On November 8, 2015, Myanmar held its first free election in 25 years. Aung San Suu Kyi’s National League for Democracy won a landslide parliamentary majority in the country’s first national vote – widely deemed ‘fair’ by international observers – since a civilian government was established in 2011, ending 50 years of military rule. The constitution bars Suu Kyi from the presidency because her sons are foreign nationals; however, she has indicated that this will not keep her from ‘ruling above the president’.
If all parties – including the military, which will control 25% of seats in the parliament – agree on the formation of a new government, democratisation will continue – but this is not guaranteed. Myanmar will open its stock market in December; and it just passed a first draft of a new FDI law.
Myanmar’s GDP in 2015 is estimated at $64bn, and is expected to grow 8% this year and next, according to World Bank figures. FDI has reached $8bn this year. This was double its total in 2014, and $3bn more than expected, given increased investment in energy (35%), and manufacturing and telecommunications (25% each).
The original liberal draft FDI law was assaulted by lobbying groups seeking to limit market access to foreign investors and to protect domestic firms (or preserve domestic monopolies –depending on the interpretation). Legislators reached a ‘fair compromise’, ultimately rejecting most of the protectionist measures. Future laws on banking, telecommunications, energy and resources are expected to be subject to similar debates.
Concerns for potential investors include corruption – given the institutional weaknesses of government agencies, including those overseeing investment and business – and the country’s shortage of highly skilled workers.
Presently, the state controls Myanmar’s foreign trade, although current reforms should liberalise the market. From 2009 to 2011, international trade averaged less than 30% of GDP. Recent figures on imports and exports are not available, but Myanmar had a trade balance of -6.8% of GDP in 2015, according to the Asian Development Bank. Analysis from Santander Trade explains that the negative balance is due to investment projects and sustained consumption. Myanmar’s main trade partners are the Association of South-east Asian Nations countries, China, India, South Korea and Japan. It imports textiles, petroleum products, fertilisers, plastics, machinery, transport equipment, cement, construction material and food, and exports natural gas, timber, vegetables, fish, rice, clothes and jade.