When Burma’s new parliament first opened just one year ago, it was roundly dismissed as a front which the country’s authoritarian rulers would use to rubber-stamp their decisions. But this week, as the parliament opens its third session, the international community – and the Burmese themselves – are taking the institution far more seriously.
Why? Because over the past year the country’s new civilian government has exceeded expectations at almost every turn. It has encouraged reform, released political prisoners, and negotiated ceasefires in Burma’s war-torn provinces. Lately it even confirmed that Aung San Suu Kyi, the country’s democracy icon, would be allowed to stand for a parliamentary seat in upcoming by-elections.
Burma still has a long way to go before it can be considered a democracy, but its progress is real and by Burma’s own standards, ground-breaking.
As a result, foreign businesses, as well as governments, are suddenly starting to look at Burma in a new light. The main economic barrier for western companies has been sanctions. But with Australia having already lifted some of its sanctions and the EU and the US now expected to follow suit, the legal and reputational obstacles to doing business in Burma could very soon be swept aside.
There’s another problem, however: Burmese law, which prohibits most foreign companies from operating in the country. This is why the new session of parliament has assumed such importance. Over the next few weeks, parliamentarians will debate two key pieces of legislation to simplify Burma’s restrictive economic policies.
Until these laws are passed, and until US and EU sanctions are dropped, Burma will remain a closed shop to most foreign enterprises. However, fund managers who specialise in frontier markets like Burma have been experiencing a surge in demand from international businesses seeking advice about the country.
As a huge, untapped market, Burma’s potential is obvious. Yet many foreign companies will remain wary. Fifty years of hapless military rule have ruined the country’s education system, isolated Burma from global supply chains, and crippled its infrastructure. So manufacturers that require a skilled workforce and good transportation links will continue to build their factories elsewhere.
However, returns could be quicker and easier in other sectors. For example, tourism, real estate, finance, energy, and resource extraction.
Whether these investments in Burma, potentially worth hundreds of billions of dollars, actually go ahead now rests in the hands of a parliament that, just a year ago, they all said was irrelevant.