There have been significant political changes in Burma over the past year and a half. Aung San Suu Kyi is a member of parliament, protests and unions have become legal and press freedoms have substantially increased. Following the partial lifting of sanctions, investors are ready to engage. However, while the investment environment outlook is risk positive for sectors such as oil and gas, there are still hurdles that investors will have to navigate.
Given Burma's significant need to develop almost every kind of infrastructure, opportunities in this sector are significant. Japan’s write-off of $3.7 billion of debt was in part an effort to increase its access to infrastructure projects – the write off was accompanied by an increase in Japanese companies bidding for contracts with “favored” status. More basic infrastructure projects with shorter timeframes are likely to face lower regulatory and contract risks, as they will have less exposure to changing regulations, generally have less environmental impact, and are typically perceived as benefiting local communities. Such projects include road construction, river dredging, and the building of river shipping facilities.
Rail, port and dam projects are likely to face more significant regulatory and contract risks due to their longer exposure to the shifting regulatory environment, greater likelihood of attracting environmental protests, and the fact that most such projects to date have not been seen as in the interests of Burma.
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