Waiting for the right time to invest in Myanmar

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Myanmar has received a great deal of attention from investors when the country opened up its economy in 2011, and later on eased its investment rules to attract foreign direct investments to key areas such as energy, mining, oil and gas, manufacturing and tourism.

By Arno Maierbrugger

The lifting of the curtain unfolded a whirlwind of activities. Democracy icon Aung San Suu Kyi was released from house arrest and allowed to travel abroad to spread her view on things in Myanmar. Outgoing US Secretary of State Hillary Clinton arrived to shake hands with Myanmar’s president Thein Sein, and for Barack Obama was the former pariah state one of the key destinations of his first trip after re-election.

Yes, Myanmar is on the way to a freer economy – but the way will be stony. The country will have to shrug off decades of economic nepotism among its military brass, and this can’t be done overnight.

A good example for this was the inauguration of the new investment law, which, in is first draft, was modelled after liberal and foreign-friendly regulations known from other ASEAN countries. However, it met strong resistance from Myanmar’s business elite and was modified and softened several times before it was signed into law by the president only in November 2012.

What we now have is a law that looks liberal, but leaves a lot to interpretation by Myanmar investment authorities. While the law clarifies some issues for investors and creates new incentives for investment, it also extends the powers and remit of the Myanmar Investment Commission, whose task is to approve and oversee foreign investment. Thus, the applause from abroad was subdued and foreign companies remain cautious on what they are really allowed to do in this country.

Internationally, the law has been received only as a modest step forward with the regulatory environment to stay almost as murky as before. Keen investors wanting to cross the “final frontier” will need to closely scrutinise Myanmar’s practical interpretation of multiple provisions of the law and remember that approval will be needed for many details.

From the numbers, though, Myanmar remains attractive for business ventures of almost any kinds. The country has to catch up in literally every sector of the economy to wipe out the effects of 50-plus years of mismanagement and protectionism by the junta.

Myanmar currently has next to nothing to offer in terms of basic facilities for its population, let alone a functioning infrastructure, banking system or telephone network. And investors are now naturally poking into every corner of Myanmar’s languishing economy to find out what could be done to get this country back on its feet and have some nice profit at the same time. However, they will have to take a close look at the power plays within the still existing “nomenklatura” or wait until Aung San Suu Kyi wins the 2015 presidential elections – which is a highly probable scenario – and really turns the country upside down, in a positive sense.

This comment is Inside investor’s weekly contribution to Qatar’s leading newspaper Gulf Times and is published every Sunday.

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Reading Time: 2 minutes

Myanmar has received a great deal of attention from investors when the country opened up its economy in 2011, and later on eased its investment rules to attract foreign direct investments to key areas such as energy, mining, oil and gas, manufacturing and tourism.

Reading Time: 2 minutes

Myanmar has received a great deal of attention from investors when the country opened up its economy in 2011, and later on eased its investment rules to attract foreign direct investments to key areas such as energy, mining, oil and gas, manufacturing and tourism.

By Arno Maierbrugger

The lifting of the curtain unfolded a whirlwind of activities. Democracy icon Aung San Suu Kyi was released from house arrest and allowed to travel abroad to spread her view on things in Myanmar. Outgoing US Secretary of State Hillary Clinton arrived to shake hands with Myanmar’s president Thein Sein, and for Barack Obama was the former pariah state one of the key destinations of his first trip after re-election.

Yes, Myanmar is on the way to a freer economy – but the way will be stony. The country will have to shrug off decades of economic nepotism among its military brass, and this can’t be done overnight.

A good example for this was the inauguration of the new investment law, which, in is first draft, was modelled after liberal and foreign-friendly regulations known from other ASEAN countries. However, it met strong resistance from Myanmar’s business elite and was modified and softened several times before it was signed into law by the president only in November 2012.

What we now have is a law that looks liberal, but leaves a lot to interpretation by Myanmar investment authorities. While the law clarifies some issues for investors and creates new incentives for investment, it also extends the powers and remit of the Myanmar Investment Commission, whose task is to approve and oversee foreign investment. Thus, the applause from abroad was subdued and foreign companies remain cautious on what they are really allowed to do in this country.

Internationally, the law has been received only as a modest step forward with the regulatory environment to stay almost as murky as before. Keen investors wanting to cross the “final frontier” will need to closely scrutinise Myanmar’s practical interpretation of multiple provisions of the law and remember that approval will be needed for many details.

From the numbers, though, Myanmar remains attractive for business ventures of almost any kinds. The country has to catch up in literally every sector of the economy to wipe out the effects of 50-plus years of mismanagement and protectionism by the junta.

Myanmar currently has next to nothing to offer in terms of basic facilities for its population, let alone a functioning infrastructure, banking system or telephone network. And investors are now naturally poking into every corner of Myanmar’s languishing economy to find out what could be done to get this country back on its feet and have some nice profit at the same time. However, they will have to take a close look at the power plays within the still existing “nomenklatura” or wait until Aung San Suu Kyi wins the 2015 presidential elections – which is a highly probable scenario – and really turns the country upside down, in a positive sense.

This comment is Inside investor’s weekly contribution to Qatar’s leading newspaper Gulf Times and is published every Sunday.

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