Myanmar-based executives and investors are bracing for a business slowdown in the run-up to next year’s general elections, as uncertainty rises over the Southeast Asian nation’s political and policy directions.

The election, tentatively scheduled for November 2020, will essentially pit de facto national leader Aung San Suu Kyi’s National League for Democracy (NLD) against the military-aligned Union Solidarity and Development Party (USDP), the country’s two major political parties.

The NLD romped to victory in 2015 in the nation’s first competitive election in 25 years, a shift from quasi-military to quasi-democratic rule that many then hoped would fuel a foreign investment-led economic boom.

But Suu Kyi’s ability and willingness to orchestrate that boom has been constrained by a power-sharing arrangement with the autonomous military, which controls the crucial defense, home affairs and border affairs ministries, as well as her singular focus on flagging peace process.

“The slowdown in activity is almost inevitable and local businesses are already using this as an excuse to limit their activities,” said Tony Picon, who runs a Myanmar-focused property consultancy, said about the uncertain pre-election environment.

Myanmar’s net foreign direct investment (FDI) fell to 1.8% of gross domestic product (GDP) last year, down from 6% in 2017, World Bank data shows.

Aung San Suu Kyi (R) visits a Suzuki car factory in the Thilawa special economic zone on the outskirts of Yangon, August 21, 2019. Photo: AFP/Stringer

That downturn, local and foreign businesspeople say, is being driven as much by uncertainty over who will be the next government’s top policymakers as the potential for election-related disruptions.

Thaw Zin, who owns a restaurant and serviced apartment in Yangon, said local businesses have rising concerns about social and political instability in the months leading up to and after the polls.

“Instability of any kind drives customers away from businesses, which is not what we want. We are reliant upon tourists, so fewer of them means less revenue for us,” he told Asia Times.

There are also concerns that pending regulatory reforms and other government business-related decisions could slow or halt as Suu Kyi and NLD politicians gear up for the 2020 campaign trail.

Myanmar faces a US$120 billion infrastructure gap for energy, transport and telecommunications through 2030, according to the Asia Development Bank, a multilateral lender.

Yet there have been glimmers of foreign investment hope and confidence. Philippine conglomerate Ayala Corporation recently announced on November 14 that it will take 20% stakes in two local companies – Yoma Strategic and FMI – for a total of US$238 million.

Next year’s electoral stakes are high. Thousands of seats will be up for grabs in the nation’s two union-level parliaments and regional legislatures during a single day of voting in November.

Those contests, some fear, could spark new rounds of instability, particularly if USDP candidates start to sense another NLD rout is on the cards.

National League for Democracy (NLD) members gather in Yangon for its second nationwide congress on June 23, 2018. Photo: AFP/Ye Aung Thu

“These will be crucial elections for Myanmar, likely more competed than 2015,” Greg Kehailia, former country director of the Carter Center, a US-based democracy monitoring organization, told Asia Times.

“There is a risk to see an increase in online disinformation and inflammatory speech. Election stakeholders need to start preparing to address attempts to distort public opinion, manipulate political behavior, incite violence or suppress political participation,” he said.

Myanmar has not yet implemented sufficient electoral reforms after decades of direct military rule, Kehailia warned.

The legal framework and regulations, including campaign finance laws, will be even more critical if the elections are more hotly contested than in 2015, he says.

Kehailia said the election cycle is expected to mirror the 2015 process, with the official campaign period starting no later than September and polls held in November.

Myanmar’s election organizer, the 15-member Union Election Commission (UEC), is not legally obliged to release an election timeline, which critics say is contributing to rising business uncertainty about the polls.

An electoral timetable would give “some confidence” to investors, commented one European executive.

“The international community, however, is skeptical about election announcements and promises and hence the reassurance given by the timetable will be limited,” the executive said. “But that is better than nothing and would thus be welcomed.”

Security personnel guarding the entrance to the Yangon-Dala bridge construction site in Dala township on the outskirts of Yangon. Photo: AFP/Sai Aung Main

After the 2015 elections, there were questions about the incoming NLD-led administration’s commitment to legacy infrastructure projects signed by military-aligned then-president Thein Sein.

Now, since businesses and investors widely believe the NLD will again win the most parliamentary seats and the largest share of the vote, few foresee a radical change in policy direction.

But the potential for a hotly contested election result is a rising risk.

That’s because local electoral laws place spending limits on individual candidates but not their affiliated political parties. Moreover, campaign finance reporting does not require accounting for party activities, even if they are election related.

Election rules also place very few restrictions on company donations to politicians, beyond a ban on donations from foreign organizations or companies.

The government still has a lot to do to bring its election laws in line with the UN Convention against Corruption, which calls on states to “enhance transparency in the funding of candidates for elected public office and, where applicable, the funding of political parties.”

Senior corporate sources say they are concerned about the potential risks and reputational damage of making contributions to political parties or government bodies in light of a recently released UN Fact-Finding Mission report.

A street food vendor attends customers at their cart next to a building construction site in Yangon in June 2019. Photo: by Ye Aung Thu

It detailed how the military has used its own companies, foreign firms and arms deals to “support brutal operations against ethnic groups that constitute serious crimes under international law, bypassing civilian oversight and evading accountability.” (Naypyidaw rejected the report’s findings.)

Meanwhile, some foreign executives in Yangon have said they do not want to “end up like Kirin”, the Japanese brewer accused by Amnesty International for making military donations via its subsidiary Myanmar Brewery “at the height of an ethnic cleansing campaign against the Rohingya population in late 2017.”

The UN report highlighted the need for companies to put better governance in place around their donations, including political party contributions. Foreign investors are also known to be paying more attention to donations made by their local business partners.

Vicky Bowman, director of the Myanmar Centre for Responsible Business, says the responsibility lies with Myanmar companies and their owners to be ethical about their contributions in the absence of proper regulations.

This extends to contributions in kind, such as flying politicians for free on a company’s airline, to offering gratis hotels or other facilities, to lending their company employees to assist political parties and campaigns.

“If the company decides to make a donation, this should be approved at the owner and board level, and ideally should be published in line with the guidance from Transparency International,” she told Asia Times, referring to the global corruption watchdog.

In 2015, the NLD campaigned on a platform of “change” but did little to articulate what that would mean for the economy.

With FDI well below official targets and investor sentiment negatively hit by the Rohingya refugee crisis some critics have referred to as “genocide”, some of Suu Kyi’s ministers are bidding to reposition themselves as business-friendly.

Finance Minister Soe Win said at a recent investment conference in Naypyidaw that the government is “ready to lend our helping hands to all investors, both foreign and local, to go through this transformation” to become “more transparent, more competitive and more rules and regulation-based.”

Myanmar’s soldiers march in a formation during a parade to mark the country’s 74th Armed Forces Day in Naypyidaw on March 27, 2019. Photo: AFP/Thet Aung

It’s not clear yet how many, if any, candidates will run on pro-business campaign messages.

“For business to have more confidence in the next administration, politicians should publish manifestos detailing what exactly they will do if elected in terms of the economy … at both the union level and state or regional level,” businessman Thaw Zin said.

But that’s not necessarily on the cards, analysts and executives say.

Picon predicts candidates will likely keep their economic policies vague, in line with the party-centric campaigns seen in 2015 and to avoid being tied to campaign trail promises they may or may not be able to deliver once in office.