President Barack Obama heads to a land of potential wealth and lingering instability when he makes his historic trip this month to Myanmar, where U.S. companies such as Visa Inc. V -0.03% and Coca-Cola Co. KO -0.25% are testing unexplored investment territory but a deadly sectarian conflict hangs dangerously over the country’ experiment with liberalization.
The first sitting U.S. president to visit the long-isolated country will give a boost to the country’ reforming president and the opposition leader, Aung San Suu Kyi.
The visit is the most important by a world leader to Myanmar since decades of military dictatorship were replaced last year by a quasicivilian government led by President Thein Sein. The new regime has been rewarded by the U.S. for opening up the economy and the political realm with the suspension of nearly all economic sanctions. Mr. Obama’s trip, part of a swing through Southeast Asia fresh off his re-election victory, is seen in Myanmar as a sign of increasing global acceptance.
“The visit of President Obama to Myanmar is very encouraging,” said Zaw Htay, an official in the president’s office. “It reflects his sound support towards Asia, including Myanmar.”
Mr. Obama arrives as a number of U.S. companies such as Coca-Cola Co., PepsiCoInc. PEP +0.07% and General Electric Co. GE +1.12% have already flagged their intention to do business in the country. Payments groups MasterCard Inc.MA +0.26% and Visa Inc. have tied up with local banks and MasterCard is issuing its first credit cards this weekend. Myanmar recently passed a new set of foreign investment laws designed to be more pro-business.
“It’s a solid endorsement of the country’s transformation and will help focus the business community’s attention on its growth potential,” said Elizabeth Buse, Visa’s group president for Asia Pacific, Central Europe, Middle East and Africa, said of Mr. Obama’s visit.
As in other parts of the world, Mr. Obama commands a level of popularity in Myanmar that far exceeds his partisan appeal in his own country. When he won his first term in 2008, citizens here hoped that an “Oburma” phenomenon would develop that would help propel reform in the country. The expectations were rekindled when news of his visit arrived early Friday.
“I feel Myanmar now has a great friend who is very strong and powerful,” said Ma Thuri, 22, a fourth-year biology student at Dagon University in Yangon. “It’s like the feeling I get from a good friend who can support me and make my life safe.”
Historically, Myanmar, also known as Burma, served as a major crossroads for people and goods moving within Asia and toward the West, but in recent decades the strategically placed nation—between China, India, the rest of Southeast Asia and the Indian Ocean—became an economic backwater under dictatorship, human-rights abuses and mismanagement as the rest of Asia powered ahead.
Now, rewarded by scrapped sanctions and acceptance by the West to encourage more reforms, the country is being eyed by investors who see it as one of Asia’s largest remaining frontier economies with enticing needs for nearly everything from physical to financial infrastructure, industry and services. The low-wage climate is seen as a plus, but the legal and infrastructural framework to make a new business a success remain a work in progress.
Mr. Obama will be the first sitting president to visit Myanmar, according to local historian Thant Myint-U. Others came when they weren’t in office: Herbert Hoover lived in the country in the early 1900s, and Ulysses S. Grant visited as part of a two-year world trip onboard the steamship SS Indiana. Richard Nixon also made visits in 1953 and 1985.
Mr. Obama will spend time with Mr. Thein Sein and Ms. Suu Kyi. His trip is part of a wider swing that includes Thailand, a longstanding U.S. ally, and Cambodia, which will host the annual Association of Southeast Asian Naitons summit. Asean is key to U.S. efforts to check China’s growing military influence. Myanmar has close relations with China, but the U.S. Army commander for the Pacific was part of a U.S. delegation that visited Myanmar last month in a signal that closer U.S.-Myanmar military relations could be possible if human-rights concerns were addressed.
Not everyone thinks the visit is a good idea. Some human-rights groups say that it’s premature in light of still pressing questions, not least the fresh humanitarian crisis taking place in Rakhine state in the west, where clashes last month between the minority Rohingya Muslims and majority Rakhine Buddhists left 89 people dead and thousands of homes burned. Tens of thousands of people have been displaced since the violence erupted in June. In other areas, skirmishes involving ethnic rebels and the military remain unresolved in some areas.
Phil Robertson, deputy director of Human Rights Watch in Asia, believes Mr. Obama’s visit now means the calibrated tit-for-tat sequencing of reforms between Myanmar and the international community has been overrun.
“When originally the reform process started, there was supposed to be a dialogue in a back-and-forth where ‘you do some things, we’ll do some things’ ” Mr. Robertson said.“What has been frontloaded evidently is engagement in foreign aid and foreign investment, where human rights has been left behind as a key concern.”
Celine Fernandez contributed to this article.