By Jon Springer/
The law firm of Herzfeld, Rubin, Meyer & Rose Limited (HRMR)
announced itself as the first 100% American owned law firm in
Myanmar on July 29, 2013. While the United States has reduced
the number of sanctions it has against the former nation of
Burma in the past year, there are many U.S. sanctions still on
the books that make it more difficult for American companies to
do business in Myanmar than companies of any other country. I
had a series of conversations with Eric Rose of HRMR about his
parent law firm’s global brand, its specialty in emerging and
frontier markets and why it has chosen Romania and Myanmar as
its two outposts in these markets.
In the interview below, Mr. Rose candidly speaks about the
opportunities and risks in Myanmar where he expects GDP to at
least triple in the coming 20 years. While representing his law
firm, his answers provide a clear view of investing
opportunities, business prospects, sanction situations,
Myanmar’s history, current stability and international
Jon Springer: During your legal career, you have done a lot
of work in emerging and frontier markets both in private
practice and as an in-house lawyer for corporations. When did
you first work in Myanmar?
Eric Rose: I set up the strategy for American Standard, the
kitchen and bath goods manufacturer, in Myanmar in the
mid-1990s. At that time, U.S. sanctions were limited. Major
sanctions came in 2003.
JS: Was this experience part of why HRMR decided to open an
office in Myanmar?
ER: Our firm specializes in emerging and frontier markets. We
chose both Romania and Myanmar for similar reasons. Both
countries at the time we arrived were newly open to American
business. They both have large, literate populations. In both
cases they were or are countries starting with a low GDP basis,
a high need for infrastructure development, an incredible wealth
of natural resources and a strong relatively cheap workforce.
JS: When you say your firm specializes in emerging and
frontier markets, what is the range of countries your firm’s
attorneys have worked in and range of services provided?
ER: A law firm is only as good as the attorneys it has. Our
attorneys have lead transactions in over fifty countries on five
continents, the majority of which were then, and some still are,
emerging or frontier markets. For example, in the early 1990s, I
guided companies like John Deere and Tyco Toys in countries of
the former Soviet Union, South Africa and China.
In the middle ’90s, I lead American Standard’s and Trane’s
entrance in Vietnam, Burma, Egypt and Eastern Europe. Later, I
helped Wabco Automotive and Diasorin penetrate India and China.
More recently, I steered Cybertel and Perry Equipment
transactions in Latin America and Eastern Europe. The firm has
over 200 practitioners in six affiliated offices on three
continents, and offers a full range of legal services to its
clients, which range from individuals to Fortune 500 companies
the world over.
JS: Specifically looking at Myanmar, it has been touted as
early as 1885 as the greatest place to invest in the world in
Archibald Colquhoun’s Burma and the Burmans: Or, “The best
unopened market in the world”. What is different now?
ER: In the first half of the 20th century, Burma was the
richest country in Southeast Asia, the largest producer of rice
in the world and the number one producer of beans and pulses.
Rangoon, at the time, had the best universities and was the hub
airport for travel throughout Asia and beyond. Today, Myanmar is
the poorest country in Southeast Asia, 75% of its population
does not have access to electricity, and only 10% have access to
cell phones. What has changed is that, for the first time since
Myanmar’s independence, all of its citizens from all ethnic
groups, as well as the government and the army, are sharing the
JS: Thus, the case is that the communism and dictatorship the
country experienced after British colonial rule ended in 1948
led to the current malaise and the country is now democratic and
primed for capitalist success?
ER: Not quite! Myanmar has experienced civil war since its
inception. It is now on the threshold of nationwide peace, it
had free by-elections last year, it has freed almost all of its
political prisoners, has adopted freedom of the press and
association legislation and ended press censorship and it has
passed a number of laws and regulations which have opened up
most of the country to foreign investment. At the same time,
much of industry is still controlled by companies associated
with the military and cronies of the former government, land
rights are in doubt or disputed, rule of law is still in its
infancy, and the country is still rated very low on the
corruption index of Transparency International. The effect of
the sanctions can still be felt everywhere.
