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Operational risk
OVERALL ASSESSMENT: Despite a series of liberalising gestures over the past year or so, business operations in Myanmar remain subject to a very high degree of risk. Parts of the country are no-go zones owing to conflict between the military and ethnic minority militia groups. National elections were held in November 2010 for new houses of parliament, but the polls were rigged in favour of the main pro-military party, the Union Solidarity and Development Party, which now has a dominant position in the new legislature. Government effectiveness is blighted by corruption, and the military's mismanagement of the economy has created a high degree of macroeconomic instability. The judiciary is firmly under the control of the military. Foreign trade and payments are tightly controlled, and there are no local financing options for foreign firms. The taxation regime is highly unpredictable. Skilled labour is in low supply, and the overall quality of infrastructure is inadequate for most modern-day business needs.
SECURITY RISK: Businesses operating in Myanmar face a moderate security risk. Although the military has reached ceasefire agreements with a number of ethnic minority groups, it remains in conflict with some groups in border areas, and this can create serious problems for business operations in the mining and energy sectors. However, there is little risk of this conflict spreading to the country's main urban areas. The major cities have, though, been the centre of a small-scale bombing campaign by unknown groups opposed to the military. Violent crime, although rising, remains low. Organised crime is rife in areas bordering Thailand, Laos and China, with smuggling and drug-trafficking being major problems.
POLITICAL STABILITY RISK: Despite a number of reform initiatives, there is unlikely to be any major changes in the balance of power, with the military regime remaining the dominant force. Simmering tensions, particularly amid rising prices, could again erupt into mass anti-government protests, which would be violently suppressed. Pro-democracy activists are routinely subject to torture and lengthy jail terms. That said, there are signs that the regime is becoming more tolerant of political...