Tue 25 Sep 2012
Filed under: Business / Trade,Inside Burma,International,News
Myanmar’s president is pushing to give overseas investors greater flexibility in their holdings in joint ventures with local businesses in certain sectors, as both reformist and protectionist elements of the nation’s legislature debate proposed foreign-investment laws, an official in the presidential office said Tuesday.
Myanmar leader Thein Sein, shown at center on a visit to Thailand in July, delayed approving a foreign-investment law.
President Thein Sein over the weekend formally delayed approval of long-awaited foreign-investment legislation, which is seen as crucial to opening the country to global companies following decades of isolation. The president’s delay followed criticism by some local business investors and entrepreneurs about the latest version passed by parliament that restricted foreign ownership to 50% in some politically sensitive industries.
In unrestricted sectors, foreign investors are required to hold at least a 35% share in joint ventures with local partners.
Zaw Htay, a director with Mr. Thein Sein’s office, told The Wall Street Journal Tuesday the “president does not want a specific ratio” for joint-venture arrangements in unrestricted sectors.
“He wants it to be worked out between the foreign investor and local investor, according to the agreement between the two of them,” Mr. Zaw Htay said.
More specifically, he said the president wants to make changes to the language in the draft legislation related to four of the 11 restricted sectors to clarify in which industries foreign investors should play a greater part and in which industries local businesses should be more active.
These four sectors are production and services, agriculture, livestock and fishing. He didn’t say to what extent the president wanted to see greater or lesser foreign or local involvement in each sector.
Parliament next meets in October, when revisions to the legislation are expected to be submitted for approval.
The resource-rich country of 60 million is seen by many international investors as a frontier market following a series of wide-ranging democratic changes implemented in the past year, ending a long period of global political and economic isolation under military dictatorship.
The initial version of the law passed earlier this month amounted to a compromise between those calling for fast economic overhauls—such as Mr. Thein Sein—and more-conservative lawmakers and local business leaders concerned that an overly aggressive pace of change would give foreign companies too big a share in the local market at the expense of domestic companies.
“It’s clear that Thein Sein is currently in a bit of a tussle with the legislature, and not only over this issue, which suggests power struggles behind the scenes,” said Jan Zalewski, a South Asia analyst at IHS Jane’s.
Mr. Zalewski now sees a real risk that a new foreign-investment framework could be held up again as different interest groups seek to make their voices heard on the matter. “This could increase the clout of those wanting more guarantees and safeguards for local businesses,” he said.