3:00 P.M. EDT
THE WASHINGTON FOREIGN PRESS CENTER, WASHINGTON, D.C.
MODERATOR: Good afternoon, everyone, and welcome to the Foreign Press Center. Thank you for joining us this afternoon. We’re delighted to have Robert Hormats here today. He’s the Under Secretary for Energy, Growth, and the Environment. He’s going to give us a readout from the first U.S. Trade and Economics delegation to Burma in many years. Thank you very much for joining us.
UNDER SECRETARY HORMATS: Well, thank you very much. It’s a pleasure to be here – does this work? Can you hear?
UNDER SECRETARY HORMATS: Okay. Well, thank you very much. It’s a pleasure to be here. And I thought I would take a few minutes to describe the setting for our trip and also give you some insights that resulted from our two-and-a-half day stay in both Nay Pyi Taw and in Rangoon. Nay Pyi Taw is, as you know, the capital – for those who haven’t been there, it’s really a relatively new city, but it is being built up and the government sits in Nay Pyi Taw. The business community is largely in Rangoon. So we visited both.
The backdrop to this visit was essentially that a lot of major reforms have taken place in the country, and they have done a number of things. The President, Thein Sein, has been in office about a year and a half with a government that is very committed to reforms, as is he. And they have released something in the order of 500 prisoners of conscience, political prisoners. They have made a number of economic reforms; they have allowed the development of over a hundred labor unions; they have allowed by-elections in which Aung San Suu Kyi, with whom we also had a chance to meet, and her party achieved very substantial victories in virtually all the by-elections that took place and gained over 40 seats in the parliament. They have engaged in a number of measures to reform the economy that are producing opportunities for more and more people in the country.
And by and large, they have committed themselves not just to the reforms that they’ve undertaken, but to additional reforms. For instance, they’re moving to provide for an independent central bank; they’re writing a new law and set of regulations on investment in order to attract more foreign investment. So a wide-range of things are beginning to emerge for what the President has called – President Thein Sein has called the second wave of reforms, which are in the process of being implemented right now.
In response to these very positive developments – which are positive, but as I will indicate in a few moments, they do have a way to go. But in response to the positive developments, a number of things have happened. Most recently, as you doubtless have followed from what you’ve seen in Washington, we have eased sanctions on Burma. And the easing of the sanctions include[s] two major elements, one of which is that we are now able to export financial services to Burma. That essentially means that American financial institutions can operate in Burma in a variety of ways which was not possible before. And also, and very importantly, American companies can now invest in Burma. And this was also prohibited before.
There are still some sanctions left. One of which is that Burmese products cannot be imported into the United States. There’s a specific prohibition on precious stones and metals that come from Burma cannot be exported into the United States. We still have restrictions on our ability to vote in multilateral institutions in favor of projects to Burma. But a number of changes, as I say, have occurred and have been just recently put into effect by presidential order. And we’re now in the process of beginning to implement those.
Now the key point about the investment element of this, which is one that I want to focus on because it’s gotten a lot attention, is that our goal is twofold. One, we want to enable American companies to invest in the country because other countries’ companies are able to invest. But the main reason is not just because others are able to do that. The main reason is that we want to demonstrate our support for the reforms the government has undertaken. And we also believe that American companies are, for the most part – certainly the very best American companies – are very responsible investors. They care about environmental issues; they care about dealing with the sensitivities of cultural minorities, of which there are a substantial number in Burma. They care about workers’ rights, which is an issue and has been an issue. They care about issues like who they buy land from and the conditions under which they purchase land. So we see American companies going in and actually supporting and providing the kind of investment – not just because of the money, but because of the way they invest – that will support the reform process in Burma.
We also have done something that we have not done in the past, and that is when we provide a general license to invest, which is what has been provided and announced just very recently, we’ve also asked for reporting requirements, which are fairly detailed but are on the internet, and you can get the details of those. But the gist of them is that these companies, when they do make their investments, need to provide information to the U.S. Government on who they are dealing with, on their labor practices, their environmental practices, how they’re dealing with issues of land acquisition, and how they address human rights considerations, particularly as it relates to ethnic minorities in Burma, which is traditionally a very sensitive issue.