For example, in 2002, the Myanmar garment industry exported
75% of its product to the United States. After 2003, when the
major U.S. sanctions began, 300 factories closed and 80,000
people were laid off. Assuming on average that those factory
workers, most of whom were women and the breadwinners for the
average family of 5, the sanctions in that industry alone
directly impacted 400,000 people. Now that the U.S. has lifted
import restrictions, being able to export garments to the U.S.
will, by itself, substantially help grow the economy. For
example, in nearby Cambodia, once restrictions were lifted in
1997, exports of garments grew from $175 million to over $2.5
billion during the next dozen years.
The same applies to the U.S., once again, granting Myanmar
the GSP status, which it lost in 1989. GSP would cover a large
percentage of agricultural products, minerals, plastics and
rubber products, as well as wood products. All other developed
countries have granted GSP to Myanmar, it is the U.S. alone
which has not. Generally speaking, the U.S. today – while the
GSP program has lapsed – is collecting $2 million/day in duties
from the poorest countries on earth, Myanmar included [The U.S.
Congress did not renew GSP legislation prior to its expiration
July 31, 2013. The legislation to renew it is still pending]. In
the first six months since the U.S. import ban against Myanmar
has been lifted earlier this year, Myanmar’s exports to the U.S.
amounted to only $14 million. Yet, over $8 million were GSP-eligible
products, with an average duty of 4.2% when they would be paying
zero under GSP.
JS: Could you briefly elucidate the U.S. sanctions currently
in place and what is needed to remove them?
ER: Currently, the U.S. sanctions regime against Myanmar is
still in place, five laws and at least five executive orders.
Most of the sanctions have been suspended by the president, but
can be re-instated on short notice. No other country continues
to have sanctions against Myanmar, except as to its military. By
itself, the simple existence of such laws and executive orders
hampers the ability of American business to invest in Myanmar,
with little, if any, discernable current positive effect on the
people of Myanmar.
In addition to the bar on deals with the
Myanmar military), or its controlled business entities, there
continues to be a bar on transactions with Myanmar entities and
individuals listed on the Office of Foreign Assets Control’s
Specially Designated Nationals list, and on the importation of
certain jewels. Furthermore, American companies and individuals
alone have to annually report on their investments exceeding
$500,000, certain payments to the government, dealings with the
national oil and gas company, and a plethora of other
requirements. Although large corporations are well equipped to
deal with these reporting requirements, small and medium and
enterprises (SMEs) are not. Thus, these reporting requirements
put a disproportionate burden on SMEs investing in Myanmar.
JS: There have been questions about the stability of Myanmar
going forward with occasional notes in the news of ongoing
fighting. How stable is it?
ER: There are 135 official minorities in Myanmar that make up
33% of the population. Most of the minorities are near the
surrounding border states of Bangladesh, India, China, Laos &
Thailand. In the country, depending on how you count, we have
11, 13 or 17 groups under major arms. There are ceasefires or
peace agreements between the government and all major groups
under arms within the country. Are there still skirmishes? Yes,
but there are few and they are usually over local issues.
All these groups came to a common platform in November, 2013.
The central government had acquiesced or agreed to the terms
contained in this platform, including requests of the Tatmadaw.
These negotiations are the first time that multiple
ceasefires and peace accords were reached since Burma was
created in 1948. This is in part due to the initial
incorporation of several regions that had been under separate
colonial rule when the British governed India & Burma. The Shan
and Karen regions went from having separate rule to being lumped
into a single larger state. Some immediately declared war in
1948 and their first peace agreements are only happening now, 65
JS: With these various complexities in mind, what is the
range of your firm’s clients in Myanmar?
ER: We represent a number of large companies which I cannot
identify due to the attorney-client privilege. As three
examples, we represent a mid-size American oil and gas
construction and equipment company, a large Asian pharmaceutical
company, and a mid-size Myanmar based company. We simultaneously
are helping foreign companies penetrate Myanmar’s marketplace
and assisting Myanmar-based companies re-enter foreign markets.
JS: Your firm has a number of well-established native Myanmar
attorneys on your staff. Did you buy out a local firm or hire
each of them individually?
ER: We take great pride in being associated with some of
Myanmar’s best lawyers. Each of them came to us last spring, and
expressed their interest in being considered. Despite being
independent practitioners before joining HRMR, they have
developed an unequalled esprit-de-corps both working in teams
among themselves as well as with the foreign attorneys
affiliated with HRMR.
