The shape of a new foreign-investment law will decide whether the country becomes an Asean heavyweight or remains a backwater
Countries that want to open up their economies to the world have to come up with a good foreign-investment law. Myanmar is no exception. Indeed, this is one of the most important steps that the government under President Thein Sein has to take on its road to reform. But so far, the draft version of its new investment law has met with strong opposition, both from local stakeholders and from potential investors overseas.
First of all, the draft details remain secret, like many other new laws currently being drafted and vetted by politicians in Nay Pyi Taw. Only local stakeholders, National Assembly members and government officials are allowed access to the drafting process. So, when the draft was leaked last month, it sparked an explosion of questions and debate in the international media.
The president was supposed to sign the law after the National Assembly passed it recently, but instead he stalled. It was reported that some aspects of the law were not attractive enough for potential investors. For instance, foreign investors were not permitted to hold more than 49-per-cent ownership of a joint venture. They also needed to invest a minimum of US$5 million (Bt153 million). This represented too many restrictions for investors in small and medium-sized enterprises.
Local businessmen and ordinary Myanmar citizens have expressed dissatisfaction with the draft law. Some fear it would open the floodgates for foreign investors and eventually kill off the more backward and weak locally owned companies. Meanwhile, business cronies of Myanmar’s political elite are scared that opening up the market would end their monopolies.
But, regardless of the objections, Myanmar will soon have a foreign-investment law. And like it or not, foreign investors will be eager to exploit this “virgin” country.
Myanmar is undergoing unprecedented development in all aspects of life. Thein Sein is working together with opposition leader Aung Sang Suu Kyi to raise their homeland’s profile. It is gratifying to see two leaders at opposite ends of the political spectrum complimenting each other’s good deeds for their country. By contrast, Thai leaders of all colours seem incapable of such vision and cooperation.
This once-isolated country is moving quickly into the global community, knowing the risk of mishaps it faces along the way. But it has no choice if it wants to avoid the fate of the many other countries that have bogged down on slow roads to reform.
Thein Sein’s government is determined to move the country forward and compete with other Asean members. They would refuse to admit it, but officials in Nay Pyi Taw are confident they can overtake Laos and Cambodia in the next few years. In a decade or two, they should also be able to compete with Vietnam, and then Thailand. It is no surprise that they’ve been busy studying good governance practice around the world. For their part, foreign donors have been quick to respond with offers of aid and expertise.
Myanmar knows its potential very well. The country is rich in resources, both natural and human. It also now has political leaders whose legitimacy the world recognises and acknowledges. Confidence in the country is growing after the joint visit of Thein Sein and Suu Kyi to the US. Economic sanctions will now become a thing of the past. Myanmar has been given the green light to proceed like any other country in the world. Indeed, it wants to make sure it can outperform expectations.