2012-11-14 22:24:58 - Cambodia, Laos and Myanmar Business Forecast Report Q4 2012 - a new country guide report on companiesandmarkets.com
The ruling Cambodian People´s Party´s overwhelming victory in recent communal elections suggests there is little threat to its tight grip on power as the 2013 general elections approach. This is a positive for foreign investors; however, there are growing risks of public unrest as the issue of land rights and forced evictions intensifies.
An improving business environment will help the country to attract investment from overseas, especially from China, boosting the country´s long-term growth prospects. Cambodia remains one of the brightest frontier market growth stories in Asia. The introduction of the country´s stock exchange in 2011 will help to improve access to corporate financing over the long term and attract greater levels of foreign private sector investment. Laos Reform momentum continues
apace in Laos as the government keeps up efforts to strengthen the business environment and attract more foreign investment.
The government´s moves to increase the country´s export base and diversify the economy away from the resource sector and towards more labour-intensive industries are likely to provide for a more sustainable model of growth. Alongside a public censure of certain government departments, the government has taken corrective measures to clean up the tourism industry, and made a material effort to provide more transparency. This suggests Laos may be shaping up for political reform, and if these changes are sustainable, it will help to shore up business confidence and usher in greater foreign investment.
We also view positively the government´s moves to strengthen bilateral relations with countries aside from those with which it shares a border. This, we believe, will prevent Laos from being over-reliant, both economically and politically, on countries such as China and Vietnam.
In August, Myanmar´s President Thein Sein bolstered his reform credentials by reshuffling his cabinet to further sideline known hard-liners while replacing them with more progressive allies. However, shortly thereafter the president suffered a strong rebuke as the lower house voted to impeach his self-appointed constitution tribunal.
We also believe that risks of a schism within the ruling Union Solidarity and Development Party are growing, as individual personalities such as Shwe Mann seek increased influence. In terms of economic reforms, the government has struggled to come to an agreement on its long-planned overhaul of the foreign investment law, and we caution that the business environment in Yangon and throughout the rest of the country remains extremely challenging as a result of emerging asset price bubbles and the country´s extremely limited infrastructure.
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