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Myanmar: Political stability and investment protection necessary for more investments: EU ambassador
More than a year ago, the Myanmar Times asked the European Union ambassador Roland Kobia for his views on the priorities for the new government. Roland Kobia, a Belgian, became the first resident ambassador of the European Union to Myanmar in September 2013, having previously served in the Democratic Republic of Congo, Kenya and Azerbaijan among others.
He then mentioned political stability and legal security as crucial factors for the country’s economic recovery, and stressed that the government should send the right signals to attract new investments.
A year later, as State Counsellor Aung San Suu Kyi met with leaders in Europe, we sat down with the EU ambassador at the European Chamber of Commerce in Myanmar to look at the developments, including the certainties and security which investors want, negotiations on investment protection agreements, and the NLD’s performance. Not surprisingly, “political stability” is a recurring theme for investors hesitant to invest in parts of the country.
The EU is the biggest investor in ASEAN economies but not in Myanmar. What is holding back EU investment from entering?
Yes, the European Union is the first provider of Foreign Direct Investments (FDIs) in the ASEAN region. It is also the first trading partners of ASEAN countries. When it comes to Myanmar, the EU ranks first among non-Asian investors and represents about 10 percent of all FDIs in Myanmar. Compared to other ASEAN countries, Myanmar indeed needs to catch up and make trade with the EU more active.
There are some reasons for this. Firstly, Myanmar has just come out of decades of isolation so it needs to take its place back in world trade. The overall context was not conducive. When you compare to Thailand, Indonesia or Vietnam, companies have been there for much longer. Another reason was that there was a reputational difficulty for European companies to invest in and do business with Myanmar. The country presented numerous problems in terms of political and economic environments, which made it difficult for most European companies to justify to their clients that their company would produce in or trade with Myanmar. Also, European companies seek to ensure their investments are sustainable in the long-term, and this requires legal certainty as well as a level-playing field for all investors. Following efforts that started in 2011, followed by the 2015 elections, together with progress made by this new administration, both the reputation and core business risks have lowered
significantly.
I personally believe that it is now a good time for businesses to actually make the leap of faith, invest in a growing economy that presents still challenges, but offers opportunities. The risk/ opportunity ratio will probably continue to become more positive.
What are the major challenges for EU companies in Myanmar?
At the legislative level, EU companies are not on equal footing with other firms. They are subject to the same laws but the latter still do not treat all companies equally. On top we don’t have an agreement to protect European investments. Myanmar has signed about 10 investment protection agreements (IPA) with different countries but not yet with the EU. It is not good for EU companies and for Myanmar as it reduces the incentive for companies to invest here. Our companies are not on a level playing field with companies that have investment protection agreements. We have been negotiating this agreement since 2014, and are very close to reaching an agreement, which would probably be the most comprehensive agreement that Myanmar has signed so far, with high international standards. This agreement would indeed bring by far the best economic, social rules to ensure fair trade and the protection of workers in Myanmar.
When I talk to EU companies, and I ask them, ‘what is preventing you from coming to Myanmar?’ One of the things they mention is legal certainty; it’s the protection of their money and their investments. It’s also transparency; it’s the most favourable trade treatment that they would like to have just like other firms which operate under an IPA.
The IPA would provide that for all European companies. European businesses don’t want to be treated better than others, but rather be treated equally and fairly, and enjoy the same level of protection and the most favourable treatment other companies benefit from.
What do EU companies expect from the Myanmar government to do in order to create a good business environment?
Number one priority must be to create a conducive environment for businesses. Number two to ensure legal certainty. Number three to ensure coherence and consistency in the laws: one thing is to develop good laws, but if they contradict each other none of them will have a positive impact.
Myanmar should also develop a more systematic approach to enter into a process of consultation with the companies. Not all members of parliament or government are specialists in the field of economy, which is normal, and hence it is important to have proper consultations with all stakeholders concerned whenever issues such as investment, competition, trademarks or intellectual property are concerned. European companies do that all over the world, and they are ready to help and give technical assistance in Myanmar as well.
Don’t forget that it is a very competitive world out there – if a company wants to invest in Asia and considers Myanmar but is confronted with an unstable political environment, it will look elsewhere. It can go to Thailand, Malaysia, India or Vietnam, and it will be received with open arms. Myanmar needs to get its acts together and maximise the advantages of the GSP/EBA preferential trade scheme. Myanmar will not be an EBA country forever because one day you will move up. Now is the moment to optimise the benefits. The EU has the full empathy for Myanmar’s challenges and we try to be active in many different areas that will promote better trade and investment. But it takes two to dance. Each party must do its bit. And it should be done now because you have sympathy and good will from the international community to help your country. It’s a good moment now for all the Myanmar people, the new government and the parliament to mobilise all their energy to send strong and positive signals to investors across all levels.
Source: http://www.mmtimes.com/index.php/business/25905-political-stability-and-investment-protection-necessary-for-more-investments-eu-ambassador.html