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.
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.
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