As the political situation stabilises, there are golden pickings for early birds willing to brave the new Myanmar.
A historic moment was marked on 16 March 2016 as U Htin Kyaw was elected as the President of Myanmar. Though widely regarded as a proxy for Daw Aung San Suu Kyi, the more important message to the business community is that the National League for Democracy is pursuing a conciliatory stance to work with the military to move the country forward. Political appointments of Chief Ministers, reshaping of the various ministries and legislations are next on the list for the Government.
A clearer and stable political environment should instil greater confidence in the business community to bring forward investment commitments which has been growing since the peaceful election in November 2015. On 15 January 2016, the Directorate of Investment and Company Administration (DICA) announced that it has approved nine foreign investments, three local investments and five joint-venture investments, including two housing projects, one private hospital, 10 garment factories, one heavy machinery rental service and two wood-product factories. On 11 February 2016, it was reported that the Australian PanAust Group has been granted exploration licences for three mining blocks. PanAust Group is the first foreign firm to receive the licence after a new mining law was passed last December. Further, Nissan announced the opening of a factory to assemble cars with a view to start a full production facility in the near future.
UNLOCKING CAPITAL AND ATTRACTING FOREIGNERS
Reforms in its financial services sector have gained some momentum, with the opening of the stock exchange in November. This has set the stage for more liquidity to be injected into the economy. The Yangon Stock Exchange could benefit from the difficulties that Myanmar companies face in accessing capital. The process of listing could also force businesses to improve governance and other standards. Other key legislative reforms like the Condominium Law, was passed in early 2016. On paper, this will allow foreigners to purchase condominiums in Yangon. However as with all emerging countries, administrative rules and policies are slow to follow. As a result, earlier expectations of a flood of foreign investors to purchase condominiums have failed to materialise. In our opinion, these are short-term hiccups which will set the stage for earlier entrants to reap their rewards for the risks undertaken. Taken as a whole, the ongoing legislative reforms in many forms are likely to attract more capital and foreigners into the country to fill in the skills gap.