Chris Blake and Kyaw Thu
February 15, 2017
Legal changes to smooth way for foreign
companies to invest
Risks rise as more than 60,000 minority
Rohingya flee country
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Aung San Suu Kyi: AFP via Getty Images
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Aung San Suu Kyi’s government in Myanmar is moving to
attract more foreign investment as a refugee crisis makes companies wary of
setting up shop in the Southeast Asian nation.
Two laws set to take effect by June will make it easier
for foreign companies to put money in Myanmar, a nation with one of Southeast
Asia’s highest growth rates. The moves are part of efforts to revamp Myanmar’s
image among investors, which has suffered of late after a transition to
democracy led to a surge in global interest.
Suu Kyi, a former political prisoner and Nobel laureate,
swept to power last year promising a change of course in a nation where the
military ran the government for decades. Yet while former President Barack
Obama in October lifted the last of decades-old sanctions on Myanmar, a refugee
crisis spurred by an army crackdown on the country’s Rohingya Muslim minority
is raising fresh concerns of human-rights abuses.
“There is apprehension that investing in the country may
by implication condone the government and military’s actions in repressing the
Rohingya, or indirectly give them more resources to do so,” said Dustin
Daugherty, a senior associate at professional services firm Dezan Shira &
Associates in Ho Chi Minh City. “This is particularly true given that current
and former members of Myanmar’s military have an outsized role in the country’s
economy.”
Rape, Plunder
The United Nations’ refugee agency said this month that
more than 60,000 Rohingya are believed to have sought safety in Bangladesh
since October 2016, in addition to the 33,000 Rohingya refugees living in two
camps in Bangladesh. A separate UN body in October documented allegations of
abuses by the military, including rape, burning down houses and stabbing
children to death.
Suu Kyi’s government has set up a commission, to investigate
the allegations and vowed to spare no effort, in bringing perpetrators to
justice, according to Feb 8 foreign ministry statement. At the same time, it
said, security forces have been told to avoid “excessive force”
while still protecting the public from attacks, including an attack on police
in western Rakhine state last year that was “funded and inspired from
abroad.”
Still, rights groups have accused Suu Kyi’s government of
whitewashing the military’s actions, including asserting that Rohingya were
setting their own homes on fire in a bid for international attention. The UN
special rapporteur to Myanmar, Yanghee Lee, said at the end of a visit last
month that "the government’s response to all of these problems seems to
currently be to defend, dismiss and deny."
Investment Falls
“This response is not only counterproductive
but is draining away the hope that had been sweeping the country,” Lee said.
The crisis threatens to hinder the government’s efforts
to revive foreign direct investment, which dipped 65 percent last year to $3.3
billion. The Asian Development Bank forecasts that the expansion will slow to
8.3 percent in 2017 from an estimated 8.4 percent, mostly due to global
factors.
A revamped companies law, set to take effect by April,
will allow overseas investors to buy up to 35 percent equity in local firms
before they are considered foreign-owned, Aung Naing Oo, director general of
the Directorate of Investment and Company Administration, said this month.
Foreigners will also be able to buy shares on the Yangon stock exchange, he
said.
A separate investment law in the works would also make
foreign companies eligible for tax incentives without first seeking approval
from the Myanmar Investment Commission, Aung Naing Oo said.
Nobel Backlash
The moves are “expected to increase levels of in-bound
direct investment and M&A opportunities,” said Tom Platts, a partner at
Stephenson Harwood LLP, who leads the firm’s Myanmar practice.
“People’s expectations have also tended to be quite
unrealistic when it comes to Myanmar’s development," he said by phone.
“You cannot revamp the political, legal, social and economic infrastructure of
a country overnight, particularly one with as many complexities as Myanmar.”
The U.S. first imposed economic sanctions on Myanmar in
1990 in an attempt to weaken the then-military regime and their associated
business cronies. In lifting them in October, Obama cited the shift to a
civilian-led government and “greater enjoyment of human rights and fundamental
freedoms.”
Suu Kyi is caught between the demands of the
international community and local interests that want action against the
Rohingya, a group of people that many Burmese consider illegal immigrants. In
December, Bangladeshi banker Muhammad Yunus and other Nobel laureates called on
the UN Security Council to intervene.
“She is basically in a very difficult position,” Sithu
Aung Myint, a political analyst in Yangon who has written about Myanmar
politics since the 1990s, said of Suu Kyi. “She cannot take a side."