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.
By Chan Mya Htwe and Daniel de Carteret , MyanmarTimes,
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
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
“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
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
“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
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 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.
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