Insurance Companies Become More Receptive to Myanmar

Burmese leaders plan to foster a more open economy as insurance companies help the enclosed Southeast Asian country open up to foreign companies, according to the Chicago Tribune. Various Japanese insurance companies and the Financial Services Agency are lending a helping hand to the government, and officials have established a regulatory body that will manage the insurance industry. Currently, Myanmar has an insurance market worth $40 million.

Burmese leaders plan to foster a more open economy as insurance companies help the enclosed Southeast Asian country open up to foreign companies, according to the Chicago Tribune. Various Japanese insurance companies and the Financial Services Agency are lending a helping hand to the government, and officials have established a regulatory body that will manage the insurance industry. Currently, Myanmar has an insurance market worth $40 million.

Myanmar is in for a major shift in 2016 as the military government plans to hand over power to the National League for Democracy in response to November elections. Many companies around the world see the nation as a goldmine for growth and opportunity, which explains why insurance companies are moving in fast.

Mitsui Sumitomo Insurance Co. and Sompo Japan Nipponkoa Insurance Inc. in particular became the first insurance companies to gain authorization to operate in a designated zone in May of this year, and Taiyo Life Insurance Co. became the first foreign insurance company to establish an office in 2012.

Insurance companies from the United States and Europe have also expressed interest in Burma, and it is an attractive investment hub because of its plentiful natural resources and a convenient location near China and India. With that, Myanmar has a brutal legacy to overcome, and leaders must do more to gain the trust of the international community.

Burma is a growing emerging market, but it suffers from a host of issues that will inevitably hamper progress. The first problem is the military-led government, and even though a change of governance is on the horizon, the country has fallen far behind due to despotism, corruption and a closed economy.

Moreover, many investors and companies do not trust the government given its abysmal human rights record and tightly controlled economy. The legal system is another matter, which will need a major revamping if foreigners believe they will be treated fairly under the law. The banking system remains disorganized as well, and a decayed infrastructure prevents future companies from establishing a beachhead in the nation.

Another issue is over-regulation, and officials must issue sound regulations and avoid burdening investors with rigid rules that hold back the private sector. The good news is that the reforms set in place in 2011 seem to be working, and investors grow more confident as the NLD is set to take the reins in 2016.

The NLD has campaigned on a platform of job creation and combating corruption, but sweeping change is already taking place upon the December debut of Myanmar’s Yangon Stock Exchange. The exchange is in its infancy, but it could help the new government while encouraging wider participation in the Burmese markets.