Myanmar’s recent democratic reforms have driven many countries to re-assess their stance on the Southeast Asian nation, and some have already fully reversed their position. The powers that helped close Myanmar’s doors to international cooperation are now the ones rushing to get in as they re-open. Where there were once strict sanctions, there now comes development capital, partnerships and political support from some of the previous regime’s harshest critics.
At the beginning of 2013, a huge and unprecedented debt restructuring with Japan, the Asian Development Bank (ADB), the World Bank and Paris Club members cleared over $6bn, or 60% of the total owed by Myanmar. Japan itself was responsible for writing off $3.58bn, Norway cancelled $534m and other nations followed suit as the World Bank and ADB immediately issued new loans worth a combined total of over $1bn.
The move is not only an encouraging nudge towards democratic reform, it has also led the way for increased business cooperation and smoothed the path for some of the largest foreign conglomerates to enter the market. The week after the debt cancellation, three of Japan’s largest firms announced their intention to enter the Myanmar market – Dentsu, the public relations giant; Nissan, one of the world’s largest auto manufacturers; and Mitsui, a leading Japanese conglomerate.
Japan’s leading stance in the debt cancellation has put it in a good position to enhance cooperation with Myanmar, and its interests in the country run deep. Japan’s help in the Thilawa Special Economic Zone has attracted the interests of Mitsubishi, Marubeni and Sumitomo, who are all conducting feasibility studies to determine whether they could make use of the zone.
The US and EU have so far been left slightly behind Japan in terms of development aid and political and business cooperation; however, efforts are steadily being made to rectify this situation. In February 2013, US sanctions on financial transactions were lifted for four Myanmar banks that had been designated as having connections to criminal enterprises and thus restricted under US law. Two private banks, Asia Green Development Bank and Ayeyarwady Bank, along with two state-owned banks, Myanma Economic Bank and Myanma Investment and Commercial Bank, are now able to allow American businesses to legally remit funds into and out of the country.
The announcement came days before a 50-company American delegation arrived in Myanmar for the first time, looking for the next market in which to expand their enterprises. “Starbucks and McDonalds are definitely interested; they are now making plans,” Nik Myint, Myanmar country officer for the World Bank, told OBG.
EU & Peace Prizes
In April 2013, the EU agreed to lift all remaining sanctions on Myanmar and re-instate the generalised system of preferences, demonstrating its commitment to long-term cooperation with the new pro-democracy government. Additionally, although Norway’s contribution in the Paris Club restructuring was modest compared to Japan’s, the EU’s financial contribution was sweetened later in the year when Finland suggested that the new Myanmar president could be a strong candidate for the Nobel Peace Prize.
Some have protested that the swift turnaround for foreign attitudes to Myanmar has come too soon, and that continued conflicts and human rights abuses within the country do not yet warrant such strong support from Western nations. However, the global consensus to help the country through its transitional period promises to provide many more positive changes than the sanctions ever could.
“The sanctions simply lead us to give concessions to other Asian partners,” U Soe Win, managing director of local consultancy Myanmar Vigour, told OBG. “Security threats from the West forced us to get vetoes from China, and vetoes do not come cheap.”
Today, Myanmar is being offered the carrot rather than the stick, and international aid and cooperation offers are arriving in droves. The once-shunned nation is now welcoming back old partners and inviting in new ones, carefully rebuilding its international reputation.
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