As you may know, several years ago, there were ongoing battles between the military and various ethnic groups, 11 altogether. Ten of them have now ended as a result of ceasefires. There’s one in Kachin state, which is Burma’s – looks like this at the very tip. There is one area where there’s called the – a Kachin army, which is sort of a local, cultural entity, a cultural minority, which is still in conflict with the government. But they are trying to work this out, and efforts are being made to resolve that, which will mean that if they do resolve it – and we’ve been encouraging them to do this, and the government wants to – then we will see that those issues, or at least the armed conflict that results from this traditional problem that the military has had with these groups and they’ve had with the military, that can be resolved. If it’s resolved in all the 11 conflict areas, that will be a very positive thing.
On the other hand, many of these conflict areas have a lot of the minerals of the country. And therefore companies that go in, particularly in the extractive industries, like oil and gas or gems and wood – they’re big exporters of wood – or food products, those – many of the minerals come from minority areas or cultural minority areas. And therefore, it’s very important that whoever is participating in that kind of investment be very sensitive to the concerns of these people and negotiate with them when they make their deals. So this is something – by establishing these reporting requirements, we want to get an insight into how companies are interacting with these people, how they’re dealing with environmental issues, how they’re dealing with a wide range of issues.
So these are not meant to be punitive. They’re meant to do two things: One, to give the U.S. Government information on how these companies are operating in Burma. But they’re also designed so that the companies that do invest there will keep these concerns in the back of their minds as they make their investments, as they think about their investments. And they’re all aimed at greater transparency. They’re all aimed at knowing what – our knowing what they’re doing, and that a lot of these are supposed to be published on the internet and provided to the general public so the general public will know.
In the end, we think this is good for reform in Burma, because to the extent that they are responsible investors, they will strengthen the reform process in the country. We think that it’s also important because, from their point of view, it will give them a lot of credibility with the people of that country. So the people of that country who are concerned about these issues of minority rights and their concern about the environment and their concern about a number of other things will know that when this information is published, they can see it, and they’ll be able to monitor this investment and feel more comfortable with this investment. So we think this is a very positive thing.
Moving forward, there are number of things that we think the government can do to enhance the reform process, and we’ve said that our policy is, in effect, action for action. If the government in Nay Pyi Taw does the kind of things we want, then we will respond by further easing these sanctions. And what are the kinds of things that we think are important? One is further release of political prisoners. Second would be emphasis on even greater transparency, particularly in the oil and gas area. There is a company, which is sort of the state-owned oil and gas company, called Myanma Oil and Gas Enterprise, or MOGE for short, and we want to be sure that all transactions with MOGE are very transparent. So we want transparency, and we’ve asked companies that do deal with MOGE to convey within 60 days to the U.S. Government the nature of their transaction, who they dealt with, what kind of transaction they’re engaged in. So we want to have this in particular be a focal point of the kind of transparency we want.
And the – we’ve encouraged the government in Nay Pyi Taw to focus on one thing in particular in addition to the internal transparency. It is to join the Extractive Industries Transparency Initiative, what’s known as EITI. And we have been very, very encouraged by the commitment that they’ve made to do that. And in fact, we met with a number of the ministers. Secretary Clinton met with President Thein Sein in Siem Reap the day before we went to Burma, and among the things that she discussed with him was the importance that the U.S. Government attached to their joining EITI.
EITI is a very interesting kind of arrangement. It is a trilateral entity in which companies, governments, and civil society all participate, and the objective is to ensure transparency with respect to extractive industries. In other words, what are the terms and conditions under which investments take place – that would be made public. Where the money goes was the result of the investments would be made public. And therefore, there would be a lot of transparency so that money that came into a country as a result of these extractive industry investments would go not to a few individuals and their individual accounts, but would go to the benefit of development in the country, would go to the budget for education, for roads, for healthcare, for general economic development.
We think this is very important for these countries, because, as you may know, some countries have a history of misusing the revenues from extractive industries. Other countries use them to good advantage, to improve the lives of their citizens. And we were repeatedly reassured by the officials with whom we met that this was a strong intention of the government to join the EITI. And in fact, the day or two after – two days after we were there, they were going to meet with the head of EITI, who is from Norway, and start the process of joining, which we think is extremely important.
