Will November Be a Transformational Month for Myanmar?

November could be an interesting month for Myanmar. This week, representatives from 18 armed, ethnic groups met at the Kachin Independence Organization’s headquarters in the northern town of Laiza to discuss entering into ceasefire negotiations with the government. If peace talks with the government commence, companies that have been wary of investing in the country might reconsider their positions. Signs that an agreement can be reached would be well timed, as they would come during a month when the country is hosting the Myanmar Port Development Forum and the Myanmar Mining Forum. Forums on agribusiness and investing in the country were held in October. Clearly, Naypyidaw is actively courting investors. Though Myanmar has a great deal of mineral wealth, it lacks the infrastructure to exploit it in an efficient manner. A ceasefire agreement combined with the proposed overhaul to the country’s 1994 mining law has the potential to attract investors who are willing to make the long-term commitments necessary to recoup investments in infrastructure.

Under Myanmar’s current mining law the Ministry of Mines serves as a non-equity partner yet it demands approximately 30% of minerals extracted as well as income tax and royalties. In addition to these terms, mining companies are currently responsible for compensating the occupiers of land despite the reality that there is no guide as to what the compensation should be. If reforms to the mining laws are passed and a guideline for compensation is established then the incentive to invest will increase, especially if political instability in the country decreases due to a ceasefire agreement. It is important to note that compensation for land is a difficult subject and it is likely that many people will not receive the compensation that they feel they are owed. This is unfortunate on a humanitarian level and it could contribute to instability in the country on a political and economic level. That said, disturbances from unarmed or poorly armed groups are not nearly as disruptive as the potential for violence posed by heavily armed ethnic militias.

Myanmar is not poor due to a lack of resources or geographic reasons such as being landlocked. The country is underdeveloped due to the decades of political oppression that is now beginning to dissipate. Myanmar has the resources to attract investors and an advantageous, geographic location that can help it to develop quickly. Reforms in the country will see it attain the level of development that its geographic location and resource base affords it. The question is how long this process will take. Trust needs to be built between a variety of factions. This takes time. That said, the process has begun. If a credible ceasefire agreement is reached and if the 1994 mining law is overhauled we could see a great deal of activity in Myanmar which would have a significant effect on trade in the Indian Ocean and economic development in the Asia Pacific region. November has the potential to be the start of this shift.