Myanmar coup likely to dampen investment interest: trade experts

According to analysts and trade experts, the coup by Myanmar’s military is likely to dampen the interest of western companies in investing in the country and may even prompt big U.S. companies to relocate.

In the first 11 months of 2020, the total trade in goods between Myanmar and the United States stood at $1.3 billion, up from $1.2 billion for the same period last year according to data from the U.S. Census Bureau.

Footwear and apparels accounted for nearly 41% of total U.S. goods imports, followed by luggage, which accounted for nearly 30%, and fish, which accounted for just over 4%, said Panjiva, the supply chain research unit of S&P Global Market Intelligence.

He went on to add, luggage maker Samsonite and privately owned apparel maker LL Bean are among big importers, along with retailer H&M and Adidas.

U.S. imports increased partly due to tariffs on goods from China.

In the fiscal year 2019-2020, according to data from the World Bank, total Foreign Direct Investment (FDI) in Myammar rose by 33% to $5.5 billion and was led by Singapore and Hong Kong. FDI by the United States was unavailable, said the U.S. Trade Representative’s office.

On Monday, Myanmar’s army handed power to military chief General Min Aung Hlaing and imposed a year-long state of emergency, saying it had responded to what it called election fraud.

The move triggered condemnation from Western leaders and renewed threats sanctions by the U.S. government, and once again raised questions about the outlook for a million Rohingya refugees.

According to Lucas Myers, an analyst with the Woodrow Wilson International Center for Scholars, the military coup would exacerbate strains in U.S.-Myanmar ties following sanctions imposed by Washington in December 2019 and would further complicate trade relations.

“On trade, the Rohingya situation and Myanmar’s troubled human rights record rendered investment less attractive for Western firms as compared with China,” said Myers.

U.S. companies could opt to pull out of Myanmar, given new developments and the Biden administration’s vow to focus more on human rights, said William Reinsch, trade expert with the Center for Strategic and International Studies think tank.

Most U.S. companies have very little sunken costs and could fairly easily relocate even if doing so would take time, said Reinsch.

“It’s not semiconductors. These factories are relatively easy to set up.”

In a statement, Stephen Lamar, president of the American Apparel & Footwear Association, said many of the trade group’s members did business in Myanmar and found the coup deeply concerning.

“We urge the full and immediate restoration of democratic rights and institutions,” said Lamar. “Our hearts and prayers are with the Myanmar people for a swift, peaceful, and democratic resolution to this crisis – one that does not take away the economic progress made by the hardworking people of Myanmar.”

According to a spokesperson for H&M, the company was monitoring events and was in close contact with suppliers, but had no immediate plans to change its sourcing strategy.

“We are closely following the developments, but refrain from speculating about what this will mean for us going forward,” the official.



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