(Reuters) - The suspension of U.S. sanctions barring investment in Myanmar in response to political reforms in the poor southeast Asian state gives a green light to U.S. firms queuing to scout for business in one of the last frontier markets.
“Today we say to American business: invest in Burma and do it responsibly,” Secretary of State Hillary Clinton said at a news briefing on Thursday with Myanmar’s Foreign Minister Wunna Maung Lwin, on his long-isolated nation’s first official visit to Washington in decades as ties between the two countries warm.
U.S. firms are expected to join those from Asia and Europe that have already moved into a market of up to 60 million people in the former British colony. Analysts and experts have said there will be opportunities for foreign companies across the industrial landscape - from energy, mining and construction to agriculture, finance and tourism.
General Electric Co, the biggest U.S. conglomerate, said on Friday it was working with the Myanmar government on possible infrastructure projects and opportunities in the healthcare and energy sectors.
“We are looking at healthcare. We are working with the government on energy. Eventually we will look into all of the infrastructure businesses,” GE Vice-Chairman John Rice told Reuters in Hong Kong. “We are looking at Yangon’s power needs, working with the ministry and the government to figure out how we can help reduce some of the shortages,” said Rice, who runs GE’s global operations and visited Myanmar about a month ago.
Nabil Barakat, CEO of Wamar International, a U.S.-based energy services firm, met senior Myanmar government officials this week to discuss projects including repairing gas-fired power plants in Yangon, local media reported. Myanmar, formerly known as Burma, has huge gas resources, but a dysfunctional power grid, with nationwide rolling blackouts.
A spokesman for automaker Ford Asia told Reuters: “It’s very encouraging to see the rapid and positive developments that are taking place in Myanmar. We are sure Ford will find opportunities to participate in this ongoing transformation.”
The International Monetary Fund has estimated Myanmar’s GDP at a little over $50 billion. Neighboring Thailand, with a population of about 67 million, has a GDP of $348 billion.
Clinton said Washington would issue a general license to permit U.S. investments across Myanmar’s economy, allowing U.S. energy, mining and financial services companies to look for opportunities in an economy which is rapidly re-opening after having been run down by five decades of military rule.
But she stressed the laws underpinning U.S. sanctions on Myanmar would remain - as leverage while pushing the reclusive country’s government further on democratic reforms.
“We are suspending sanctions. We believe that is the appropriate step for us to take today,” Clinton said. “We will be keeping the relevant laws on the books as an insurance policy, but our goal and our commitment is to move as rapidly as we can to expand business and investment opportunities.”
Elaborating on the policy shift, President Barack Obama said Washington would work to “ensure that those who abuse human rights, engage in corruption, interfere with the peace process, or obstruct the reform process do not benefit from increased engagement with the United States”.
The announcement is the latest step in a rapid rapprochement between the United States and Myanmar, which has seen a dramatic series of political reforms in the past year.
Its reformist, quasi-civilian government took office a year ago and has started overhauling its economy, easing media censorship, legalizing trade unions and protests, freeing political prisoners and agreeing to ceasefires with a dozen ethnic rebel armies. Nobel Peace Prize laureate and pro-democracy icon Aung San Suu Kyi has a seat in parliament.
Suu Kyi’s National League for Democracy, Myanmar’s biggest opposition force, won a 1990 election by a landslide but the country’s military refused to cede power and for two decades suppressed the party’s activities, jailing many of its members.
In response to the reforms, the United States has promised to begin unwinding the complex web of U.S. sanctions that have contributed to the country’s isolation and driven it closer to its powerful neighbor, China. Derek Mitchell, the State Department’s coordinator for Burma policy, would be nominated as U.S. ambassador in Myanmar, Clinton said.
Pro-democracy advocates have urged the United States to move cautiously, saying sanctions are an important tool to maintain pressure on Myanmar’s government to follow through on pledges of greater democratic openness.
Illustrating those concerns, the United Nations is investigating reports of possible weapons-related deals between North Korea and Myanmar, and Syria, according to a confidential report seen by Reuters.
In preparation for a likely wave of foreign investment into the resource-rich economy, Myanmar’s central bank said it would seek to weaken its newly floated kyat currency and prevent further rises that could derail economic reforms.
“In the near future there will be a massive inflow of foreign direct investment, and as a result Myanmar’s kyat is expected to appreciate. We will do our best to prevent this,” Nay Aye, one of two deputy central bank governors, told Reuters in an interview. [ID:nL4E8GI3GQ] Nay Aye said foreign banks will be able to form joint ventures in Myanmar by 2014, a year earlier than expected.
Hans Vriens, a Dutch consultant and adviser to both European companies and the Myanmar government, said the nascent open economy was “desperate for foreign investment and especially for Western investment” as it didn’t want to be “a client state of China”.
”The regulatory system is completely outdated,“ Vriens told Reuters. ”It’s difficult to import, difficult to export. They need to modify that most of all. The government means well and they’re very open to asking for advice, but you need to remember that the government is staffed by former generals.
“They know how to fight an insurgency, but they don’t know how to run an economy,” he said.
U.S. Campaign for Burma, a human rights advocacy group that opposes wholesale lifting of sanctions until the government makes deeper reforms, said Myanmar’s army continued to wage a brutal campaign against the Kachin ethnic minority in northern Myanmar and the new U.S. policy would do little to stop it.
Bill Davis, Burma Project director of the group Physicians for Human Rights, said Kachin and other ethnic minority groups whose homelands hold Myanmar’s natural resources told him in interviews they were “still afraid of the government”.
“If the people of Burma do not trust their government, the U.S. administration should not either,” he said.
A senior U.S. official said U.S. investments in Myanmar would be subject to the highest standards of corporate responsibility and that Myanmar’s “bad actors” would remain subject to sanctions on a list that would be regularly updated.
Democratic Senator Jim Webb, an influential lawmaker on Myanmar policy, said Obama should have done more, noting the European Union had already lifted its sanctions.
Additional reporting by Matt Driskill in SINGAPORE, Henry Foy in MUMBAI, Alison Leung in HONG KONG and Jason Szep and Aung Hla Tun in NAYPYITAW; Editing by Cynthia Osterman and Ian Geoghegan