On Nov. 8, Myanmar’s citizens flocked to the polling stations to their vote in the country’s first free nationwide election in 25 years. The triumph of Aung San Suu Kyi’s opposition party, the national league for democracy, marks a historic moment in Myanmar’s history, and sends a clear signal that its people yearn for change. The new government is expected to waste no time in addressing the country’s long-standing social and political issues, while building on the raft of economic and legal reforms that were introduced by the outgoing semi-civilian government. Kanishk Verghese reports

The votes have been cast, and the people of Myanmar have spoken. The results from Myanmar’s first free election in 25 years, held on Nov. 8, saw Aung San Suu Kyi’s opposition party National League for Democracy (NLD) claim a thumping victory over the current semi-civilian government led by President Thein Sein. The resounding win gives the NLD an absolute majority in parliament, and sends a clear message that Myanmar’s citizens have placed their trust in Suu Kyi and the NLD to bring about change.

The honeymoon period will not last for long, and the new government will be expected to move swiftly to embark on ambitious political, economic and social reforms. While Myanmar, a nation of 53 million people, has experienced considerable economic progress over the past five years under the current regime, much of the investment has been concentrated in the cities of Yangon and Mandalay, and most of the benefits from the reforms have not flowed down to the general public at large, says Chester Toh, partner and co-head of Rajah & Tann’s Myanmar practice.

To ensure that the economic reforms will benefit the general public and attract more foreign investment, the NLD is expected to focus on the manufacturing, hospitality, healthcare and education sectors, as well as clamp down on widespread corruption that continues to stifle the country’s growth. Furthermore, the new government will look to build on the economic liberalisation initiated by Thein Sein’s government in the areas of infrastructure, telecommunications and banking, as well as the development of three Special Economic Zones – Thilawa, Dawei and Kyaukphyu.

The NLD will also look to focus on agriculture as it has been a neglected sector, and given that part of its political base is made up of the rural poor, says Romain Caillaud, a senior director at FTI Consulting in Singapore, who has conducted a number of political, regulatory and business risk assessments and due diligence investigations in Myanmar. “If done in conjunction with improvement in the legal framework for land ownership, agriculture reforms could have a significant positive impact on Myanmar’s economy. Power is another sector where the next government will want to create quick wins, though the focus might be on small to mid-size renewable and gas projects, rather than hydropower or coal projects that will likely come under scrutiny and criticism by environmental activists close to and/or from the NLD,” says Caillaud.

A SMOOTH TRANSITION

While the year ahead holds much promise, all eyes are on the transition to the new NLD government, which will form at the end of March 2016, as well as the implementation of the new party’s policies, says Goh Wanjing, a partner at WongPartnership and the firm’s Myanmar Country Representative.

Despite the NLD’s landslide victory, the military is still guaranteed 25 percent of the seats in parliament. Furthermore, under the constitution, the powerful ministries of interior, defense and border security are still controlled by the military. “The key barometer of how successful the NLD-led government will be is how it will work with the military as they essentially co-exist in parliament,” says Rajah & Tann’s Toh. President Thein Sein, whose semi-civilian government took power when the military junta stepped aside in 2011, has said he would respect the result and hold reconciliation talks with Suu Kyi soon. Such a clear endorsement of the NLD’s victory could smooth the lengthy post-election transition.

The NLD also has the task of selecting a presidential candidate, as the charismatic Suu Kyi cannot become president herself under a constitution drafted by the military, although she has said she will run the country anyway through a proxy chosen by her party.

THE CHALLENGES AHEAD

Besides the fact that the military remains entrenched in Myanmar’s political structure, the lack of experience in running a government could present a challenge to the NLD, says Caillaud. “Inside the NLD, Suu Kyi needs to form a team of advisers, ministers and other key personnel who are competent and trusted. Suu Kyi will also need to strike a balance between promoting further liberalisation of the economy to attract foreign investors and dislodging a number of powerful domestic vested interests, while managing protectionist sentiments among the local business community in particular, but also the general population as a whole,” he says.

A second concern is corruption that remains rampant throughout government and leads to opaque decisions, the inadequate allocation of resources and detrimental collusion between some powerful local companies and officials, notes Caillaud. “Suu Kyi is a very moralistic individual and she will likely try to clean up ministries upon her taking power; though she is also pragmatic and understands she cannot rock the boat too much if she wants the government to function. In this area however, I expect positive developments for foreign investors with more transparency, less opacity, and increasingly a level playing field and more rule of law,” he says.

Foreign investors will also look for greater transparency surrounding Myanmar’s oftenmurky legal system. “Foreign investors can sometimes get a bit bogged down with the legal and bureaucratic processes. Myanmar can be tricky to navigate because the laws can be a bit vague and sometimes require extra clarification from the authorities,” says Goh. “Therefore, it is crucial to have patience, and to have a plan B or plan C. The process itself can be a little frustrating or time-consuming, and probably needs to be refined,” she adds.

REFINING THE LAWS

Indeed, the current government has been regularly refining its foreign investment regime to make it friendlier to foreign investors by opening new sectors up to foreign investment and clarifying a number of grey areas, says Toh. And as recently as November 2015, Myanmar’s Ministry of Commerce issued a notification to allow foreign companies to enter into a joint venture with a local company to import and sell certain goods in the agriculture and medical sectors.

Myanmar is also expected to combine its Foreign Investment Law and the investment law for Myanmar citizens into one piece of legislation, says Goh. “We expect that once that is done, the government will probably set out new categories for foreign investment. They will need to strike a balance between the local companies as well as the host of foreign companies that want to enter the market,” she adds.

With foreign investors streaming in and many more watching eagerly from the sidelines, law firms have been quick to follow their clients into Myanmar. The past three years alone have seen more than 20 international and regional firms set up shop in Yangon. “The influx of law firms into Myanmar shows that there is a sustained interest in the market,” says WongPartnership’s Goh, whose firm opened a Yangon office in June last year. “Whether the NLD’s victory will act as a catalyst for more law firms to enter will depend on the social and economic policies it puts in place and how smooth the transition to the new government is. We’ll certainly see more competition in the legal space, but if all things go well in 2016, there will be enough work across a number of areas for all the law firms. We are optimistic and excited for the years ahead.”