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November 27, 2012
RANGOON, BURMA — The United States is looking to increase business with Burma following President Barack Obama's historic visit and the easing of economic sanctions. But some limitations remain and American investors are proceeding cautiously.
The United States suspended the restrictions on imports from Burma just ahead of President Obama's trip.
"America is lifting our ban on companies doing business here, and your government has lifted restrictions on investment and taken steps to open up your economy," said Obama. "And now, as more wealth flows into your borders, we hope and expect that it will lift up more people.
But sanctions against Burmese jade and rubies, considered the world's finest, are still in place.
Members of Burma's previous military government and their cronies still profit from the gem industry that remains tainted by its record using forced labor and children.
Gem mine owner and dealer Aung Kyaw Zin claims labor abuses are a thing of the past and argues U.S. restrictions fail to curb the trade in jade while unfairly hurting family-owned businesses like his.
"Jade is especially for the China market, there is no American market," he said. "So, the current sanctions are not effective on the jade market and business. Ninety-five percent of [precious stone] annual profits, $2 billion to $3 billion, are from jade selling. The profit from gems, like ruby and sapphire, selling are less than 5 percent [of the precious stone total]. Therefore, sanctions only affect gem & colored stone dealers.
Despite lingering concerns over labor practices, there are already signs the stigma of doing business in Burma is fading and American companies are moving in.
Thaw Tin says his company plans to open two more shops exclusively selling Apple products.
He says despite import problems American brands are well known. "It's just a matter of how much we can import in and how many we can get them on shelf," he noted. "They just move by itself.
Major U.S. investors are also eyeing Burma's markets for opportunities, but are proceeding cautiously.
YGA Capital Managing Director Thura Ko Ko is advising the largest U.S. equity firm in the world.
"Sanctions can be lifted or waived or suspended within a very short time," he explained. But, if you cannot wire dollars over, if you cannot convert easily, if you cannot wire funds outside, I think you'll still see challenges in the pace of foreign investment.
President Barack Obama's unprecedented visit underscored the potential the U.S. sees in Burma.
But his reception here also demonstrated the potential that Burma, long reliant on neighbors China and Thailand, sees in the U.S.
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