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Myanmar Seeks More Carrots as U.S. Moves to Ease Sanctions

Buildings stand in Yangon, Myanmar. Photographer: Brent Lewin/Bloomberg
Buildings stand in Yangon, Myanmar. Photographer: Brent Lewin/Bloomberg

April 9 (Bloomberg) -- Myanmar wants the U.S. to lift sanctions faster after Secretary of State Hillary Clinton said some restrictions on investment and financial services would be eased, according to an adviser to President Thein Sein.

“They should do more if they want to see us reaching the mission faster,” Nay Zin Latt said in an April 7 e-mail. “The government is doing its job, which is national reconciliation and being a democratic society. This is the time giving more carrots will work more.”

The U.S. will allow companies to invest in certain sectors of Southeast Asia’s fourth-smallest economy, Clinton said on April 4, without offering specifics. They may include telecommunications, agriculture, tourism and banking, according to two senior administration officials who briefed reporters the same day. Nothing has been decided, they said.

The criticism reflects a debate over whether sanctions are still needed to encourage democracy. China last week joined Southeast Asian nations in calling on the U.S. and European Union to lift all sanctions against the former military dictatorship.

President Barack Obama’s administration won’t ask Congress to lift the Jade Act or other legislative sanctions, preferring instead to rescind executive orders, the administration officials said. Further progress on releasing political prisoners and resolving ethnic conflicts is necessary before the U.S. takes further action, they said.

Ethnic Peace Talks

The Karen National Union, one of Myanmar’s biggest rebel groups, agreed on April 6 to conditions for implementing a cease-fire that include releasing political prisoners, ending forced labor and establishing a mechanism to monitor progress, according to a statement on its website. The group also met with Thein Sein and former political prisoner Aung San Suu Kyi.

“The KNU will continue to hold meetings with the Burmese (Myanmar) government, systematically, until the goal of genuine peace in Burma (Myanmar) is reached,” the group said in the April 7 statement.

Suu Kyi’s party won 43 of 45 legislative seats in April 1 by-elections. Myanmar’s 664-member parliament is still dominated by Thein Sein’s Union Solidarity and Development Party and the military, which is automatically granted 25 percent of the seats under the constitution.

Suu Kyi’s National League for Democracy party “will be welcomed by the USDP,” Nay Zin Latt wrote. “The reform process keeps going on. It is irreversible.”

Mineral Wealth

The opening of Myanmar’s economy, one of Asia’s last untapped frontier markets which shares borders with India and China, may give investors and neighboring countries access to its mineral wealth and a market of 64 million people after decades of military rule. Thein Sein has freed political prisoners, held talks with Suu Kyi and begun overhauling the financial system, including a managed float of the currency.

Foreign banks such as Standard Chartered Plc may get a chance to operate in the country in 2015, when an agreement to integrate with the 10-nation Association of Southeast Asian Nations takes effect. Myanmar’s per capita gross domestic product amounts to $2.25 per day, about half that of Vietnam and 14 percent of neighboring Thailand’s, according to International Monetary Fund estimates.

Only one in 30 people in Myanmar has a mobile phone and even fewer have Internet access, Nomura Holdings Inc. said in a March 14 report. The nation attracted about 800,000 tourists in 2010, 20 times less than neighboring Thailand, as its hundreds of kilometers of coastline sit undeveloped.

‘Targeted Easing’

U.S. sanctions against Myanmar, detailed in five Congressional acts and four presidential executive orders, include bans on investment in the country, restrictions on money transfers, asset freezes and the purchase of native gemstones. European Union foreign ministers will meet April 23 to reconsider sanctions, which are less restrictive.

Clinton said the U.S. would appoint an ambassador to Myanmar, allow more aid and non-profit groups to operate in the country, and permit visits by certain government officials. It would also start “a targeted easing of our ban on the export of U.S. financial services and investment,” she said.

“Sanctions and prohibitions will stay in place on individuals and institutions that remain on the wrong side of these historic reform efforts,” Clinton said, without naming anyone. “This reform process has a long way to go,” she said.

Derek Mitchell, the State Department’s special envoy to Myanmar, is poised to become the first U.S. ambassador to the country since 1990, the Financial Times reported on April 7, without saying where it got information.

To contact the reporter on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net

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