The controversial Foreign Direct Investment (FDI) law will be debated at
Burma’s Union Parliament on Friday after the Upper House objected to certain
restrictions.
Upper House MPs approved the FDI
draft as amended by their bill committee on Wednesday, but the proposed changes
will have to be put to the vote during Friday’s combined-houses session.
“We will try to get it out to the
Union parliament on Friday as the FDI bill has been debated for such a long
time,” Phone Myint Aung, Upper House MP for the New National Democratic Party,
told The Irrawaddy on Thursday.
He said MPs objected to some
restrictive amendments made by the Lower House last month.
“We agreed to remove the minimum
amount of US $5 million for foreign investments; the maximum 49 percent foreign
ownership on joint ventures; over protection on small and medium enterprises,
and many others,” he added.
The minimum capital for foreign
investment in Burma under the draft FDI was $5 million—the highest capital
amount in the Association of Southeast Asian Nations (Asean)—with neighbors
Cambodia, Laos, the Philippines and Thailand only having low restrictions in
certain important sectors.
Foreign ownership is allowed for
restrictive businesses—such as agriculture, livestock and offshore fishing—but
set at a maximum of 49 percent while the minimum level is 35 percent across
even nonrestrictive sectors. Foreign investment in areas which would damage
culture, health, natural resources or the environment would be prohibited.
Critics allege that these new
restrictions were added to the amended bill to protect Burmese crony tycoons
with close links to the former military junta who fear becoming uncompetitive
if unfettered foreign ownership is allowed.
Earlier this week, the Union of
Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) also urged MPs
to relax these restrictions if the country is to welcome foreign investors.
Business owners say foreign capital and technology is vital to help develop the
economy and create jobs.
Phone Myint Aung said, “in the
previous drafts, which the Upper House agreed, such controversial amendments
were not included as these were newly added by the Lower House last month after
the Lower House Speaker [Shwe Mann] and his delegation met with the local
businesspeople.”
There is also a fear that
restrictions on overseas investment will result in ownership fraud, which is
currently rife in garment businesses as legislation passed in 1982 prohibits
100 percent foreign ownership. Many international businessmen use their local
manager’s name to register factories and so dilute lines of responsibility for
worker rights.
The draft FDI law also contains
provisions for local workers in foreign-invested industries. In the first year,
25 percent of the total workforce must be Burmese, with this expanding to 50
percent and then 75 percent over the following two years. Foreign investors
also must help with the technical transfer of skills to domestic workers
through their local business partner.
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