(MENAFN- Gulf Times) Investors' darling and top frontier market Myanmar will be holding general elections on November 8, and investors are all ears.
The country, after decades of military rule, has become a more or less open economy since 2011 when the junta loosened its grip on local businesses and allowed foreign investors in, many of which have since pumped billions of dollars in the underdeveloped nation € among them Qatar's mobile phone giant Ooredoo.
But with elections on the horizon, investors are jittery whether the volatile stability in the country can be maintained. Over the past months, investment activity has already been subdued, and investors and businesses have taken on a wait-and-see approach.
It is expected € and history shows € that the ruling Union Solidarity and Development Party (USDP) of President Thein Sein, established in 2010 as some sort of liberalised successor organisation of the junta, will be confronted with significant losses in its competition with the National League for Democracy (NLD) under opposition leader and Nobel Peace Prize Laureate Aung San Suu Kyi.
"We don't expect a result from this election like the result we got in 2010," USDP General Secretary Maung Maung Thein told reporters at a press conference in Yangon on July 29, referring to a landslide victory five years ago € but without a real competitor as the NLD boycotted the polls.
Suu Kyi on July 20 registered for this year's elections in an apparent move to keep her seat in parliament and challenge the ruling military-backed party.
She cannot become president as she is banned by the Constitution to take the top job because her late husband was and her two sons are British.
The NLD has still yet to present a presidential candidate.
For the USDP, Shwe Mann, an important figure in the junta and Speaker of the House of Representatives, will run as candidate in a quest to take over from President Thein Sein who will probably step aside when his term ends, at least he will not run in the polls due to health concerns.
Shwe Mann submitted his application to compete in the polls to the Election Commission on July 30.
If, as expected, Suu Kyi's party gains enough constituency seats to oust the USDP, some political and economic instability can indeed be the result.
Much will depend on how the army responds to the reduced representation in the parliament and thus in businesses within their influence sphere € which are many. While USDP contender Shwe Mann is widely seen as a reformist, he is also known to have a large business network across the country and his own "unscrupulous" interests, as opposition politicians put it. Despite the high growth potential of Myanmar, it is clear to investors that political power struggles after the elections could lead to a rude awakening.
While there has been a lot of foreign direct investment and positive business sentiment in the past four years, observers warn that there are fragile fundaments upon which this optimism is built.
Much of Myanmar's economy is still fuelled by opium trade and illicit gems export, and corruption remains rampant.
The country's currency, the kyat, has continuously lost value against the dollar and other major currencies since it has been floated in 2012.
There are still a lot of structural problems such as lack of transparent regulations, violent internal conflicts and bureaucratic hurdles, resulting in the country's low ranking of 177th (from 189 economies) in the latest World Bank's Doing Business Guide.
On the latest Euromoney Country Risks core, Myanmar's political and economic risk indicators have fallen to just 24.7 out of 100, whereby a lower score indicates higher risk; the government stability score has been falling with the elections due.
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