Govt delays foreign investment law Skip to main content

Govt delays foreign investment law

By REUTERS 11 December 2017

Burma will delay a long-awaited reform that would open the door further to foreign investment, two officials told Reuters, a move likely to disappoint cash-starved businesses amid growing doubts over the management of the economy by the country’s leader, Aung San Suu Kyi.

The postponement of the corporate reform, which would have allowed foreign companies to take up to a 35 percent stake in Burmese companies, will likely deal a fresh blow to investor confidence in Suu Kyi’s administration. Economic reform is a key goal for her to complete Burma’s democratic transition after decades of isolation under military rule.

The delay underscores the daunting challenge facing Suu Kyi, whose promise of a reformist government that would attract foreign investment is under threat. Some aid to Burma, officially known as Myanmar, is already being withheld and investors are concerned that the sanctions that long hobbled the country’s economy will be reinstated over its treatment of its Rohingya minority.

A Burmese companies law, which could bring much-needed foreign capital to the country after decades of mismanagement by the former military junta, was approved last week by President Htin Kyaw without a commencement date specified.

Aung Naing Oo, head of Burma’s Directorate of Investment and Company Administration (DICA), told Reuters the authorities may not be ready to implement the new rules until as late as August 2018, after bylaws were prepared and a company registry that he said was vital to enforcement was completed.

“We really want to implement the law as soon as possible but there are many things for us to do,” he said, declining to elaborate what bylaws were needed. He said the government would make sure implementation would be no later than 1 August. “We have to make sure the reform is on the right track.”

Myo Min, director of DICA, said the authorities needed up to eight months to “work on the guidance and operating manual” for the country’s first modern online registry, an initiative driven by the Asian Development Bank to electronically revamp the country’s company registry to boost transparency.

The law includes a first set of modern corporate governance regulations, in some parts replacing rules made over a century ago, to bring the country’s business regulatory framework closer to international standards.

At issue is a clause that allows foreigners to take up to a 35 percent share in local companies, which would give local businesses access to a larger capital pool and open up the door for mergers and acquisitions in sectors that are in urgent need of an injection of cash from banking to property.

The delay of the much-anticipated reform comes as Suu Kyi faces criticism that she has neglected economic reforms. Growth in both foreign investment and gross domestic product have slowed since her National League for Democracy took office last year in one of the region’s poorest countries.

Htay Aung, president of the property-to-trading conglomerate Sakura Trade Center, said putting off implementation of the law “was bad for business as it will bring delays and extra costs, which result in losses”.

The company is seeking $100 million in over­seas financing for a condominium development in Burma’s commercial hub, Yangon. “Foreign investment will be postponed and local businessmen will be disappointed,” he said.

“Missed opportunity”

Investors have been waiting for the corporate reform, which was initiated by the former military-backed government in 2014. It establishes guidelines on how a company is run and governed, removing outdated rules on share transfers and offering greater protection to shareholders.

But Chris Hughes, a lawyer with Berwin Leighton Paisner in Yangon who was commissioned to draft the rules, said it was a “missed opportunity” for Suu Kyi’s administration.

“I can’t see a compelling economic reason or policy behind the delay. It seems more driven by technology or administrative factors.”

William Greenlee, managing director at law firm DFDL in Yangon, said the business community would struggle with the delay.

“International investors are watching and it’s wins like this that create a buzz and can materialise into a profound and sustained increase in foreign investment,” he said. “The euphoria will quickly turn to disappointment if it’s not implemented quickly.”

Aung Naing Oo of DICA said there would be no negative impact on investment. “Investors always need to take some time before they invest,” he said. “So this actually is the time for investors to make preparation to invest in Myanmar.”

The Asian Development Bank, which gives financial and technical assistance to Burma, said “it is ultimately the government’s decision when the law comes into force” and declined to comment further.

http://www.dvb.no/news/govt-delays-foreign-investment-law/78785

Comments

Popular posts from this blog

Chronology of the Press in Burma

1836 – 1846 * During this period the first English-language newspaper was launched under British-ruled Tenasserim, southern  Burma . The first ethnic Karen-language and Burmese-language newspapers also appear in this period.     March 3, 1836 —The first English-language newspaper,  The Maulmain Chronicle , appears in the city of Moulmein in British-ruled Tenasserim. The paper, first published by a British official named E.A. Blundell, continued up until the 1950s. September 1842 —Tavoy’s  Hsa-tu-gaw  (the  Morning Star ), a monthly publication in the Karen-language of  Sgaw ,  is established by the Baptist mission. It is the first ethnic language newspaper. Circulation reached about three hundred until its publication ceased in 1849. January 1843 —The Baptist mission publishes a monthly newspaper, the Christian  Dhamma  Thadinsa  (the  Religious Herald ), in Moulmein. Supposedly the first Burmese-language newspaper, it continued up until the first year of the second Angl

ARSA claims ambush on Myanmar security forces

Arakan Rohingya Salvation Army (ARSA) on Sunday claimed responsibility for an ambush on Myanmar security forces that left several wounded in northern Rakhine state, the first attack in weeks in a region gutted by violence. Rakhine was plunged into turmoil last August, when a series of ARSA raids prompted a military backlash so brutal the UN says it likely amounts to ethnic cleansing of the Muslim Rohingya minority. The army campaign sent some 650,000 Rohingya fleeing for Bangladesh, where refugees have given harrowing accounts of rape, murder and arson at the hands of security forces and vigilantes. Myanmar's military, which tightly controls information about Rakhine, denies any abuses and insists the crackdown was a proportionate response to crush the "terrorist" threat. ARSA have launched few attacks in recent months.  But the army reported that "about ten" Rohingya terrorists ambushed a car with hand-made mines and gunfire on Friday morning

Thai penis whitening trend raises eyebrows

Image copyright LELUXHOSPITAL Image caption Authorities warn the procedure could be quite painful A supposed trend of penis whitening has captivated Thailand in recent days and left it asking if the country's beauty industry is taking things too far. Skin whitening is nothing new in many Asian countries, where darker skin is often associated with outdoor labour, therefore, being poorer. But even so, when a clip of a clinic's latest intriguing procedure was posted online, it quickly went viral. Thailand's health ministry has since issued a warning over the procedure. The BBC Thai service spoke to one patient who had undergone the treatment, who told them: "I wanted to feel more confident in my swimming briefs". The 30-year-old said his first session of several was two months ago, and he had since seen a definite change in the shade. 'What for?' The original Facebook post from the clinic offering the treatment, which uses lasers to break do