We also explained to them that while this takes a while to do – the United States actually has just agreed to become a member – it takes time to do all the kinds of things you need to join, we encourage them to start implementing the commitments right away so that – not wait till they join, but actually start implementing them right away, and particularly to meet with civil society to discuss this with them and to try to get a better sense from them as to what they were looking for in the way the country dealt with natural resource revenues.
So we were very pleased to hear that, and we think that if they move along that route, they will be quite successful in reassuring their own people that the money is going to be used wisely, and certainly reassuring us and others that they’re using their money wisely. And that, I think, is a very positive thing for them and very positive in the way the international community looks at their reform. So this is a very important area.
Obviously, the release of political prisoners is very important, and we – or prisoners of conscience – that they have made progress on. We would like to see more progress. But we heard very reassuring things about this as well. So we’re watching what they’re doing. We’re encouraged by the commitments they have made already.
And as I say, the measures that we’ve taken were designed to say to them: Look, you’re on the right track. In fact, within a year – course of a year and a half, they’ve made a remarkable number of very substantial reforms. So the point we’re trying to make is: You’re on the right track in our view, we’re going to take measures to demonstrate that we support the track you’re on, we would like you to continue the process of reform, and we will respond constructively if you do that. And this was, I think, a very useful dialogue.
We had a lot of conversations not just with the President of the country but with the Minister of Industry, with the head of the Central Bank, the speaker of the lower house of parliament, who is another former general who’s now speaker of the parliament, and Aung San Suu Kyi – The Lady, for those of you who have seen this wonderful movie about her – who is every bit as impressive as you’ve seen on TV. And also we met with a number of civil society people, younger people, who had been in jail, in some cases 10, 15 years. And many of them had just been released months ago, so we spent a lot of time with them going over their concerns, what they were focusing on.
And the general view – and I’ll give you their view as well, which – their general view and Aung San Suu Kyi’s view is that they welcome the easing of the sanctions, because they want more investment to create jobs in the country. They also want to make sure and are very supportive of the fact that our investment now and the way we’ve done this, by lifting this – the restrictions and giving them – people a – providing for a general license, that we’ve – it also incorporates reporting requirements, because they are very, very focused on transparency, that the people of the country know what’s going on and can see the terms and conditions and where people invest, who they deal with, how they deal with the military, et cetera. They regard transparency as very important.
The other thing they regard as very important is that traditionally the big companies have done quite well, big well-connected companies. They want to be sure that these reforms in country and the investment that takes place from outside benefit some of the small- and medium-sized enterprises too. It’s a very big agricultural country traditionally. Most people are in the farm sector. So they want to be sure that if investment comes – and it’s not just in the extractive industries; it’s in the processing sector for instance. And President Thein Sein made a very significant point to Secretary Clinton about that, that they wanted not just to export raw products like oil and gas and lumber and precious metals and jewels, but be able to process them in country, which would create a lot of the small-and-medium-sized enterprises that would give them a higher value-added internally rather than all the processing be somewhere else. And so that’s one of the kinds of investment they’re encouraging.
They’re also focusing a lot on improving the healthcare system. They’re improving, as I say, a lot – they’re focusing a lot on improving the role of labor unions. Education is very important. And the rural urban divide is another very substantial issue. The cities have done reasonably well. The countryside has not seen very much benefit from all this investment that’s taken place. And there has been some – not by the United States, but by China, India, Thailand, Korea, and others. But a lot of it’s been concentrated in certain areas, but they would like to see more inclusive growth and growth that’s broader in terms of it being distributed around the country.
So this is sort of a quick overview of where I think we stand and what we tried to do and what we think is likely to happen. I must say, from the point of view of at least myself and others who were in our group, we found this very – the process very encouraging and the commitments we heard from the leaders very encouraging. But they still need to implement those, and I think that is going to take time.
I went with a group of people who were pulled together by the ASEAN-U.S. Business Council, and this was a group of businesspeople that represented a wide range of companies, senior executives for the most part representing roughly 40 companies. And they had meetings with a number of the government ministers, and they were there just trying to get a sense of the investment environment. And there was very good engagement with government officials, so that was another element to introduce.
