There are two camps in the current government: those who want to encourage investment and open up the country, and those who want to protect local businesses against foreign dominance. The main driver of the former camp is the President’s office, while the main driver of the latter is the parliament. The risk for foreign investors is that the protectionist camp eventually wins out and foreign investors are put at a disadvantage.
This was a major concern in the past, and indeed foreign businesses have been nationalized in Myanmar before. Understanding that this is a key risk to foreign investors, the government has taken a few key steps to make sure that nationalization won’t happen again in the country. The first of these is that Article 36 of the Constitution guarantees that the government will not nationalize businesses in Myanmar. The second is that the text of the Foreign Investment Law also includes such language. The chance of a small business being nationalized in today’s investment climate is virtually zero, but it is always useful to think of this as a possibility if political winds change.
Rule of Law
While there has been some improvement in this area recently, it must still lags behind its neighbors in terms of rule of law and law enforcement. Foreign investors should be aware that in case of a dispute in Myanmar, their rights are not guaranteed to be respected. A key step that the new government has taken in this area is to sign the New York convention, which means that international arbitration decisions must be upheld in Myanmar. Foreign investors in industries that may result in lawsuits or litigation should be careful.
Since 2012 there has been a huge wave of investor interest in Myanmar and all sorts of shady characters have washed up. Were there is no doubt that the country holds a lot of potential, it can be a sobering experience to actually visit and see how far behind its neighbors Myanmar is. Investors looking at Myanmar should be optimistic but understand that there are still many infrastructure problems and other issues, and it is not a place to make quick money.
Stepping on the Wrong Foot
Many foreign investors barge into the country and attempt to implement their agenda. In doing so they unwittingly step on the foot of the wrong person, which then makes life very difficult for them. Don’t do this. Make sure you know who you’re dealing with before you offend somebody and be cautious when dealing with government officials and others in positions of power.