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Myanmar Opening Will Be Boon for US Companies


Political instability masks enormous potential.

MINYANVILLE ORIGINAL On Wednesday, HSBC (NYSE:HBC) hosted the final discussion in its four-part series Changing the Game: Asia's Emerging Markets at the Asia Society in New York City. The tone of the evening reflected a proverbial "sea change" for Asia and the United States, as well as for a global economy currently being molded by a combination of the eurozone crisis and Chinese caution.

Irene Dorner, President and CEO of HSBC USA, who recently topped the list of American Banker's 25 Most Powerful Women in Banking, introduced the night's panel with the following remarks on the world's economic quandary:

It's a world where a pause in activity from China can have untold rippling effects. Though China long ago emerged as an economic giant with advantages in manufacturing due to its vast pool of lower cost labor and foreign investment activities, rising transportation cost [and] higher labor wages are now working against China's comparative advantages. At the same time, you have many of the South East Asian countries like Vietnam, Malaysia...and Indonesia all gearing up to take advantage of their low costs and abundant labor supply. But even when you consider these shifting variables, by 2016, it's still likely that China will actually overtake the US as the largest trading nation in the world. That's according to HSBC's Benchmark Global Connections Trade Forecast. There has also been a steady growth in South-South trade that has led to developments like China's strongly increased trade with Brazil...What started as mainly commodity exports from Brazil to China has right now led to high levels of foreign direct investment from China in a wide range of sectors in Brazil. In fact, our research has shown that China is the biggest investor in Brazil. Now, a key piece of research HSBC has come out with, The World in 2050, projects that the emerging world will grow five-fold by 2050, and will in fact be larger than what we today call the developed world.

A panel following Dorner was moderated by Clyde Prestowitz, Founder and President of the Economic Strategy Institute, and included Murray Hiebert, Deputy Director of the Center for Strategic and International Studies, and Marc Mealy, Vice President of Policy at the ASEAN Business Council.

The Association of Southeast Asian Nations (ASEAN), whose members include Brunei, Cambodia, Indonesia, Lao, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, remained a central topic over the course of the evening. ASEAN+6 -- which adds six more countries in the region to the trade group, including China, India, Japan, South Korea, Australia, and New Zealand -- is expected to launch the world's largest free trade market, the Regional Comprehensive Economic Partnership (RCEP), in November.

Of particular interest was the role of the group's most politically unstable member, Myanmar, which, by the independent suggestion of each panel member, was addressed with urgency at the end of the night's discussion.

As pointed out by The Economist, Myanmar was seen as having good "development prospects" when compared to other recently-independent countries in the region following World War II. But it fell to social and economic oppression, as well as isolationism, when accused human rights violator Ne Win rose to power after a 1962 military coup d'etat, and implemented a disastrous economic plan, the Burmese Way to Socialism. In 1988, after nearly 3000 people were killed in protests, the United States issued a long list of sanctions against Burma, which essentially cut off all trade between the two countries.

In 2011, the United States began a process of opening relations with Myanmar, after former Prime Minister and notable moderate Thein Sein was elected president. Sein is unprecedented in his willingness to open talks with the country's biggest opposition leader Aung San Suu Kyi, as well as to push to see Myanmar chair the ASEAN summit in 2014.
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