With the November 8 vote, Myanmar saw its first truly democratic election in many decades.
As expected, Nobel Laureate Aung San Suu Kyi’s National League for Democracy (NLD) has won a landslide victory in the elections, paving the way for a new government.
To fully appreciate the current political scenario, one must have a grasp of the complex political paradigm within the country. Myanmar has long been embroiled in a struggle between the pro democratic, progressive forces, led by Suu Kyi, and the military junta.
With the NLD officially winning more than 67 percent of the seats in both houses of parliament, it has the majority to form a new government and elect the next president of Myanmar.
Suu Kyi, however, is constitutionally barred from being the president. That is due to a clause in the Constitution that bars any person who is married to a foreign passport holder or has children who hold foreign passports from holding the top post.
While she won’t be eligible to become president, Suu Kyi has however said openly that she will control the government, regardless of her title.
It will be interesting to see how events unfold in the coming days, but one thing is certain overall — the military will still be the key player in Myanmar’s political landscape.
Under the Constitution, the military automatically occupies 25 percent of the parliament seats, giving them power to veto any constitutional change.
Additionally, the military functions as a wholly autonomous entity and holds the power to appoint three of the most important ministerial posts of the country: defense, home affairs, and border affairs.
Therefore, even with the NLD being the majority party in the parliament, Myanmar essentially still remains a limited democracy.
It goes without saying that there is unprecedented speculation as to how the political situation will impact the economic climate in the country.
At present, businesses are struggling as inflation has accelerated to high single digits and the Kyat currency has suffered a massive slide.
Meanwhile, major companies are not sure how the new NLD government will handle foreign investment, although there are hopes that there will be some continuity in policies.
The NLD has vowed to make the Central Bank of Myanmar independent and more transparent, and loosen regulations.
Suu Kyi has especially identified labor intensive businesses such as the textile industry, which at present employs more than 250,000 people, for improvement and expansion so that they can help create new jobs and shore up the overall economy.
It remains to be seen exactly how the ongoing developments in the political scene will play out. With a new Foreign Investment Law and a Companies Act in the drafting stage, on course to be passed by 2016, foreign investors can expect a much freer and FDI-friendly environment, but also ruthless pragmatism.
It is possible that Myanmar will turn the corner and secure its place as a leading emerging economy. But the prospects will depend, to a large extent, on whether the NLD and the military will be able to forge a good working relationship and cooperation.
Myles E. Hankin, Partner of DLA Piper, and Mohammed Hakim, Consultant of DLA Piper, are the co-writers of this article.
– Contact us at [email protected]