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Matthews Asia Weekly


U.S. to Lift Myanmar Sanctions

Week of September 23, 2016


November 13 will be a “red letter” day for Myanmar. Two weeks ahead of Thanksgiving, Myanmar will have its own reason to be thankful—the end of U.S. economic sanctions, which will be marked by a re-instatement of the Generalized System of Privileges (GSP) program that was suspended in 1989, following a brutal crackdown on political dissidents by its then military government. The GSP program is the largest and oldest preferential trade program in the U.S., used to promote sustainable development.

The U.S. started easing sanctions back in 2012, when the previous quasi-military administration led by former President Thein Sein started to clear a path toward democratic elections. The importance attributed to Myanmar’s democratic pivot can be seen in the context of President Obama’s two subsequent visits, and in the official Oval Office reception awarded to Aung San Suu Kyi, Myanmar’s de facto leader (who is barred from the official presidency due to restrictions in the constitution written by the military).

Besides a reinstatement of the GSP, the end of U.S. sanctions will remove restrictions on trading with certain individuals associated with the former military junta and military-affiliated companies. This may also pave the way for broader international engagement with Myanmar. While the business sector has unanimously cheered these developments, civil sectors of Myanmar society appear less enthused. They believe that removing sanctions will reduce international leverage over the country’s military, whose privileged position remains officially enshrined in the constitution, and which remains dogged by allegations of human rights abuses in ethnic minority regions.

That said, there are early signs of progress. The plight of the Muslim ethnic Rohingya minority in Mynamar’s western Rakhine state, which has been displaced by sectarian violence, has finally been taken up with the formation of an advisory commission. Led by former United Nations Secretary General Kofi Annan, the committee is tasked with evaluating potential solutions. As Myanmar’s recent economic progress—after languishing for over 50 years under military rule—shows, constructive engagement may well offer the best prospects of promoting positive change.

The views and information discussed in this article are as of the date of publication, are subject to change and may not reflect the writers' current views. The views expressed represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. Such information does not constitute a recommendation to buy or sell specific securities or investment vehicles. It should not be assumed that any investment will be profitable or will equal the performance of any securities or any sectors mentioned herein. 

The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation, but no representation or warranty (express or implied) is made as to the accuracy or completeness of any of this information. Matthews International Capital Management, LLC does not accept any liability for losses either direct or consequential caused by the use of this information.