With the easing of US sanctions on Myanmar earlier this week, now more and more companies from the former can find smoother passage into Myanmar’s market, including those doing business in retail apparel and fashion clothing.
In what is being seen as a move to promote reforms, exports and economic development, the United States’ move came as an incentive for the newly elected civilian government, led by President Htin Kyaw and Nobel Laureate Aung San Suu Kyi, to move towards democracy and facilitate economic development. This move has certainly been welcomed by the US companies as well, who stand to gain a lot from this changed scenario. Major US firms like General Electric, Western Union, Gap Inc and Coca-Cola have made business forays into Myanmar.
“We did this to demonstrate support for the new government’s democratic reforms and to promote broad-based, inclusive economic development,” said US State Department spokesperson John Kirby.
These steps, announced by the Department of the Treasury, were intended to promote trade, aid the movement of goods, allow certain incidental transactions related to certain individuals living in Myanmar, and allow more transactions involving designated financial institutions in the country, Kirby said.
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The easing of sanctions will now facilitate trade and financial transactions, which have been restricted between the two countries since the military rule in 1988.
This move will help expand General License 20 (GL 20), allowing use of key transportation and trade-related infrastructure, to counter unintended consequences of sanctions that hurt the Myanmar economy and US businesses engaged in the Myanmar market, said the US Treasury Department.
For this purpose, Secretary of State John Kerry will visit Myanmar on May 22 and meet leaders in Nay Pyi Taw to initiate US’s support for the democratically elected, civilian-led government, a statement by the State Department said. “Expansion of GL 20 signals to foreign and domestic companies, that Myanmar is open for business,” it said.
Myanmar, on its end, welcomed the US decision, expressing hopes that easing of economic sanctions would improve trade ties and investment between the two countries.
“It is a good move. I hope bilateral trade will get a boost starting from this year, given the recent easing of some sanctions. Obviously, our trade volume will also increase, thanks to the potential increase in bilateral economic activities,” said Maung Aung, an economist and senior adviser to the Commerce Ministry.
Easing of sanctions will also allow Myanmar’s banks on the blacklist, like Specially Designated National (SDN), to involve in financial transactions with US banks, and connect the country’s financial system with the global economy. Suh banks include Myanmar Foreign Trade Bank, Myanmar Investment and Commercial Bank, and Myanmar Economic Bank.
Earlier, these banks could not directly engage with US banks. They had to depend on banks in Singapore for it. Besides, US investors could not directly invest in Myanmar. A US firm was also not allowed to invest more than $500,000 in Myanmar.
The first quarter of this year saw Myanmar-US bilateral trade reaching new heights at US$124.1 million, with US exports to Myanmar amounting to $75.8 million. Trade figures have also risen steadily with the sanctions being formally eased in July 2012, from $65.8 million in 2012 to $361.2 million in 2015. Total trade value in 2013 and 2014 accounted for $175.7 million and $185.6 million respectively.
