U Nay Win Tun, Chairman, Ruby Dragon Group of Companies, on the changing environment for business and investment: Interview

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U Nay Win Tun, Chairman, Ruby Dragon Group of Companies

Interview: U Nay Win Tun

What measures still need to be taken to promote investment in mining, and how can the decentralisation process play a role in this?

U NAY WIN TUN: There are 14 states in Myanmar, 13 of which can produce mining resources. If we can manage to introduce value-added services, newer technology and a more modern banking system, the hope is that all of these can become productive. There are also widespread calls for Myanmar’s mining law to be updated and made more attractive to potential prospectors. While the mining law has in fact been updated, the ministry has not codified it yet. The law is expected to be passed within six months.

As a result, our economy is in something of a stalemate. The law is limiting the penetration of international investors, as it is currently not profitable to enter the market here. Consequently, underdeveloped states with access to substantial resources have yet to be empowered. The process of decentralisation will be a key component in the success of the country and of the mining industry in particular.

The new legislation will create an environment of empowerment. The previous law was not profitable for any kind of business. Whether you were a large or small enterprise, your chances of success in the sector were frequently harmed by unfair practices. So the implementation of the law will be critical for the development of just and fair extractive industries. If the law is good it will create demand and promote international investment.

Another area that needs major attention is the banking system. While we would like to develop value-added services, financial limitations have historically made this very difficult. By improving the banking system and updating the law, we will encourage foreign investment, in turn boosting value-added services and creating more jobs, improving the use of technology and raising business standards. While previously the maximum permit length for foreign mining activity was five years, we are currently negotiating to have it increased to 50 years.

How has the business environment evolved in recent times, and how do mining companies stand to benefit from these changes?

NAY WIN TUN: First of all, it is important to point out that while there have been significant changes, they have not happened overnight. Although major strides have been taken in recent years, the process of improving the business environment began some time ago. From 1962 until the 1990s, private entities were prohibited, so even to think about fair business was a challenge. However, in 1990 when companies were given permission to do business, things began to change. In the wake of this important first step, although many local companies were established, they were operating in a restricted and controlled economy, and as a result of sanctions there was very little interaction with international companies. One of the biggest obstacles for many companies was their lack of exposure to international practices and to the benefits of dealing with foreign markets. As such, many local businesses have not had much experience with the latest technologies and financial tools.

In the four or five years since the economy opened to the outside world, there has been a major increase in trade activity. However, as I mentioned before, the one piece of the puzzle that still needs to be addressed is legislation. In order for the country to reach its potential, we need to establish effective laws and policies to govern business activity. Most of the 14 states and divisions in Myanmar are resourcerich, so there is a lot of ground to be covered. As we start to familiarise ourselves with international practices, the priority is to advance our systems so that we can cooperate with investors on a greater scale and conduct business in line with international standards, in turn creating successful, disciplined organisations.

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The Report: Myanmar 2017

Mining chapter from The Report: Myanmar 2017

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The Report

This article is from the Mining chapter of The Report: Myanmar 2017. Explore other chapters from this report.

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