It may take a while for foreign investors to show faith in the new regime in Myanmar, following this week's historic victory of the National League for Democracy (NLD) party in the nation's first democratic elections for more than 50 years.

Key priorities for the country include developing infrastructure to facilitate manufacturing and creating a robust rule of law to provide a stable and predictable platform for investment.

Myles Hankin, Singapore-based corporate partner at law firm DLA Piper, told AsianInvestor the immediate priority is “to peacefully transition to a new government that is recognised as legitimate both domestically and internationally”.

NLD leader Aung San Suu Kyi has been assured by Myanmar’s military rulers that there will be smooth transfer of power and no repeat of the 1990 election, when she won a clear majority that was subsequently over-ruled. Suu Kyi spent 15 of the next 20 years under house arrest.

Hankin said it was difficult to predict the new government’s plans at this point, as its makeup had yet to be determined. However, he noted that Suu Kyi has said that investors should focus on agriculture and rural development.

At present, foreign direct investment (FDI) is coming largely from other Asian countries, including China, Singapore and Thailand. With a peaceful transition to democratic government, it is very likely that Myanmar will attract more investment from Western countries, although Hankin said they may require a longer track record of political and economic stability before deciding to invest.

The amount of FDI from China has actually fallen over the past few years, as Myanmar has moved towards a more democratic free market system, so Hankin said it would be interesting to see whether that trend continued following the NLD's success.

In many respects, Myanmar is building from the ground up, and there will be many foreign investors who will want to see how the new government fares in eradicating corruption and establishing tribunals to deal with ownership disputes.

Hankin agreed that the legal system was one of the key challenges: “Training of lawyers and judges and capacity-building programmes for those in the legal sector are important steps.”

Also critical, he said, is the adoption of domestic legislation to implement the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards – which Myanmar has already ratified – as a further signal to foreign investors that Myanmar is committed to allowing dispute resolution through international arbitration, if desired, instead of domestic courts.

Legislation to provide additional clarity and certainty around the legal framework governing foreign investment is also key.”

The financial sector is another area where a lack of formal lending practices could hold up the necessary investment. Nine foreign banking licences have been issued so far in Myanmar, including those handed to three Japanese banks, Singapore’s UOB and ANZ from Australia.

There are no formal structures in place for private equity investment, so the channels available for foreign investors are limited.

Moreover, the military government had previously announced that the Yangon stock exchange would launch in early December this year, but this may be viewed with skepticism as the opening has been delayed several times already.

Earlier this year, Serge Pun, chairman of Myanmar conglomerate Yoma Strategic Holdings, told AsianInvestor that the stock market would open in July and that his company would be the first to list.