Bloomberg View: Toward a More Open Myanmar

Illustration by Bloomberg View

There’s no denying the symbolic power of the April 1 parliamentary election wins by “The Lady,” as Aung San Suu Kyi is known in Myanmar. After boycotting 2010’s elections, the National League for Democracy appears to have won 43 out of 45 seats in parliamentary by-elections, a strong affirmation of its political appeal and Suu Kyi’s leadership.

Yet the government’s recent decisions on economic policy are arguably more promising. The April 1 implementation of a managed float for Myanmar’s kyat, and the elimination of a more than 100-to-1 discrepancy between the official and black market exchange rates, will help Myanmar’s manufacturing and agricultural sectors and make it harder for corrupt officials to hide illicit gains. A planned law on foreign investment promises to give investors the right to lease land, repatriate profits, and import skilled workers, as well as allow foreign banks the right to operate in country.

The election results have prompted calls to lift sanctions and provide more aid and investment to Myanmar. There’s a good reason to think twice: Cambodia. That nation, the beneficiary of huge amounts of foreign aid after the fall of the Khmer Rouge in the 1980s, is now a paragon of corruption and crony capitalism. Myanmar lacks the institutional capacity to absorb much aid and investment, which at this stage would probably enrich only the already powerful.

Instead of unleashing a flood of investment and assistance, the outside world should grant Myanmar liberal technical assistance, including parliamentary and ministerial exchanges, and pay for initiatives to improve its agriculture and manufacturing. The lifting of sanctions and the application of aid to those areas should also be limited to where they can do the most good. Congress, for example, should renew sanctions laws such as the Burmese Freedom and Democracy Act of 2003 (which blocks imports and international financial institution assistance, freezes assets, and bans visas for certain Burmese officials) and the Tom Lantos Block Burmese JADE Act (which bars importing gemstones of Burmese origin, expands the ban on visas, and restricts financial transactions). It should also ensure that President Barack Obama can waive their implementation based on the regime’s actions.

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