Myanmar Seeks US Investments

ASEAN

Myanmar, a strategically important state on the Bay of Bengal and located on the southern borders of China, has been targeting the US as an important source of foreign investment.

A forum entitled “Myanmar – Asia’s Last Frontier” organised under the patronage of the Myanmar Investment Commission (MIC) and the President’s Office was held at the end of September in New York to assure US investors that the country will stay the course on its political and economic changes, and welcomes investors from low-cost and labour intensive industries such as garments, textiles and footwear. This strategy aims to create entry-level jobs and increase economic output in the short and medium term. However, whether this will lead to the establishment of sustainable industries for higher skilled work, and ward off competition from countries with lower labour costs is debatable.

According to the Directorate of Investment and Company Administration (DICA) in Myanmar, the total direct investment by US companies in Myanmar remains at slightly more than US$243 million as of June 2014, which is the same as it was in 2001. When compared to the cumulative investment of $14.25 billion made by Chinese companies – the top foreign investor in Myanmar – this sum seems paltry, amounting to only 1.7% of what the Chinese have put in.

DICA officials believe that the small amount has been due to US companies preferring to invest in Myanmar through their regional headquarters based in other Southeast Asian countries. This is to take advantage of the ease of project investigation and negotiation in these countries.

Be that as it may, Myanmar’s wish to lessen its overdependence on China is possible only when other countries, including Japan, are prepared to invest in the country. After it restored diplomatic relations and lifted most economic sanctions against Myanmar, the US government has been encouraging, albeit guardedly, investment in the country through exhortatory, diplomatic and practical means. It has increased the number of visits by trade officials and delegations of US businessmen and established a commercial service office at the US embassy in Rangoon and the American Chamber of Commerce Myanmar chapter.

However, the US government imposes certain requirements upon US companies investing in Myanmar. The American Chamber of Commerce spells out the principles on its website: compliance with national laws; respect for the individual and dignity of workers; provision of training and education for employees; adherence to environmentally responsible practices; and the promotion of high standards of professionalism and business ethics. The companies’ efforts to uphold these have to be detailed in public reports.

Moreover, US firms are not permitted to make new investments with the Burmese Ministry of Defence, state or non-state armed groups, or entities owned 50 percent or more by any of the above. Americans are still prohibited from dealing with blocked persons, including both listed Specially Designated Nationals (SDNs) as well as entities owned 50 percent or more by an SDN.

President Obama’s comments during his attendance at the East Asia Summit in Nay Pyi Taw reveals that, as far as the US is concerned, the political situation in Myanmar requires much more work before the country could be considered to be sailing smoothly towards democracy and the rule of law. Prior to President Obama’s visit, commentators were already pointing out the damage to media freedom (the shooting of a Burmese journalist by the military), peace (sectarian violence and institutionalised persecution of the Rohingya as well as fighting in certain ethnic states) and democracy (the failure to make changes in the 2008 constitution) that had been occurring in recent months.

The President underlined the importance of these issues, claiming that the prohibition of persons with children of a different nationality running for president ‘doesn’t make sense’ and that the discrimination of the Rohingya should not be part of how the country views ethnic relations. In light of this, it seems unlikely that the Myanmar government has as yet succeeded in convincing the US to remove remaining economic sanctions.

Dr. Su-Ann Oh is a visiting fellow at the Institute of Southeast Asian Studies (ISEAS) in Singapore.