This study analyzes Myanmar’s external economic relations that has been changing rapidly since the new government came into power in 2011. It specifically considers two topics. The first is the easing of Western sanctions on Myanmar and the second examines how major countries have responded to Myanmar’s unexpectedeconomic and political reforms. By systematically analyzing the fast-changing external economic environment of Myanmar, a country now considered the last frontier of Asia, this study aims to provide detailed information and policy implications on Myanmar’s transition.
US sanctions on Myanmar have been eased substantially as a response to Myanmar’s political liberalization and as an inducement for further reform. Sanctions in most sectors, except GSP withdrawal and arms embargo, have been eased or suspended to a great extent. Yet the current easing of sanctions is the result of presidential waivers all basic legislations on sanctions on Myanmar remain intact. Therefore, there is a technical possibility that sanctions can be swiftly restored should reforms in Myanmar backslide or a major political catastrophe occurs. The US used to maintain a comprehensive sanctions regime on Myanmar but now it is moving toward a targeted sanctions regime based on Specially Designated Nationals (SDN) list maintained by the US Treasury’s Office of Foreign Assets Control. As SDN is emerging as an important framework for economic cooperation with Myanmar, governments and businesses will need serious risk assessments when engaging in bilateral cooperation or business transactions involving the country. The suspension of the import ban and investment restrictions by the US presents an unprecedented economic opportunity for Myanmar and foreign investors, but the nuances and technical details of the new sanctions regime call for attention to its remaining restrictions and related business risks. For its part, EU has suspended all the sanctions except the arms embargo on Myanmar and offered development assistance with focus on health, education and peace.
Although the dominant position of China in Myanmar has been challenged, China is and will continue to be one of its most important trade partners, investors and aid donors. China is expected to continue its numerous infrastructure and development projects across the country although its modus operandi will have to adapt to new political sensitivities of the Myanmar government as well as public scrutiny. It will also have to face international competitionin natural resource development, infrastructural development, foreign aid, and market share for consumer goods. Japan, on the other, has been engaging Myanmar most aggressively since the reform, with offers of sizable debt relief and foreign aid. It has already achieved early successes in securing infrastructure development deals with Myanmar and is emerging as one of the most significant donors for the country. Moving to ASEAN countries, neighboring Thailand has been aggressively pursuing joint development projects and investment with Myanmar along its border. Singapore, Myanmar’s important regional ally, has proposed government capacity and human capital development as its area of specialization for assistance.
Korean government and businesses need to adapt to the new US sanctions regime. It also needs to find ways to partner with China and Japan in large-scale infrastructure development projects and in the energy sector. For development assistance, Korea will need to identify sectors and methods for concentration to best serve Myanmar’s pressing development goals while not straining Myanmar’s scarce human and government resources.