May 19, 2013

Myanmar opening to U.S. influence — and business

T-shirts bearing images of U.S. President Barack Obama and Aung San Suu Kyi, Myanmar’s prodemocracy leader, hang side by side in the shops just off busy Kabar Aye Pagoda Road in Yangon. It’s a reminder of the history made in November when Obama became the first sitting U.S. leader to set foot in Myanmar, the country formerly known as Burma.

A return trip to this former pariah state doesn’t appear to be on Obama’s immediate itinerary. However, corporate America is on its way.

Google Chairman Eric Schmidt visited in March, and Ford announced its entry into the chaotic local auto scene at an April event with the U.S. ambassador. Hilton is building a hotel across from the golden Sule Pagoda, and Colonel Sanders is not far behind, as Yum Brands’ KFC posts job ads in local newspapers.

It’s just one element of the surprisingly rapid expansion of economic, political and even military ties between the United States and Myanmar in recent months after more than two decades of estrangement.

The thaw will be on display again when Myanmar President Thein Sein visits the White House on Monday — the kind of event that would have been unimaginable even a year ago. The former general, who took power in a transition to civilian government in 2011 and has ushered in a wave of political and economic reforms, is also scheduled to be the featured guest at a U.S. Chamber of Commerce event.

Taking their cues from the administration, many U.S.-based companies are looking to make up for lost time in Southeast Asia’s last untapped market, where regional and European rivals have already moved in.

Yet the relationship between the U.S. and Myanmar remains fraught with awkward complications — including the fate of remaining political prisoners and U.S. concerns about the government’s handling of recent anti-Muslim violence, which has re-emerged after being suppressed during decades of rule by the former military regime.

In a May 6 speech, Thein Sein acknowledged that “we are still at a sensitive stage in the reform process where there is little room for error.”

Derek Mitchell, who last year became the first U.S. ambassador to Myanmar in 22 years, said the ability to expand ties, “even as we frankly raise issues of concern,” reflects a maturing of the relationship. The United States is clear-eyed about the challenges but needs to keep backing reformers, he said. “I don’t think anyone expected the speed of change we have seen in this country over the past two years, and our engagement has sought to keep pace,” Mitchell said by email.

The United States is also ramping up foreign aid and considering reinstating tariff benefits that have been suspended since 1989.

Indeed, Singaporean, Chinese, Japanese and Thai firms have long operated in Myanmar, and European companies face a far easier road following the European Union’s recent decision to end sanctions, other than an arms embargo.

“For the first time . . . you’re starting to see American brands,” said Joshua Brown, the chief representative in Myanmar for Tractus Asia, a management consulting company that helped arrange a visit by a U.S. Chamber of Commerce delegation in February.

Still, for every Ford or Coca-Cola, people in the local business community say there are several more American companies still evaluating whether they have the stomach to jump in, particularly ahead of an important presidential election looming in 2015 — when Suu Kyi might be allowed to run as a candidate.

Myanmar poses unique risks, Brown said, and companies want to know whether things could go backward, as they have before. “American companies are very wary of the risks that are posed by the sanctions regime. It’s very difficult to understand who’s who,” he said. They want to “understand if the undoing of the sanctions regime has permanence.”

Source: The Japan Times