This week, we conclude our series by TransLegal’s correspondent in Myanmar, Oliver Massmann. Oliver was invited by His Excellence Minister Soe Thane to the President’s office on 22 January 2014 to present on current investment and trade issues faced by foreign investors in Myanmar. Here are Oliver’s suggestions to improve the investment climate in Myanmar.
Contact TransLegal and Oliver to learn more about investment opportunities and challenges in Myanmar.
The Future – Recommendations for Myanmar
Following our discussion last week of the challenges facing foreign investors in Myanman, we turn to specific recommendations for how the country can improve its current investment climate to attract foreign direct investment (FDI).
In general, we recommend that Myanmar align standards with international best practices to enhance the country’s competitiveness, pave the way for regional integration and improve the quality of products/level of services for the people of Myanmar.
We suggest that Myanmar’s government work towards high levels of international integration with bilateral investment protection agreements for the mid-term and a long-term free trade agreement (FTA) with the EU, the US and other trading partners.
We similarly encourage the government to retain an open investment regime for foreign direct investment. Any backtracking on liberalization efforts would send a contradictory signal to the international business community which has monitored the rapid economic reforms in Myanmar with great interest.
Liberalization efforts will have wide positive effects on the growth of Myanmar’s economy, and the simplification of conditions for import and export will support the growth of Myanmar’s small and medium-sized enterprises as well as facilitate FDI in Myanmar. We hope that the Myanmar government will continue on this liberalization path and continue the gradual removal of all licensing requirements.
We would welcome greater involvement and transparency in policy making as well as government consultations with foreign businesses on planned policy initiatives and draft laws and regulations.
We believe that wide consultation with various stakeholders will lead to better and more efficient regulations. Both the Directorate of Investment and Company Administration (DICA) and Myanmar Investment Commission (MIC) should share a public relations board to ensure that the right messages are being sent to the international community and questions are being properly answered. This could include providing the status of certain bills or draft laws.
In keeping with international practice and economic reforms, we suggest Myanmar grant greater independence to the Central Bank of Myanmar. The Central Bank of Myanmar should be free of a government financing role; its role should be to achieve price and currency stability and financial sector supervision. However, the Central Bank of Myanmar will only be able to achieve genuine independence if Myanmar gets its fiscal house in order.
Specifically, we recommend that the Myanmar government address current challenges to investors as follows:
- Develop a more transparent and less lengthy bureaucratic licensing process and meanwhile avoid any non-relevant costs, especially for lease rentals for offices and manufacturing facilities.
- Simplify export and import procedures in line with its framework for economic and social reforms. Either abolish the import licensing requirement entirely, or at least convert it to a per importer basis instead of per shipment basis.
- Provide more land protection: increase minimum lease terms to at least 5 years.
- Negotiate with the big banks to drop their self-imposed restrictions on monetary transfers to Myanmar and empower the Central Bank to set reasonable interest rates.
- Merge the two investment laws to level the playing field between foreign and local firms.
- Create a website under the MIC to highlight the tender process. Another step would be to appoint an independent, respected observer whose sole task it would be to provide oversight on this process.
- Offer a tax system more attractive to investment and lower tax burden.
TransLegal has offices throughout Southeast Asia. Contact us and Oliver to learn more about investment opportunities and challenges in Myanmar.