Myanmar: A Risky Mineral Extraction Market

A new bill submitted by Myanmar's Ministry of Mines could make the Southeast Asian nation more attractive to those looking to invest in its mineral extraction sector. Limited surveys conducted by foreign geologists show that Myanmar possesses tin, lead, nickel, gold, manganese and substantial copper and coal reserves. Mineral extraction is the country's third-largest destination for foreign direct investment, but regulatory barriers have kept it from being a significant contributor to gross domestic product.

If the bill becomes law, it would take effect in May 2014, and it would help enrich the regime and its favored private companies. However, some of the most promising reserves are located in Myanmar's restive ethnic regions, and extracting resources from those areas would be difficult. While the government could share profits with insular communities to incentivize cease-fires, many businesses and individuals therein may feel threatened by commercial encroachment. A challenging political environment and unmapped reserves will relegate Myanmar to being a frontier market, but it is a market in which minor foreign players could capitalize on an erstwhile-untapped resource base.