RANGOON—Just days after the US eased key sanctions on Burma, General Electric became the first American company to invest in the former pariah state, signing deals Saturday to provide medical equipment to a pair of hospitals in the country’s biggest city.
Burmese President Thein Sein held talks on Friday with US Secretary of State Hillary Rodham Clinton, who declared the country open to American investment. The meeting in Cambodia was attended by some of the largest US corporations.
On Wednesday, President Barack Obama’s administration officially gave the green light to American companies to invest in the country, also known as Myanmar. Western nations imposed economic and political sanctions on Burma’s previous military regime in response to its repressive and undemocratic policies, and the easing of sanctions is a reward for a series of reforms by Thein Sein’s new government over the past year.
GE’s deals were signed in Rangoon in the presence of Derek Mitchell, who assumed his job Wednesday as the first US ambassador to Burma in 22 years.
The agreements, worth about US $2 million, were inked with two private hospitals. Under the deals, GE will provide X-ray machines through Sea Lion, a local company.
“The recent granting by the US government of licenses to operate will enable us to fast-track our plans to establish an office here in Yangon [Rangoon] and execute our strategies, mainly in the energy and healthcare sectors,” said Stuart Dean, who heads GE’s Asia operations. “We believe there is no turning back.”
Mitchell added, “My fervent hope is that we’re going to be doing this on a regular basis.”
After Clinton met Thein Sein in the Cambodian town of Siam Reap on Friday, the two hosted representatives of American businesses including Coca Cola, Ford Motor Co., General Electric, General Motors, Goldman Sachs and Google. Clinton said US officials were taking 70 company representatives to Burma this weekend to speak with officials and explore opportunities.
Burma represents a similar sort of “frontier investing” climate for Americans as Vietnam did in the 1990s after the US lifted its trade embargo. Burma is also transitioning to a free-market economic system, as Vietnam did.
But its history of isolation means it will be starting from a much smaller base. An idiosyncratic socialist regime barred most foreign investment in 1962-89, and then Western sanctions against the repressive military regime limited economic growth. A complicated dual exchange rate system, changed only this year, also discouraged repatriation of profits.
Virtually every sector in Burma is underdeveloped, but several stand out for investors. Tourism is expected to boom, with a shortage of hotel rooms at all levels. The country already has large foreign investments in oil and gas exploration and production, but there remains room for growth.
The government has vowed to seek foreign help in expanding the country’s power industry, which is in such a sorry state that blackouts and limited service are common and have prompted public protests. Mining is another underexploited sector, with Burma’s gemstone reserves considered among the world’s best. The low-cost economy also makes Burma attractive for production of garments and footwear, although it faces regional competition from Bangladesh, China, Cambodia and Vietnam.
The Obama administration is hoping to coax Asian governments away from Beijing as it pivots US power toward the Pacific.
The goal is to expand the American foothold in a part of the world that is increasingly becoming the center of the global economy, but where democracy and human rights lag. Containing China’s burgeoning power is another objective.
Earlier Friday, Clinton announced that the United States will provide Vietnam, Laos, Cambodia, Thailand and Burma with $50 million over three years to assist them with health, education and environment programs.