Everyone’s frantic for a piece of the newly reformed Burma, not least its neighbour China, says Paul French, China editor
About 18 months ago this column deviated from China for a one-off focus on Burma. At the time the country was at the start of its transition from a military junta to civilian rule, which continues today. It was also re-emerging from behind the barriers of decades of international sanctions to start engaging with the outside world, which in turn was definitely gearing up to start looking for investment opportunities in Rangoon (Yangon).
Some international companies have been involved in Burma for a long time, of course, and paid no attention to the sanctions. Beijing never signed up to the sanctions and, as a dictatorship itself, seemed to feel quite comfortable dealing with the unelected generals in a neighbouring country.
Burma was, and is, of major interest to China – gas and other energy deposits, a cheap labour force for low-end manufacturing on its doorstep as well as a potential consumer market and, via the old Burma Road, overland access direct from south-western China to the Indian Ocean. Chinese business and investment poured in. However, the end of the junta has forced Beijing to realign the way it does things, now that the media spotlight is on Burma.
There is room for some cautious optimism. Initially, post-junta, some Chinese firms found themselves not coping too well with democracy. Wanbao Mining, a subsidiary of the state-owned Chinese arms manufacturer China North Industries Corporation, ran into trouble when local communities were able at last to protest openly against the poor environmental record of Wanbao at its copper mine at Letpadaung in central Burma.
At first Wanbao was like a rabbit in the headlights – what to do? Where was the government to crack down on these protests when you needed them? However, since then, a serious realignment has occurred and Wanbao has decided to go the soft route with a new corporate responsibility programme involving $1m a year in social investment into villages close to the mine and a promise to devote 2% of profits toward local projects.
Given the price of copper and expected wealth of the mine it’s perhaps a little paltry, but better than nothing. New efforts by Wanbao and other big Chinese investors in Burma seem to be supported (if not indeed ordered) by the Chinese embassy in Rangoon, with China’s ambassador, Yang Houlan, urging companies to engage more. China these days is image conscious and nowhere less than in Burma where it doesn’t want to be seen as a symbol of the bad old days.
And what of all the new entrants now targeting Burma as a new market? Burmese activists for corporate responsibility are trying to encourage good practice from the get-go. Leading pro-democracy activist Ko Ko Gyi told the independent Burmese magazine Irrawaddy News: “Even though many international investors follow global corporate social responsibility standards, Burma should take steps to ensure that international firms spend a certain percentage of their profits on local development projects.”
Ko and others have also urged the new government to speed up the legislative process and enact laws that prevent rich new entrants from gaining monopoly positions in key industries, protect the labour force and the environment, and combat cronyism.
Right now investment is at a nascent stage but examples of good corporate practice are apparent. Typical of the sort of project emerging is a training centre set up by Canadian firm Optelia to help local engineers train in installing modern fibre-optic technology. A flurry of new tourism projects from eco-resorts to coastal yacht cruising firms are building sustainability criteria and support for local community businesses into their business plans.
Right now the level of excitement around opportunities in Burma and the energy being displayed by both big corporate executives and small on-the-ground entrepreneurs is breath-taking and redolent of China in the late 1980s or the south-east Asian “tigers” in the 1990s.
Money will flow into Burma, deals will be done – momentum has gathered. However, the protection of labour rights, fair treatment for minorities and preservation of communities and the environment will be the litmus test of whether business has learned anything positive from experiences in emerging markets before.
Based in Shanghai, Paul French is an independent China analyst and writer.Burma China China column China Government China trade
December 2013, Webinar
This upcoming free webinar will reflect on and analyse key events of the past 12 months – the progress, opportunities, announcements and challenges faced. We will look into our crystal ball and outline how we see corporate sustainability evolving in 2014