A series of new investment laws, set to be introduced as early as April by the Myanmar government, are expected to attract more FDI and open up the country to further reform.
The government’s plan to simplify its foreign exchange, liberalise its banking sector, offer investors a series of tax holidays and reform the areas of investment available for foreign participation could be approved by next month, according to the commentary and investment news outlet 2point6billion.com.
Other far-reaching changes will involve plans to give more independence to the country's central bank as well as incremental steps taken to open the economy to foreign phone companies and banks. Coupled with the decision by the US to lift its sanctions on the current regime, this move signals the beginning of a new phase of growth in Myanmar’s economic development.
These laws follow earlier reforms that have generated increasing enthusiasm among business executives and foreign investors alike over the past year. Following the transfer of power from a military regime to a parliamentary government in 2011, the by-elections on April 1, in which pro-democracy leader Aung San Suu Kyi claimed a landslide victory for her National League for Democracy, were closely monitored by the investor community.
According to 2point6billion.com, an increase in FDI will depend to a large extent on the success of the elections. If they are successful, these new regulations will be passed into law. Indeed, these elections would do much to serve as a litmus test of the business climate in Myanmar. The degree to which the elections will be judged as transparent will heavily influence investor perception of the country’s business environment.
Nevertheless, Myanmar remains beset by several challenges. Infrastructure continues to be a much-cited problem within the country, and its legal structure continues to be perceived as unpredictable. In an online statement, 2point6billion.com maintained: “Foreign investors in the country will need time to be experienced in dealing… with corruption and massive inefficiencies.”
Even so, the government appears to be actively balancing these challenges by introducing several policies that could entice foreign interest in the country’s business environment. As well as offering tax holidays of up to 100% for five years, the ban on foreign labour will be relaxed, and foreign investors will have the right to repatriate 100% of profits earned.
Chris Devonshire-Ellis, founding partner of Dezan Shira & Associates, told 2point6billion.com: “It remains early days in Myanmar, although we watch this market with keen interest. However, the developments and potential for Myanmar are exciting and the future for the nation at this juncture looks most promising.”