September 2, Wall Street Journal
As Myanmar’s parliament goes on recess ahead of the upcoming general elections, crucial laws related to the economy are still stuck in limbo, heightening what will be a prolonged period of uncertainty and political risk for investors in this already complicated market.
Last Friday marked the last time lawmakers will convene before Myanmar’s November 8 vote, expected to be the freest and fairest the country has seen in decades. More than 80 parties will contest the vote, including opposition leader Aung San Suu Kyi’s National League for Democracy.
But several laws that Myanmar investors and financial institutions have been waiting for—including a new investment law, companies act and the banks and financial institutions law—have not yet been passed by this current government. Other long-awaited laws, such as a new mining law that would ease restrictions for foreign companies in one of the country’s most lucrative sectors, are also still stuck.
According to state media, these laws are among 50 bills that are stalled. A report in the state-run Global New Light of Myanmar added that parliamentary secretaries are meeting this week to “discuss their priorities” and prepare for the post-election parliament.
The new investment law would have combined elements of Myanmar’s foreign investment law, passed during the early days of the nominally civilian government’s reforms, and the domestic investment law, creating a comprehensive document for would-be investors both inside and outside the country. After months of extensive consultations, though, the law has not even reached the parliament floor for discussion.
The proposed banks and financial institutions law has been praised by experts as being a progressive document that would create a strong framework for the banking system—especially important to the nine foreign banks that won licenses to open a branch each in the country. Eight of the nine foreign banks have already set up their offices in Myanmar, including Japan’s Mizuho Bank and Singapore’s United Overseas Bank (UOB), despite uncertainty over the legal framework.
“What is missing in the current government’s approach to economic reform is commitment and follow through,” said Sean Turnell, an expert on Myanmar’s economy at Macquarie University in Sydney. “In each of the areas covered by the stymied laws, real transformational reforms and structural change have not taken place.”
Turnell compares Myanmar’s banking system to a “nineteenth century pawn shop” where banks do not lend on credit analysis or real banking methodologies, “but simply to those with land,” leaving no room for young entrepreneurs to access the financial system.
It is likely that none of these bills will be passed into law until a new government is formed. But the election period is Myanmar is a protracted one. While polling is in November, a new government does not have to be formed until the end of January. This new legislature, made up of lawmakers elected in November, will then vote for a new president, and the new administration will take over in March.
Myanmar’s lawmakers are not always so slow in passing new legislation. In the weeks before parliament was dissolved, legislators passed a set of four highly controversial laws related to race and religion, pushed through by hardline monks who have called for the social exclusion of minority Muslims.
These four laws, which were swiftly signed into law by the president, will make it harder for people to convert out of their religion and seek to curb marriage between Buddhist women and those outside their faith. The package of laws also includes a population control law, which human rights campaigners say will be used against the country’s minority Muslims—particularly the stateless Rohingya.
The laws have been widely criticized by foreign governments, rights groups and the United Nations. Human Rights Watch said that the laws would “entrench discrimination based on religion” and “violate internationally protected rights to privacy and religious beliefs”.
