A chief source of confusion has been a list of restricted activities, in which foreign investment apparently would be capped.
The latest version of the law reduces from 13 to 11 the number of "restricted" or "forbidden" areas for foreign investors, but also gives the Myanmar Investment Commission the power to restrict any manufacturing or services business it decides Myanmar nationals can do, according to a copy of the legislation.
Farming, livestock breeding, and fishing activities that can be undertaken by Myanmar nationals are singled out for restrictions in the new legislation. The remaining restrictions apply to ill-defined businesses that might harm people's health, traditional cultures or the environment; deal in toxic waste or dangerous chemicals; import technology, medicine or equipment that has not been approved for use outside the country; and businesses that lie within 10 miles of the border.
In restricted sectors, foreign investors "can propose" a 50-50 joint venture, according to the legislation. This is up from 49 percent foreign ownership in a prior version, but the new wording has left some wondering whether a foreign investor could also apply for a majority stake in a restricted joint venture. In unrestricted sectors, the law permits wholly-owned foreign businesses or joint ventures with a minimum 35 percent foreign stake.
Kyaw Zaw Maung, the investment commission director, said he fears the restrictions are so broad they could force foreign garment manufacturers to enter into joint ventures, hindering the growth of a sector that could create tens of thousands of local jobs.
The legislation also requires foreign companies to hire locals. A quarter of skilled positions must be filled by Myanmar nationals during the first two years of operation, 50 percent during the second two years, and 75 percent thereafter. All unskilled positions must be filled by locals.
The law would sweeten tax incentives for foreign investors, increasing the minimum tax holiday from three years to five years, and would allow foreign investors to lease land for 50 years, extendable for two ten year terms. There is no minimum required investment. An earlier draft had stipulated a $5 million minimum, which critics said would benefit Myanmar's large "crony" businesses by limiting competition from small and medium-sized businesses that are also a crucial engine of job creation.
The legislation would give the investment commission sweeping powers over licensing and regulating foreign business, including approving which bank a company does business with and empowering it to blacklist foreign companies or withdraw their tax incentives.
Serge Pun, a businessman who chairs the SPA group, which includes one of Myanmar's few listed companies — Singapore-traded Yoma Strategic Holdings — called the law "wishy-washy," and said it "breeds more confusion."
Of particular concern to him is the provision for 50-50 partnerships in restricted sectors, which he said would likely lead to deadlock between the foreign and local partners.
"There's still a lot of flaws," Pun said. "Everybody wants everything to go at breakneck speed. I think it's better for us to debate a little more."