Burma embarked upon an aggressive agenda of democratic reform in 2012, with plans to liberalize its previously cloistered markets and attract foreign investment. In response to these reforms, the U.S. government has eased sanctions on the country. Nevertheless, progress has been slow, with U.S. exports to Burma reaching only $145 million in 2013, and imports of $30 million.
However, the U.S.’s commitment to Burma’s future development has been unwavering. Speaking exclusively to the Sourcing Journal, a spokeswoman from the United States Trade Representative office (USTR) candidly discussed the U.S.’s recent initiatives to vitalize Burma’s once moribund, but now promising, future as a manufacturing hub. She acknowledged Burma’s historic missteps, but also explained the scope of the U.S.’s plans to participate in its economic renewal. She said:
“Years of centralized economic planning, regulations unfriendly to businesses, and restrictive foreign investment laws have stymied broad private sector development. Under the changing economic and business environment, however, the U.S. Government has taken a number of steps to build closer economic and commercial ties with Burma and to address the investment climate, and has also been clear about its expectations the U.S. businesses engage in responsible business conduct, including respecting human and labor rights in their operations and supply chains.”
The first step toward reform was the establishment of a free trade agreement, detailing the economic structure within which Burma and the U.S. could engage in trade and broker foreign investment. “In May 2013, the U.S. and Burma signed a Trade and Investment Framework Agreement (TIFA) to promote dialogue and cooperation on trade and investment issues,” the USTR spokeswoman said. “We also signed an Investment Incentive Agreement that will allow the U.S. Overseas Private Investment Corporation, to support potential U.S. business investment in Burma.”
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Also, finding sources of much-needed funding was of paramount importance. The USTR spokeswoman said, “As part of our broader efforts in Burma, we have requested increased funding in support of Burma’s unprecedented political and economic transitions. FY 2014 Request expands funding for Burma to $75.4 million from $46.6 million in FY 2012, reflecting a 62-percent increase. U.S. assistance will focus on economic governance issues to foster a positive business environment, increase private sector competitiveness, expand access to credit, and increase agricultural productivity and food security.”
Eager to avoid the problems manufacturing nations like Pakistan and Indonesia have encountered with energy shortages, the U.S. has focused on its rehabilitation in Burma. The USTR spokeswoman explained, “In the oil and gas sector specifically, we are engaging with Government of Burma officials to improve the transparency and governance of their energy sector. During the May 2013 visit of Burmese President Thein Sein to the United States, we released a joint statement on good governance and transparency in the energy sector, and in June, the United States and Burma launched a partnership on extractives transparency under the auspices of the G8.”
A comprehensive approach to improving Burma’s energy sector involves properly mining its considerable natural resources. The USTR spokeswoman said:
“The Government of Burma has committed to implement the Extractive Industries Transparency Initiative (EITI), and has taken the initial steps to do so, putting the country on a trajectory to improve transparency in — and accountable management of — its rich natural resources sector. The government recently concluded a competitive onshore oil and gas licensing round, and is in the process of concluding its first offshore and deepwater licensing round, in which we understand several U.S. and European companies submitted bids.”
For the sake of guaranteeing responsible investment in Burma, the U.S. Department of Treasury has quickly established legal guidelines. “When the Department of Treasury issued its General License for new investment in Burma in July of 2011, it made the General License contingent on complying with Responsible Investment Reporting Requirements administered by the Department of State. We believe that reporting on responsible investment can reinforce the reform process by playing a positive role in upholding the rule of law, spurring economic development, and demonstrating to Burma’s people that democratic reforms pay both political and economic dividends. Transparent business practices promote economic inclusion and empower civil society to feel a sense of ownership in the development around their communities. For more information on the reporting requirements, please visit www.HumanRights.gov/BurmaResponsibleInvestment.”
The ultimate goal is the rapid improvement of Burma’s economy, making it hospitable to foreign investment, while also ensuring responsible protocols. The USTR spokeswoman emphasized this as a principal feature of U.S. strategy. She said, “The U.S. Embassy in Rangoon is also in frequent dialogue with the U.S. business community in country and we are encouraging American companies to look closely and with eyes wide open at Burma as a possible investment opportunity.” She continued, explaining how economic maturity and social responsibility develop in tandem:
“In turn we see American companies as having some of the highest standards of responsible business conduct and we hope that American business can be a model for responsible investment and business operations, supporting further positive change, promoting inclusive economic development, and contributing to the welfare of the Burmese people. A long-term commitment from the private sector will be key in developing Burma’s business environment, training the workforce, and increasing economic opportunity.”