A US ban on all Myanmar imports is stifling key job-creating areas of the economy such as the garment industry rather than hurting the interests of the corrupt elite it targets, a report said Friday.
The International Crisis Group think-tank said Myanmar's reform process had challenged "the dominance" of crony businessmen, who flourished under the disbanded junta, and nudged the economy towards greater openness at the expense of some key hardliners.
But it warned that renewing the US import embargo, due to lapse this year, "could have a serious impact on Myanmar's economic recovery".
The ban is skewing the nation's economy towards "potentially problematic" extractive industries at the expense of sectors that employ large numbers of ordinary people, it said.
Industries such as oil, gas and gem mining have long been linked with corruption in resource-rich but poor Myanmar and also raise fears over environmental damage.
"At this stage in the reform process, it is indeed hard to see how retention by the US of its import ban could in any way serve the interests of the Myanmar people or assist the democratisation process," the ICG report said.
Washington lifted a slew of financial and investment sanctions on Myanmar earlier this month, including allowing finance houses to work in the former pariah nation, in response to nascent democratic reforms.
But it has retained the ban on Myanmar imports -- a restriction that a US Senate committee this month said should be extended by three years.
The United States says it will keep some sanctions in an effort to pressure President Thein Sein's government to continue reforms as the country emerges from half a century of repressive military rule.
The ICG report welcomed economic and political changes that undercut the dominance of cronies and the military.
"Their (the cronies') key sources of revenue are being removed, including control of monopolies as well as privileged access to permits, licenses, and major government contracts.
"They recognise they have much to lose in the new economic reality," it said, adding that the tycoons appear ready to "accept a diminished role" rather than impede reform.
At the same time it said key military brass had offered support for the reforms resulting in army monopolies, such as over cooking oil and beer, opening up to greater competition.
The report also welcomed the recent resignation of a vice president widely regarded as a hardliner, Aung Myint Oo -- who is closely linked to former junta chief Than Shwe -- as a key step towards widening reform.
Myint Swe, seen as a marginally more moderate figure, has been selected by the military as the replacement, but his appointment has not yet been formally approved amid uncertainty about whether he is qualified.