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US ban on investing in Myanmar lifted
The Obama administration has suspended a ban on investments by US companies in Myanmar, accelerating its economic engagement with the south-east Asia nation.
The announcement on Thursday removes one plank of the complex and overlapping series of sanctions that have isolated the Myanmar economy from the US for the last two decades, but which are gradually being dismantled.
However, legal experts said the new rules could still potentially block many US investments in energy and resources, the most attractive but also the most politically controversial sections of the Myanmar economy.
The announcement reflects the Obama administration’s delicate efforts to reward the Myanmar government for its steps to open the country’s political system, while also maintaining some sanctions as leverage to encourage further reforms.
The formal end of the investment ban also comes as the administration has been facing pressure from business groups and some influential members of Congress to accelerate the unwinding of sanctions, despite warnings from human rights groups about continued abuses in the country.
President Barack Obama said the reforms in Myanmar were “nascent”. “We continue to have concerns, including remaining political prisoners, ongoing conflict, and serious human-rights abuses in ethnic areas,” he said in a statement on Thursday.
In April, the administration said it would permit investment in some industries and relaxed restrictions on financial transactions, while keeping sectors such as energy and natural resources off-limits. Under the new policy announced on Thursday, US companies can invest in any deals or companies as long as they are not connected to what US officials call “bad actors” – a list of banned entities and individuals mainly linked to the Myanmar military.
The actual impact of the new rules remains unclear. Hillary Clinton, secretary of state, said it was “the most significant adjustment yet” to US policy on Myanmar, but a senior US official later described the move as a “recalibration” and said there were still big questions about the mining, timber and oil and gas industries. For instance, he said, it was not clear if Myanmar Oil and Gas Enterprise, the national oil company, would be on the revised list of blacklisted partners.
“Given the pervasiveness of military entities and individuals connected to the regime in the energy and resources sectors of the Burmese economy, the relaxation of the investment ban might not actually mean all that much,” said one expert on US sanctions on Myanmar.
Some western investors involved in Myanmar welcomed the easing but said its value was “more symbolic then practical” for US investors wanting to make substantial commitments in the short term. It would still “take some time to eliminate US regulations to enable direct investment,” said Jeremy Kloiser-Jones of Bagan Capital, an emerging markets investor which is planning a $50m to $75m Myanmar fund.
“We can still go ahead and raise our fund, but unfortunately for now it will not include US investors – although there is still the possibility they can join prior to launch, should sanctions be lifted by then,” he said.
Jim Webb, an influential Democratic senator, urged the administration to move more quickly to unwind sanctions. “I continue to believe that US policy must be more proactive. The president has wider powers with respect to economic sanctions, and he should use them to lift all economic sanctions,” he said.
The remaining US sanctions still bar imports of goods from Myanmar to the country, however one of part of those restrictions needs to be renewed by Congress next month, providing an early opportunity to further relax economic ties with the country.
The administration also confirmed that Derek Mitchell, currently the state department’s special envoy for Myanmar, has been nominated to be US ambassador to the country.
Financial Times
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