JS: You began making trips to Myanmar regularly two years
prior to your office opening. Were there other countries HRMR
was looking at to open its first office in Asia, or was Myanmar
always the clear choice?
ER: The clear choice was Myanmar. As stated earlier, there is
a compelling case for being in Myanmar, both from a business, as
well as legal standpoint. Furthermore, we have been welcomed
with open arms by both government, as well as by the business
community, primarily because we bring a new type of legal
practice to the country. Our attorneys are helping Myanmar
change its laws, adopt the rule of law, provide unequalled pro
bono activities defending the rights of the innocent and
persecuted alike, and advise U.S. government entities. All our
local attorneys have voluntarily adopted the American Bar
Association’s code of ethics.
JS: Among your staff in Myanmar, Dr. Andrew Ngun Cung Lian is
distinctly listed as a government policy professional and is the
only American educated member of your legal team fluent in
Myanmar’s language. His full
bio notes he was a revolutionary
against the government in 1988, then a refugee in India, and
then came to the U.S. in 1996 on a Burmese Refugee Scholarship
from the United States Information Agency. He ultimately went on
to complete a Doctor of Juridical Science at the Indiana
University Maurer School of Law and launched an impressive
career. How did you come to meet him?
ER: I heard Dr. Lian speak at the Center for Strategic and
International Studies in Washington D.C. about 2 years ago. I
spoke to him after his presentation and we both agreed, on the
spot, to start a law firm in Myanmar.
JS: It would seem Asian countries such as China, Japan, South
Korea, India and Singapore which have not had similar sanctions
against Myanmar have been there longer and may have a
competitive advantage. With the competitive disadvantage U.S.
firms face with more sanctions in place than any other country,
why should American firms work to enter the Myanmar marketplace
ER: The simple presence of various Asian-based competitors does
not necessarily translate into a universal disadvantage for
American business. Some of these investors have brought with
them a heavy baggage of neo-colonialist practices, which are
resented by the people (and government) of Myanmar. Examples
abound. See the issues surrounding the building of theMyitsone
Dam, the Letpadaung
copper mine, the two
793 km pipelines, and so on. U.S. companies are bringing a
new way of doing business which, although impeded by the current
sanctions and reporting requirements, can and does overcome such
restrictions. Examples abound here as well: Chevron’s long
presence in the country, Coca-Cola’s new re-entry, Ford and
Chevrolet entry or re-entry, Pepsico’s licensing deal, et
JS: In Eastern Europe, your firm has helped set up American
Chambers of Commerce (AmCham) in Romania, Moldova and
Montenegro. Does your firm plan to do this in Myanmar and other
ER: We are a founding member of the AmCham Myanmar chapter which
was set up with the cooperation of AmCham Thailand. At this
time, we are concentrating on making this AmCham a success. The
American Chamber of Commerce Myanmar chapter is also working
with its members to implement recommended practices that will
allow businesses to achieve, simultaneously, their corporate
investment goals while upholding the corporate social
responsibility standards we are accustomed to in the U.S.
JS: As a first-mover for Americans in Myanmar, what is your
relationship with the U.S. State Department and other branches
ER: HRMR attorneys have been asked by various branches of the
U.S. government (e.g. the State Department, Office of the United
States Trade Representative and so on), to consult on a number
of issues, and we have enthusiastically responded every time. We
believe that our government has a central role to play in
advancing the rule of law in Myanmar, and it contributes every
day in a number of initiatives. The business community is
responding, in turn, with initiatives that U.S. government
entities are invited to support (e.g. AmCham Myanmar chapter
JS: What is your outlook for the prospect of U.S. sanctions
against Myanmar unwinding?
ER: We do not expect the broad sanctions to be removed before
2015 when national elections are scheduled to be held. If those
elections are certified as fair, democratic and open to all, we
believe that the Obama administration will respond in-kind by
asking Congress to dismantle the sanctions regime.
JS: What are your expectations for economic growth in Myanmar
over the next 20 years?
ER: I take great comfort in knowing that McKinsey and
Bank appear to be on the same page in predicting that the
GDP of Myanmar will, at least, triple during that period.
99B Myay Nu Street, LAMAI Condo, Suite 6D, Sanchaung Twp., Yangon 11111, Myanmar - Phone: +95 1 230-5935©2015 Herzfeld Rubin Meyer & Rose Law Firm Limited. - Legal Info