Aung San Suu Kyi’s government in Myanmar is moving to attract more foreign investment as a refugee crisis makes companies wary of setting up shop in the Southeast Asian nation.
Two laws set to take effect by June will make it easier for foreign companies to put money in Myanmar, a nation with one of Southeast Asia’s highest growth rates. The moves are part of efforts to revamp Myanmar’s image among investors, which has suffered of late after a transition to democracy led to a surge in global interest.
Suu Kyi, a former political prisoner and Nobel laureate, swept to power last year promising a change of course in a nation where the military ran the government for decades. Yet while former President Barack Obama in October lifted the last of decades-old sanctions on Myanmar, a refugee crisis spurred by an army crackdown on the country’s Rohingya Muslim minority is raising fresh concerns of human-rights abuses.
“There is apprehension that investing in the country may by implication condone the government and military’s actions in repressing the Rohingya, or indirectly give them more resources to do so,” said Dustin Daugherty, a senior associate at professional services firm Dezan Shira & Associates in Ho Chi Minh City. “This is particularly true given that current and former members of Myanmar’s military have an outsized role in the country’s economy.”
The United Nations’ refugee agency said this month that more than 60,000 Rohingya are believed to have sought safety in Bangladesh since October 2016, in addition to the 33,000 Rohingya refugees living in two camps in Bangladesh. A separate UN body in October documented allegations of abuses by the military, including rape, burning down houses and stabbing children to death.
Suu Kyi’s government has set up a commission to investigate the allegations and vowed to “spare no effort” in bringing perpetrators to justice, according to a Feb. 8 foreign ministry statement. At the same time, it said, security security forces have been told to avoid “excessive force” while still protecting the public from attacks, including an attack on police in western Rakhine state last year that was “funded and inspired from abroad.”
Still, rights groups have accused Suu Kyi’s government of whitewashing the military’s actions, including asserting that Rohingya were setting their own homes on fire in a bid for international attention. The UN special rapporteur to Myanmar, Yanghee Lee, said at the end of a visit last month that “the government’s response to all of these problems seems to currently be to defend, dismiss and deny.”
“This response is not only counterproductive but is draining away the hope that had been sweeping the country,” Lee said.
The crisis threatens to hinder the government’s efforts to revive foreign direct investment, which dipped 65 percent last year to $3.3 billion. The Asian Development Bank forecasts that the expansion will slow to 8.3 percent in 2017 from an estimated 8.4 percent, mostly due to global factors.
A revamped companies law, set to take effect by April, will allow overseas investors to buy up to 35 percent equity in local firms before they are considered foreign-owned, Aung Naing Oo, director general of the Directorate of Investment and Company Administration, said this month. Foreigners will also be able to buy shares on the Yangon stock exchange, he said.
A separate investment law in the works would also make foreign companies eligible for tax incentives without first seeking approval from the Myanmar Investment Commission, Aung Naing Oo said.
The moves are “expected to increase levels of in-bound direct investment and M&A opportunities,” said Tom Platts, a partner at Stephenson Harwood LLP, who leads the firm’s Myanmar practice.
“People’s expectations have also tended to be quite unrealistic when it comes to Myanmar’s development,” he said by phone. “You cannot revamp the political, legal, social and economic infrastructure of a country overnight, particularly one with as many complexities as Myanmar.”
The U.S. first imposed economic sanctions on Myanmar in 1990 in an attempt to weaken the then-military regime and their associated business cronies. In lifting them in October, Obama cited the shift to a civilian-led government and “greater enjoyment of human rights and fundamental freedoms.”
Suu Kyi is caught between the demands of the international community and local interests that want action against the Rohingya, a group of people that many Burmese consider illegal immigrants. In December, Bangladeshi banker Muhammad Yunus and other Nobel laureates called on the UN Security Council to intervene.
“She is basically in a very difficult position,” Sithu Aung Myint, a political analyst in Yangon who has written about Myanmar politics since the 1990s, said of Suu Kyi. “She cannot take a side.”