The head of the investment commission has encouraged representatives from hundreds of foreign firms to invest and help build “a new Myanmar”, amid continued uncertainty over planned amendments to the foreign investment law.
“We need your assistance and support,” Myanmar Investment Commission chairman U Soe Thein told 800 Myanmar and foreign delegates at the Myanmar Global Investment Forum in Nay Pyi Taw on September 12.
“Please assist us by helping to promote our trade and industry by facilitating investment, by exposing us to world-class business practices, please assist in training our young businessman and entrepreneurs to grow with you and assist us to regain our stance back in the global arena,” he said during the opening speech at the two-day forum.
“We are in the midst of an unprecedented and multifaceted transition from military government to democracy, from armed conflict to peace and from a state-centred economy to a free market economy. And from isolation to being an active and productive member of the international community.
“We are committed to build a new Myanmar: democratic, inclusive, peaceful with sustainable economic growth, which will actively and responsibly participate in our shared mission to build a thriving and harmonious Asia.”
He reaffirmed the government’s commitment to undertaking further reforms “in order to re-enter the global economy”, including signing on to the Extractive Industries Transparency Initiative.
“We need to improve our political environment and ensure future stability. Democratic institutions must be strengthened. … We have a major weakness in infrastructure and reform steps are being taken regarding judiciary and other rules of law institutions,” he said.
However, U Soe Thein, who was recently shifted from the Ministry for Industry to the President’s Office, mostly avoided the main talking point among prospective investors: amendments to the foreign investment law passed by the Pyidaungsu Hluttaw on September 7.
While a controversial clause setting the minimum initial capital at US$5 million has been scrapped, foreign businesses are restricted from owning more than a 50 percent share in 13 vaguely defined sectors, including “small- and medium-sized enterprises”.
Under the 2008 constitution, the president has two weeks to either sign off on the changes or send them back to the parliament – now in recess – with suggested amendments.
Prominent businessman U Serge Pun, executive chairman of Yoma Strategic Holdings, said during a panel discussion at the forum that it would be “better for us to debate a little more so that we can find a good foreign investment law that will be sustainable”.
“Presently … there are still a lot of flaws” in the version approved by parliament on September 7, he said.
“There’s been a lot of people saying it’s taking too long, but let me say that for such a big, significant piece of legislation it is actually a very short time they are taking … we have to manage expectations.”
One potential issue, he said, is the parliament’s decision to raise the cap on foreign ownership in restricted sectors from 49pc to 50pc.
“Giving that additional 1pc, to me is really not meaningful. In fact, it is counterproductive … 50-50 is a sure way for a deadlock and investors fear deadlock because it means limbo, it means no progress.”
Denis O’Brien from telecommunications firm Digicel said small and medium companies would become the “powerhouse” of the country’s economy. As such, some amount of initial protection for Myanmar companies was in the country’s interests.
“A gradual opening up of the market is better than a ‘big bang’,” he said.
While the foreign investment law amendments are yet to be enacted, he said his firm had already made its first investment in the country, a job search website, and he encouraged other foreign companies to follow suit.
“Go in and do something small and work with a local partner. It’s time to be bold and make a move,” Mr O’Brien said.
Other panelists stressed the importance of investment that creates jobs and fosters equitable growth.
Mr Alisher Ali, chairman of Silk Road Finance, which offers a “three M” investment fund – Myanmar, Mongolia and Mozambique – said a failure to ensure all levels of society benefit from foreign investment could lead to political instability.
In Mongolia, voters recently threw out the incumbent government because economic reforms delivered high growth rates but little material benefits for average Mongolians, he said.
To avoid a similar situation, he said the Myanmar government needed to prioritise job creation.
“You cannot find better empowerment than getting someone a job. It is crucial not to have only political will from the leadership but also buy-in from the broader population,” Mr Ali said.
U Serge Pun said the reforms were irreversible but there is a risk is in “the resolve of our government to formulate good policy and follow it through”.
He cited the application of the existing foreign investment law promulgated in 1988.
“We had an investment law, a good investment law … [but] nobody wanted to go to [Myanmar Investment Commission] because we felt that it would create more problems for ourselves than it would solve.
“Today we have a very different MIC … it’s a very different mindset, a very different way of working.
“If you have a good law, you need to stick to it and implement it without fail.”