ADB worried about Myanmar investment
The delay in issuing Myanmar’s new investment law has spurred the Asian Development Bank to express concerns about the country’s attractivness to foreign investors and the anticipated economic growth of the country.
The new law, originally expected for July, has been amended several times in the last months and now contains more restrictive regulations for foreign investors. For example, there is now a requirement for foreign investors to capitalise newly set up companies at a minimum of $5 million, much more than in the earlier investment law. Foreign ownership has also been capped at 49 percent in important sectors. The draft also requires 75 per cent of employees to be Myanmar citizens after six years, down from 15 years in an earlier version.
“It will create a lot of problems for Myanmar if they want to compete with Cambodia, Laos, Thailand, the Philippines or others,” Alfredo Perdiguero, the Asian Development Bank’s principal economist on Myanmar, was quoted by Bloomberg.
The law is still in discussion by lawmakers. It is believed that strong lobbying efforts by influential local conglomerates have prompted the substantial amendments. Local firms fear competition by multinational companies such as Coca Cola, Pepsi, Mastercard, General Electric, Total, Chevron and many others which have already committed themselves to invest in Myanmar.
The ADB might revise its Myanmar economic outlook issued in August in case the new investment law will come into effect with all the restrictive regulations.
The ADB initially said that Myanmar could become a middle-income nation by 2030 and benefit from an annual growth rate of 7 to 8 per cent during the next decade.
The report was released on August 21 and identifies multiple areas for growth and development, in addition to outlining potential obstacles to democratic and economic reforms.The ADB identified oil and gas, mining, forestry and tourism as the most promising sectors.
However, before Myanmar takes the first step towards becoming a middle income country, it must first address the $500-million debt owed to ADB, the development bank said. This won’t be possible without large influx of investments from overseas.
With the draft for the new investment law has been “watered down to a point where we think it’s too weak,” Perdiguero said according to Bloomberg.
The delay in issuing Myanmar's new investment law has spurred the Asian Development Bank to express concerns about the country's attractivness to foreign investors and the anticipated economic growth of the country. The new law, originally expected for July, has been amended several times in the last months and now contains more restrictive regulations for foreign investors. For example, there is now a requirement for foreign investors to capitalise newly set up companies at a minimum of $5 million, much more than in the earlier investment law. Foreign ownership has also been capped at 49 percent in important sectors. The...
The delay in issuing Myanmar’s new investment law has spurred the Asian Development Bank to express concerns about the country’s attractivness to foreign investors and the anticipated economic growth of the country.
The new law, originally expected for July, has been amended several times in the last months and now contains more restrictive regulations for foreign investors. For example, there is now a requirement for foreign investors to capitalise newly set up companies at a minimum of $5 million, much more than in the earlier investment law. Foreign ownership has also been capped at 49 percent in important sectors. The draft also requires 75 per cent of employees to be Myanmar citizens after six years, down from 15 years in an earlier version.
“It will create a lot of problems for Myanmar if they want to compete with Cambodia, Laos, Thailand, the Philippines or others,” Alfredo Perdiguero, the Asian Development Bank’s principal economist on Myanmar, was quoted by Bloomberg.
The law is still in discussion by lawmakers. It is believed that strong lobbying efforts by influential local conglomerates have prompted the substantial amendments. Local firms fear competition by multinational companies such as Coca Cola, Pepsi, Mastercard, General Electric, Total, Chevron and many others which have already committed themselves to invest in Myanmar.
The ADB might revise its Myanmar economic outlook issued in August in case the new investment law will come into effect with all the restrictive regulations.
The ADB initially said that Myanmar could become a middle-income nation by 2030 and benefit from an annual growth rate of 7 to 8 per cent during the next decade.
The report was released on August 21 and identifies multiple areas for growth and development, in addition to outlining potential obstacles to democratic and economic reforms.The ADB identified oil and gas, mining, forestry and tourism as the most promising sectors.
However, before Myanmar takes the first step towards becoming a middle income country, it must first address the $500-million debt owed to ADB, the development bank said. This won’t be possible without large influx of investments from overseas.
With the draft for the new investment law has been “watered down to a point where we think it’s too weak,” Perdiguero said according to Bloomberg.
