Busi­nesses talk sanc­tions

As the state coun­sel­lor heads to Washington to meet with Pres­i­dent Barack Obama, ty­coons and in­vestors are ea­ger to see re­main­ing US sanc­tions lifted, es­pe­cially on the fledg­ling gar­ment sec­tor.

The Myanmar Times - - Front Page - CHAN MYA HTWE chan­myahtwe@mm­times.com DANIEL DE CARTERET d.de­carteret@mm­times.com – Ad­di­tional re­port­ing Zaw Zaw Htwe and Shoon Naing; trans­la­tion by Win Thaw Tar and Emoon

WITH State Coun­sel­lor Daw Aung San Suu Kyi set to meet US Pres­i­dent Barack Obama in Washington to­day, many in Myan­mar’s business com­mu­nity will be watch­ing closely. The two are set to dis­cuss US sanc­tions that have been in place for decades, and that in­vestors are rear­ing to have re­moved.

Busi­nesses have long called for lift­ing sanc­tions they say crip­ple the econ­omy, with an ad­verse im­pact stretch­ing be­yond those com­pa­nies and in­di­vid­u­als black­listed. Rights groups in­sist that tar­geted sanc­tions must re­main to curb rights abuses by the Ta­madaw and to ap­ply pres­sure on the mil­i­tary’s hold over the 2008 con­sti­tu­tion.

U Khin Shwe, chair of the Zayk­abar com­pany, said that the US must con­sider its strate­gic role in pro­vid­ing a coun­ter­bal­ance to China’s in­flu­ence in the re­gion.

The prom­i­nent real es­tate ty­coon, who re­mains black­listed by the US, said the lo­cal econ­omy was in danger of be­com­ing “lop­sided” and de­pen­dant on its largest trad­ing part­ner, China.

“This is the right time to ease sanc­tions against Myan­mar. If they [the US] re­ally want to help Myan­mar, they need to in­vest in Myan­mar and re­dress the bal­ance, they will have to ease sanc­tions,” he said.

Other Western coun­tries were likely to fol­low the US lead into Myan­mar, cre­at­ing job op­por­tu­ni­ties for the lo­cal econ­omy, U Khin Shwe said.

“But main­tain­ing sanc­tions will leave China in place as our main business part­ner. Poverty will be en­trenched. If sanc­tions are not lifted un­der this demo­cratic gov­ern­ment, when will they be lifted?” he asked.

Busi­nesses ap­pear to have a rea­son to be hope­ful.

At a press brief­ing at the re­cent ASEAN sum­mits in Laos, Ben Rhodes, Obama’s deputy na­tional se­cu­rity ad­vi­sor for strate­gic com­mu­ni­ca­tions, said the US would con­tinue to seek trade op­por­tu­ni­ties with Myan­mar, which in­volves sanc­tions re­lief.

“It’s some­thing that we con­tinue to look at be­cause the pur­pose of the sanc­tions regime was to sup­port a demo­cratic tran­si­tion, and some of the sanc­tions even were tied to the treat­ment of Suu Kyi specif­i­cally,” he said.

The US ap­plies sanc­tions on Myan­mar via the In­ter­na­tional Emer­gency Pow­ers Act (IEEPA), which gives the US Trea­sury power to black­list in­di­vid­u­als and com­pa­nies. The penal­ties be­gan eas­ing in 2011, when the gov­ern­ment, led by then-Pres­i­dent U Thein Sein, ini­ti­ated re­forms that set the coun­try upon a path of demo­cratic tran­si­tion. The US de­cided to main­tain the sanc­tions fol­low­ing the Na­tional League for Democ­racy’s election vic­tory in 2015, but has re­moved a few state-owned en­ter­prises from the black­list. Most of the re­main­ing sanc­tions tar­get com­pa­nies and in­di­vid­u­als tied to the mil­i­tary, and the coun­try’s multi-bil­lion-dol­lar jade in­dus­try.

Myan­mar’s fledg­ing gar­ment in­dus­try is hop­ing that the US will grant ac­cess to the Gen­er­al­ized Sys­tem of Pref­er­ences, which will pave the way for tax priv­i­leges on ex­ports to the world’s largest econ­omy and in turn fuel for­eign in­vest­ment into the in­dus­trial sec­tor.

“Cur­rently in­vestors are not in­ter­ested in in­vest­ing in our business be­cause we don’t have US GSP sta­tus,” said U Aung Win, vice-chair of Myan­mar Gar­ment Man­u­fac­tur­ers As­so­ci­a­tion.

Lo­cal fac­to­ries are strug­gling to com­pete with other gar­ment man­u­fac­tur­ing na­tions that have ben­e­fit­ted from tax pref­er­ences on US ex­ports in the past, he said.

