Myanmar’s Mining Reforms Stall, Hindering Foreign Investment

A new mining law that would clarify rules and ease restrictions for foreign investors looking to tap into the lucrative sector remains frozen in Myanmar’s legislature, said an official from the country’s Ministry of Mines.

The law, which was proposed more than two years ago, is still being debated by Myanmar’s parliament said Win Htein, the director general of the ministry. “[Lawmakers] have not been able to come to a decision on resource sharing,” added Win Htein.

Ethnic minority representatives, he said, have pushed for greater controls over resources in their states, but others have resisted and would rather keep precious gems, jade and other valuable assets under central government control. These minerals are largely concentrated in ethnic minority regions like Kachin and Shan states, where armed ethnic groups continue to clash with government troops, in part over resources.

The delayed law—considered a crucial precursor to foreign investors’ entering Myanmar’s mining sector—highlights the continued difficulty for large foreign companies hoping to extract the country’s rich deposits of minerals and precious stones. Although reforms geared toward opening the country’s once-military-dominated economy to outsiders have been under way for over four years, key components such as the mining law still remain in deadlock.

Myanmar’s current mining law dates back to 1994. It includes no protections for foreign investors and shuts them out of important sectors such as coal and gold, forcing foreigners to partner with local companies if they are interested in these materials. It also includes a clause that states that the government is entitled to a share of the production—even though the private sector has to put up all the investment for the project—and entitles the government to additional loyalties and taxes.

The new law, if passed, will also clarify the legal framework under which foreign and local companies can mine in Myanmar. Human rights watchdogs and local residents claim the land for these mines, handed out under previous regimes, was often procured through land grabbing.

Tensions over land rights came to head at a copper mine in Monywa, central Myanmar, operated by a Chinese state-owned firm. Residents say they were evicted from their land without adequate compensation, and some continue to resist the project, even after a public relations and social spending push from the company, Wanbao Mining.

Mining is the fifth-largest recipient of foreign direct investment in Myanmar. Win Htein said that the source of this investment still largely comes from Myanmar’s neighbors, including China and Thailand, and he would like to see more Western companies invest in the sector. “We understand that changing this law is a prerequisite for more foreign companies to come into the country,” he said, adding that he hopes the law will be passed before the end of this year.

Analysts have warned foreign investors against hoping for any major legislative change before Myanmar’s upcoming general elections, scheduled for this November.

Source: The Wall Street Journal

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