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Burma Business Roundup (Monday, February 13)


By WLLIAM BOOT / THE IRRAWADDY Monday, February 13, 2012


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China ‘Unable to Bring Burma into 21st Century’

The failure of “military-crony capitalism” and a realization by generals that China alone could not bring Burma into the 21st century are at the heart of the new West-leaning liberalization, claims the latest edition of The Economist.

The economic and social mess Burma finds itself in “trumped the ability of a few to make very corrupt fortunes,” says the leading business magazine.

“Many in government badly want their country to be reconnected to sources of international finance, especially the IMF and the World Bank. [Burma] has been denied this under Western sanctions.

“Many presumed that these sanctions did not worry the generals because they could rely on Chinese aid instead. Not so. Particularly in northern Myanmar, the often arrogant and sometimes brutal behavior of Chinese companies in the end alienated even the government. What is more, the sort of technical and educational assistance—“capacity-building” in the jargon—that Myanmar now craves is just what China does not do.”

Burma still Tops ‘Extreme Risk’ List for Foreign Investors

Burma retains poll position in an international index of countries providing the least legal protection for foreign companies and investors.

Despite recent liberalizing developments, Burma is still judged to be the worst of 19 countries classified as an “extreme risk” for foreign investment, according to the latest assessment by British risk analysis firm Maplecroft.

“With recent political reforms and the likelihood of sanctions being lifted, Myanmar offers huge potential for oil and gas firms,” says the Maplecroft study.

Burma has been at the top of Maplecroft’s extreme risk index for the last five years.

“The Burmese government continues to dictate policy direction and judicial decisions. Tangible improvements in the rule of law, including increased judicial independence and greater transparency in the regulatory system, will be required before the long-term potential of the economy can be realized,” writes Maplecroft.

Burma is in the company of North Korea, Somalia, South Sudan and Turkmenistan in Maplecroft’s five most risky countries in which to do business.

“Organizations investing in lucrative energy markets, such as Myanmar, Turkmenistan or Libya, need to be extremely cautious,” said associate director at Maplecroft, Mandy Kirby. “The rule of law serves as a check on abuses of private and state power and is important in the oversight of business regulations, including contract enforcement and competition laws.”

World Bank Move Shows US Sanctions Weakening

Most economic sanctions imposed on Burma by the United States remain in force, but Washington in the last week rescinded its block on international financial bodies such as the World Bank working with Burmese institutions.

Lifting the ban was in recognition of recent liberalizing moves made by the Burmese government and follows the visit to Burma by US Secretary of State Hillary Clinton.

The Burmese Freedom and Democracy Act currently remains in force and requires the US to prevent financial institutions from giving loans or technical assistance to Burma.

A State Department statement said limited engagement by the World Bank, now supported by Washington, would encourage understanding of Burma’s economic situation, especially its “severe poverty alleviation needs.”

Until now Washington used its veto at the World Bank, where it has strong influence, to block all links with Burma.

“The United States remains committed to supporting and partnering with the Burmese government along the path of reform,” said the department.

Japan Seeks Better Protection for Business Investments

Japanese government officials begin lengthy negotiations in Naypidaw on Tuesday for a more secure investment agreement for companies seeking to do business in Burma.

Japan, a close ally of the United States, has been reticent to spend money in Burma, where it is ranked only 12th in foreign business investment terms. Burma is the only country in Asean with whom Tokyo does not have an investment protection treaty, said the Japanese business news agency Nikkei.

Representatives from Japan’s foreign, industry and economy ministries will begin initial negotiations on Feb. 14.



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