We had not had – this is the highest level government delegation that had gone to Burma in over a quarter century. In fact, we don’t know when the last one was, but I say well over a quarter century because it’s been at least a quarter of a century. But it’s also the first American business delegation that’s gone there in roughly the same period of time, because even before full sanctions were imposed, there was – there were a lot of issues that deterred American companies from going there. So now you have American companies on the basis of the easing of sanctions that have just occurred going there really with the aim of identifying opportunities for investment, at least understanding the rules and the procedures and the people who are going to be making the investment decisions or establishing the investment rules on the Burmese side.
MODERATOR: Excellent. Thank you very much. We’re joined today by our sister office, the Foreign Press Center in New York, so if there are any questions from New York, please just step up to the microphone. We’ll recognize you, but we’re going to start here in Washington with Lalit.
UNDER SECRETARY HORMATS: Please.
MODERATOR: And please identify yourself and the news organization you’re with.
QUESTION: Yeah, Lalit Jha from the (inaudible).
UNDER SECRETARY HORMATS: Right.
QUESTION: Do you have any predictions for U.S.-Burma bilateral trade relations in the coming years, maybe five years from now? And secondly, on your reporting things for the U.S. companies, wouldn’t this be some kind of distraction or dissuading factors for the U.S. companies to go into Burma? Because if these companies are going to implement those rules and regulations and report back to you, they would be competing against companies from China who are not going to implement those factors. So why would the U.S. companies go and invest in Burma if they’re not going to make any profits?
UNDER SECRETARY HORMATS: Okay. First, on the projection side, I don’t have any – I think it’s too early to make projections on increase and investment or trade, for that matter. I think it’s much too early. This is really just the start. This change has just occurred a week ago, so it’s a bit early. But we – I hope we will have a better idea once we talk to the companies who have come back and they assess the business and investment environment. Then we will get a better sense of that.
On the second point, it’s a very important question that you’ve asked. We thought about this a lot. Our view was we wanted to do two things.
One, we wanted to encourage American investment in Burma because we thought that this would demonstrate support for the reforms that had taken place and because we thought that American companies would be supportive of the reform process by investing with good environmental practices, good labor practices, sensitivity to the cultural issues of the country. And we’ve encouraged those companies to take their time. This is a complicated environment here. There are a lot of issues you need to understand before you invest in Burma.
So we have tried to explain to these companies – and they obviously saw it themselves when they went there – that this is a complicated environment. So they need to do their due diligence, which they would do in any country, but in Burma, it’s even more complicated and for the reasons that I mentioned.
So then that brings me to the second part of your question, and that is we do not think it is a deterrent, and for the following reasons. In fact, in one sense, we think it will be positive, and let me explain why I say that. Because initially, people said, “Well, if you impose these reporting requirements, it will be to try to discourage them.” But two things: One, we were there with about 40 companies, and what – they’re clearly – because it’s all new, they’re clearly studying what these reporting requirements are. But there are – there were a lot of conversations with these executives who participated in this. And very few of them – none that I can – that I talked to – regarded this as a bad idea or an onerous imposition on them, in part because a lot of them have to do due diligence anyway and their shareholders want to know what they’re doing in a complicated country like Burma.
The other thing, though, is equally important, and that is they will do better in the country and establish credibility in the country by demonstrating very publicly that they are concerned about the environment, and sensitive to the environment. It’s a big issue in Burma, the environment, because a number of these raw material investments have not been quite as sensitive to environmental considerations. The people of the country want to know that cultural minorities’ rights are being protected and that they’re – that these companies reflect the sensitivity of cultural minorities, particularly about raw materials on their land or putting pipelines through their territory.
As in the United States and Canada where you have groups be – that – where there are people who care about what happens if a pipeline goes through their neighborhood or their state or their – the area where they live – so people, local people, care about these things and want to be consulted. And then also labor rights. Labor rights are a very important issue. They haven’t really had labor rights in Burma; now they do. They want companies to subscribe to those and support those. So I actually think that you can turn this – and I think the progressive companies who are thinking of investing there think that they can turn some of these into an advantage; it improves their credibility with the people of the country.
And the people of the country are going to see that these kind of companies are committed not just to extracting stuff and taking it out of the country, but are there for the long run of course to make a profit, but as they make a profit to do so responsibly and respond to the concerns of the country. This is just a newly opened place, don’t forget. I mean, except for a couple of – there’s one gas pipeline to Thailand and then there’s an oil and gas pipeline to – that would go across sort of – that way across Burma, up to Yunnan Province. But they are – and they raise some sensitivities about where they’ve gone and the land – whose land has been utilized for this and what happens to the people on the land when these pipes are built.