“We are all ea­gerly wait­ing to hear the news about the GSP dur­ing State Coun­sel­lor Daw Aung San Suu Kyi’s trip to the US.”

But the gar­ment sec­tor is just one of many in­dus­tries econ­omy-wide that is sti­fled by the US re­stric­tions, said Eric Rose, lead direc­tor at Herzfeld Ru­bin Mayer & Rose Law Firm in Yan­gon.

“The ef­fect of the US-Burma sanc­tions, im­posed at dif­fer­ent times by four dif­fer­ent US ad­min­is­tra­tions, on Myan­mar’s econ­omy has been enor­mous,” he said in an email. “These sanc­tions have re­sulted, since 1989, in the loss of hun­dreds of thou­sands of jobs, es­pe­cially in the gar­ment in­dus­try, and mostly for women work­ers, the im­pov­er­ish­ment of farm­ers who could not ex­port their crops and seafood to the US, the un­der-ed­u­ca­tion of Myan­mar’s youth who were barred from study­ing abroad, and, mostly, from the lack of Amer­i­can in­vest­ment, know-how and business ethics.”

Yet much will de­pend on how far the Obama ad­min­is­tra­tion de­ter­mines Myan­mar’s demo­cratic tran­si­tion to have come. Vis­it­ing Sec­re­tary of State John Kerry in­di­cated ear­lier this year that any fur­ther re­lief to the sanc­tions would be tied to amend­ments to the mil­i­tary-drafted 2008 con­sti­tu­tion, which blocks Daw Aung San Suu Kyi from be­com­ing pres­i­dent be­cause her chil­dren are Bri­tish.

“The key to the lift­ing of the sanc­tions is re­ally the progress that is made within Myan­mar in con­tin­u­ing to move down the road of democrati­sa­tion … It’s very dif­fi­cult to com­plete that jour­ney – in fact, im­pos­si­ble to com­plete that jour­ney – with the cur­rent con­sti­tu­tion,” Mr Kerry said dur­ing a joint press con­fer­ence with Daw Aung San Suu Kyi at the time.

U Myat Thin Aung, chair of the Hlaing Thar­yar In­dus­trial Zone Ad­min­is­tra­tion Com­mit­tee and of the AA Group of Com­pa­nies, cau­tioned that busi­nesses will need to be pa­tient, as the US was still wary of a demo­cratic re­ver­sal while the mil­i­tary main­tains a hold on sig­nif­i­cant po­lit­i­cal power.

“They’re afraid the mil­i­tary might re­sume con­trol if all sanc­tions are lifted,” he said. “Sanc­tions will be re­moved only when the gov­ern­ment is com­pletely demo­crat­i­cally elected,” he said.

Rights groups are ad­vo­cat­ing for the sanc­tions to re­main.

“The US im­posed sanc­tions in re­sponse to hu­man rights vi­o­la­tions, and they are still tak­ing place,” Zoya Phan, a po­lit­i­cal ac­tivist from the Burma Cam­paign UK, told The Myan­mar Times. “Lift­ing sanc­tions will just en­cour­age the Myan­mar mil­i­tary to think they can keep com­mit­ting hu­man rights abuses and keep block­ing con­sti­tu­tional re­form and get away with it,” she said.

Hu­man Rights Watch last week re­leased a state­ment cau­tion­ing that re­mov­ing the penal­ties could de­rail the gains made since 2011.

“US sanc­tions are fo­cused on the Burmese gen­er­als and their cronies in or­der to en­cour­age demo­cratic re­forms,” John Sifton, Asia ad­vo­cacy direc­tor at Hu­man Rights Watch, wasquoted as say­ing in the state­ment. “The sanc­tions are cru­cial for press­ing the mil­i­tary to end rights abuses and trans­fer power to a civil­ian gov­ern­ment. They shouldn’t be fully lifted un­til the demo­cratic tran­si­tion is ir­re­versible.”

Global Wit­ness (see story on page 9) has warned that rolling back the sanc­tions will un­der­mine pres­sure ap­plied to the coun­try’s no­to­ri­ous jade in­dus­try. The UK-based trans­parency watch­dog says this is tied to the peace process, and eas­ing of sanc­tions will re­verse the ef­forts made to re­duce ten­sion in eth­nic ar­eas.

But business lead­ers are con­fi­dent that im­prove­ments have been made and the coun­try is open­ing up.

U Myo Thet, deputy chair of the Union of Myan­mar Fed­er­a­tion of Chambers of Com­merce, said a pos­i­tive re­sponse from Pres­i­dent Obama would send a strong sig­nal of trust in Myan­mar’s econ­omy.

“As his pres­i­dency comes to an end, he might want to take the op­por­tu­nity to help the leader of a new democ­racy,” he said.

Photo: Kaung Htet

US Pres­i­dent Barack Obama speaks in Yan­gon in 2014.

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