Myanmar is quickly developing into Asia’s hottest “frontier” economy. The resource rich nation has undergone considerable political reform in recent years and as a result many sanctions against the country are now being lifted by countries across the world. In November of 2012, President Barack Obama himself visited the nation and promised to continue to help the country open up. Yet, even as the United States has dropped most of its wide sweeping sanctions against the country, American businesses are concerned that without further action they will fall behind their European and Asian counterparts.
While the United States has dropped many of its trade sanctions against Myanmar as a whole, the government has not dropped bans against working with certain individuals and institutions. In fact, until this week American citizens and businesses were banned from doing business with Myanmar’s four largest banks. The Department of Treasury has announced, however, that it has issued a “general license” to the Asian Greed Development Bank, Ayeyarwady Bank, Myanma Economic Bank and Myanma Investment and Commercial Bank.
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This move should increase financing and capital flexibility for American companies looking to set up shop in the South East Asian nation. Importantly, both the Asian Green Development Bank and Ayeyarwady Bank are controlled by individuals who have personally been targeted by U.S. Sanctions. This move by the treasury suggests that the American government may be looking to relax sanctions against key individuals in Mynamar.
While the United States has lifted many of its general sanctions against Myanmar, a huge step towards normalizing trade, it has left in place sanctions that target key individuals within the country. These individuals are being targeted for being cronies of the former military regime, alleged human rights abuses, and other serious crimes. For better or worse, however, many of the people on the Specially Designated Nations list are also key players in the local economy.
American companies are unable to do business with these individuals and their companies. This greatly reduces the number of people and businesses with which American companies can engage with. This in turn hinders the ability of American companies to conduct business in Myanmar.
Myanmar is famed for its rich preserves of natural resources. Following World War II and the end of European colonialization in the region, the country was actually one of the richest in the region. Decades of rule by military strongmen, however, and the impacts of stifling sanctions have left the country lagging behind its regional counterparts. Mynamar’s infrastructure is dilapidated and the country largely lacks industrial capacity.
Many analysts are predicting strong growth of 8% or more in the coming years. This should greatly increase the wealth and well-being of Myanmar’s 60 million citizens, most of whom are young and eager, though lacking in education and skills. This growth will increase the need for a world class infrastructure and could lead to a real estate boom, among other things. With other economies in the region approaching fully developed status, some believe Myanmar will be one of the last “frontier” economies in the region.
Many western companies are now looking to take advantage of Mynamar’s natural resources and are hoping to secure infrastructure projects, but if the United States continues to target Myanmar’s most powerful citizens, American companies might be left out in the cold. President Obama has promised to continue to lift sanctions against Myanmar and to work towards fully normalized trade relations. If President Obama is serious about his commitment the move should be sooner, rather than later or else there’s a serious risk that his actions will be too little and too late.