INTERNATIONAL ARBITRATION 1/3LY
KNOWN UNKNOWNS : FORE IGN INVESTMENT AND ARBI TRAT ION IN MYANMAR
In recent years, Myanmar’s economy has grown in leaps and bounds – and so with it has its legal and arbitration landscape. However, despite this significant progress, Myanmar has a long way to go in terms of implementing best practice arbitral laws and offering investors similar levels of protection to that of its neighbouring economies. INTO THE GLOBAL ECONOMIC FOLD Myanmar’s economy has become an increasingly favoured investment destination. In 2014, Myanmar’s gross domestic product grew7.7%, drivenmostly by significant investment into infrastructure and property, service sectors, andmanufacturing, which has benefitted from increasing flows of foreign direct investment (more than one new garment factory opening on average per week). Myanmar’s national planning initiative expects a 9.3% increase in economic growth for 2015 - 2016, with the Asian Development Bank and theWorld Bank forecasting 8.3% and 8% respectively. These figures were unfathomable less than ten years ago, following serious economic and political unrest which gave rise to the so-called ‘Saffron Revolution’. This led to the imposition of economic sanctions andwidespread international condemnation of themilitary junta, which, over its long tenure, eroded the rule of law inMyanmar. The end of Myanmar’smilitary rule in 2011 has seen significant democratic reforms and economic changes in the country. Various trade sanctions imposed by the EU and the United States have been lifted, placing the country’s vast natural resources in the sights of foreign investors. Such natural resources include large oil reserves, and proven, thoughmainly undeveloped, gas reserves, as well as agriculture, timber, hydro-electricity and gems. Myanmar’s sizeable population also provides for a large and relatively newmarket for consumer goods. DespiteMyanmar’s economic growth, development remains hindered by corruption in the country, an issue whichweighs heavily on foreign investors looking to invest in the jurisdiction. In 2014, Myanmar’s Corruption Perceptions Index ranking was 156 out of 175 (a ranking shared equallywith Cambodia and Zimbabwe). In a bid to combat corruption, Myanmar became a signatory to the UN Convention against Corruption at the beginning of 2013 and is currently implementing the Extractive Industries Transparency Initiative (although is yet to havemet its requirements). Further, in February 2015, Myanmar’s Parliament released a draft investment lawbill with the intention of introducing a consistent and transparent legal framework for both domestic and foreign investors (this bill will eventually replace the Foreign Investment Law 2012 currently regulating foreign investment inMyanmar). Such efforts will go far in combatting corruption inMyanmar; however, there remains serious concern among foreign investors that the jurisdiction continues to pose a risk to foreign investment.
MICHAEL HORN, RUPERT COLDWELL AND LUKE C ARBON, PARTNER AND A SSOCIATES AT CLYDE & CO
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