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Bill Lehane and news wires, 16 March 2012 03:08 GMT...
The government of Burma has drafted new investment laws that
would make it easier for foreign businesses to operate in the
resource-rich Asian state.
Upcoming election: Aung San Suu Kyi standing in vote next
month seen as key indicator for potential lifting of sanction. Credit: AP/Scanpix
Foreigners will no longer need a local partner to set
up businesses in the country and may be granted a five-year tax holiday
from the start of commercial operations, according to the draft of a new
investment law obtained by Reuters.
The law is thought likely to be approved by parliament during the current session, which is expected to end later in March.
The long-awaited new regulations, along with plans to float its currency, the kyat, from April mark the boldest economic reforms since the country also known as Myanmar emerged from decades of dictatorship last year, its economy decimated by chronic mismanagement and trade-crippling sanctions.
A recent report by risk analysts Maplecroft ranked the country as the riskiest place in the world to invest for the fifth year running despite the recent reforms and the likelihood of sanctions being lifted.
Maplecroft said that while the country offers “huge potential” for international players, “the Burmese government continues to dictate policy direction and judicial decisions”.
Western companies shied away from the largest Burmese exploration round in years last November, leaving the way clear for Indian, Thai and Malaysian players.
American firms were excluded from bidding because of sanctions, and one analyst said he believed just a single bid out of 50 had come from Europe.
Some now expect sanctions to begin to be lifted if by-elections on 1 April, in which Nobel peace laureate Aung San Suu Kyi will run for parliament, are free and fair. A November 2010 general election was widely criticized as a sham.
Burma's nominally civilian government has begun to court Western investors, who have swarmed into the commercial capital Rangoon in recent months ahead of a possible end to the sanctions.
Under the new proposed law, foreigners can now either own companies 100% or set up a joint venture with Burmese citizens or government departments. Such joint ventures must involve at least 35% foreign capital.
Foreign investors can also lease land from the state or from private citizens who have permission to use land, the law says.
Foreign firms will not be allowed to employ unskilled foreign workers, and local citizens must make up at least 25% of their skilled workforce after five years, with companies ensuring the necessary training to achieve that.
It also drops a previous requirement that products manufactured by foreign firms must be entirely for export. The aim is to provide more for the domestic market to reduce the country's reliance on imports, which are often too expensive for domestic consumers.
The draft law goes some way to reassuring investors worried about a reversal of the reforms and the possible seizure of assets.
"The government gives a guarantee that permitted businesses will not be nationalized during the period allowed in the contract or extended in the contract other than by giving compensation based on current prices in the market, in the interest of the general public," it says, according to a Reuters translation.
http://www.upstreamonline.com/live/article1242146.ece
The law is thought likely to be approved by parliament during the current session, which is expected to end later in March.
The long-awaited new regulations, along with plans to float its currency, the kyat, from April mark the boldest economic reforms since the country also known as Myanmar emerged from decades of dictatorship last year, its economy decimated by chronic mismanagement and trade-crippling sanctions.
A recent report by risk analysts Maplecroft ranked the country as the riskiest place in the world to invest for the fifth year running despite the recent reforms and the likelihood of sanctions being lifted.
Maplecroft said that while the country offers “huge potential” for international players, “the Burmese government continues to dictate policy direction and judicial decisions”.
Western companies shied away from the largest Burmese exploration round in years last November, leaving the way clear for Indian, Thai and Malaysian players.
American firms were excluded from bidding because of sanctions, and one analyst said he believed just a single bid out of 50 had come from Europe.
Some now expect sanctions to begin to be lifted if by-elections on 1 April, in which Nobel peace laureate Aung San Suu Kyi will run for parliament, are free and fair. A November 2010 general election was widely criticized as a sham.
Burma's nominally civilian government has begun to court Western investors, who have swarmed into the commercial capital Rangoon in recent months ahead of a possible end to the sanctions.
Under the new proposed law, foreigners can now either own companies 100% or set up a joint venture with Burmese citizens or government departments. Such joint ventures must involve at least 35% foreign capital.
Foreign investors can also lease land from the state or from private citizens who have permission to use land, the law says.
Foreign firms will not be allowed to employ unskilled foreign workers, and local citizens must make up at least 25% of their skilled workforce after five years, with companies ensuring the necessary training to achieve that.
It also drops a previous requirement that products manufactured by foreign firms must be entirely for export. The aim is to provide more for the domestic market to reduce the country's reliance on imports, which are often too expensive for domestic consumers.
The draft law goes some way to reassuring investors worried about a reversal of the reforms and the possible seizure of assets.
"The government gives a guarantee that permitted businesses will not be nationalized during the period allowed in the contract or extended in the contract other than by giving compensation based on current prices in the market, in the interest of the general public," it says, according to a Reuters translation.
http://www.upstreamonline.com/live/article1242146.ece
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