RANGOON — Despite lingering infrastructure problems such as the country’s poor roads and patchy power supply, Burma’s government wants foreign businesses to be less cagey about investing in the much-touted frontier economy.
Aung Tun Thet, an economics advisor to President Thein Sein, implored would-be investors on Monday to “please take a risk, please take the plunge,” when weighing-up whether or not to establish operations in Burma.
Lamenting the bet-hedging disposition of some business representatives who visit Burma, Aung Tun Thet said, “Sometimes you come, you look, you see, you go away.”
Some producers of well-known branded products, such as Coca-Cola, Heineken, Nestle and Unilever, have recently set up operations in Burma, however, and cumulative foreign investment since 1988 reached US$46.4 billion at the end of April, according to data compiled by the Ministry for National Planning and Economic Development.
Some 70 percent of that investment was in the power and oil and gas sectors, with manufacturing next on just under 9 percent of the total. Half of the total investment came from China and Thailand—investment sources that are now declining relative to other countries, as Burma attracts increased investment outside the energy sectors
Since a nominally civilian government took office in early 2011, business laws have been reformed and new codes introduced, while the elimination or suspension of Western sanctions has facilitated renewed European, Japanese and North American commercial interest in Burma.
Burmese Minister of Industry Maung Myint said legislative changes had contributed to increased investment in recent years, citing the passing in late 2012 of a new Foreign Investment Law to replace a 1988 code.
“The foreign investment law has brought significant changes to the investment environment in Myanmar,” said the minister, who was speaking at the Myanmar Manufacturing Summit 2014 in Rangoon. The event was organized by Singapore’s CMT Events and was endorsed by the Ministry of Industry.
More than 700 foreign firms are now operating in Burma, but the government wants more investment in manufacturing, he said, citing garments as a likely growth sector.
Minn Naing Oo, managing director of Singaporean law firm Allen & Gledhill’s Burma office, said that the country remains a risky investment prospect, for now.
“A lot of things are unpredictable and there remain a lot of holes in the legal framework,” he said.
To nudge timid foreign companies wary about investing in Burma, Aung Tun Thet, a member of the Myanmar Investment Commission (MIC)—the government agency that assesses large foreign investment applications—said the government is writing “a new generation of investment polices” and wants to cut red tape for foreign companies.
“We now have a one stop service at the MIC,” Aung Tun Thet told an audience of current and prospective investors from countries such as Japan, Singapore, Thailand and the United States.
Since the opening of the new MIC “one-stop” office in Rangoon in April, “you no longer have to go from one ministry to the other when preparing an investment,” Aung Tun Thet said.
The opening of the office came after the Organization for Economic Co-operation and Development (OECD) published a Myanmar Investment Policy Review in early 2014.
The report described Burma’s investment regulations as intricate, saying that “the current regulatory framework is complex, with half a dozen laws regulating the entry of investors.”
“The approval process is equally complex and sometimes opaque,” the report said.
The OECD recommended changes to the MIC’s role, restricting its discretionary powers when assessing possible investment and advocating that the government “remove overlaps in terms of multiple approvals involving different ministries and bodies”—which is what the new one-stop office aims to achieve.
“We welcome advice from the OECD,” Aung Tun Thet said, when asked by The Irrawaddy if he agreed with the organization’s recommendation that the MIC’s discretionary powers be curbed.
“But it is done on our own terms.”