Rohingya migrant women and children from Myanmar at a confinement camp at Bayeun, in Indonesia's Aceh province after being rescued at sea. Credit:Chaideer Mahyuddin Coming ahead of November's general election, the changes add to uncertainty for investors, from General Electric to Coca-Cola who are expected to bring $US8 billion ($10.4 billion) into the country this fiscal year, up from $US1.4 billion when sanctions were eased in 2012. "The optimism otherwise apparent in the last few years risks being displaced by a feeling that, deep down, not that much has changed in Myanmar," said Sean Turnell, an associate professor of economics at Macquarie University in Sydney who has advised the US Congress on the country. "These laws add to perceptions of political and social instability. Never good news for investors of course." The population law was enacted amid international pressure on Myanmar for its treatment of Rohingya Muslims, who are denied citizenship and are at the centre of a regional humanitarian crisis as they flee western Rakhine state by sea. While many predicted the government would be tested in seeking to broker lasting peace with the nation's 17 ethnic armies, the flare up in religious violence that followed the end of a half-century of military rule surprised many.

Rohingya children pose for the camera at the Kutupalong refugee camp, Bangladesh, in May. Credit:Rafiqur Rahman It has put scrutiny on a government already under pressure to move forward with democratic reforms and stage a free and fair election in November, the first nationwide poll that opposition leader Aung San Suu Kyi's party will contest since 1990. The new parliament - which will still have 25 per cent of seats devoted to the military - will select the next president, though Suu Kyi is constitutionally barred from taking the role. The race and religion bills "reflect the distance between international norms and deep-rooted issues of identity that are now only coming to the fore because of the space allowed for interest groups and mobilisation under Myanmar's reforms," said Nyantha Maw Lin, managing director for Myanmar at Vriens and Partners, a regional corporate advisory. The risk of more violence is "worrisome" but clashes tend to happen away from major urban areas, he said. "Known areas and regions where there have been tensions and outbreaks of violence, such as Rakhine state, may drive off much-needed investment."

The office of the United Nations High Commissioner for Human Rights urged Myanmar this week to "send a clear message against hate speech" by outlawing "advocacy of national, racial or religious hatred that constitutes incitement to discrimination, hostility or violence." Under the new law, local authorities can carry out surveys to determine if their region is "unbalanced" due to a large number of migrants, a high birth rate or a fast population growth rate. They can ask the government to mandate that women in the region wait at least three years between babies. Myanmar has 51.5 million people. While Muslims officially make up 4 per cent of the population, the actual number is thought be higher. It is unclear what the punishment would be for breaking the rules. The law doesn't single out a particular religion or ethnicity, though rights groups say its target is clear. "This law, which is rooted in discrimination and is likely to be implemented in a discriminatory fashion, provides a clear basis for the government to continue its targeted persecution of minority populations, including Rohingya and other Burmese Muslims," said Charles Santiago, a legislator in Malaysia and chairman of the group Asean Parliamentarians for Human Rights.

Myanmar denies that it discriminates against any Muslims. Ye Htut, Myanmar's information minister and President Thein Sein's spokesman, said he would not comment on the new law. Still, hundreds have been killed and tens of thousands displaced in recent years as sometimes minor disputes between Buddhist and Muslim communities that had lived side-by-side for generations spiralled into riots in which entire neighbourhoods were burned. Some of the worst violence has been in Rakhine, near the border with Bangladesh and home to the Rohingya. Myanmar says the Rohingya are Bengali migrants who illegally entered the country. Even in areas untouched by the violence, there is tension. May Pale Thwe, a 43-year-old Muslim woman in Yangon, said when she walks down the street people glance at each other with "suspicious eyes" and when she hails a taxi she can be greeted with an anti-Muslim rant. "Before the conflicts, we didn't have stress and just went about our lives," she said. "The harmony has been destroyed and the level of trust has plummeted."