Interview: Daw Cherry Trivedi
What are the main issues standing in the way of effective corporate governance?
DAW CHERRY TRIVEDI: The traditional corporate governance structure, as found elsewhere in the world, does not exist in Myanmar. What exists instead is a hierarchical, founder-based structure with centralised power around one individual. There tends to be a topdown approach with very little delegation, consisting of boards which are then filled with friends or family. The result of this is a lack of transparency, empowerment and administrative controls. Many corporations are realising the need to have international corporate governance standards to have access to growth capital and the capital markets. When Myanmar became more liberalised at the turn of the decade, we saw many foreign companies enter the market and introduce a new operating paradigm. These companies, competing with local companies, are better structured, more agile and more open. In the face of competition local firms are now less insular and appreciate the need for restructuring. Loans and joint ventures are attractive options for Myanmar companies in the process of working towards norms that have hitherto been anomalous.
Which factors have made potential entrants into the market ultimately shy away?
CHERRY TRIVEDI: We see a lot of interest from foreign firms keen to invest in Myanmar but there is less execution, which is discouraging. Why is this? International firms are usually required to abide by certain compliance and disclosure frameworks, and this can be hard to secure locally. At the very least, there has to be regulatory certainty, legal support and enforcement methods. First-hand knowledge of a potential partner’s firm is essential. Companies must also be willing to be more transparent and allow for compliance and financial and tax openness to meet international standards. International players have openly communicated this to the local private sector. Since 2016 we have experienced great strides in this direction. In addition, the government has prioritised and started investing heavily in improving corporate governance standards.
In what ways can family-run businesses improve their succession mechanisms?
CHERRY TRIVEDI: While internships are a useful tool to gain experience, they are often not implemented effectively in Myanmar. Young people are often placed in high-level positions from the start, which is unfair to them because they lack the experience to perform in their role as well as the necessary understanding of the company to be successful. This is challenging for both the individual and the company. Companies often do not have strong rapport with employees from the bottom up as a result. In a country where almost all companies are family-run to varying degrees, managers must invest more in succession planning.
How can corporate governance structures encourage and enable women to enter into management?
CHERRY TRIVEDI: In Myanmar many women have a very strong work ethic and acute analytical skills. Indeed, throughout the country it is mothers who control the family finances. If one were to look at demographics within the private sector, the next generation is predominantly female. Many young women will take over from their fathers. That being said, women do join the workforce but often leave when they have children because they lack support with childcare. Some women want to only take time off while their children are young, but then return to find their job has disappeared. A lot of very good workers are therefore not retained or replaced. There are also issues with female empowerment of those in management. Even female CEOs may not do enough to bring other women into management positions. There are enough qualified women that can truly lead progress, and good governance will enable Myanmar to utilise this workforce more effectively.