2013-01-15 13:21:17 - Cambodia, Laos and Myanmar Business Forecast Report Q1 2013 - a new country guide report on companiesandmarkets.com
Despite a newly formed opposition coalition, we believe that the Cambodian People´s Party is almost certain to maintain its dominance at the 2013 elections, which we see as a positive for the country´s business environment in the near term despite the risks it poses in terms of further social unrest over the medium term. Given its relatively stable business environment, we expect foreign investment into Cambodia to help the country achieve average real GDP growth of 6.6% over the next five years. Chinese investment in infrastructure, spurred on by the close relationship between the Cambodian and Chinese governments, and Japanese investment in the manufacturing sector, are two areas of major growth potential. Moreover, the mining industry in Cambodia looks poised
to take off following Angkor Gold´s discovery of a significant gold deposit in the northeast Ratanakiri Province.
Laos 2013 is set to be a watershed year for Laos, as the country is expected to gain entry to the World Trade Organization. Its ascension to the international trade body is likely to accord the country significant benefits, such as increased market access and greater foreign investment. We highlight, however, that we are unlikely to witness an immediate and material improvement in the country´s business environment, which continues to be dogged by inefficient government bureaucracy, pervasive corruption and a lack of intellectual property rights. Meanwhile, in the political sphere, we find that Vientiane´s strengthening bilateral relations with a growing list of countries bode well for both its political and economic prospects. That said, we highlight that the government´s posture towards development of the domestic hydropower sector is worth monitoring given its regional political implications.
US President Barack Obama´s visit to Myanmar in November 2012 signified a significant milestone in the country´s nascent reform drive that only recently would have been considered unthinkable. However, this is not to say that the country does not face a spate of mounting challenges, including ongoing ethnic violence in Rakhine state, direct conflicts with separatist groups such as the Kachin Independence Organization, and friction within the Union Solidarity and Development Party-led government. At the same time, the reform drive has maintained its positive momentum, as heralded by the widely anticipated signing of a new foreign investment law in November. The new law, which provides a clearer framework for such wide-ranging issues as real estate leasing and minimum quantum for direct investment, will be a boon for foreigners wishing to enter the market. Nevertheless, we continue to stress that Myanmar´s business environment is an extremely challenging one, and even in light of the new law, the system remains relatively opaque on the whole.
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