The historic easing of US sanctions on Burma announced last week will not have a dramatic impact on the domestic commercial environment, claim local business leaders.
Industry experts told The Irrawaddy that the foreign direct investment (FDI) law only remains in draft form and so the suspension of US restrictive measures will not affect the real market situation on the ground in Burma.
“The current economic situation in Burma is not good,” said Zaw Zaw, the owner of Max Myanmar Group who pulled out from the Dawei (Tavoy) Economic Zone project last month. “In fact, the situation is worse than before. But we are on the way of economic reform.
“For us, we welcome US investors and believe the market will grow after they initiate their investment here. If we can have mutual benefits, why not accept them?”
Zaw Zaw explained leaving the controversial Thai-backed Dawei project as offering others a opportunity to get involved. “I don’t say that I pulled out my investment,” he said. “That is only wrong message. I just want to dilute my share and which means giving the chance for other people to invest there.
“The economic context in Burma is very complicated. Many foreign investors come and observe the market situation in Myanmar. There were many ‘business matching’ meetings between foreign investors and local business people. But only some people have worked arrangements out with them.”
General Electric became the first US company to invest in Burma on Saturday when it signed a deal worth US $2 million to provide medical equipment to a pair of hospitals in Rangoon. Thai media company True Corporation announced plans to jump into Burma’s emerging cable television market on Monday with a possible investment of one billion baht ($30 million).
“We plan to spend at least one billion baht on cable TV in Myanmar,” Chief Executive Suphachai Chearavanont told the Bangkok Post. “We’ll produce local-language programming in entertainment and international stations.”
“We don’t want foreign investors who feel upset after they come here to observe business,” said Kyaw Soe Tha, the director of the Denko Gas Station. “Now we are trying to improve our economic situation.
“I guess public companies will help the market situation with a stock exchange market in Burma. Many people can only save their capital at a bank with interest. They don’t know where they can invest and what kind of business they can do. Public companies will be the place where they can invest their money.”
US Secretary of State Hillary Clinton introduced President Thein Sein to the largest delegation of American businesses to Southeast Asia—including Coca Cola, Ford Motor Co., General Electric, General Motors, Goldman Sachs and Google—at the sidelines of the Asean conference in Siem Reap at the weekend.
Nevertheless, Washington’s sanctions waiver falls short of the complete removal of punitive measures which many North American firms have been lobbying for. Currently Washington’s sanctions waiver allows US firms to invest in Burma as long as certain registration procedures are followed.
“This is not a sanctions lift. It is only an easing and they can reintroduce economic sanctions again anytime,” said Soe Tun, a central executive committee member of the Myanmar Rice Industry Association.
“The US government has been pressured from business people who want to do business in Burma. But we don’t have FDI laws yet. They just eye our market which may benefit them or not.”
Burma has been attracting potential foreign investors with its lucrative natural resources, abundance of cheap labor and strategic global position. But numerous barriers remain with a badly-worded and often contradictory legal system, little regulation in the economic sector, largely nonexistence infrastructure and entrenched corruption.
“The economic situation in the agribusiness market is worse now than last year during the economic reform of the new government,” said a representative of a local public company who asked to remain anonymous. “Our export volume is growing but earnings are decreasing. We have some problems with competing in the international market. We did not get support from our government.
“To improve the quality of our products, we have to change the machines being used in our industries. Currently, many special rice companies have already left and can’t run the next crop anymore as farmers cannot give back money which is borrowed from them.”
