President Barack Obama authorized U.S. companies to invest in Myanmar for the first time in about 15 years, including with a state-run oil firm that opposition leader Aung San Suu Kyi urged multinationals to avoid.
The licenses to invest and provide financial services will require companies to submit detailed annual disclosure forms, according to a joint statement by the State and Treasury departments. Ventures with the Defense Ministry and individuals blocked under the sanctions regime, including businesses connected with Myanmar’s former junta, remain off limits.
“Easing sanctions is a strong signal of our support for reform, and will provide immediate incentives for reformers and significant benefits to the people of Burma,” Obama said in a statement yesterday, referring to the country by its former name. He also issued an order that allows for punitive measures on individuals who hinder the country’s shift to democracy.
The move provides clarity to businesses following Obama’s announcement in May that he would ease sanctions against Myanmar after President Thein Sein freed political prisoners, allowed greater media freedom and held peace talks with rebels. Coca-Cola Co. said last month it would return to Myanmar for the first time in 60 years once the licenses are issued, while Kevin Thieneman, president of Caterpillar Asia, will co-lead a U.S. business trip to the country next month.
U.S. Business Forum
Thein Sein plans to join a business forum with U.S. Secretary of State Hillary Clinton and executives from the 10-member Association of Southeast Asian Nations tomorrow in Siem Reap, Cambodia, according to an official who wasn’t authorized to speak on the record. Thai Prime Minister Yingluck Shinawatra will also join the event.
Myanmar dismantled a fixed exchange rate in April and parliamentarians are revamping laws to attract investors to the country of 64 million people. The nation’s per capita gross domestic product is less than 10 percent that of neighboring Thailand, according to International Monetary Fund estimates.
“There’s an influx of interested people but still we don’t have the influx of investment coming,” Kan Zaw, Myanmar’s deputy minister of National Planning and Economic Development, said in an interview in Hong Kong yesterday. “One thing the investors are waiting for is the new foreign investment law.”
That law may take effect as early as September if a joint session of parliament approves the bill, he said. The draft bill would allow investors to lease land for as long as 70 years, up from 60 years, and foreign companies would be guaranteed a level playing field with local businesses, he said.
Thein Sein last month pledged to create jobs and increase incomes while targeting economic growth of 7.7 percent per year until 2016, addressing what Suu Kyi has called a “time bomb” of youth unemployment. About a quarter of the population lives in poverty, agriculture accounts for 70 percent of employment and about three in four people don’t have access to electricity, according to the Asian Development Bank.
Suu Kyi, a former political prisoner who was elected to parliament in an April by-election, urged companies during a trip to Europe last month to avoid ventures with state-run Myanma Oil & Gas Enterprise, known as MOGE, because it lacks transparency. The U.S. rules require businesses to notify the State Department of ventures with MOGE within 60 days.
Myanmar plans to implement the Extractive Industries Transparency Initiative, which calls for governments to disclose all payments from oil, gas and mining companies, Industry Minister Soe Thane said last month. The country only ranked above North Korea and Somalia at the bottom of Transparency International’s 2011 Corruption Perceptions Index of 182 nations.
The U.S. licenses require companies with investments valued at more than $500,000 to file an annual report detailing land purchases, payments to government entities, contacts with the military and policies on human rights and the environment.