The European Union will launch negotiations this week for an investment pact with Myanmar, the EU’s top trade representative said on Monday, a deal aimed at giving European firms preferential access to one of Asia’s final frontier markets.
Myanmar, an underdeveloped country closed off until 2012 to Western firms due to trade sanctions, is on the radar of many European companies seeking access to restricted sectors and guarantees against risks in an uncertain climate.
“We’ll negotiate preferential agreements and special deals, mostly because we have quite a lot to offer them. We are big investors and for a country like Myanmar, it’s of the utmost importance to have investors,” EU Trade Commissioner Karel De Gucht said in an interview in Hanoi.
Located between the booming economies of India and China and offering low wages, big agriculture and tourism potential and natural resources like oil, gas, teak, copper and gemstones, Myanmar’s opening after 49 years of military rule has seen a rush of western investor interest.
The country is looking to review investment legislation more than a year after passing a foreign investment law that caused rumbles among local tycoons and small firms worried about competition.
Many foreign firms have yet to commit fully to Myanmar, however, concerned about red tape and poor power and transport infrastructure. They are also looking for safeguards in an environment where cronyism exists among a political and economic elite with ties to the still-powerful army.
“Our investors must be protected and it’s important to Myanmar because if the investments aren’t protected, they simply won’t happen,” De Gucht said.
“If you don’t have that it’s very difficult to take the risk of putting in money from abroad.”
De Gucht was in Hanoi to try to advance talks on a free trade agreement with Vietnam which he said both sides were keen to finalise by October after six rounds of negotiations.
Such an agreement has been reached with Singapore and talks on a similar pact were ongoing with Thailand and Malaysia.
The push to finalise the bilateral deals, he said, did not mean the EU had scrapped its initial plan of a trade deal with the Association of South East Asian Nations (ASEAN), the 10-member bloc that covers a region of more than 500 million people, with a combined GDP of over $2 trillion.
“It didn’t work out and we switched to a one-on-one solution,” he said. “The idea is ...once we have agreement with majority of ASEAN members, we can then turn it into a regional agreement and that has been repeatedly discussed.
“We haven’t put this aside, we’ve approached this the other way around. A region-to-region agreement is the ultimate goal.”
De Gucht was due to visit Cambodia on Tuesday, where he said he would relay concerns from EU lawmakers about the rate of land grabs and forced evictions in the country, some of which implicate companies that have benefited from EU trade concessions offered to poorer nations. (Reuters)