Myanmar's parliament on Friday adopted a much anticipated foreign direct investment law that is crucial to the government's ambitious plans for economic expansion in one of Asia's poorest countries.

The law drops several provisions in the original draft that had raised fears it could deter investors. The law was seen as one of parliament's most urgent tasks and was passed on the last day of its current session.

One proposal dropped from the law would have required a $5 million minimum initial investment outlay. The final version also allows foreign parties to hold a 50 percent stake in joint ventures rather than limiting them to a proposed 49 percent.

Elected President Thein Sein launched economic and political reforms when he took office last year after almost five decades of military rule, foreign sanctions and restrictive laws that kept the economy stagnant. Myanmar has an inefficient agricultural sector and small industrial base, and most of its export earnings come from extractive industries, especially natural gas.

Western nations earlier this year eased economic sanctions instituted against the former military regime, lifting another barrier to foreign investment. Reforms to the financial system, especially the jettisoning of an onerous dual exchange rate system, were also made to encourage investors.

Another progressive aspect of the new law allows foreign investors to lease land for an initial period of 50 years with an option to renew, compared to 35 years under old rules.

"What Myanmar needs is a law that will attract new investment rather than restrict it," said Myint Soe, chairman of the Myanmar Garment Association and an executive member of the Myanmar Chamber of Commerce and Industry. "I welcome the fact that the amended law has dropped the regulation that requires $5 million startup initial capital."

Myint Soe said that allowing 50 percent foreign equity in joint ventures was also conducive to attracting foreign investors, who might be wary if the law tilted in favor of too much protection for local entrepreneurs.

While the new law, which must be signed by Thein Sein, is considered a major step forward, Myanmar still needs to strengthen its legal framework, bolster institutions and improve infrastructure such as communications and transportation to further upgrade the investment climate.