So they – they’re sensitive to these issues. There was a dam as you may know – you do know – $3 billion dam that was going to flood 300 square miles of land, and there was a big outcry by the people who lived there, and the electricity was going to go to China. And the government canceled the project because it understood that there were very substantial objections to it from the local people.
So I think that to the degree to which American companies are sensitive to these local considerations and to these environmental considerations, they will actually get a very good reception, and they’ll be able to do better business than if they were not.
MODERATOR: We’ll turn now to New York, Foreign Press Center in New York. Please state your name and your news organization.
QUESTION: Yeah, I’m Tuyen Le from Vietnam News Agency. I have one question for you.
UNDER SECRETARY HORMATS: Sure.
QUESTION: As far as I know, China right now is dominating almost economic sectors in Burma. So in your opinion, are there any chance for U.S. business to do business in Burma?
UNDER SECRETARY HORMATS: Sure. Thank you. Let me make a couple points on that. One, we’ve sensed very clearly that there is a strong feeling in Burma that they want to diversify and have a number of countries’ companies invest in the country. So we look at this as they do, as an opportunity for them to diversify their investment relationship, diversify their trade relationship, get expertise and capital and technical support from another big country, the United States.
So we see this as part of their effort to sustain their reforms, to grow their economy, and to have a more diversified set of economic relations around the world, which would be with us. They already have, as you correctly point out, very close economic relations with China. They have close relations with Thailand, as you know, because of the gas, and with India, and South Korea has investments there as well. But to have American companies with very high reputations go in there and participate, it gives them yet another source of capital and another source – and another connection to commercial ties that they didn’t have two months ago.
Let me also say this about China: Our goal in this – and the question always arises: Is this some kind of competition between the U.S. and China? And the answer is: It is definitely not. We understand that there is going to continue to be close economic ties between Burma and China. There are close, natural trade ties because they have a border with one another. China has, as you correctly point out, investments there, trade ties there, so we know that’s going to continue, as their trade and investment relations with India will continue or with Thailand will continue.
So our goal is not to see this, and we don’t see this as competition between the United States and China. We accept the fact they’re going to continue to have economic relations with China because of the closeness of the – the proximity of the two countries. But we want and they want to have diversification, and we think that what we’re doing to allow general license for investment and the other things that we’re discussing will give them a broader set of options and alternatives so that they’re not heavily reliant on one or any group of countries.
The other thing is that we see this as part of what the people in Nay Pyi Taw also see it as, and that is a – an effort to strengthen their ties with other countries in ASEAN. And that is that they have been in ASEAN, they’re a member of ASEAN, they – the fact that they were a largely isolated economy made it harder for them integrate in some ways with their neighbors, many of whom were attracting a lot of investment and were developing thriving trading relationships with the rest of the world. Burma was, in a way, much more insulated from the opportunities in the global economy than its neighbors. So this put them at sort of a disadvantage in the ASEAN context.
Now as – they’re moving ahead with these reforms in large measure because they see the benefits for their neighboring countries of being more open, and I think they felt that this would be an opportunity for them to improve the lives of their citizens. I think it will strengthen their ties and their interactions with their neighboring countries in ASEAN. So it sort of strengthens ASEAN. And we, as one of the pillars of our overall relationship in Asia, are very strongly committed to strengthen our ties with ASEAN, and we’re very strongly committed to support the increased unification and cooperation of ASEAN countries on issues like trade and investment and connectivity, electronic connectivity and other kinds of connectivity in the region. So we think this is helpful to overall health and cohesion and opportunities for a stronger ASEAN as well.
MODERATOR: Okay. Other questions? Yes.
QUESTION: My name is Andrei Sitov. I’m –
MODERATOR: Andrei, hold on.
QUESTION: Okay, thank you. Thank you for doing this, sir, and thanks for our friends at the FPC for doing this. I am Andrei Sitov from TASS, the Russian news agency.
UNDER SECRETARY HORMATS: I remember from our last discussion. (Laughter.)
