US Takes Steps to Restart Business Relations With Burma

By Ye Ni 3 September 2014

RANGOON — With religious tensions, the threat to press freedom, the peace process in limbo and continued human rights abuses, the political and economic reforms put in place by President Thein Sein’s government have been stalling. As a result, the United States-Burma relationship is yet to improve as expected, and the complete lifting of sanctions is still far away.

However, last Thursday, a positive step was made toward better ties between the two countries. The two agreed to work together to strengthen labor rights and improve work conditions in Burma. The International Labor Organization (ILO) welcomed the agreement made during US Trade Representative Michael Froman’s recent visit to Burma. The US trade representative held talks with Asean economic ministers in Naypyidaw.

The agreement paves the way for the adoption of a strategy to reform Burma’s outdated labor laws with the participation of US and Burmese government officials, willing governments and businesses, workers and labor organizations. The agreement is aimed at helping build the capacity of Burmese workers and Burma carry on its reforms in line with international norms.

For example, trade unions are allowed in Burma and there are many trade unions, but unfortunately there is little understanding of how to interact between government, employers and employees. To put it in a nutshell, even basic salary still can’t be negotiated. The agreement is believed to help solve the basic salary problem.

The agreement is also viewed as an effort by the United States to make the Burmese government and businessmen see that ensuring human dignity and respect for employees is an important business value in the 21st century.

Meanwhile, US-based ACO Investment Group last Thursday signed a US$480 million deal with Burma’s Ministry of Electric Power to build two solar power plants in Nabuine in Myingyan District and Wundiwn in Meikhtila District in Mandalay Division. The project is scheduled to be completed in 2016 and will account for 10-12 percent of national electricity demand, providing electric power to the Myotha Industrial Zone and Myingyan and Meikhtila District.

The Obama administration suspended sanctions and re-built ties with Burma because of an open-door policy after Thein Sein’s government took office. US officials have made continuous visits to Burma this year with likelihood of military engagement and the lifting of more sanctions. US Secretary of State John Kerry visited Burma recently and President Obama is set to visit Naypyidaw in November.

US corporations are optimistic about Burma. The Bangkok-based The Nation newspaper quoted an Asean Business Outlook Survey, conducted at the Asean Economic Ministers meeting in July, saying that US businessmen are optimistic about establishment of the Asean Economic Community (AEC) in 2015, and expect expansion of their business and profits in the region.

The survey was designed and conducted by US Chamber of Commerce and Association of US Chamber of Commerce in Asean, formed with 588 US companies doing business in the 10 Asean countries. Some 91 percent of the respondents said they are thinking of expanding their business in Burma.

The outlook says that Burma is favored most among Asean countries for business expansion, said president Mariano Vela of American Chamber of Commerce in Thailand.

Ninety-one percent of foreigners working in Burma are satisfied with their jobs and 77 percent said they want to stay longer but described rent, infrastructure and scarcity of trained staff as a problem.

However, Burma remains a tough place for US investors. US businessmen that invest more than $500,000, or enter the oil and gas sector, have to report their business plans and due diligence reports to the State Department.

Coca-Cola set up its bottling plant in June 2013 and its major rival Pepsi has also entered Burma. San Francisco-based Gap Inc. is now buying from two garment factories in Burma. Gap in its statement said “as the first American retailer to begin sourcing from Myanmar, we understand that we have a responsibility to ensure that our vendors provide a safe, healthy and fair workplace for workers.”