by SIMON LEWIS - Asian Review -
-- Just two weeks before President Barack Obama paid his second
visit to Myanmar last November, the U.S. Treasury announced that
Aung Thaung, a parliamentarian in Naypyidaw's lower house, had
been added to its Specially Designated Nationals list. The U.S.
considers those on the list to have links to terrorism, drug
running or human rights violations, and bars American companies
and individuals from doing business with them.
A U.S. Treasury official said at the time that Aung Thaung, a
former minister of industry, had been "intentionally undermining
the positive political and economic transition" in Myanmar.
Those reading between the lines concluded that Aung Thaung was
being punished for his alleged support of an extremist Buddhist
movement that has been linked to attacks on Muslim communities
One of Aung Thaung's sons is involved in the conglomerate IGE
Group and United Amara Bank, one of Myanmar's private banks, but
no companies or other individuals linked to Aung Thaung were
sanctioned. In the days following the announcement, however,
United Amara was forced to reassure the public that the MP was
not a shareholder in order to contain a run on the bank.
Whatever Aung Thaung's connections, the US move riled many
circles in Myanmar's government and parliament. A recent U.S.
announcement however was more welcome. The U.S. Treasury said on
April 23 that it had removed from the SDN list Win Aung, the
head of the Dagon construction group, and two of his companies.
Win Aung is also president of the Union of Myanmar Federation of
Chambers of Commerce and Industry, the country's most
influential business group, and has been a key figure in
welcoming foreign business groups to the country.
The removal of Win Aung from the list - after years of lobbying
- offers hope to the 41 Myanmar business people and officials
still on the SDN list, a handful of whom are thought to be in
ongoing talks with the U.S. government to have their names
However, the contrasting treatment of the two individuals - Win
Aung and Aung Thaung - shows how the U.S. "blacklist" acts as
both a carrot and a stick as Washington attempts to exert
influence in Myanmar. The country has elections later this year
and is struggling to break free of an overbearing military that
retains vital powers under a constitution written by the former
While human rights campaigners say the SDN list may encourage
better behavior from Myanmar's so-called cronies, others say the
list is a blunt instrument that will have a negative impact on
the country's wider economy. It remains a significant barrier to
investment from the U.S., and may be locking American companies
out of a foreign direct investment boom in Myanmar. Not only
that, multinationals from other countries also hesitate about
Myanmar if they have significant operations in the U.S. or
involving U.S. companies.
Win Aung is a significant choice as the first businessman to be
removed from the U.S. list (some of Myanmar's political leaders
were removed much earlier). Not only does he head the country's
most important business association, he chairs the consortium
representing Myanmar's interest in the Thilawa Special Economic
Zone, a Japanese-backed project close to Yangon that Japanese
and Myanmar business intend to transform into a manufacturing
The U.S. State Department said in a statement that decisions to
remove people from the list were based on the submission of
"verifiable information demonstrating that changed circumstances
warrant their removal, including that they have taken positive
steps and changed behavior."
"We will lift targeted sanctions based on actions by the SDNs
and add individuals or entities to the SDN List as appropriate,
for example, where there is evidence they have undermined the
reform or peace processes, committed human rights abuses in
Burma, or participated in military trade with North Korea," the
Shine Zaw-Aung, country analyst at New Crossroads Asia, a
Yangon-based consultancy, said that Myanmar's business community
had mixed feelings about the SDN list. While it was a way to
punish "noxious" generals and their families who had used their
positions to accumulate wealth, some decisions related to
listings were "arbitrary," he said
"There are many 'crony capitalists' and government hardliner
reactionaries who are not on the list," he noted, adding that
some listed individuals had little choice but to collaborated
with the junta that ran Myanmar before the administration of
President Thein Sein took office in 2011.
"When you were living under a dictatorship, you were roped into
helping and supporting the government and its projects; and that
was the only way businesses could obtain necessary permits and
Vicky Bowman, director of the Myanmar Centre for Responsible
Business, said the changes to the SDN list could make it
stronger. "A sanctions list has more impact when it is clear
that people can be removed, added, or even put back on the list,
and there are clear benchmarks for what is required for this to
happen," she said.
Bowman, a former U.K. ambassador to Myanmar, was involved in
advising Brussels on the EU's Myanmar sanctions list, which has
now been scrapped. She said that Win Aung and Dagon group had
shown a commitment to transforming business practices, as
demonstrated by the group's performance in a report that MCRB
prepared last year on corporate transparency.
"Obviously there is always room for Dagon to improve, for
example through greater transparency on land issues and other
human rights impacts that the company has, so we hope they will
strive even harder in 2015," Bowman said.
Win Aung joins a tiny group of Myanmar individuals who have been
removed from the list, including President Thein Sein and
parliamentary Speaker Shwe Mann, both retired military officers.
As well as Aung Thaung, another 40 Myanmar individuals and 77
entities remain blacklisted. They include prominent tycoons such
as Zaw Zaw, head of the Max Myanmar conglomerate, and Tay Za of
Htoo Group. The former is tipped to be next to be removed from
the list, but the latter seems unlikely to qualify for early
removal, given his admission last year during an interview with
Forbes Asia that he facilitated arms deals with North Korea.
In a sign of how much it hurts to be on the list, both have gone
to some lengths, including forming charitable organizations, to
demonstrate their "clean" credentials. The U.S. government
insists that philanthropy alone will not influence SDN
There are plenty of Myanmar business figures not on the list,
and they are the most desirable partners for American companies
if they want to enter the country through joint ventures. U.S.
fast food company Yum! Brands' Kentucky Fried Chicken is set to
enter the country in a joint venture with tycoon Serge Pun. Pun
is not blacklisted, and as a result has been able to enter into
a number of similar partnerships, as well as gain assistance
from the World Bank's International Finance Corporation.
However, the impact of the list may go beyond those targeted.
Yangon-based U.S. attorney Eric Rose said the Treasury's
enforcement of SDN rules globally was having a "chilling effect"
Despite foreign direct investment approvals in Myanmar amounting
to more than $8 billion in the last fiscal year to March 31, few
significant investments have come from the U.S. The country
ranks only 13th in total investment in Myanmar since 1988,
according to Myanmar government data.
The major bright spots for recent American investment are
limited to The Coca-Cola Company, which set up Coca-Cola Myanmar
to bottle and sell throughout Myanmar, U.S. can maker Ball
Corp., which will make cans for Coca-Cola Myanmar, apparel
company Gap, which announced last year it would begin sourcing
clothes from two factories in Yangon, and Colgate, which has
announced an investment of $100 million in a local toothpaste
U.S. financial institutions fear inadvertently doing business
with an SDN, or a related company, and therefore some steer
completely clear of financial transactions involving Myanmar,
Rose said. The country is also regarded as high-risk for money
"The result is that U.S. companies' exports to Myanmar, and
investment, especially by SMEs, are hampered by antiquated trade
and sanctions policies which have outlived their usefulness long
ago," he said.
"The [U.S.] banks are giving [Myanmar] a miss at this point,"
agreed John Goyer, the U.S. Chamber of Commerce's senior
director for Southeast Asia. "This is obviously unfortunate,
both for potential U.S. investors, but also for Myanmar, whose
under-developed financial services sector will constrain
economic growth and development."
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