A battle is brewing between Burma’s President Thein Sein and lawmakers, who are adding protectionist changes to a draft Foreign Investment Law now in the Parliament.
“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 Burma, said. “They have really watered down the law to a point where we think it’s too weak.”
The battle pits local businesses interests against progressive forces wanting to ensure foreign capital is attracted to invest in the fledgling democracy.
The Asian Development Bank said last month said Myanmar’s economy may grow as much as 8 percent per year if it continues taking steps to increase trade and attract investment.
“What you see here is a lobbying effort by local industry with the lower house of Parliament that clearly doesn’t reflect the opinion of the president and the key economic ministers,” said Hans Vriens, managing partner of Vriens & Partners. “I expect this draft will see substantial changes. I can’t think of any country in Southeast Asia with the exception of Singapore where the government is so keen to attract foreign companies to invest and build up the economy as Myanmar.”
The requirement for foreign companies to spend a minimum of $5 million to invest in Burma might stifle investment in the tourism industry, where jobs can be created quickly, Vriens said. Myanmar attracted 816,369 tourists last year, compared with about 19 million in neighboring Thailand, according to government statistics.
The draft caps foreign ownership at 49 percent for joint ventures in restricted sectors, which include agriculture and fisheries, and mandates parliamentary approval for “investments of a very large size.”