Top US State Department economic official Robert Hormats told US investors on Wednesday that doing business in Burma will not be easy and there is not likely to be a “big gush of money” coming in from the US and foreign countries.
Speaking to the Washington International Trade Association, he said Burma is rich in resources, but it has relatively few processing industries and is poor compared to its neighbors.
Hormats downplayed the possibility of big investments in the now undeveloped market, at least in the near term.
“This notion that there's going to be a rush of American capital coming in there - there probably won't,” he said.
“Burma is a very complex place and if you're going to invest, you have to do a lot of due diligence,” he said.
He said one reason is the ethnic minorities, who remember the difficult relations they have had with the military government and with past investment deals that pushed many of them off their land, Hormats said.
Hormats visited Burma with a US business delegation earlier this month, which included leading US companies, some of which indicated they are ready to begin doing business in Burma. General Electric was the first US company to conclude a deal, agreeing to sell health care equipment to two private hospitals. It indicated it was also interested in providing electrical generating capacity to Burma.
Companies need to tread carefully because of local concerns about the environmental impact of investments, Hormats said.
He said he did not believe the government would reverse its move toward democracy, because “there would be a lot of social pressure against them.”
“My baseline scenario is they will continue to move in the direction of reform,” because the average Burmese citizen anticipates increased economic and civil liberties, he said.
Hormats noted that Washington is prepared to lift additional sanctions on an “action for action” basis and noted that President Thein Sein has promised another wave of reform.
Meanwhile, a bill to reauthorize a long-time U.S. import ban on Burma through July 2015 is pending in Congress. President Barrack Obama could rescind it at any time through a presidential order.