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South Korean stock market operator Korea Exchange has confirmed that it is looking into the possibility of setting up a stock market in Burma.
Lee In-pyo, a project director at Korea Exchange, was quoted by Reuters as saying that they had “had a discussion [with Burma] before”, adding yesterday that “anything is possible, anything can happen” in regards to the possibility of setting up the bourse.
Korea Exchange has already created stock exchanges in Laos and Cambodia, regarded as the other two new frontiers in Southeast Asian economic development.
Burma economics expert Sean Turnell from Australia’s Macquarie University says that “Burma will need one – stock exchanges are the main source of long-term financing for companies”.
An anonymous official at the Seoul-based company told Reuters however that while the company had visited the pariah twice, “nothing has been decided”.
The move is a further sign of the Burmese military’s commitment to liberalising the economy and attracting foreign investment, a process that has been viewed critically for its management and lack of transparency.
A foreign businessman in Rangoon confirmed that business was hindered by the lack of security that investors possessed in front of the law, pointing out that licenses for business property were only given for one year and subsequently had to be renewed annually, with no guarantees.
Indeed Turnell told DVB that “Burma tried to establish one [a stock exchange] before about 10 years ago, but that went nowhere”.
“The big problem with stock exchanges, unlike banks and so on, is that they require very strict legal rights, like property rights and so on, because of course the key is the legal entitlement to ownership. So if you have a case like Burma where the legal ownership claims are often highly subjective to the actions of the state, then it can be quite difficult.”
Increased South Korean investment will also further highlight the military’s adept handling of rival nations. In this case they have seemingly played both bitter enemies from the Korean peninsula off against one another, as recent leaked cables corroborate fears of a military relationship between North Korea and Burma, whilst trade relations with the South continue to appear buoyant.