Myanmar rush risks
undermining progress By Carey L Biron
WASHINGTON - As governments
continue to discuss how to ease sanctions in
Myanmar, fears are increasing that a sudden
massive influx of foreign investment could be
detrimental to the delicate ongoing transition.
"I see a rush
of over-investment, to the extent that things that
can be done to slow down investment may be in the
long-term interest of the country," Lex Rieffel,
an economist and Southeast Asia expert with the
Brookings Institution, said on Thursday at the
Council on Foreign Relations, in Washington.
"I
can assure you that even if we keep sanctions in
place, there is going to be plenty of investment
in this country. But what we will probably see is
underinvestment in people - the government is
currently meeting with every Tom, Dick and Harry,
but there is no
time
being set aside for important decision-making or
implementation."
Recent weeks have seen a
flurry of investment-related moves surrounding
Myanmar, kicked off by two critical events on
April 1. First were parliamentary by-elections in
which opposition leader Aung San Suu Kyi's party,
the National League for Democracy (NLD), won 43
seats. That included one for Suu Kyi, who finally
made her first formal entrance into the government
on Tuesday.
Several governments,
including those of the US and UK, used the
electoral outcome to begin to draw down the
economic sanctions that have been in place for
years. These had successfully cut Myanmar off from
much of the world, making much foreign investment
exceedingly difficult if not impossible.
Second and simultaneous with
the election, the Myanmar government took
long-overdue steps to allow its currency, the
kyat, to trade freely.
For
three-plus decades, government officials had kept
the kyat pegged to an International Monetary Fund
(IMF) global rate. While this left the country's
official exchange rate at between six and eight
kyat to the US dollar, black market rates hovered
between 700 and 1,400 kyat to the dollar. Such a
discrepancy created a huge impediment to doing
business above board.
"The currency decision was a
more important step than the by-elections in terms
of its potential to affect the lives of ordinary
people of Myanmar," Rieffel said.
Even
prior to the elections, foreign business
representatives had over the past year begun
flocking to Myanmar, as the country implemented a
series of contested but significant reforms.
Reports suggest that inbound flights and high-end
hotel rooms in Yangon have been abnormally full,
particularly with potential investors.
Already, competition has
heated up. According to a letter by the US
business community sent to President Barack Obama
last week, "US companies are starting from a
disadvantage, as numerous entities from Europe and
elsewhere in Asia have substantially stepped up
their engagement in recent months."
The
letter, signed by the US Chamber of Commerce, the
US-ASEAN [Association of Southeast Asian Nations]
Business Council and others, including the
American Petroleum Institute, called for "lifting
the financial services facilitation and
transactions sanctions in conjunction with easing
the investment ban".
The sanctions issue has been
a divisive one for Myanmar watchers for years, and
the overall efficacy of the multiple international
sanctions regimes remains debated today. With most
agreeing that the time has come to revisit the
various financial and other bans in place,
however, the conversation has shifted to the rate
at which these measures should be rolled back. "We do not agree with the
business community's approach," Jennifer Quigley,
with the US Campaign for Burma (as the US
government and others still refer to Myanmar) told
IPS. "They think they should be allowed into all
sectors, with no restrictions. The argument seems
to be, 'Everyone else is being let in, so we don't
want to be left out.' But it's too early for US
companies to go in."
In an economy as devastated
as that of Myanmar, the country's complete lack of
regulation spooks many as international investors
begin to line up. The US Campaign for Burma and
many others are pushing for the adoption of a
framework by the US and other major international
actors on how to encourage investment that
positively impacts on the people of Mynamar.
Critical among these are
ensuring buy-in by local communities, particularly
long-marginalized ethnic communities. Given that
much of Myanmar's natural resources are found in
areas dominated by ethnic minorities, Quigley
said, "Ethnic groups feel that the regime is
engaging in talks for economic benefit - so, right
now, ceasefire negotiations are very fragile."
Other reforms
notwithstanding, violent conflicts are continuing
between ethnic minority groups and the government,
as are related human-rights violations.
The
sanctions issue also remains one of the most
important points of leverage for the international
community - simultaneously its greatest stick and
carrot.
"If we go in and allow
foreign investment, there won't be any motivation
for the government towards political resolution,"
Quigley said.
Others see economics as
having come dangerously close to eclipsing more
pressing concerns.
"The United States needs to
be very stingy about removing sanctions, as once
sanctions are removed the Burmese military
government [now in civilian clothes] is likely to
dump Aung San Suu Kyi, the NLD and the
pro-democracy forces," Kyi May Kaung, an analyst
based in Washington, told IPS.
"The
US has to be very careful that it does not place
human rights on the back burner, as it seems to be
doing in the case of Chen Guangcheng in Beijing,"
referring to a Chinese lawyer who recently took
refuge in the US Embassy in Beijing. Though no
longer there, his immediate future remains in
doubt.
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