A Boom Town Beckons
AsiaWeek :FEBRUARY 23, 2001 VOL.27 NO.7
.Business radars are on alert in the wake of political talks. But is investment wise?
. By ROGER MITTON
The meeting was unusual enough, but the outcome even more so. On one side were two generals from Myanmar's military junta, and on the other were members of Yangon's leading chambers of commerce.
The businessmen local and foreign , had a common gripe: too much bureaucratic red tape getting in their way. Could the generals help them cut through it?
. Yes, came the answer. The next day, a trader in the fisheries industry received a call from his bank. He had complained to the generals about currency exchange problems that dogged his export business. The bankers asked him to drop by so they could devise a solution. An efficient response, in anyone's commercial language.
Myanmar is back in business. With a moribund economy and biting sanctions, the generals are bending over backwards to keep the vital signs ticking over. Indeed, business interests may have helped spur the recent talks between the junta and its determined nemesis, National League for Democracy leader Aung San Suu Kyi. The dialogue may lead to nothing, but the fact that it is even taking place has already warmed the international climate toward pariah state Myanmar.
The new U.S. administration has hinted that economic sanctions imposed in 1997 due to political repression may be lifted. The European Union is scrambling to establish meaningful ties after years of avoiding eye contact.
. Is it the beginning of real change for Myanmar, or just a cynical gambit by the military dictators?
Whatever the case, developments have foreign investors rubbing their hands and the generals licking their lips. "Economic stability is the key to political stability," says respected Myanmar analyst-in-exile Aung Naing Oo.
."The junta sees sanctions as obstacles to economic development and thus a threat to their future hold on power." Despite a shambolic economy born of decades of mismanagement, Myanmar is often rated Southeast Asia's richest nation in terms of natural resources. And now the time seems ripe for a sustainable boom. "When foreign investors hear the talks {with Aung San Suu Kyi} are going on, they feel a glimmer of hope," says Moe Kyaw, who heads a market research company in Yangon. "They feel Myanmar may no longer be ostracized."
If only it were that simple. Yes, out of self-interest, the junta has sent unmistakable signals that it is preparing to come in from the cold. And yes, the generals are increasingly eager to make life easy for investors. But ethical dilemmas remain. Will increased engagement result in a rapprochement between Suu Kyi and the generals, ending the 13-year military dictatorship? Or will it serve to prop up the regime? Will investment make a difference to the lives of ordinary Burmese, or will the junta cream the benefits? Not least, will forced labor be used to build this new Myanmar? ASEAN countries, plus China, India, South Korea and Japan, have already made up their minds: business opportunities are too hot to ignore. For the rest of the world, the writing on the balance sheet isn't hard to read. Says Bo Olson of the nongovernment Sweden-Democratic Burma Friendship Association: "The West is just dying to get in there."
But should it? That depends on whom you ask. Broadly speaking, three schools of thought have emerged. One says that whatever political game the junta is now playing, more business activity will inevitably enrich the population. Even if the generals and their cronies rake off most of the profits, the man in the street will still benefit. Big business is a leading proponent of this line. U.S. oil company Unocal arrived in Myanmar in 1993 to help build the Yadana offshore gas pipeline to Thailand, now among Myanmar's most profitable legitimate operations. The Washington sanctions barred U.S. companies from setting up new business deals, but Unocal, as an established outfit, was allowed to remain. It retains a small foreign workforce of managers and technicians on the pipeline with its French partner Total and points to the jobs and community facilities it provides for local maintenance workers. "Real change and improvement will come when there are dozens of Yadana-size projects," says Unocal spokesman Barry Lane. Critics say forced labor was used to build Yadana. The companies deny this.
A second school of thought is more cautious. It has few problems with investment, but does want to see evidence of political progress. Olson believes that foreign investment on the whole is a positive thing: "Naturally the generals get most out of it, but ordinary people can get jobs and can sell their produce if the economy is rolling." Yangon-based lawyer and foreign business consultant Alec Christie thinks investment can only improve standards of living for all. "If you ask me what are the areas where there are problems, it would be infrastructure," Christie says. More money would improve telecommunications, electricity supply and roads ù especially outside the capital. "If there is investment and international aid, things would be better," he says. Compromise, however, remains a dirty word for many Burmese.
. Kanbawza Win, a dissident and visiting professor at the University of Winnipeg, Canada, believes that investment merely strengthens the dictatorship. "The system put in place by the junta aims to prevent the growth of the middle class which has the potential to lead the country to democracy," he says.
. "Only the top brass and the cronies get richer while the mass of the people remain poor."
. The rallying cry of Western labor groups, too, remains "sanctions on, business off." Says Phillip Fishman, the assistant Asia director for the American Federation of Labor-Congress of Industrial Organizations: "What would most help the citizens of Burma would be the restoration of civilian, democratic governance and the rule of law, and an end to widespread corruption."
.That's a big wish list, but one that helped convince mostly U.S. companies to abandon Myanmar in 1997. Pepsico Inc., for instance, which had an estimated 80% share of the soft-drink market, sold its joint-venture stake with a local company in 1996. The next year it closed shop completely by canceling supplies of Pepsi syrup. The company said its decision was "based on our assessment of the spirit of current U.S. government policy." In fact, its involvement in Myanmar had resulted in boycotts by U.S. students the company's main domestic market which soon translated into shareholder concern. Other U.S. firms quick to toe the domestic-opinion line included Levi Strauss, Amoco, Apple and Eastman Kodak.
Did their withdrawal make a difference? Possibly. But for almost every outfit that left, one arrived.
.Tiger Beer (Singapore), Rothmans (U.K., tobacco), Japanese conglomerates Sumitomo and Mitsui, Clough Engineering (Australia) and Ivanhoe Mines (Canada) are well established. Oil and gas players Premier (U.K.), Petronas (Malaysia) and Nippon (Japan) jostle with Unocal and Total. Singapore companies, the biggest investors, have hotels, garments, defense supplies, banking and travel services. A French-Myanmar fisheries joint venture began operations in November.
. The bottom line, says market researcher Moe Kyaw, is that if you know how to do business, you can do it in Myanmar. So long as you are not too fussy about the company you keep.