Jun 8, 2013

GE Executive Says U.S. Companies Playing Catch-Up in Myanmar

U.S. companies are playing catch-up to their global rivals in Myanmar, where many of the Southeast Asian nation’s former ruling elite are on a U.S. government blacklist, according to John Rice, vice chairman of General Electric.

A rush of companies has poured into Myanmar in the past two years since the government began a process of political reform. Many countries have completely dropped sanctions against the Southeast Asian nation.

The U.S. has dropped some sanctions but it has held a relatively tough line. U.S. companies are effectively forbidden from doing business with anyone on the list of Specially Designated Nationals. Most of these people are former members of Myanmar’s ruling military junta or have close ties to them.

Mr. Rice, who spoke to The Wall Street Journal on the sidelines of the World Economic Forum on East Asia, said the SDN list is “a complication” and that it is “hard to make absolutely, positively sure” you are not doing business with a blacklisted person.

But, he added, the sanctions and blacklist won’t deter GE from deepening its ties with Myanmar. GE is already active in Myanmar, in healthcare, aircraft leasing and energy infrastructure, for instance.

“We do business in many countries and we figure out who we want to business with,” Mr. Rice said. “We want to stay a-political. Someday, there will be a new administration [in Myanmar] and we want to stay above the fray.”

In addition to GE, U.S. companies like Coca-Cola Co. PepsiCo Microsoft MSFT and Visa Inc. are also making headway in Myanmar.

Companies looking to move into the former pariah state often find there’s a lack of information about organizations and people they want to do business with, or the information that is available isn’t accurate.

Stuart Witchell, a senior managing director with FTI Consulting, says that one of the major hurdles for any company wanting to invest in Myanmar “is the widespread lack of transparency related to ownership of businesses and other involvement of the military and former military.”

Machut Shishak, first economic secretary at the U.S. Embassy in Yangon, Myanmar, said U.S. companies have to do “some more legwork” as a result of the SDN list.

“But that’s not a roadblock. It’s more something that they have to find ways to work around,” Mr. Shishak said.

But competitors from other countries have gotten a head start on their U.S. rivals, especially because they were in Myanmar before the country’s recent opening up.

“They’ve been here longer and it’s up to us to catch up,” GE’s Mr. Rice said.

In the year to March 31, Myanmar received about $1.4 billion worth of foreign direct investment, according to recent government data. Most of that came from Singapore, Vietnam, Thailand, China and Japan. The U.S. hadn’t made a mark on the FDI list. But this week, Coca-Cola Co. announced it is investing $200 million over the next five years in production and distribution of its soft drink products in Myanmar.

Source: The Wall Street Journal