President Thein Sein has freed hundreds of political prisoners, eased press censorship and allowed Nobel Peace laureate Aung San Suu Kyi and her party to contest special elections for parliament.
Reliance on China
Economic reforms, however, have lagged. Many investors, particularly from the United States and Europe, are waiting for the investment law to be passed before putting money into a country that until recently was considered a pariah by the West.
“It’s important to have a good understanding of this investment law,” said Pierre Trouilhat, a senior projects manager at Nestle who is overseeing the company’s efforts to set up in Myanmar. “It’s the first thing our lawyer is going to ask us.”
Greater foreign investment is also a way for Myanmar to reduce its economic reliance on China, which grew during the country’s decades of international isolation.
The majority of investments still come from China, which accounted for 45 percent of approvals from April through August of this year, followed by Hong Kong, Korea, Thailand and Britain, according to data provided by the commission.
Details of the new legislation, which would supplant Myanmar’s existing 1988 investment law, have been opaque and shifting.
Factions in the government have tussled over how much to open up the economy, underlining a difficult balancing act of attracting overseas capital without decimating local business or alienating still powerful cronies of the former military regime.
“Foreign direct investment alone will not contribute to the development of our country. Local businesses and industries are also important.”
A chief source of confusion has been a list of restricted activities, in which foreign investment apparently would be capped.
The latest version of the law reduces from 13 to 11 the number of “restricted” or “forbidden” areas for foreign investors, but it also gives the Myanmar Investment Commission the power to restrict any manufacturing or services business it decides Myanmar nationals can do, according to a copy of the legislation.
Farming, fishing and breeding livestock – activities that can be undertaken by Myanmar nationals – are singled out for restrictions in the new legislation.
The remaining restrictions apply to ill-defined businesses that might harm people’s health, traditional cultures or the environment; deal in toxic waste or dangerous chemicals; or import technology, medicine or equipment that has not been approved for use outside the country.