QUESTION: Yeah. I keep asking you the same thing and I will ask again about APEC, because it’s coming up, and I do want to know what your priorities are for the APEC. My technical question about Myanmar or Burma is what is it, Myanmar or Burma? How do you refer to it? And then –
UNDER SECRETARY HORMATS: We refer to it as Burma. Others refer to it as Myanmar.
QUESTION: I know. When you were in country, did it create any –
UNDER SECRETARY HORMATS: We largely said that we were dealing with the people in the country.
QUESTION: Right. Why is it that you insist on calling it the old way?
UNDER SECRETARY HORMATS: There’s a history to it which is probably not worth – or not useful to get into. But for the moment, we’re calling it Burma. Others call it Myanmar or the people – and some people in the country called it Burma, other people called it Myanmar in the country itself. So we – it’s the same country, so we’re – we tried not to get into that. We would refer to it as the country or the people of the country or the government of the country or the people we spoke to in Nay Pyi Taw or the people we spoke to in Rangoon. We did not want to get into a big discussion over that – over that issue. We were focused on substance.
QUESTION: Right. But to come back to the original point, I did want to ask about the regional integration, regional plans, and specifically APEC. The summit’s coming up. The Secretary will be traveling there. So I wanted to ask you about your priorities at that forum. Thank you.
UNDER SECRETARY HORMATS: Yes. Well, thank you for asking that question, because we regard APEC as very important and we regard the Russian presidency as a very important opportunity for APEC. And it’s the first time it’s been chaired by Russia. It’ll be, as you know, in Vladivostok. There have been a number of preliminary meetings in Kazan and Khabarovsk and other places as well.
I would say that the – that we regard APEC as important because, first of all, it includes some of the largest economies in the world, and that makes it important just in terms of its influence on the global economy or the influence of member countries on the global economy. Second point, a lot – the advantage of APEC is that it is not mandatory – that it’s not like you’re negotiating WTO rules with strict penalties behind them, and therefore you can do things that are more forward looking, recognizing that some countries can do them today and some countries can do them tomorrow, but you can establish sort of a common sense of direction for progress in the region.
And the kinds of things we’ve focused on are expanding opportunities for trade in environmental products, lowering barriers to trade in environmental goods and services, which was one of the results of the last meeting. Because a lot of people in the region, a lot of countries in the region want to pursue green growth, and we thought one way of doing it was to lower barriers, tariff barriers and other kinds of barriers.
A second thing that we think was very important is we can improve regulatory cooperation and regulatory consistency among countries of APEC so that we don’t have these behind-the-border barriers.
Third, we would like to explore opportunities in other areas. There are some very important areas of environmental cooperation that can be moved forward in APEC, and we think that there are – we’ve made a number of proposals to the Government of the Russian Federation on this issue. And I’ve had contact with the Environment Minister directly on a number of things that we think are particularly important.
One of the areas I mention because it’s a very significant concern and – of President Putin is the protection of wildlife and particularly endangered species. So we would like to see progress on that issue. And we think given his interest in this, particularly tigers, we would like to see a lot more emphasis on this question in the region, and not just tigers but rhino horns which are – the rhinos killed in Africa and the horn for reasons that people think it’s a – has medicinal properties, which it does not. Unfortunately, a lot of rhinos are killed and the stuff’s taken to places like Vietnam and China.
We also think that there are things like cooperation on counterfeit medicines, counterfeit drugs, where countries in the region can cooperate.
So we look at it as a way of liberalizing trade, of addressing environmental issues, of dealing with issues such as the protection of our citizens through stopping and cooperating more closely on counterfeit drugs, indeed, and substandard drugs. And these are the kind of things that I think we can work on. I’m looking forward, actually, to going there. I’ve never been to Vladivostok. I’ve been to almost every part of Russia but not the Russian Far East, so I’m actually looking forward to that. But I think it’s a great opportunity for Russia. This is a very useful institution. As you know, we hosted it last year in Honolulu. You may have been there. Were you in Honolulu?
UNDER SECRETARY HORMATS: It’ll be colder in Vladivostok than Honolulu.
QUESTION: They said it will – they said it will be a similar kind of weather. I didn’t believe it.
UNDER SECRETARY HORMATS: Is that right? With palm trees and the beach? Well, okay, you and I will go to the beach together.
