US poised to allow new investment in Myanmar

WASHINGTON (AP) ? The United States is poised to allow American companies to invest with Myanmar's state oil and gas enterprise, a go-ahead that marks Washington's biggest easing of economic penalties but also a rare break from democracy leader Aung San Suu Kyi.

The Nobel Peace laureate, long a guiding force on U.S. policies toward Myanmar, last month advised against investment by foreign companies with the Myanma Oil and Gas Enterprise because of concerns over its accountability and transparency.

Her comments reflected the growing disagreement between human rights groups and business advocates over how the U.S. should proceed in rolling back restrictions.

Suu Kyi cautiously has supported suspending sanctions as a reward for Myanmar's shift from five decades of authoritarian rule. But she and other democracy advocates are wary about investment in oil and gas enterprise, which had been an economic lifeline for the former ruling junta.

Doing business with the state enterprise is the only way to gain access to Myanmar's potentially lucrative energy resources. U.S. companies fear they will lose out to foreign competitors if the restrictions aren't lifted.

Recognizing concerns over corruption and rights abuses in Myanmar, the Obama administration is expected to require U.S. companies to report on their investments in the country, which also is known as Burma.

Secretary of State Hillary Rodham Clinton said in May that U.S. companies would be allowed to invest in all sectors of Myanmar's economy, though not businesses owned or operated by the military. She also announced the suspension of a ban on the export of U.S. financial services, seen as vital for starting to do business in the country.

The administration is expected to take the next step as early as Wednesday, with the issuance of a general license that finally opens the door for American companies to operate in one of Asia's last untapped markets.

Clinton was traveling through Southeast Asia, meeting with foreign ministers but also underscoring U.S. efforts to deepen trade and investment ties with a region of rising prosperity and importance as an export market.

An announcement would coincide with the arrival in Myanmar of Derek Mitchell, who on Wednesday presented his credentials to become the first U.S. ambassador to the country in 22 years as Washington normalizes its diplomatic relations with a former pariah state.

In a further sign of U.S. efforts to forge closer ties, Robert Hormats, undersecretary of state for economic growth, energy and the environment, and Francisco Sanchez, undersecretary of commerce for international trade, will travel to Myanmar this weekend to promote economic and business engagement.

Western governments are eager to reward reformist President Thein Sein for reconciling with Suu Kyi, who has been elected to parliament after spending 15 years under house arrest. The investment penalties, in place since 1997, have contributed to Myanmar's missing out on the region's economic boom.

The U.S. Chamber of Commerce and some U.S. lawmakers have pressed the administration to expedite the general license so American companies can compete with those from Asia and Europe already free to operate in Myanmar.

Advocates argue that allowing investment would give a valuable boost to Thein Sein in winning over some in the military to his reform agenda. U.S. companies also face more legal constraints on their foreign operations than Asian and European firms and could have a positive influence in opening up the nation's economy.

In her criticism of the state enterprise last month, Suu Kyi said countries could help by not allowing their companies to become partners until Myanmar applies internationally recognized standards such as the International Monetary Fund's code of good practices on fiscal transparency.

She also advocates Myanmar's joining the Extractive Industries Transparency Initiative, which calls for governments to disclose payments from oil, gas and mining companies. Myanmar's industry minister, Soe Thein, has said the government intends to join. Achieving full compliance is a lengthy process that would require Myanmar meeting benchmarks and partnering with both companies and civil society. The head of the Oslo-based group's secretariat will visit Myanmar next week.

Human rights groups and many Myanmar activists argue that the Obama administration is moving too fast to reward Myanmar and will lose leverage in pressing for more reforms. The country is still plagued by ethnic and communal violence. Despite the releases of hundreds of political prisoners in the past year, hundreds more reportedly remain in detention.

Lisa Misol, a senior researcher on business issues at the New York-based group Human Rights Watch, said if the U.S. government allows "across-the-board investment," it could undercut reforms and potentially fuel rights abuses and corruption.

"Requiring disclosures by companies would be better than nothing, but greater transparency isn't enough and certainly doesn't justify opening the floodgates to business in a country with Burma's track record," she said.

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Associated Press writer Matthew Lee contributed to this report.

Source: http://news.yahoo.com/us-poised-allow-investment-myanmar-065932868.html

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