Wednesday, November 12, 2014

New blacklisting shows Myanmar business perilous

October 31, Wall Street Journal

The latest U.S. sanctions on a Myanmar lawmaker highlight the conundrum for companies looking to bring Western investment to the country: more names are going on the Myanmar blacklist than coming off.

U.S. officials placed Myanmar parliament member Aung Thaung on America’s blacklist Friday, freezing his assets in U.S. –connected banks and forbidding him from deals with American firms. The move represents the first time the U.S. has placed a senior Burmese official on the blacklist since it began lifting sanctions in 2012.

The Obama administration has faced criticism from human right groups that say the U.S. should do more to punish members of Myanmar’s military who they say are blocking the country’s move to democracy. “By intentionally undermining the positive political and economic transition in Burma, Aung Thaung is perpetuating violence, oppression, and corruption,” said Adam J. Szubin, director of the Office of Foreign Assets Control, in a press release.

The new sanctions highlight the obstacles to Western firms seeking to do business in Myanmar. U.S. officials have been encouraging companies to consider investing in Myanmar, which was under an almost complete trade ban until 2012, after a civilian government was formed. But while U.S. diplomats are actively encouraging Myanmar businessmen to apply to be taken off the U.S. blacklist, few of the 100 or so names have so far been removed. That means American firms remain forbidden from doing business with many of the country’s key players.  No names were taken off the blacklist in 2014 and only one was removed in 2013, while several were added, according to public records.

“This shouldn’t be read as a stop sign from going to Myanmar,” said Erich Ferrari, a sanctions attorney who represents Myanmar businessmen seeking to get off the blacklist. “But doing business there is still fraught with peril because a lot of [specially designated nationals] still control the economy, so it’s going to require a lot of work.”

Peter Kucik, a former OFAC official, said based on his conversations with Burmese businesses and American policymakers he believes the blacklist will shrink in the next year or so. “We’ve been hearing that quite a number of SDNs have either submitted applications for removal  from SDNs or are getting ready to do so,” said Mr. Kucik, who is now a consultant for Inle Advisory Group, which helps U.S. companies set up shop in Myanmar.

Mr. Kucik said he believes doing business in Myanmar will become similar to countries like Mexico, where many individuals are blacklisted because of alleged ties to drug traffickers, but legitimate trade continues to flow. “When you are talking about doing business in Mexico or South America no one thinks that’s problematic,” he said.