BANGKOK (Reuters) - Just days after releasing Nobel laureate Aung San Suu Kyi from house arrest, Myanmar's military rulers have a message for investors with a steely appetite for risk: their isolated country is open for business.
After entering a new era of military-managed democracy following a Nov. 7 election, the secretive junta is courting investment and touting the potential of a country rich in natural gas, timber and minerals with urgent infrastructure needs.
Myanmar Prime Minister Thein Sein gave a rare speech at a regional summit on Wednesday in the Cambodian capital Phnom Penh to promote the former Burma's business credentials and trumpet plans for an investment-friendly regulatory framework.
"We encourage participation from the private sector," Thein Sein told leaders and business executives from Vietnam, Cambodia, Thailand and Laos packed into a conference room. "We are creating a pro-business environment in order to work together to get much more business and investment in the region."
After decades off the investment radar, Myanmar appears ready to open its doors to foreign businesses, a step analysts say is easier said than done in a country blighted by decades of economic mismanagement and closed off by Western sanctions.
Sean Turnell, an expert on Myanmar's economy at Sydney's Macquarie University, cautions that Myanmar is vastly different from other Asian frontier markets such as Vietnam, whose communist government opened to foreign investment in the 1990s.
Since then, multinationals have piled into Vietnam, keen to break ground on factories and hire some of Asia's cheapest workers. Today, Vietnam boasts gleaming shopping malls, a $33 billion stock market and a surplus of foreign-run factories.
"In Vietnam, there may be problems with democracy, but that country has latched onto the Southeast Asian 'tiger' economy model which is about identifying external markets and investing in manufacturing with a view to employing lots of people and getting into the global production chain," said Turnell.
"But in Burma, it has been about dividing up the domestic economy rather than any sort of outward projection. The regime lacks that developmental mindset. That explains a lot their decisions, which don't make any economic sense. That is what separates them from Vietnam," he said.
U.S., European, and Australian sanctions, imposed in response to human rights abuses, have stifled Western investment in the country of 50 million people that just over 50 years ago was the world's biggest rice exporter and major energy producer.
The embargoes, however, have not stopped the flow of money. China, Thailand and India are big investors. Official data show China pumped $8.2 billion into Myanmar January to May, including $5 billion in hydropower and $2.2 billion in oil and gas.
But Saturday's release of Suu Kyi may offer a chance to recalibrate those sanctions, which critics say have hurt ordinary people by allowing the junta to monopolise the economy.
Some diplomats expect the pro-democracy leader to play a pivotal role in pushing for a relaxing of embargoes. She hinted at such a day after her release. "If people really want sanctions to be lifted, I will consider this," she told reporters.
The military junta rarely comments on sanctions. But diplomats in Myanmar say growing dependence on China is a concern for the generals, who also want an end to arms embargoes that limit their access to modern weapons technology, say analysts.
Washington is wasting no time and said on Monday it was ready to engage with the new government, but made no mention of sanctions.
The recently formed Myanmar Business Council handed out glossy pamphlets this week to investors in a ballroom of the Cambodiana Hotel after its director delivered a PowerPoint presentation on investment opportunities in Myanmar.
"After 50 years of isolation, Myanmar's doors have been unlocked" read one pamphlet. "Myanmar is not a 'maybe market', it will be a 'must have' market."
"Unfavourable" Western sanctions offer opportunities for its closest neighbours, the Council added, encouraging Thai investors to use the baht currency instead of dollars. It said Myanmar was "just like Thailand 20 years ago", offering tax breaks.
But analysts, diplomats and executives with experience in Myanmar identify a host of risks for those trying to get in on the ground floor: corruption, fiscal mismanagement, poor infrastructure, cronyism, a rudimentary banking system, an unclear regulatory framework and opaque foreign investment laws.
"The major problem is political uncertainty. We never know what those generals want and if they will change their mind. It's very risky," said a trader at a leading Thai sugar miller who declined to be identified.
This year, the junta set up the Myanmar Sugarcane Enterprise, a think tank, ahead of a free-trade zone in the Association of South East Asian Nations, whose newest members -- Cambodia, Laos, Vietnam and Myanmar -- must eliminate tariffs by 2015.
Asked how Myanmar is preparing for competition, Yi Yi Mon, the organisation's general manger, told Reuters: "We are planning to increase sugar production." But she declined to elaborate.
While neighbouring Thailand is the world's biggest sugar exporter, producing about 7 million tonnes a year, Myanmar produces just 800,000 tonnes from 6 major millers mostly run or held by the military. Unlike nearby Cambodia and Laos, it has done little to attract foreign investment.
Some analysts see hints of change. The government sold off more than 300 state assets in the last year in areas like shipping, aviation, banking and real estate.
Although the deals are likely to favour businessmen close to the regime, they could also generate interest among U.S. and European investors willing to take a hit on their reputation to pursue gains in a country long seen as an international pariah because of its poor human rights record.
Additional reporting by Prak Chan Thul in Phnom Penh and Apornrath Phoonphongphiphat in Bangkok. Editing by Andrew Marshall