Htet Tayza discusses reports which reveal that recently, Myanmar’s government initiated measures to further open up its economy to foreign investors.
Liberalising investment law
According to The United Nations Conference on Trade and Development (UNCTAD), a worldwide trade and development organisation, Myanmar is a global leader in liberalising investment. UNCTAD found that during October 2015 and February 2016, Myanmar’s government has initiated a number of new investment laws which were designed to open its economy up to international investors.
The South-East Asian country has now turned its attention to its Foreign Investment Law. Under this legislation, foreign companies are legally restricted from entering specific industries and engaging in certain activities. For example, international firms cannot explore the production of jade in Myanmar. Instead, they must form a joint venture with a local business to take part in these industries.
Opening up industries
The Bangkok Post reports that The Myanmar Investment Commission (MIC) has recently decided to amend the Foreign Investment Law. MIC issued a new notification – designated 26/2016, which changes the list of economic activities which require a joint venture, meaning that the country’s seed and rubber production sectors are now open to foreign investors.
Under the notification, foreign investors can now take part in the production of hybrid seeds, as well as the production and propagation of local and high yield seeds. They can also now manufacture rubber and rubber products in Myanmar, without the aid of a local partner. The notification also expanded the list of activities which are completely prohibited to foreign investors, with these measures particularly designed to protect Myanmar’s natural heritage and resources.
Commenting on this change to the Foreign Investment Law, an MIC official said: “MIC wants to relax some [areas of] foreign enterprise [to benefit] the economic situation of the country.” The official added that the removal of activities from this list largely depends on Myanmar’s economic needs, as well as requests submitted by foreign investors to the South-East Asian nation’s government.
According to World’s Top Exports rubber is one of Myanmar’s most lucrative industries, with the country being the 13th largest global rubber exporter (in US dollar terms) during 2014. The Myanmar Times reports that Myanmar is currently drafting a new law which is designed to promote its rubber sector. Explaining this initiative U Win Myint, the Director of the Myanmar Commerce Ministry’s Trade Promotion Department said: “Myanmar imports more than it exports, and we want to promote rubber as a good product for export, so we are trying to improve the quality of local products.”
Myanmar’s rubber export sector could benefit from foreign direct investment (FDI). As the International Monetary Fund explains, FDI does not just provide the host economy with a capital injection. It can promote technology transfers and employee training, providing industries with new knowledge which facilitates growth opportunities. By amending the Foreign Investment Law, Myanmar could attract foreign investors who will help its rubber sector expand going forward.