Jul 18, 2012

Myanmar Investment Law Expected This Month

Myanmar's parliament is expected to approve a foreign-investment law by the end of July, a senior government official said, as the resource-rich nation seeks more investment to pull its people out of poverty.
"Once the legislation is approved, international business will flood into Myanmar," Tin Ko Win, deputy director general of the Directorate of Investment and Company Administration, said in an interview in Singapore Tuesday. "Our country is ready for any foreign partnership, joint venture or investment."
Separately, opposition leader Aung San Suu Kyi said she plans to travel to the U.S. in September to accept an award from an American think tank, the Associated Press reported. It will be a high-profile trip for Ms. Suu Kyi, who spent most of the past 20 years under house arrest and whose trip to Europe a few weeks ago received massive international news coverage. She gave no further details about the visit.
The investment law, expected to give foreign companies tax breaks and allow them greater freedom to lease land from private owners, is seen as a crucial step for Western companies that want to do business in the once-secretive nation but worry the legal framework is unclear. Myanmar's reformist government, which took power last year, pledged to pass an investment law earlier this year but then delayed the bill for reasons that have remained unclear. Many investors have expressed frustration over the slow pace of progress since then.
The bill is now being debated by the upper house of parliament. Assuming passage there, it would then be expected to go to the president for review, which can take 15 days.
The nominally civilian government has been lifting the legacy of five decades of harsh military rule in recent months, with steps that include loosening restrictions on the media and Internet and giving dissidents more freedom.
Seeking to encourage Myanmar's political and economic overhaul, the U.S. in May nominated a new ambassador and said it would ease financial sanctions. Last week, the Obama administration cleared American companies to invest there.
Some U.S. companies have already begun the process: Coca-Cola Co. KO +1.84% said last month it planned to start selling drinks in Myanmar for the first time in 60 years, and General Electric Co. GE +0.92% has held talks with Myanmar officials to supply electrical power-related equipment.
"This is the most opportune time for foreign investors to do business in Myanmar, making best use of its abundant natural resources," Mr. Tin Ko Win said, adding that the government plans to seek investment in sectors such as electricity generation and oil and natural-gas production. The proposed law will ensure that local and foreign investors are on equal footing, he said.
Mr. Tin Ko Win and Ye Aung, an assistant director at the Central Bank of Myanmar, were in Singapore for the Myanmar Business Conference organized by FRC Conference and Myanmar's FBC Services Co.
Mr. Ye Aung said the central bank will ensure that the exchange rate of the local currency, the kyat, continues to be determined by the market, rather than by the system of multiple, unofficial rates that used to apply. Since the financial year began April 1, the central bank has published a daily reference rate for the kyat and implemented a two-way foreign-exchange auction with authorized dealer banks.
Mr. Ye Aung added that the central bank will intervene in forex markets as required.
He said Myanmar plans to develop an interbank foreign-exchange market by 2015, in keeping with its commitments as a member of the Association of Southeast Asian Nations. To more closely integrate their economies, Asean nations aim to reduce barriers to trade and capital flows by 2015.
Mr. Ye Aung also said the central bank will become independent of the government in the future, but declined to provide a timetable.

Source: WSJ Asia Business