Sanc­tions may hurt peace prospects, de­rail econ­omy

Talk of pos­si­ble sanc­tions on Myan­mar’s mil­i­tary by the Euro­pean Union and United States could have a cas­cad­ing ef­fect on the coun­try’s econ­omy, ex­perts cau­tion.

The Myanmar Times - - Front Page - CHAN MYA HTWE chan­myahtwe@mm­times.com

THE US and EU are con­sid­er­ing tar­geted sanc­tions against the Myan­mar mil­i­tary over an of­fen­sive that has re­sulted in an ex­o­dus of over half a mil­lion Ro­hingya Mus­lims from the coun­try. Those sanc­tions, if im­posed, could set the econ­omy back after years of progress.

“There have been var­i­ous ru­mors of tar­geted sanc­tions against Myan­mar. It is not a good sign. Sanc­tion­ing a coun­try pre­vents it from com­pet­ing eco­nom­i­cally with oth­ers. They would block our rights to freely do busi­ness and rights to de­velop the coun­try and this is not good,” said U Tun Tun Naing, Per­ma­nent Sec­re­tary for the Min­istry of Plan­ning and Fi­nance.

While Western sanc­tions, if im­posed on Myan­mar, are un­likely to have a di­rect im­pact on the econ­omy due to low lev­els of trade and co­op­er­a­tion, they could de­rail the coun­try’s push for peace with the var­i­ous eth­nic­i­ties. This will have neg­a­tive con­se­quences on for­eign di­rect in­vest­ments (FDI) and do­mes­tic eco­nomic re­form.

Demo­cratic progress

Myan­mar is only still at the be­gin­ning of its push for demo­cratic trans­for­ma­tion and na­tional rec­on­cil­i­a­tion to­wards a Fed­eral Union. Its econ­omy, in com­par­i­son, has pro­gressed much faster. FDI is up by three times for the first six months of this fis­cal year com­pared to the same pe­riod the year be­fore, ex­ceed­ing US$4 bil­lion. Mean­while, the new In­vest­ment Law has been en­acted, while the new Com­pa­nies’ Act and Con­do­minium Law are ex­pected to be ap­proved soon.

Talk of de­vel­op­ing a thriv­ing dig­i­tal econ­omy and help­ing lo­cal star­tups gain ac­cess to loans has been rife in the busi­ness com­mu­nity, while plans are be­ing laid out for na­tional elec­tri­fi­ca­tion. Mean­while, ma­jor in­vest­ments in sev­eral Spe­cial Eco­nomic Zones and a deep-sea port are be­ing dis­cussed. No doubt, the econ­omy’s progress has gen­er­ated a wave of new jobs and lifted mil­lions out of poverty.

That could all be placed on the back­burner if the sanc­tions are put in place. “No mat­ter what kind of sanc­tions, [the West] should con­sider not af­fect­ing our efforts to tran­si­tion to democ­racy, pur­sue in­ter­nal peace and raise the stan­dards of our peo­ple’s lives,” said U Zaw Htay, spokesper­son for the State Coun­sel­lor’s of­fice.

“Not ben­e­fi­cial to any­one”

Since the pre­vi­ous ad­min­is­tra­tion, the govern­ment, mil­i­tary and var­i­ous eth­nic groups have agreed to pur­sue in­ter­nal peace ac­cord­ing to the Na­tion­wide Cease­fire Agree­ment. Nev­er­the­less, is­sues re­lat­ing to eth­nic­ity, re­li­gion and mil­i­tary are still highly sen­si­tive.

As such, the West’s in­ten­tion of ap­ply­ing tar­geted sanc­tions on Myan­mar’s mil­i­tary could re­sult in in­ter­nal di­vi­sion and dis­unity, said U Ye Min Oo, eco­nomic ad­viser to the Na­tional League for Democ­racy govern­ment.

As Myan­mar is still strug­gling to de­velop its econ­omy, sanc­tions at this time will only hin­der the govern­ment’s at­tempts to im­prove democ­racy and hu­man rights. There­fore, sanc­tions should not be ap­plied dur­ing this time. “No one will gain any­thing from it, and it will cause dis­unity,” U Ye Min Oo said.

“All the peo­ple and eth­nic­i­ties live to­gether in this coun­try. We are all work­ing to­gether for the devel­op­ment of the coun­try. We are go­ing to walk to­wards the fu­ture to­gether. So, if a su­per power tries to im­pose se­lec­tive sanc­tions, it means they are try­ing to di­vide our na­tion. No one will ben­e­fit from this,” he added.

Eco­nomic im­pact

As a whole though, the di­rect eco­nomic im­pact on Myan­mar from sanc­tions by the West is likely to be lim­ited. “So­cio-eco­nomic im­pacts due to sanc­tions de­pend on whether there is high level co­op­er­a­tion with the coun­tries in­volved. As trade be­tween Myan­mar and the US and EU is lim­ited com­pared to China, Ja­pan, Thai­land and Sin­ga­pore, there won’t be a sig­nif­i­cant im­pact on Myan­mar’s econ­omy,” said U Tun Tun Naing.

Be­tween April 1 and Septem­ber 30 of the cur­rent fis­cal year, ap­proved FDI from China and Sin­ga­pore to­taled US$829.1 mil­lion and US$1.7 bil­lion, re­spec­tively, ac­cord­ing to the Direc­torate of In­vest­ment and Com­pany Ad­minin­stra­tion. In com­par­i­son, the com­bined FDI from France, Ger­many and The Nether­lands was US$537 mil­lion.

De­spite ex­pec­ta­tions that US FDI would en­ter Myan­mar after US sanc­tions were lifted, it has now been two and a half years and FDI has not ma­te­ri­alised as much as ex­pected. Mean­while, Myan­mar al­ready has strong trade ties with its part­ners in Asia, U Tun Tun Naing said.

“Still, we need to be friendly with all na­tions. When a na­tion [im­poses a sanc­tion against us], we have to re­veal the truth of the sit­u­a­tion in Rakhine. The sanc­tions shouldn’t hap­pen and to avoid this, we need to re­port the ac­tual sit­u­a­tion,” U Tun Tun Naing said.

Photo: EPA

A Ro­hingya woman feeds her child in a med­i­cal cen­ter near a camp in Palonkhali, Coxs­bazar, Bangladesh, on Oc­to­ber 11. The West is now con­sid­er­ing sanc­tions against Myan­mar after a mass ex­o­dus or Ro­hingya from Rakhine.

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