Legal Wheels Turn for Foreign Investors in Myanmar
Sure, the military maintains a significant amount of power, but it cannot be overstated how important this development is for the country. Some have wondered if, after the NLD landslide victory, the military would step in and slow reform, but that has not happened – the military should be credited with not only this transition but also for the overall political and economic advancements made in recent years.
One of the military’s reported red lines not to cross is modifying the 2008 constitution. More specifically, the constitution provides the military 25% of the seats in parliament. To amend the constitution requires a vote of more than 75%, so it is unlikely as it would require approval by the military. This may be why on 10 March 2016 the NLD announced their presidential candidate, U Htin Kyaw, a long-time trusted associate of Aung San Suu Kyi who will apparently abide by her instructions (she has been frank in public comments that she will be making the decisions).
The constitution does not permit Suu Kyi to be president as her children do not hold Myanmar passports. Since the NLD’s election victory she has been reportedly discussing with the military allowing this provision of the constitution to be modified, however the red line appears to remain firm.
Regardless, a huge political change is almost complete: the new NLD-nominated president starts his term on 1 April, and Suu Kyi will likely be named Minister of Foreign Affairs. Various other ministries will have NLD heads and the parliament is comprised with a majority of NLD parliamentarians. The country can now get on with encouraging foreign investment.
With most sanctions now removed, Myanmar is trying hard to turn its geopolitically strategic position, rich natural resources, young labour force, over 50 million-strong population and proximity to some of the most dynamic economies in the world into an engine that drives it into the modern age. To do so, it is actively encouraging foreign investment, and many international companies have arrived already, with more keen to come. However, risks remain.
Although the legal environment is in the early stages of reform and modernization, the military’s civilian government arm has made progress in drafting laws oriented towards foreign investment, and more laws in this vein are expected to be approved by the new NLD-led parliament. These laws co-exist both with old British colonial laws and regulations – which provide much of the fundamental legal framework still in place today – and with laws and regulations issued by the various military governments in the past 50 years.
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