Myanmar open for US business, but is it a safe bet?

The Obama administration's decision to allow American businesses to invest in Myanmar after years of sanctions has prompted some regional analysts to warn potential investors of the country's high number of "unacceptable business partners," particularly in the oil and gas sector.

According to the new policy announced yesterday, US businesses will now have free rein to work within Myanmar's oil and gas industry, perhaps most significantly with the giant state-run Myanma Oil and Gas Enterprise (MOGE), the primary revenue source for the previous military government.

US President Obama called yesterday's announcement a first step in "allow[ing] US companies to responsibly do business in Burma [Myanmar]" and credited both Myanmar President Thein Sein and recently elected MP Aung San Suu Kyi for their combined work toward reform in the former military regime. 

But analysts have warned of the myriad crony-linked businesses and rights abuses that allegedly comprise Myanmar's resource industry and warned US companies to "do their homework."

"We need to be very cautious in engaging with this business sector because there are many unacceptable business partners in Burma," says Wong Aung of the Thailand-based Shwe Gas Movement, an activist group that researches the social, economic, and environmental effects of Myanmar's oil and gas industry.

"Many businesses are still controlled by the Burmese military and [its] cronies, and have been for a decade, so it is difficult not to engage with them," says Wong Aung. “We need to pass legislative framework to ensure that they are transparent and accountable and that local people can be protected. [Until then] I do not think the US government can ensure that there are accountable and transparent businesses in [Thein Sein's] administration."

Last month, Ms. Aung San Suu Kyi warned international governments that MOGE "lack[ed] both transparency and accountability" and advised leaders to block all investments with the company until it met international standards – concerns which effectively delivered, until yesterday, what the US Chamber of Commerce called a "de facto investment ban.”

Most significant easing

Surprisingly, Aung San Suu Kyi today called Obama's announcement "nothing significant," but told reporters that the international community should pressure MOGE to be more transparent. She also stressed that the state-owned enterprise should follow International Monetary Fund codes of conduct. 

Yesterday's announcement marks, to date, the most significant easing of US sanctions and strategically precedes US Secretary of State Hillary Clinton's meeting with Thein Sein at the Association of Southeast Asian Nations (ASEAN) summit in Phnom Penh tomorrow. Derek Mitchell, the new US ambassador to Myanmar, arrived in the country yesterday, and a US business delegation is also expected to visit Myanmar this weekend. 

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