Myanmar boosted by sanctions lift

By Kyaw Ye Lynn

YANGON, Myanmar (AA) - Myanmar's business community is welcoming a United States promise to lift sanctions imposed against the country during almost 50 years of repressive military rule, but many set to gain are the allies of the very people that the international community fought for so long to keep at bay.

The country's former capital Yangon was often said to be frozen in time due to the crippling embargoes imposed by the international community as it sought to push juntas into improving their human rights records and return the country to full democracy.

Earlier this month, U.S. President Barack Obama announced during a visit by State Counselor Aung San Suu Kyi to Washington that long-standing trade sanctions would be lifted, clearing the way for the country's one-time junta-affiliated undesirables to benefit from preferential tariffs as it emerges from decades of military rule.

Khin Shwe, chairman of one of the country’s most controversial military-linked conglomerates, spoke of his delight to Anadolu Agency at the lifting of bans by the U.S. on doing business with Special Designated Nationals (SDN) -- a ban on which he figures prominently.

“It is believed to be a silver lining for the country as well as for us,” the Zaykabar Company chairman told Anadolu Agency from his office compound near Yangon International Airport

Shwe is one of a number of tycoons in Myanmar referred to by the locals as "cronies" -- businessmen alleged to have benefited directly from tight relationships with the former military junta that left the resource-rich country one of the poorest in Asia.

He was placed on the SDN with around 100 other Myanmar businessmen in 2007 after being accused of hiring a U.S-based lobby group on behalf of the military government to lift trade sanctions.

During the repressive military government of Than Shwe, Khin Shwe is alleged to have been responsible for the repossession of thousands of acres of farmland by the dictatorship. Today, in his compound, he still keeps a bear and leopard in pens to showcase his wealth.

“Under the previous government term, businesspeople like me were unable to do any business with foreign firms, especially those in America,” he tells Anadolu Agency.

He says he expects the sanctions lift to bring good fortune as for years he couldn't even access his wealth outside of Myanmar since he can't even qualify for a bank card.

“[But] not only rich people, also poor will benefit from the sanction lift," he promises.

In 2011, many hoped that the election of the quasi-civilian government of so-called reformist President Thein Sein would open the door to the outside world, but to the international community it remained "the final frontier".

Slow reforms saw some democracies lift or ease some sanctions, paving the way for some foreign investment to flow in and out, but most were hesitant to join what was still seen as an invitation-only party dominated by local investors.

Earlier this month, an official from the government's Directorate of Investment and Company Administration (DICA) told Anadolu Agency that many western courtiers still saw doing business in Myanmar as a murky affair.

“The investment from western countries is still low compared to those from Asian countries,” DICA director Aung Naing Oo said by phone.

According to the DICA, as of August this year foreign directive investment in Myanmar was around $70 billion, of which U.S. investment made up just 0.39 percent of total FDI.

On Sunday, Prof. M. Panjaratnam, who heads the International Studies Department of Malaysia's Putera University, told Anadolu Agency that Myanmar can tremendously benefit from the lifting of sanctions, particularly in sectors such as retail, technology and exports of jade and garments.

He said U.S. expertise in retail and technology could boost the presence of new retail brands and malls in Myanmar, as well as the movement of some large U.S.-based tech firms interested in a base in Myanmar.

"The entire Southeast Asian [countries] are fighting for their share in high tech investments from countries like the U.S. The only separating factor is the labor cost that differs in countries like Malaysia, Vietnam and Myanmar,” he underlined.

"Given Myanmar's known affordable labor cost, it could be an attractive proposition for U.S. companies to shift from high labor cost countries to either Vietnam or Myanmar," he said in a telephone conversation.

Panjaratnam added that Myanmar's jade and garment industries, which constitute a significant portion of the country's gross domestic product (GDP), would also be enhanced through a large new market like the U.S.

Other sectors expected to benefit from new markets include the country's airlines, one of which is Air Bagan.

The owner of Air Bagan is another local former blacklisted tycoon Tay Za -- the founder and chairman of Htoo Group of Companies in which former dictator Than Shwe’s family was said to have invested heavily.

Tay Za has long been alleged to have been an arms dealer for the junta, and many locals also allege he is responsible for much of Myanmar's deforestation, as one of his companies was granted a license to export timber, much of which is alleged to have gone over the northern border to China.

Former juntas relied on tycoons such as Tay Za and Khin Shwe to prop up the economy.

They are then suspected to have become experts at circumventing sanctions and then become richly rewarded by the junta, which granted concessions ranging from forestry to car imports.

Last month, local media reported an official from Air Bagan as saying that the carrier has long wanted to expand its operations internationally, "but the U.S sanctions prohibited us".

“We want to buy new aircraft as we want to expand flights to compete with others for market share," the official said.

Despite the lifting, several restrictions, however, will remain in place, according to a U.S. State Department press release.

These include a visa ban barring some former and current members of Myanmar's military from traveling to the U.S. and limitations on foreign assistance to the military.

The U.S. has also said it will restore its Generalized System of Preferences (GSP) to Myanmar, more than 25 years after it was removed in 1989 following a brutal military crackdown on pro-democracy demonstrations.

The chairman of the Hlaing Tharyar industrial zone in Yangon heralded the lifting to Anadolu Agency as a major boost for the country’s labor-intensive garment, agriculture, fisheries and export sectors.

It is generally considered to be the proponent of the embargo that when restored will benefit the country's around 51 million people.

The zone is the biggest of 19 industrial zones in Myanmar where several labor intensive factories were established, and the GSP strikes duties off imports granting Myanmar tax privileges to the largest economy in the world.

“GSP will create jobs for our people,” Myat Thin Aung said. “It’s about time our people had good jobs and decent wages.”

* Anadolu Agency correspondent P Prem Kumar contributed to this report from Kuala Lumpur