The coup in Myanmar is expected to dampen the interest of companies in the United States and other Western countries to invest in the Southeast Asian country, and could prompt some large American companies to withdraw, according to reports. trade experts and analysts.
Total merchandise trade between Myanmar and the United States rose to nearly $ 1.3 billion in the first 11 months of 2020, up from $ 1.2 billion in 2019, according to US data. Census Bureau.
Clothing and shoes made up about 41% of total U.S. merchandise imports, followed by baggage, which accounted for almost 30%, and fish, which made up just over 4%, said Panjiva, the research unit. on the S&P Global Market Intelligence supply chain.
Luggage maker Samsonite and private clothing maker LL Bean are among the largest U.S. importers sourcing from Myanmar, along with retailer H&M and Adidas, Panjiva said.
U.S. imports increased in part due to tariffs on products from China, but Myanmar still only ranked 84th on the list of suppliers of U.S. goods, according to U.S. data.
The World Bank reported a 33% jump in total foreign direct investment commitments to Myanmar to $ 5.5 billion in fiscal year 2019-2020, led by Singapore and Hong Kong, but said the outlook was uncertain due to the pandemic and market developments.
At the end of last year, China was Myanmar’s second-largest investor behind Singapore with $ 21.5 billion in foreign capital approved. Beijing also accounts for about a third of all Myanmar trade – about 10 times more than the United States.
Data on U.S. direct investment was not available, the U.S. Trade Representative’s office said.
The Myanmar military handed power over to military leader Gen. Min Aung Hlaing on Monday and imposed a one-year state of emergency, saying it had responded to what it called electoral fraud.
The move resulted in condemnation of Western leaders and the threat of further sanctions by the U.S. government, and raised questions about the prospects for a million Rohingya refugees in Myanmar.
Lucas Myers, an analyst at the Woodrow Wilson International Center for Scholars, said the coup would exacerbate tensions in US-Burma relations following the sanctions imposed by Washington in December 2019 and further complicate trade relations.
“On trade, the situation of the Rohingya and Myanmar’s difficult human rights record has made investing less attractive for Western companies than for China,” Myers said.
William Reinsch, a trade expert at think-tank Center for Strategic and International Studies, said U.S. companies may choose to pull out of Myanmar, given new developments and the Biden administration’s commitment to pulling back. focus more on human rights.
While some American companies have moved work from China to Myanmar in recent years to take advantage of lower wages, the country’s infrastructure is still lacking, which has kept investments from flourishing, he added.
Most of the work in the United States was in low-capital-intensive industries and could be offshored quite easily, although it would take time, Reinsch said. “They are not semiconductors. These factories are relatively easy to set up. “
Stephen Lamar, president of the American Apparel & Footwear Association, said many members of the trade group were doing business in Myanmar and found the coup deeply concerning.
“We urge the full and immediate restoration of democratic rights and institutions,” he said. “Our hearts and prayers are with the people of Myanmar for a swift, peaceful and democratic resolution to this crisis – a solution that does not take away the economic progress made by the working people of Myanmar.”
A spokesperson for H&M said the company was monitoring events and was in close contact with suppliers, but did not intend to immediately change its sourcing strategy. “We are monitoring developments closely, but avoid speculating on what this will mean for us in the future,” the official said.