Apr 18, 2011

Making a fortune in Myanmar

European companies operating in Myanmar face all sorts of pitfalls - pressure from their governments, campaigns by activists, boycotts by customers. So why do so many continue to work there?

Companies exist to make money, and there are plenty of opportunities to turn a profit in Myanmar.

But the US and several other nations have squeezed most of their firms out of Myanmar by maintaining tough sanctions.

Europe has imposed arms embargoes, asset freezes, import bans and penalties for companies knowingly supporting military activity or repression.

But there is no blanket ban on firms investing in the country - so travel agents, insurance firms, haulage companies, energy firms and telecom conglomerates can continue to work there.

In fact, doing business with the junta is "not so different from most other places", according to one Western executive who has worked with the generals.

"They speak English, so there were no language problems. But they refused to use e-mail, so all contact was by fax, or face-to-face - which could make things a little bit tricky," said the executive, who spoke on condition of anonymity.

"I think now they are more comfortable with using telephones."

Coy companies

Other Western workers say dealing with the junta became more difficult when they moved their capital city from Yangon to NayPyiTaw, a new town carved out of the countryside in 2006.

"It's an administrative town, built on paddy fields, and the ministries are quite spread out," said a European with experience of working in the capital.

Despite living in a country with vast natural resources, most Myanmar people are chronically poor "Only now are there signs of any commercial activity - hotels and shops are opening, and civil servants are just starting to bring their families to the town from Yangon."

Western businessmen paint a picture of relative normality in Myanmar, yet few companies will speak openly about their dealings with the junta.

Insurance firms such as Catlin and Atrium Underwriting, which were accused in a 2008 report by Burma Campaign UK of funding repression, refused to make any comment.

German insurance firm Hannover Re confirmed it continued to work in Myanmar, spokeswoman Gabriele Handrick arguing that insurance would help the whole country in times of need.

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Everyone I spoke to during my visits urged us to keep sending tourists”
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Nick Laing

Steppes Travel
But she added: "We acknowledge that it is questionable whether, in a dictatorial regime, these funds filter through to those who are most in need."

French telecom giant Alcatel-Lucent helped to build a communications network in Myanmar with Chinese government money, and in a statement on its website rebuffs reports that it provided surveillance equipment to the junta.

A spokesman confirmed Alcatel continued to work in Myanmar, but gave no further details.

Local benefits?

Dozens of travel agencies across Europe offer holidays in Myanmar, but few will speak of their work in the country.

Nick Laing, from UK-based Steppes Travel, is one of the few willing to defend his position, saying he decided to offer "tailor-made travel" to Myanmar after visiting the country himself.

"Without exception, everyone I spoke to during my visits urged us to keep sending tourists, as the money foreigners spent in markets or on tips helps the local economy," he says.

Activists say tourism helps to legitimise military rule, provides funds to the generals and ignores widespread reports that forced labour was used to build some facilities.

But Mr Laing, who sends only about 40 tourists a year to Myanmar, says he uses only independent Myanmar agencies and organises tailored trips for individuals rather than sending people on group tours to official sites.

"Their presence really benefits the local economy," he says.

Charm offensive

The debate about investment in Myanmar has remained largely unchanged for two decades.

The firms that invest say their capital helps to improve the lives of ordinary Myanmar people, ties the military into international systems of oversight, and consequently promotes openness and a respect for human rights.

Opponents say the army is entrenched in every aspect of society, and investors' money goes straight to the generals, who use it to buy weapons and widen their repression.

Nowhere is this debate more pronounced than in the energy sector. French energy giant Total is the biggest Western firm with operations in Myanmar. It runs the Yadana offshore gas field with the help of US firm Chevron.

Energy firm Total has been involved in Myanmar since 1992, and operates vast pipelines The Yadana field is not a huge money spinner for either firm when compared with their operations in other countries, and both have faced lawsuits accusing them of condoning rights abuses.

US oil giant Unocal - which is now a Chevron company - settled one case out of court in 2005 over violations alleged to have taken place during the construction of the Yadana pipeline.

A suit brought against Total by Myanmar exiles in Belgium was eventually dismissed.

The French firm vigorously denies any wrongdoing and has waged a charm offensive with a website largely devoted to its charitable work there.

Chevron spokesman Morgan Crinklaw says its Myanmar interests are underpinned by "compelling business reasons, fundamental of which is to better meet South East Asian demand for energy supplies".

But such reasoning is unlikely to win over critics such as lobby group Earth Rights International, which claimed in a 2009 report that the Yadana field had yielded $4.8bn for the generals since 2000.

It is likely that the two firms persevered when others pulled out in the hope that Myanmar would get a government the West could deal with, and sanctions would be eased.

But in the past year, Indian and Chinese energy companies have been pouring money into Myanmar - billions of dollars, if Myanmar government figures are to be believed.

So Western firms hoping to turn a profit in Myanmar may already have missed the boat.

Source: BBC