UNDER SECRETARY HORMATS: Yeah. But it’ll be – but it’s going to be very important, I think, for Russian leadership to make real progress on this. And I think that the areas – and let me just say one of the things we were very pleased with Russian support for the kind of things we tried to do in Honolulu. We want to work with Russia, because I mean, the Russian Far East and the American West really have had a very traditional relationship for a very long time. The Russian River in San Francisco demonstrates that very clearly.
So we understand the importance of working with Russia on this, and we think that there’s a lot that can be done. And we’d like to see Russia take the leadership for a very ambitious agenda, and we’re very supportive of that.
MODERATOR: I think we have time for one more question. We’re going to go to New York. Please state your name and your news organization.
QUESTION: Hello, I’m Emily Hey with the Nikkei from Japan. And I would like to ask – you said that you’d like to encourage U.S. companies to invest in Burma, but there’s allowing investment, releasing the sanctions, and sort of designing the reporting requirements. But then there’s also the possibility of active support. Is there anything sort of planned –
UNDER SECRETARY HORMATS: What was the last --
QUESTION: -- like future – is there any active support available, do you think, or planned for companies that are interested, resources for people that are considering investing in Burma? Thank you.
UNDER SECRETARY HORMATS: At this point – at this point, we don’t have any particular programs that will support them directly, but we have a lot of programs which will assist them in ways that I’ll describe now. It’s a very good question. We understand that it’s a complicated environment. So we are very actively engaged through this – the meeting we had at the U.S.-ASEAN Business Council, for instance, or with them in helping our companies to better understand the business environment in Burma, help them understand the regulatory environment, help them understand some of the unique features of various parts of the country, which are very different one from the other. It’s a country that, if you look at Burma on a map, it goes sort of north-south. They’ve very different areas ethnically, for instance, throughout the country. So you really have to understand where you’re investing and the people who live in the area where you’re planning to invest.
So we’re going to utilize – in addition to allowing them to invest, we’re going to use our knowledge of the country, and we just had a new ambassador accredited there a few days ago, Derek Mitchell, who has been our special emissary to the country for some time. Now he’s Ambassador, very familiar with it. We have a team – throughout this period, we’ve had a team there. We’ve had an embassy there. It just hasn’t had an ambassador with it. Now we do. So what we’re – we’re going to use our knowledge of Burma to help American companies who are interested in investment make the right contacts, understand the laws, understand the regulations.
We’re also, in order to help our companies, encouraging the authorities to develop very constructive investment laws and regulations. The investment code in the country is now something in the order of 400 pages long – very complicated. And we have been and plan to work with the government. They’re in the process of adopting a new investment law, which is being – which is in the parliament as we speak. But we’re trying to encourage the government to streamline the approval process to provide greater encouragement for investment to come there, tax treatment, leases of land, ease of doing business, all these kinds of things. And we think that will help American companies as well.
So we’re doing our very best to help the companies themselves to understand opportunities and what they have to – and the regulatory and legal environment, and to do their due diligence, which they will do. And we’re also working with the government to help them to make changes in their laws and regulations which will allow for greater transparency for a more attractive investment environment for them to – for American companies to operate in. So this is really part of the process.
And we’ll continue to engage with American companies. We have the U.S.-ASEAN Business Council. We’ll work with them to get their sense of how they see things moving. We will continue to maintain a dialogue with the government, we’ll continue to maintain a dialogue with Aung San Suu Kyi and her group of supporters in the parliament and with civil society, all of which have an interest in making sure that there is more job creating investment, but also making sure that this job-creating investment is based on sound investment practices – that is to say, responsible investment.
And I would say – you asked the question about American companies – I think what’s very interesting is that, as I mentioned before, American companies are not objecting to these reporting requirements, first of all. And second, they – the fact that we have put these reporting requirements in has been very welcomed by Aung San Suu Kyi and others. So we’re very much working along the same lines that she is working on, which is greater transparency and investment responsibility. And we’re doing it in a way that also demonstrates our support for the reform process that will say, as I said before, to the government that you’re doing the right things, keep doing them. And this investment will help to create, not only jobs – which we think it will – but it will also create opportunities for more people to get jobs in the country and not just in the big extractive industries, but in the processing industries and small and medium-sized enterprise. And it will give American companies an opportunity to do business, but to do business in a very responsible way that will enable them to be sustained players in the country, to develop their corporate responsibility practices in the country, which will make them better corporate citizens, which in turn will redound to their advantage and their ability to do good business in the country and get positive results. That’s really what we want.
