Slowing of Myanmar reforms a risk to business

CFO Innovation Asia staff
13 Jun 2014

Myanmar is undergoing a notable political transition where democratic and economic reforms are intended to facilitate a move towards participatory governance.

Progress with these reforms will make a major impact on the international operators vying for a share of the nation's largely untapped telecom market, including Telenor, PT Telkom and potentially KDDI.

According to Maplecroft’s Country Risk Report, a key risk for investors will be the vexed issue of constitutional amendments to allow opposition leader Aung San Suu Kyi to seek the presidency.

If the military-backed government fails to allow transition to civilian rule, the risks of international isolation and even restoration of sanctions would increase.

Further, while Myanmar is currently adapting its regulatory framework to improve the country’s attractiveness for investors, the process is slow and lacks sufficient transparency.

Additional investor concerns include endemic corruption, low skill base of the workforce and severe underdeveloped infrastructure.

At the societal level, the reform process has allowed deep-seated societal prejudices to emerge and to manifest themselves as violence continues between Buddhists and Muslims.

Such violence can pose risks to personnel in parts of Myanmar, notably Rakhine state, and also pose reputational risks to businesses investing in the country.

Forcible acquisition of land remains a significant reputational risk, particularly in mining, logging, and large-scale infrastructure development.

Companies operating on land formally seized by the government are also exposed to possible legal disputes in the future, says Maplecroft.

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