As the Panglong Conference gets underway this week in Myanmar, an initiative spearheaded by State Counselor Aung San Suu Kyi to bring peace and national reconciliation to Myanmar after decades of ethnic separatist civil wars, many analysts are considering what potential scenarios might arise from the conference and what it could mean for investment in the country.

Despite the excluding of three armed ethnic groups, the conference has been fairly well attended by a cross section of stakeholders. For many, this is the start of a long process of trust building between the newly appointed government, the military, and the numerous ethnic groups that make up Myanmar. The hope is for an agreement on a federalist system of governance that allows for greater ruling autonomy by ethnic groups who have until now been largely excluded from governance. The mechanism by which this is achieved is largely up in the air with some supporting a redrafting of the existing constitution and others supporting a completely new model. The military is firmly behind maintaining the current constitution given the protection afforded them under the present framework.

While the exclusion of certain armed groups and the dissatisfaction of others may pose a threat to the process, large scale buy-in to a single proposal based on a federalist democratic union, especially from the military and the government, could force some of these dissenting groups into line as they risk becoming marginalized or replaced as key stakeholders.

The question is, what would a federalist system mean for investment in the country? Well, over the next five years we are likely to see a graduate stabilization of the country should a federalist model gain momentum and should dialogue continue to remain open and fair. Often meaningful engagement alone is enough to set the foundations for stability as previously excluded groups begin to feel included and importantly, heard.

In areas that had previously been difficult to achieve any kind of social licence to operate, this stability will provide new opportunities for engagement and stakeholder trust building by foreign companies who are willing to put the investment and effort into these areas. The companies who can identify the new stakeholders and develop real and viable partnerships with those stakeholders could benefit greatly under the proposed federalist model.

The Tatmadaw (Myanmar Military) will remain a key stakeholder and continue to exert an exceptional amount of economic power through its ownership of two of Myanmar’s largest conglomerates, Myanmar Economic Holding (UMEH) and Myanmar Economic Corporation (MEC). Through these companies, the Tatmadaw will continue to monopolize many key industries and remain central to many investment projects, especially in areas that are currently under strong military control.

Near term instability will continue as Myanmar moves towards a workable framework for reconciliation and regional autonomy but the smart money for foreign investors is on identifying potentially key stakeholders now and starting to develop those relationships for when calmer waters arrive.