Myanmar open for US business, but is it a safe bet?
Analysts are warning US businesses to 'do their homework' on the crony-linked businesses and rights abuses that allegedly comprise Myanmar's resource industry.
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But Human Rights Watch called the announcement an "undercut [to] Aung San Suu Kyi" and said the US had "caved to industry pressure." Rights groups also underlined continued government abuses – among them mass arrests, the recent killings of ethnic Rohingya in Arakan State, and the continued detention of political prisoners – as proof that yesterday's decision was a premature one.Skip to next paragraph
In Pictures Myanmar Edges Into the Open
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Why the sudden move?
The green light is expected to qualm US concerns over losing potential business in the country to international competitors, as doing business with MOGE is seen as the only way to gain access to Myanmar's considerable stockpile of energy reserves. When economic sanctions were enacted in 2008, Chevron was the only US company in Myanmar to be exempted, according to the US government (PDF). The Yadana pipeline project, which is owned by French Total (of which Chevron has a 28 percent share), was at the time worth an estimated $500 million in revenue for the Myanmar government.
Now a two-day oil and gas summit is planned for September in the commercial capitol Rangoon (Yangon) – the second such summit this year. At least 40 new exploration and production licenses will be on offer by the Energy Ministry.
Under the new policy, American businesses investing more than $500,000 in Myanmar must disclose information on their activities in the country, among them their protocol on land acquisitions, the environment, human rights, and payments to Myanmar’s government. They are also required to inform the US State Department within 60 days of investing with MOGE. A ban still remains on doing business with companies owned by armed groups or the defense ministry.
Not so problematic?
Such regulations prove that the lifted sanctions may not be so problematic after all, says Aung Naing Oo of the Thailand-based think-tank Vahu Development Institute. "Myanmar needs all kinds of investment, which would help the country's No. 1 priority: economic progress," he said by e-mail from Rangoon. "I think the lifting of restrictions will help the reform process here and contribute to [a] better relationship between the two countries. It is also good for Myanmar in a sense that US companies are the best in terms of transparency and high standards."
Thein Sein told the Financial Times that a "second wave" of reforms was imminent and encouraged all governments to relinquish their sanctions against the country. His government aims to triple the size of its economy within the next five years, a goal Myanmar expert Sean Turnell of Australia's Macquarie University has called "ambitious to the point of utterly unachievable" – its 60 million citizens are among the poorest in Asia, with a per capita GDP of roughly $1,300 (for comparison, the CIA World Factbook reports that per capita GDP in Thailand in 2010 was $8,700).
While immediate benefit to the local community might be seen in smaller finance and investment sectors, among them tourism and commercial activity, Myanmar should be concerned about the prospect of larger oil and gas project abuses, says Wong Aung.
"In current development projects in ethnic areas, there is a total information black-out," he says. "We don't have any kind of disclosure policy on revenue, or information, or impact assessment, and that's not in line with any democratic principles of the needs of the people."