Both houses of Burma’s Parliament have passed a new foreign investment bill that is expected to become law as early as next week, according to legislators.
The bill, based on investment laws introduced in 1988, aims to boost the country’s economy by offering tax breaks and guarantees to overseas investors.
Speaking to The Irrawaddy on Friday, Dr Aye Maung, an Upper House MP from the Rakhine Nationalities Development Party, said the new bill was approved by the Upper House after being reviewed and corrected by Lower House MPs.
He said the next step is for the speaker of the Upper House, Khin Aung Myint, to send the bill to President Thein Sein for approval. If the president accepts the bill in its present form within seven days of receiving it, it will become law.
Under the proposed law, investors will be granted a five-year tax exemption and land leases of up to 50 years. The 1988 investment laws offered only three-year tax holidays and 30-year leases.
Experts described the draft law as fair, said Aye Maung, adding that it would likely be seen by potential investors as very welcoming.
Although the law imposes certain restrictions, such as health and safety regulations and provisions aimed at protecting ethnic traditions, investors will be free to negotiate with the government, he added.
The law also seeks to increase employment opportunities for the local workforce by requiring foreign companies to do most of their hiring inside the country.
Although some jobs demanding special expertise may go to foreign workers, companies are expected to train Burmese workers to fill these positions within a fixed period of time.
The bill is just the latest measure by the government to overhaul the country’s economy. On April 1, it abolished an official exchange-rate regime that was seen as an impediment to international trade. Next month, it is expected to allow the private sector to set up insurance companies.
However, economic observers say that foreign companies will remain reluctant to invest heavily in Burma until there is a further easing of sanctions by Western nations.
Besides sanctions, there are also other issues that need to be addressed before Burma can expect to see a major influx of investment into the country, according to economic analyst Khin Maung Nyo.
“I don’t think that there will be a huge increase in investment in the short term because of a lack of infrastructure and the weakness of the financial system. And the new investment law won’t be enough to instill confidence in investors unless they can be sure that it’s more than just words,” he said.