And the last point is that – one of the – you say to yourself: Well, why do they want American companies in there? It’s – as I say, it’s not just for the money, but – obviously, American companies that invest bring capital – but they also bring very good business practices, very responsible environmental practices. American companies are used to dealing with – in multicultural environments; they do that very well. They’re used to dealing in environments where they respect the rights of labor. And we have – what I call, sort of, the American brand, which essentially is American companies bring very high quality products, but also very high-quality business practices where they invest. And I think the Burmese see this. The government sees this. I think the people see this. And for the moment, investment is not something they’ve seen before. There are a couple of American companies in there that have been grandfathered – Chevron, for instance, has a joint venture with Total that was there before the sanctions, so it was grandfathered in. But they don’t – haven’t seen many American companies. And this is an opportunity for American companies to do well while doing good. And we think that that will happen.
MODERATOR: Okay. We have time to slip in one more quick question, but we want to make it very, very quick.
UNDER SECRETARY HORMATS: Since you’ve been very patient. (Laughter.)
QUESTION: Thank you very much for taking the last one. Kyoko Yamaguchi, I’m with Yomiuri Shimbum newspaper. I’m sorry if you’ve already touched on this, but I’m not clear what happens if you found a violation of investment rules. Would there be penalties for U.S. companies?
And very quickly, what would cause you to reconsider imposing – reimposing sanctions? Thank you.
UNDER SECRETARY HORMATS: Well, the sanctions – the reporting requirements were not meant to be legal reporting requirements in the sense that there was a legal penalty attached to violation of those. There will be penalties for people who are working against the reforms or violating human rights on an individual basis. Their assets will be blocked. And then there’s a list called specially – special designated nationals where, if people are violating human rights or are impeding the process of improving relations with cultural minorities, there will be penalties on them that the government can impose.
But the transparency is not designed to do – the transparency is designed to let us know what companies are doing and to make them understand that what they do will be very transparent, and people in the country and people here will see what they’re doing. I actually think that – so that they will know in advance that they have this – these transparency requirements that they will have to adhere to. I actually think that – we went through this process. We really thought very hard about it. What’s the right balance between having no requirements – just have a general license with nothing, no transparency requirements at all, or having very onerous, legally complicated procedures for reporting and penalties attached to failure to do X, Y, or Z? And we decided that the key element here was this: The key element was to – and we’ve never done this by – we have never issued in any circumstance before a general license with reporting requirements at all.
So this is very different from anything we’ve done in the past. But the fact is that it’s a complicated country with all the complications that I’ve been mentioning throughout the last hour. And we want them to take these complexities of this country into account when they decide to make their investment, as they negotiate their investment to let us know, and to provide, in most cases, relatively broad public access to a lot of what they’re doing. And we think that will achieve the results we’re talking about.
And I must say, from the conversations – and we were with these companies for a day in Yangon – and they were very, very aware of the fact that these were being done. And there was, I would say, virtually no resistance to those at all. I think they understood that in this complicated environment, they would have to have a lot of transparency in the way they reported what they were doing anyway. And I really think that is going to be less of an issue than – actually, than we had even thought it was at the outset because they really have not demonstrated – and even a lot of big companies, they in a way see this – I mean, most people don’t want extra reports that they have to write, but many of them are going to have to do this anyway, to report to their shareholders or report to NGOs who are interested in this, or provide information within the country on what they’re doing.
So I don’t really find this a negative thing, and I think it will actually cause them to have more support in the country and in our country than they otherwise would, because Americans will know what they’re doing and the people in the country will know what they’re doing. The opposition in the country, the civil society in Burma, will know what they’re doing. And I think it’ll actually give them a stronger base for the future and greater public buy-in because of the transparency that’s connected with their investments.
MODERATOR: Okay. Well, thank you very much. We really appreciate your being here.
UNDER SECRETARY HORMATS: Thank you.
MODERATOR: Thank you for joining us and our people online, as well as the folks out in New York.
UNDER SECRETARY HORMATS: Thank you, New York.
MODERATOR: And we’ll have a transcript out shortly for you. Thanks.
UNDER SECRETARY HORMATS: Thanks.
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