Sunday, March 3, 2024
HomeAnalysisUS aims to boost investment in Burma

US aims to boost investment in Burma

Spending two days in Burma as a part of a commercial diplomacy tour in Southeast Asia, US Commerce Secretary Penny Pritzker inaugurated a commercial service office at the US embassy in Rangoon on Friday.

Commercial service offices, as explained to DVB by Andrew Leahy of the US embassy, serve as “an advocate and liaison for US businesses attempting to invest in a particular country,” and work “directly with US businesses interested in learning more about a country or navigating the country’s economic environment.”

Pritzker’s regional tour was touted by the US Department of Commerce as one intended to elaborate on the economic dimension of President Obama’s pivot to Asia, with time spent in Burma intended to encourage the “building of soft and hard infrastructure necessary to support the growth of emerging partners.”

Her three-legged tour also included the Philippines and Vietnam.

Burma’s emergence as a US trade partner is distinguished most clearly by a jump in US exports to the once pariah state, which, according to the US embassy, ran from US$9.8 million in 2010 to $145 million in 2013. On top of this, as of 30 April 2014, US companies have plans to invest $243.6 million in the Burmese economy.

While that figure of American foreign direct investment (FDI) in Burma is dwarfed in comparison to the latest available US FDI figures for the Philippines, $4.6 billion, and Vietnam, $1.2 billion, the reaction by US firms to the 2012 removal of the majority of US economic sanctions has been swift.

On Thursday, Pritzker met Burmese President Thein Sein in Naypyidaw, as well as Vice President Nyan Tun and Shwe Mann, speaker of the Lower House.

To each she reportedly stressed the need for the Burmese government to “build on the progress that has been made by implementing measures that increase inclusive economic development, promote government transparency and accountability, and safeguard labour rights and human rights.”

That progress was evaluated last month and resulted in President Obama renewing the US classification of the situation in Burma as a “National Emergency.” With that motion, the limited economic sanctions that bind US businesses investing in Burma were renewed. Those sanctions, according to US Ambassador to Burma Derek Mitchell, primarily affect “individuals and entities that materially benefited from their close ties to the former regime and who are still impeding reform in this country, the so-called ‘specially designated nationals’.”

One such blacklisted entity, military-owned Union of Myanmar Economic Holdings (UMEH), is set to neighbour American company Ball Corporation at Thilawa Special Economic Zone (SEZ), currently under construction 20 kilometers south of Rangoon.

Ball Corporation will benefit from minimal government red tape and relaxed labour laws that characterise the SEZ, as will UMEH, a company already exempt from commercial and profit taxes. UMEH will continue to develop infrastructure plots at the zone, which includes heavy manufacturing and port facilities.

On Friday, representatives from Ball Company, as well as APR energy, who are constructing a large-scale thermal power plant in Burma, joined Priztler as she affirmed, “When our businesses make investments, they bring with them the highest standards, including a commitment to corporate and social responsibility.”

That comment came a day after Washington-based lobby group US Campaign for Burma (USCB) released what it called a “report card”, grading the six US companies that have each invested over $500,000 in Burma. Those companies were adjudged on levels of transparency, procedural behaviour, risk mitigation and social responsibility. USCB was only able to classify one of the companies, Coca-Cola, as a “responsible” investor, whereas two firms were designated as “questionable” and three as “irresponsible”.


One such “irresponsible” US company, Capital Group Companies Inc, was singled out for their relationship with Burmese concern Yoma Strategic Holdings. USCB links Yoma to “human rights abuses, including environmental destruction, forced displacement, land confiscation, political detentions, and labor abuses.” USCB also noted that Yoma was reviewed by the US Treasury for potential inclusion on their blacklist, for links to the previous military regime.

Yet Yoma have never featured on the list, and their CEO, Serge Pun is frequently referred to in the international media as “Mr Clean”. That title comes despite his flagship enterprise Yoma Bank not appearing on the list of 100 top Burmese corporate taxpayers list for 2011-12 nor the top 500 list for 2012-13.

That Serge Pun has been able to run a multitude of successful businesses in Burma under successive military regimes and the current quasi-civilian government has raised the suspicions of lobby groups such as USCB. Last month, USCB called for the International Finance Corporation to pull out of a development deal with Yoma.

The US embassy included Yoma in 2008 as a player in the Burmese government “system of economic patronage” which insures that “certain companies, often owned by regime cronies, receive key contracts and profitable business opportunities in exchange for their support for the regime.”

Yet Yoma, nor any company that Pun has been involved in, have ever been hit with sanctions, leaving Pun with a reputation as a professional and esteemed business leader in a national business environment which clearly fosters corruption.

Last week, Andrew Rickards, CEO of Yoma Strategic Holdings, told DVB that USCB’s allegations are “without substance” and that Yoma, “rejects the validity of these [USCB] calls.”

“If anything,” Rickards asserted, “Mr Pun should be congratulated.”

While pessimistic about the current performance of US private sector investment in Burma, USCB maintains that “Responsible US investment has the potential to further the US policy goal to support ‘the establishment of a peaceful, prosperous, and democratic state that respects human rights and the rule of law.’”

The rights watchdog will hope to be able to grade garment manufacturers Gap Inc with a pass mark on their next report. The fashion brand has recently announced the intention to open two factories in Burma and in doing so has indicated a commitment to corporate social responsibility.


Feel the passion for press freedom ignite within you.

Join us as a valued contributor to our vibrant community, where your voice harmonizes with the symphony of truth. Together, we'll amplify the power of free journalism.

Lost Password?