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U.S. Eases Myanmar Sanctions

By AYE AYE WIN and YADANA HTUN 05/18/12 11:07 AM ET AP

YANGON, Myanmar — Officials and businessmen in Myanmar welcomed U.S. plans to ease economic sanctions, saying Friday it will benefit both countries in a market long cut off from most Western investment.

However, human rights activists are wary and some exporters in Myanmar say they may not immediately benefit.

President Barack Obama on Thursday announced he was easing an investment ban and naming the first U.S. ambassador to Myanmar in 22 years to reward it for democratic reforms.

Myanmar opposition leader Aung San Suu Kyi's election to parliament last month prompted Western governments to roll back years of hard-hitting restrictions against the Asian nation also known as Burma, which is emerging from decades of authoritarian rule and diplomatic isolation.

Its former military regime was shunned for its human rights abuses and failure to hand over power to a democratically elected government – a situation that began to change after a 2010 general election.

U.S. Secretary of State Hillary Rodham Clinton said in Washington that the U.S. was suspending sanctions on export of American financial services and investment across all sectors of the Myanmar economy – including in the resource-rich country's lucrative oil, gas and mining sectors. She spoke after meeting with Myanmar Foreign Minister Wunna Maung Lwin.

Other Western nations and the European Union had already taken similar moves, putting pressure on Washington to do likewise so U.S. companies would not lose out to foreign competitors in this latest frontier market.

Despite the easing of restrictions, U.S. companies would still be barred from doing business with firms associated with the country's powerful military. The White House also announced it was keeping the legal framework of hard-hitting sanctions in place for now, saying Myanmar's democratic reforms are still "nascent."

The ban on financial transactions had been a particular hurdle for doing business in Myanmar, since the dollar is the world's main trading currency. Transactions through other currencies raised costs to uncompetitive levels, Nay Zin Latt, an adviser to Thein Sein, said Friday.

"It's very beneficial if U.S. companies come and invest here. We can get technology, new markets and management skills," he said. U.S. companies will also be able to help Myanmar products reach a larger global export market, he said.

For foreign investors, Myanmar has the advantage of a being a low-cost economy, important for such mass market commodities as textiles and footwear.

However, restrictions that still remain on trade that will keep the American export market out of the reach of Myanmar producers, pointed out Myint Soe, a factory owner who is chairman of Myanmar's Garment Manufacturers Association Garment Factory Association.

Along with the provisional nature of the suspension, "Who will dare to come and invest here?" he asked, saying local businessmen won't immediately benefit.

"We haven't achieved our goal of getting made-in-Burma products into the U.S. market," he said.

Human rights groups and exiled Myanmar activists have been strongly critical of easing economic controls. They are particularly concerned about fighting in northern Myanmar between the government and members of the Kachin ethnic minority.

"We urge the U.S. government to be cautious in taking new directions. We urge that the easing of sanctions needs to match up with reality in Burma," said Sunai Phasuk, a researcher in Bangkok for U.S.-based Human Rights Watch, highlighting the "full-scale" armed conflict in Kachin State.

A U.S.-based group, United to End Genocide, said "President Obama's premature action to remove the investment ban on Burma is overly optimistic.

"It ignores the reality of the situation on the ground, including ongoing atrocities," the group's president, Tom Andrews, said in a prepared statement. "This is a dangerous decision that is likely to further exacerbate human rights abuses and has left the U.S. government without any leverage in the future."

The opposition party of Aung San Suu Kyi welcomed the naming of a new ambassador to Myanmar and the easing of U.S. sanctions.

Nyan Win, a spokesman for the National League for Democracy, said that easing sanctions now is timely but pressure on calls for the release of political prisoners and ending ethnic conflict in ethnic regions should continue.

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Myanmar opposition leader Aung San Suu Kyi smiles as she leaves after visiting a polling station in the constituency where she stands as a candidate in Kawhmu on April 1, 2012. Voting began in Myanmar elections seen as a test of the government's budding reforms, with opposition leader Aung San Suu Kyi standing for a seat in parliament for the first time. (CHRISTOPHE ARCHAMBAULT/AFP/Getty Images)
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Filed by Eline Gordts  |