Elizabeth Broomhall looks at the potential for Asia's biggest untapped market and what is holding firms back

After five decades of military rule which cut it off from much of the rest of the world, Myanmar, previously known as Burma, appears to be looking forward to a period of relative peace and prosperity. 

Following a series of far-reaching political reforms, which started opening up the resource-rich country in 2011, Myanmar – once known for its appalling human rights record, tyranny under military rule and media censorship – has seen US and EU sanctions eased, while interest from the international business community is mounting. 

The introduction of a new foreign investment law, allowing foreigners 100% ownership of their businesses, has been particularly significant. The new law, approved by President Thein Sein last November, also allows long land leases and options for tax relief.

Law firms say the new foreign investment regime, coupled with the country's strategic location between the fast developing economies of India and China, will be important in attracting spending by non-nationals, and in turn, their own attention. Equally significant will be Myanmar's wealth of natural resources and its urgent need for infrastructure development – not to mention its huge untapped domestic consumer market and its potential as a manufacturing hub.

Those to have already announced plans to enter the market include Singapore firm Rajah & Tann, Malaysia's ZICOlaw, Hong Kong outfit Charltons and US player Duane Morris Selvam. While Rajah & Tann has teamed up with local firm NK Legal to create the rebranded entity Rajah & Tann NK Legal, ZICOlaw has launched independently with a team of seconded and local lawyers. 

Taking a similar approach is Duane Morris, which has a Myanmar team on the ground and is due to relocate one partner and one counsel from its network. It hopes to open for business in April with two offices: one in the current capital Naypyidaw and one in the commercial centre Yangon.

Firms potentially interested in opening or doing deals in the market include Herbert Smith Freehills, Allen & Overy, Hogan Lovells, Baker & McKenzie, Gibson Dunn & Crutcher, Watson Farley & Williams and Berwin Leighton Paisner – though none have plans to launch in the country yet.

Of the firms named, Bakers is probably the closest to an opening, with five local Myanmar lawyers being trained in Thailand to handle a mix of transactional, advisory and intellectual property (IP) work.

cook-clive-cutout-web"The firm has been looking at Myanmar as an opportunity for the last 18 months," said Bangkok-based senior consultant Clive Cook (pictured).

"We currently have 14 offices in Asia and Myanmar is one of the last major untapped markets. It's certainly a jurisdiction where we will give active consideration to establishing an office, but we haven't made that decision yet. 

"[Up until now] deals have been very stop-start; clients express interest, but it takes a long time for them to work out what to do. They're quite cautious and conservative, and the process is very slow. But it's now gathering momentum and the new foreign investment regulations definitely will help the position."

Christopher Osborne (pictured), a Thailand-based corporate partner at Watson Farley & Williams, also cites slow dealflow as a key reason for law firms holding back, as well as looming 2015 elections: "In the short term, I can't see many firms setting up there. [At the moment], we can happily service it from Singapore.

"In a perfect world, it would be good to have an office there, but it's a question of efficient allocation of resources and the amount of work you're going to have on an ongoing basis.

"We see a lot of investment standing on the sidelines, ready to go. But what's holding the investment back at the moment is the pace at which the relevant laws are being introduced."

Other problems include difficulties sourcing local talent. While there is a whole spectrum of different standards in relation to responsiveness and quality of advice, the market is visibly lacking lawyers with an international education, English-language skills and transactional experience. 

"It's all still at the very preliminary stages," says Hong Kong corporate partner Michael Aldrich at Hogan Lovells, which plans to make a decision on whether to open in Myanmar in the next 12 months. "You have excellent IP lawyers in Myanmar, but there has been very little experience with corporate and finance work, largely because of the US and UN embargo." 

Many partners, though, believe it is only a matter of time until law firms start entering the country in force, despite the challenges, with some anticipating that Myanmar's legal framework could overtake those of its regional counterparts. 

Cook says: "The legal system, if updated, has the potential to leapfrog over some of Myanmar's Asian competitors because it has the framework at least to provide the rule of law, and is based upon the English law system, so is very familiar to Western investors. 

"For most firms, initially they will be reliant on foreign clients. But there will be more work from the Burmese Government as it invests in infrastructure, and then there will be a number of Myanmar clients. Over time, that client base has significant potential." 

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MYANMAR – FAST FACTS

Population 54.5 million

Capital Naypyidaw 

GDP $54bn (£36bn) 

Proved crude oil reserves 50 million barrels 

Proved natural gas reserves 283.2bn cubic metres 

Labour force 33.41 million 

Exports $8.529bn (£5.71bn)

Current opportunities Energy, mining, telecoms, infrastructure and manufacturing

Law market entry requirements Firms must hire local lawyers and get approval from Attorney General

All figures are 2012 estimates (based on CIA data)