President Thein Sein wants to make Burma’s Foreign Investment Law more
open to investors and his office has been working to convince lawmakers to
remove dozens of restrictions, according to wire reports. The law could be
approved this week.
The law has undergone debate and
extensive revisions for five months, and it is still not clear if it will
achieve passage this legislative session, which ends this month.
Ninety-four changes were
introduced by the Lower House, ostensibly to help domestic small and
medium-sized enterprises compete.
New requirements call for up to
$8 million in start-up capital and barriers for foreign joint ventures in 13
restricted sectors, say officials with ties to the president’s office.
Since the suspension of most
Western sanctions, most foreign firms are awaiting the passage of the law
before committing large sums to Burmese businesses.
Coca-Cola Co, Yamaha, General
Electric, hotelier Marriott International Inc, automakers Suzuki Motor Corp and
Ford Motor Co and tech firms Panasonic Corp and Toshiba Corp have expressed
interest in entering Burma’s market.
The overhaul of the law puts
restrictions on 13 sectors, limiting foreign firms to a maximum 49 per cent
investment. The restricted sectors include manufacturing, farming, agriculture
and fisheries.
The revised, proposed law would
require foreign firms to put up between $5 million and $8 million in start-up
capital for a 35-49 per cent stake in joint ventures with a Burmese partner,
said sources.
Sean Turnell, an expert on
Burma’s economy at Australia's Macquarie University, said the draft's changes
represented a backlash to the reform process by entrenched vested interests,
which had prevailed in some other post-transition countries.
“Instead of moving to a more
liberal economic environment, some within the country seem to be pushing
towards an outcome that could see the effective 'oligarchization' of Burma's
economy,” he said.
In consultation with his
advisers, Thein Sein had urged a more "flexible" approach. That would
include dropping the $5 million start-up capital requirement and increasing
foreign shares in joint ventures in the restricted sectors, a source said on
the condition of anonymity.
Changes to the draft legislation,
which initially allowed 100 per cent investments by foreigners in any sector,
followed a June 30 meeting in Rangoon between Lower House Speaker Shwe Mann and
Rangoon businessmen who urged an immediate review of the law, Reuters news
agency said.
According to parliamentary
sources, lower house members discussed the bill with local businesses between
July 6 and 11 and then asked the Upper House to send it back. The bill was
returned to the Upper House recently with 94 points for amendment, which
included the new restrictions.
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