Continued foot-dragging on the future of EU sanctions on Burma, coupled with lingering controversy within the bloc over the ethics of investing there, is placing European companies at a disadvantage, the EU’s Commissioner for Development has said.

Andris Piebalgs says sanctions would be lifted “as soon as possible” if nascent reforms enacted by the Burmese government continue apace. He said however that it “would require a lot of steps” to get companies to “look again” at Burma, given scepticism of the quality of changes there.

That could be to the detriment of European business, he warned in an interview with Reuters today. “I believe this country is big enough for opportunities and has a lot of wealth potential, but at the same time companies will be extremely conservative, and that’s where I’m a bit afraid that we will lose time in so far as direct investment could make a difference.”

The EU has already relaxed a visa ban on top government ministers, including President Thein Sein, as a reward for developments in the country since the new government came to power in March last year. That could pave the way for a gradual lifting of all sanctions over the coming year, after which investment could sweep in.

But despite reports of Rangoon hotels bursting at the seams with business delegations, there is a feeling that the predicted “rush” to Burma may not be so dramatic after all: the country is yet to overhaul archaic investment laws, and armed conflict continues in the border regions that many consider a veritable goldmine of natural energy potential.

Moreover, entrenched corruption across all rungs of Burmese society does little to aid the image of an unstable investment environment. Piebalgs conceded that European companies “would not come by [themselves], because they would say, ‘Well, how stable [is] change?’”.

Concerns that Burma, which is eager to open up to western trade and investment, could become victim to a neoliberal hijack will be reinforced by a sense that EU businesses are increasing looking to Southeast Asian markets replete with cheap labour and malleable investment regulations in the wake of the financial crisis now rocking Europe.

European banks, including Germany’s Commerzbank AG and Britain’s Standard Chartered PL, have already shown interest in scoping out opportunities in Burma. The Asia head of Standard Charter told reporters in January that the bank would “very happy to get back there [Burma]“.

The feeling that Burma may be prone to exploitation by foreign investors is shared by Surin Pitsuwan, head of the Association of Southeast Asian Nations (ASEAN). He told the Myanmar Times this week that unmonitored investment could bring “more inequality and more disruption”.

“I’m worried about all these people who are already gathering in Bangkok and Singapore and who are bent on exploiting Myanmar’s [Burma’s] resources and opportunities,” he said.

Piebalgs said that wealth from ventures into the energy sector should be shared equally among the population, a sentiment that Nobel Prize winning economist Joseph Stiglitz, who leaves Burma on Tuesday after a five-day visit, has pressed on the government. To date the vast majority of output from energy projects has gone to neighbouring countries, while the government has been accused by campaigners of siphoning the proceeds into offshore accounts in Singapore.