Gemunu Amarasinghe/AP
The US Treasury Department last week changed its rules in regards to Myanmar, making it easier for US goods to pass through crony-controlled ports.
For the next six months, goods will be able to pass through trade facilities owned by sanctioned companies, as long as the goods transported are not the property of a sanctioned entity, according to a treasury document released last Monday.
The loosened rules could allow for easier US trade with Myanmar but has the potential to divert more dollars into the hands of companies still on the US sanctions list for links to the military and a background in heroin production.
Asia World
US-Myanmar trade slowed in recent months after Citigroup and other banks halted financing to companies that did business with Asia World, slashing the potential for US investment, Reuters reported.
Asia World owns one of Yangon’s major seaports, and was founded by Steven Law, the son of heroin kingpin Lo Hsing Han. Asia World has been the target of specific sanctions since February 2008.
Reuters reported that two banking associations said in a letter to the US Treasury Department that cutting off financing of shipments handled by Law’s firm “could amount to a de facto trade embargo because half of all Myanmar’s trade flows through the Asia World terminal.”
Besides its port terminal, Asia World is involved in a wide swath of businesses across Myanmar, some of which are not yet publicly known.
Its construction arm was involved in the building of Naypyitaw, as well as the highway from Lashio to Muse. The company was slated to be involved in the construction of the now-halted Myitsone Dam.
A classified US diplomatic cable from 2007 revealed by Wikileaks claimed that Asia World was believed to have a stake in “several garment factories and palm oil processing plants in Hlain Tha Ya Industrial Park, several paper mills, Myanmar Brewery in Rangoon, and the Asia Light supermarket chain.”
Later cables claimed Asia World had built Yangon, Mandalay, and Naypyitaw airports, and had stakes in the construction of the Sedona and Traders (now Sule Shangri-La) hotels.
The pervasive nature of Law’s businesses made it infeasible for the US to enforce sanctions against him. While this workaround allows financing to once again flow to companies that use his ports, Steven Law and Asia World remain under official US sanctions.
Bloomberg reported US State Department spokesman John Kirby as saying that the partial easing of the sanctions “is not a reward for the recent election, and does not represent a change in US-Burma sanctions policy.”
Champing at the bit
Despite Kirby’s assertion, this has raised the possibility that this could be a first step towards a loosening of sanctions in the country, which would allow for greater direct US investment in the company.
A great deal of US investment in the country is done through shell companies in Singapore.
In an interview with Bloomberg in late 2014, Deputy finance minister Maung Maung Thein said, “Some of the US companies register in Singapore as a Singapore company and come and invest in our country. That is why Singapore takes over China.”
Existing US investments, by contrast, represents less than one hundredth of one percent of total investment in the country with $4.6 million on the books, according to the Directorate of Investment and Company Administration.
This investment is still new; broad US sanctions were lifted in 2012.
“Because of the sanctions we had to export goods via Singapore and Thailand. Some have been disguised as Singaporean or Thai goods. This easing of sanctions is very good for our country. I also hope they will release more sanctions permanently in the future,” said economist Daw Yi Yi Myint.
From: Myanmar Business Today