NAYPYITAW (Reuters) - A law intended to accelerate foreign investment in Myanmar will be signed soon by the president after pro-democracy leader Aung San Suu Kyi helped kill a clause that would have protected crony businessmen, a government minister said on Wednesday.
The long-delayed foreign investment law, passed by parliament last week and now awaiting approval by President Thein Sein, is widely expected to clear the way for an increase in foreign investment by companies such as Coca-Cola Co in the resource-rich country that emerged only last year from 49 years of military rule.
Suu Kyi, the Nobel Peace Prize-winning opposition leader, joined other lawmakers in opposing a proposal that would have forced foreign companies to invest at least $5 million of start-up capital to do business in Myanmar, said Soe Thein, a minister in the president’s office, describing her as influential in the debate.
That clause, which would have been the largest such provision in Southeast Asia, was widely seen as an attempt to protect a coterie of businessmen who prospered under military rule. It would have dramatically reduced foreign competition, especially among small businesses, if included in the new law.
“She took part in talking about the new foreign investment law and supported dropping stuff like the $5 million requirement,” Soe Thein said an interview.
Backing of the investment law marks a significant turn for Suu Kyi, who in June urged corporate executives to avoid “reckless optimism” and warned investors that “even the best investment laws would be of no use whatsoever if there are no courts that are clean enough and independent enough to be able to administer those laws justly”.
“We all our friends now,” Soe Thein, a former naval commander-in-chief and senior member of the ruling military-backed party, said of the pro-democracy leader, who spent 15 years detained at home by the former ruling generals.
He said the law would probably be approved soon, although it was unclear if it would be signed before the president and Suu Kyi visit the United States, scheduled for later this month.
Resource-rich Myanmar is opening up to the world after nearly 50 years of military rule and economic stagnation.
Western countries have lifted or suspended sanctions since a quasi-civilian government took over last year but most firms are waiting to see details of the investment law, which was held up in parliament for five months as proposed changes went back and forth between the assembly and the president’s office.
Among other companies that have expressed interest in investing in Myanmar, one of Asia’s last frontier markets, are hotelier Marriott International Inc, car makers Suzuki Motor Corp and Ford Motor Co plus tech firms Panasonic Corp and Toshiba Corp.
But many executives say they want regulatory clarity in a market dominated for decades by tycoons with ties to powerful generals, a tightly knit circle of cronies who face competitive threats as the government liberalizes the economy.
Soe Thein was speaking on the sidelines of an investment conference held by Euromoney magazine in the capital, Naypyitaw, where the new law was hotly debated.
The latest draft raises the maximum share foreign companies can hold in 13 restricted sectors by one percentage point to 50 percent, retaining a protectionist flavor by capping foreign investment in several important industries.
Serge Pun, chairman of SPA Group, a Myanmar investment company whose holdings range from real estate to financial services, sees that as a mistake, illustrating the difficulties the government faces in one of its most important pieces of legislation.
“My question is very simple. If it is a restricted industry where we feel it should be kept in the hands of Myanmar nationals, then the government must be very clear-cut that the foreigner must be minority,” he said.
He also believed the 13 industries were vaguely defined.
“Some of them are specific and some of them are general, so is it really 13, or is it 13 that covers maybe another 35?”
The restrictions could cause confusion if 50-50 control meant decisions were deadlocked, Pun said. “Who’s actually going to have the big say? That is the problem.”
Editing by Alan Raybould and Robert Birsel