* US approves investment by energy, mining, banking firms
* Myanmar welcomes "excellent" decision
* Rights groups say US move overlooks wars on minorities
* GE says looking at opportunities in health, energy
* Caterpillar aims to step up financial presence
By Andrew Quinn and Alison Leung
WASHINGTON/HONG KONG, May 18 The suspension of
U.S. sanctions barring investment in Myanmar in response to
political reforms in the poor Southeast Asian state opens the
door to U.S. companies queuing to scout for business in one of
the last frontier markets.
Industrial heavyweights including General Electric Co
and Caterpillar Inc are joining rivals 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.
GE, 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 in April.
Even before the suspension of sanctions, Caterpillar sold
its bulldozers and excavators in Myanmar through an independent
dealer - an arrangement it uses around the world. The suspension
will allow the world's biggest maker of earth-moving equipment
to use its financial services arm to help that dealer expand.
"There had been prohibitions on financial services support,
and as we understand it these would be lifted (with the
suspension of sanctions) and we believe this will give us an
opportunity to support that dealer better, to better allow them
to expand and grow and support the customers in the market,"
said Jim Dugan, a spokesman for the Peoria, Illinois-based
U.S. Secretary of State Hillary Clinton announced the
suspension of sanctions at a news briefing on Thursday with
Myanmar Foreign Minister Wunna Maung Lwin, on his long-isolated
nation's first official visit to Washington in decades.
"Today we say to American business: invest in Burma and do
it responsibly," Clinton said.
Myanmar, also 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 ... We are sure Ford will find opportunities to
participate in this ongoing transformation."
Hotel chains and airlines are also looking for a chance to
move in -- earlier this year executives of Starwood Hotels &
Resorts and Marriott International said they
were interested in opening properties in the country.
"The country won't be the same in five years as global
competition to make investments and provide services heats up as
a result of this U.S. policy decision," said Kevin Mitchell,
chairman of the Business Travel Coalition.
The International Monetary Fund has estimated Myanmar's
gross domestic product at a little more than $50 billion.
Neighbouring Thailand, with a population of about 67 million,
has a GDP of $348 billion.
SANCTIONS SUSPENDED, NOT LIFTED
Clinton said Washington would issue a general licence 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 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."
Myanmar welcomed the announcement.
"It is excellent," Industry Minister Soe Thein said in an
interview with Reuters in the capital, Naypyitaw. "This morning
I heard the news and I am very, very happy.
"For the investor, financial sanctions are very important.
Because of them, I haven't been able to move ... The U.S. can
invest in a lot of areas."
Soe Thein, who met GE's Rice in Naypyitaw last month, said
the company was interested in leasing generators to supply
electricity to Yangon. An official in Yangon said the project
would consist of four generators of 25 megawatts each.
President Barack Obama, elaborating on the policy shift,
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".
Myanmar's 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 cease-fires with ethnic
minority rebels. Nobel Peace Prize laureate and pro-democracy
leader Aung San Suu Kyi has a seat in parliament.
"TOOL TO MAINTAIN PRESSURE"
Suu Kyi's National League for Democracy, Myanmar's biggest
opposition force, won a 1990 election by a landslide but the
military refused to cede power and for two decades suppressed
the party's activities, jailing many of its members.
In response, the United States and other Western countries
imposed sanctions that drove the country closer to China. Now,
Derek Mitchell, the State Department's coordinator for policy
towards Myanmar, is to be nominated U.S. ambassador.
Pro-democracy advocates have urged the United States to move
cautiously, saying sanctions are an important tool to maintain
pressure on the 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, according to a confidential report seen
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, a deputy central bank governor, told Reuters in an
Hans Vriens, a Dutch consultant and adviser to European
companies and the Myanmar government, said the 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.
Some human rights activists remain wary.
U.S. Campaign for Burma, which opposes wholesale lifting of
sanctions until the government makes deeper reforms, said
Myanmar's army continues to wage a 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.