It has only been just over three years since the West suspended trade and economic sanctions against Myanmar. This followed a period of transition from military rule, with a civilian government having been installed in 2011 and Aung San Suu Kyi's party, the National League for Democracy (NLD) having won 43 out of 45 seats in bi-elections in 2012. With sanctions suspended, Myanmar emerged into the spotlight as a multitude of foreign investors looked to this newly opened country as a land of opportunities. That the pro-democracy NLD has now won a landslide victory with enough seats to control both houses of Parliament, notwithstanding the 25% of seats reserved to the military, is likely to add to investors' interest in a country where a reform agenda is already underway.
I visited Myanmar in 2012, taking part in the first UKTI trade mission since sanctions had been imposed. Rich in natural resources such as oil and gas, minerals and gems, and with business opportunities in sectors such as construction, tourism, jewellery and retail, the potential for reward seemed high. However, considerable challenges faced investors. Myanmar was suffering from under-investment: the infrastructure, from transport to telecommunications, desperately needed updating and the funds, skills and technical knowledge to do it were in short supply. Banking was largely under State control with no overseas banks having been permitted to open branch offices. Reports of corruption were high and uncertainty over the rule of law was a real concern. Also, a high number of governmental departments and complex administrative requirements made setting up operations complex. Laws key to investor protection were also either missing (e.g. in the field of competition law) or outdated (the Companies Act dating back to 1914).
The Government was already taking steps to bring about reform, but were aware of the huge challenge ahead. Law reform is not a quick process, but three years on, it is encouraging to see the progress that has been made. Banking and telecommunications networks are improving now that licences have been granted to mobile phone operators and foreign banks. Having quickly implemented a new foreign investment law (on which we reported), further improvements are proposed in the form of a draft new investment law, coupled with new draft company law. There are plans to open a stock exchange (at last report, due to be opened in December) and, importantly, competition law was enacted earlier this year. Myanmar has also acceded to the New York Convention on the recognition and enforcement of arbitral awards. This, once national implementing legislation is in place, will in theory allow arbitral awards from the resolution of disputes in forums outside Myanmar to be enforced against assets and properties in Myanmar. Taking steps to tackle corruption (and money laundering), the Central Bank has also put out a directive requiring the banks it licences and supervises to conduct customer due diligence.
All these measures are positive steps. It is hoped that completion of these reforms will not be substantially delayed by the elections and negotiations which will follow. However, there is also still much to be done in the fields of rule of law and to tackle corruption. The NLD and particularly Aung San Suu Kyi have as a tenet of their constitutional reform agenda the need for a fair and impartial judiciary to support the rule of law. They will need to work carefully and closely with other key stakeholders to achieve these aims. It is yet to be seen how far they will succeed. The world will be watching the country which has become known as "the last Asian Frontier".