Despite Myanmar’s great investment potential, the country's business environment is still fraught with risks, particularly given the lack of clarity over investment regulations, says a report by Maplecroft.
Although investors are likely to welcome the adoption of a new Foreign Direct Investment (FDI) law in November 2012, the granting of greater discretionary powers to the Myanmar Investment Commission is a concern.
While liberals amongst the political elite are keen to demonstrate improved governance to create a more favourable foreign investment climate, a Maplecroft report states that a sudden influx of capital and donor financing is likely to increase the avenues for corrupt practice. Senior military officials, who have made considerable political concessions, will want to capitalise on this dynamic.
"Investors therefore risk becoming associated with partners who are complicit in corruption, embezzlement, and human rights violations," says Maplecroft in its risk report on Myanmar.
Whether or not Myanmar will realise its full economic and investment potential will depend, in no small part, on the continuation of the current political and economic liberalisation process, says Maplecroft.
Thousands of political prisoners have been released, agreements have been brokered with armed ethnic minority groups, and regulatory reforms have by and large improved the investment framework for foreign companies, notes the report.