able to list because they have not been subjected to modern auditing practices, the full and accurate disclosure of their finances or pressure to offer investor-oriented business planning, Myanmar Securities Exchange Centre executive director U Soe Thein told The Myanmar Times.

“Public companies should begin offering accurate financial statements and to avoid [being seen as not] paying taxes, or tricking their auditors and financial regulators,” he said.

He added that even with a regulatory framework in place, there has been little in the way of enforcement to prevent illicit activity. “Law enforcement is not effective and most public companies do not follow the rules and regulations,” he said.

During a press conference in September, Deputy Finance Minister Maung Maung Thein expressed similar thoughts and voiced doubt as to whether any company had the capacity to restructure the way it does business in just two years.

“Stock exchanges historically took many years to set up in other countries … but we’ve just started and I can’t say we will complete ours” in time, he said.

Tatsuo Murao, founder of CAST Consulting, a firm that helps Japanese firms invest in local businesses, said inefficient accounting and transparency practices stemmed from a lack of skilled professionals able to bring businesses up an international standard.

“Human resources staff equipped with the required financial skills need time to develop, so it would be difficult for Myanmar to be fully prepared for the start of the new stock exchange,” he said.

Water and soda manufacturing conglomerate Loi Hein plans to open its books next March to the Daiwa Institute of Research, which is providing IT support to help develop the exchange, said the company’s chairman Sai Sam Htun.

“We will face some problems and we have to be sure of the strength of our funding through exchange rate fluctuations and other issues. The bigger a public company is, the bigger those impacts are,” he said.

“At this point, it is too early to say whether we would be able to achieve listing in time for the launch, he said.

On July 31, President U Thein Sein signed the Securities Exchange Law, which allows for the establishment and operation of a securities regulator. Laws that will outline how the bourse will be regulated are still not yet in place, the Central Bank has said.

According to media reports last month, the managing director of the Myanmar Securities Exchange Centre, Shigeto Inami, said that only about eight companies might be listed on the exchange when it opens.

These are expected to include First Myanmar Investment (FMI), First Private Bank and Asia Green Development (AGD). Myanmar Citizens Bank and Forest Products Joint Venture Corp are currently traded over-the-counter and are also considered to be among those that would list.

Source: Myanmar Times

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