Though multinational companies are still on the waitandsee move to enter Myanmar, the nation’s recent legislative reforms to create a more enabling business environment will create positive signals for foreign direct investment inflows, according to a panel discussion by the global research and consultancy firm Oxford Business Group taking place on last Thursday.
The panelists at the roundtable entitled, “Impact of the new investment law and Companies Act on Myanmar’s business climate”, amicably agreed that Myanmar’s legal reforms would help the nation to attract high quality and responsible investors.
Pedro Jose Bernardo, partner at Kelvin Chia, noted that the new law is an excellent piece of legislation which will make it easier for people to come and invest in Myanmar, as it provides clear investment protections.
He said the passage of the long-awaited updates to the Companies Act, and the institutionalisation of a responsible public-private partnership framework to further make Myanmar a truly competitive investment destination.
Charles Schneider, senior operations officer of International Finance Corporation, has been helping the Myanmar government with modernising investment-related laws and regulations since 2014. He said that the new legal framework will help to differentiate Myanmar from other investment destinations to maximise the nation’s already high potential.
He stressed the importance of transparency of the regulatory framework to attract responsible businesses that will bring modern technology and create new jobs in Myanmar.
Yet, Schneider suggested monitoring approved businesses to investigate whether they do the same as committed in their proposal.
“Approved investment is really a huge number. But if you look at other statistics that show actual investment, i.e. how much is really investฌed, it is probably 1020 per cent (of approved amount),” he said.
Kristen Bauer, US embassy’s deputy chief of mission, said that the responses to the new law have been positive and people are now waiting for its full implantation, particularly for the bylaws. She said the reforms will push for the liberalisation of controls on sectors such as insurance, agriculture and banking.
“The interest is driven by the reality. It is a growing market with a very high potential,” she said.
Aung Thura, founder and chief executive officer of Thura Swiss Co, welcomed Myanmar Investment Commission’s recent move to devolve power to investment by allowing State and region investment committees to permit investments worth up to US$5 million or Ks6 billion. He urged to strengthen regional authorities’ capacity.
“Basically, if you abolish an old system, you need to have the replacement system ready… Decisions need to be made within one or two months, and they need to be monitored as well,” he said.
Aung Thura suggested building up confidence that Myanmar is a stable investment environment by making processes easier, planning policies and allowing proper transition periods.
“We have very high expectations that everything will change immediately.
Yet, Myanmar is in a competition. Basically, some multinational companies and smaller companies will see if it is now the right time to invest in Myanmar. Probably, they will have the attention once a year. We really need to grasp such kind of opportunity,” he said.
“We have a new law. We want to show Myanmar has changed, and is really interested in attracting investment,” he added, suggesting that the top level of the administration should lead the moves to attract FDI.
Azeem Azimuddin, chief financial officer of Aya Bank, said that new laws and transparent implementation of regulation-related measures will help Myanmar gain a top 50 position in World Bank’s Doing Business ranking. But the implementation needs to follow thorough to make it sustainable, he said.
“We have just gone thorough the first round. This is a 15round super heavy weight fight. We have to be standing at the end of the 15th round,” he said.
Azimuddin said there should be no delay in the implementation of the new laws, and the entire regulatory framework and roadmap for the next five, seven or ten years should be made public.
He added that all draft regulations should go through a consultative process with various stakeholders. He said Myanmar has a real opportunity to develop from a least-developed country to a middle-market growing economy, although it is by far in the lowest in the region in terms of bank capital.
He urged the government to learn from what India, Thailand and Brazil have done.
Paulius Kuncinas, OBG’s managing editor for Asia, said that the new regulations should help address a series of risks and questions on how to evaluate shares between public and private players. To him, energy, power generation, tourism and infrastructure are critical areas that need long term investment.
“We know from other markets we cover that legal reforms play a crucial role in sending out a powerful message to investors, that they are welcome and the country is open for business,” Kuncinas said.
“We think the legal reforms will help to address a number of issues related to how risks are shared between the public and private sector,” he added.
At the event, Than Aung Kyaw, deputy director general of Directorate of Investment and Company Administration, said that the challenge for Myanmar would be to grasp new opportunities by streamlining its business procedures. He said DICA would continue to be proactive in attracting further investment to boost the dynamism of the country’s promising sectors.