Myanmar to delay law that would have allowed more foreign investment

Myanmar will delay a long-awaited reform that would open the door further to foreign investment, two officials told Reuters, a move likely to disappoint cash-starved businesses amid growing doubts over the management of the economy by the country's leader, Aung San Suu Kyi.

The postponement of the corporate reform, which would have allowed foreign companies to take up to a 35 percent stake in Myanmar companies, will likely deal a fresh blow to investor confidence in Suu Kyi's administration.

Economic reform is a key goal for her to complete Myanmar's democratic transition after decades of isolation under military rule.

The delay underscores the daunting challenge facing Suu Kyi, whose promise of a reformist government that would attract foreign investment is under threat.

Some aid to Myanmar is already being withheld and investors are concerned that the sanctions that long hobbled the country's economy will be reinstated over its treatment of its Rohingya minority.

A Myanmar companies law, which could bring much-needed foreign capital to the country after decades of mismanagement by the former military junta, was approved last week by President Htin Kyaw without a commencement date specified.

Aung Naing Oo, head of Myanmar's Directorate of Investment and Company Administration (DICA), told Reuters the authorities may not be ready to implement the new rules until as late as August 2018, after bylaws were prepared and a company registry that he said was vital to enforcement was completed.

"We really want to implement the law as soon as possible but there are many things for us to do," he said, declining to elaborate what bylaws were needed. He said the government would make sure implementation would be no later than August 1. "We have to make sure the reform is on the right track."

Myo Min, director of DICA, said the authorities needed up to eight months to "work on the guidance and operating manual" for the country's first modern online registry, an initiative driven by the Asian Development Bank to electronically revamp the country's company registry to boost transparency.

The law includes a first set of modern corporate governance regulations, in some parts replacing rules made over a century ago, to bring the country's business regulatory framework closer to international standards.

At issue is a clause that allows foreigners to take up to a 35 percent share in local companies, which would give local businesses access to a larger capital pool and open up the door for mergers and acquisitions in sectors that are in urgent need of an injection of cash from banking to property.