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Emerging from decades of isolation, Myanmar is undergoing major reforms to become a more market-driven economy. IFC is working with the Republic of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) to raise awareness on the importance of good governance. The UMFCCI is a national-level nongovernmental organization representing the interests of Myanmar's private sector.
“Good corporate governance is critical at this stage of Myanmar’s economic transition where family-owned companies are going to be facing competition,” IFC East Asia Pacific Director Vivek Pathak said. “Foreign investors who are going to bring in capital and technology will want to work with companies that are well-managed with financial statements that are audited and transparent.”
Many Myanmar companies have poor transparency and rudimentary governance structures. The country’s capital market is at a nascent stage of development and its main listing board, the Yangon Stock Exchange, was only established last year; securities trading is scheduled to begin in March.
U Htay Chun, member of the Securities and Exchange Commission of Myanmar, said the country needs a comprehensive and effective regulatory framework. The commission is planning to establish corporate governance guidelines for Myanmar companies based on the principles from the Organisation for Economic Cooperation and Development; areas that will be examined include disclosure and transparency, board responsibilities, and shareholder rights, he said.
The signing took place at a forum that launched IFC’s Corporate Governance Program in Myanmar. The forum attracted more than 400 participants, including government officials, regulators, and business executives in Yangon.
IFC East Asia Pacific Corporate Governance Lead Chris Razook said Myanmar needs to build up a pool of qualified directors who understand their duties to shareholders well to serve on company boards. “We will help the UMFCCI develop and deliver corporate governance training to Myanmar companies with poor transparency, underdeveloped boards of directors, and inadequate shareholder practices,” he said.
Myanmar’s Deputy Finance Minister Dr. Maung Maung Thein said, “Better corporate governance will help build trust among market stakeholders – a prerequisite to tapping new sources of capital, which is crucial to fuel companies’ growth and expansion over the long-term.”
At the forum, Serge Pun, chairman of First Myanmar Investment and Yoma Bank and a leading entrepreneur in the country, said despite some initial sacrifices and lost business, good corporate governance measures have enabled his companies to attract top-tier institutions including IFC and the Asian Development Bank as investors.
“It took our group a longer time to establish a foothold in this country, but the added value of implementing transparent practices has been enormous in terms of efficiency and profit,” he said. “Not only are we able to attract investors and capital, but our reputation as a trusted firm affords us the ability to pick and choose what kind of people and resources we want to work with. Once trust and integrity are embedded in a corporate governance structure, benefits will flow.”
Good governance is not only needed in Myanmar’s private sector but also among its state-owned enterprises, Professor Aung Tun Thet, economic advisor to the president of Myanmar, told the forum.
“The key to good corporate governance is good management. The leaders and the board of directors must take the lead. We need to have openness, transparency, integrity, and be performance-oriented,” he said. “We reached a historic $8 billion in foreign direct investment for the first time in 2014-2015. We hope that with the new environment, we will have a 10-fold increase in FDI.”