Mon 16 Jul 2012
Filed under: Business / Trade
Rangoon, Burma —Just across the Rangoon River, a bumpy hour’s ride from downtown Rangoon on a cramped, rickety bus, the Hlaing Tharyar Industrial Zone is a subtropical shanty town of factories employing tens of thousands.
The nearly 2,000 employees at the South Korean-owned Hi-Mo High Art factory, which produces wigs for export, earn just 8,000 kyat ($9.25) ar month.
These women, their faces painted with a paste of tree bark called thanakha, have mostly migrated from across this impoverished Southeast Asian country for among the lowest wages in Asia, if not the world. In return they have worked 13 hours a day, six days a week.
On May 9, they staged a hunger strike.
Ya Min Lwin, a slender but forceful labour representative bundled in long-sleeved cotton work clothes in the sweltering midday heat, said the factory workers would not return to work unless pay and living conditions improved — even if it meant losing their jobs.
“Korean companies and others (such as Japanese and Chinese firms) don’t pay us fair wages,” she said through a translator, as hundreds of young women gathered in support.
“More jobs will be created if Canada and other foreign countries come here to open factories and know about our working conditions.”
The women urged reporters to relay their story to the international community using the few English words they knew: “Save us. Help us.”
Help is coming.
With harsh military rule easing and the recent suspension of sanctions by Canada, the United States and the European Union, Western firms are rushing to set up businesses in Burma.
Oil giants Total and Chevron are already here, as are companies from China, the country’s largest outside investor. Foreign businessmen throng Rangoon’s few hotels, some of which have quadrupled their prices. Coca-Cola has announced plans to re-enter the country, while General Electric has also shown interest in Burma, also known as Myanmar.
The flurry of activity follows the April 1 election of democracy icon Aung San Suu Kyi, making her a member of Burma’s fledgling, military-dominated parliament.
The country is still largely undeveloped thanks to two decades of repression, cronyism and underinvestment. Electricity is notoriously unreliable, Internet connections operate at a snail’s pace and cellphones are rare outside main cities.
However, Burma is blessed with natural resources — oil, gold, tungsten, timber and copper. It borders China and India, engines of international economic growth that are both hungry for raw materials.
Burma is ripe for a gold rush.
But will the expected wave of investment make a difference for people like Ya Min Lwin? And can Western companies turn a profit in a country that does not even use credit cards?
Kyaw Tin , the Burmese ambassador in Ottawa, said Canadian firms are already joining the rush. They have expressed interest in “gold, tin and tungsten mining and fibre-optic cables or equipment for oil and gas pipeline activities.”
One of those is Toronto-based Northquest Ltd., which announced on June 6 that it had applied to explore for gold at a 180-square-kilometre site in central Burma.
Engineering firm SNC-Lavalin is already providing studies, advice and expertise in a supporting role on projects in Burma. But a “more sophisticated investment” in the country’s woefully inadequate national power grid would require further legal and economic reforms, said Ronald Denom, president of SNC-Lavalin International.
Some Canadian firms have been conducting small, private fact-finding trips. There will be a first official visit to Burma by the Thai-Canadian Chamber of Commerce in Bangkok, which would include about 30 companies, later this quarter.
“We’re going to have to turn people away,” TCCC president Peter van Haren said in an interview.
“It would be pretty naïve of us to come in and think we could do business as we do in the Western world,” he added. “But I think a lot of Canadian companies are going to see that there is good opportunity”
Amid political and economic reforms, there are numerous investment positives in this country of 60 million people, not least of which is a growth rate the International Monetary Fund expects to reach 5.5 per cent this year.
Other pluses include underdeveloped markets in everything from mobile phones to banking, a recent float of the currency — from 6 kyat to the U.S. dollar to 880 kyat — a rising flood of incoming aid money, a highly literate workforce and, of course, very low wages.
Although a new investment law has been delayed, it is expected to pass by August. It will exempt foreign companies from taxes for five years, extendable for another five years with a 50-per-cent reduction on rates.
Still, Tin Maung Htoo, the director of the Ottawa-based campaign group Canadian Friends of Burma, warned of the dangers of investing in extractive industries during a committee hearing on Burma in the House of Commons.
“It would be better for us to stay away from mining operations until and unless there are regulations put in place that are in accordance with social responsibility and environmental standards,” he said.
Dave Van Kesteren, Conservative MP for Chatham-Kent-Essex, disagreed.
“Quite frankly, your investment will come where there is a return, and we know extraction is where your greatest return is going to be,” he told human rights committee members. “My suggestion to you is to welcome that, embrace that, especially when it comes from Western countries that have proven they have a strong, what we call, social conscience.”
Wayne Marston, NDP critic for human rights and MP for Hamilton East-Stoney Creek, said the problem with Canada’s new policy on Burma was the loss of leverage generated by sanctions.
“I believe that investment in Burma is a risky business at this point,” he said in an interview.
The two people representing Burma’s rapidly narrowing political divide, new reformist President Thein Sein and Suu Kyi, appear much closer on what the country needs in terms of investments.
Speaking at the recent World Economic Forum in Bangkok, Suu Kyi’s first foreign trip in nearly two decades, she said investors should create jobs rather than strip wealth from the country. At the same event, Burmese Energy Minister Than Htay said almost the same thing.
Suu Kyi called on foreign investors to use “healthy skepticism.” She also highlighted a major concern for foreign investors looking beyond the hype: rule of law. While the proposed investment laws promise market value if assets are expropriated, Suu Kyi warned these laws “would be no use whatsoever” due to Burma’s shoddy standards of justice.
The Asian Legal Resource Centre warned in a report this month that although Burma’s politics and economy is changing rapidly, there is little evidence the legal system is keeping pace.
“Judges in Myanmar (Burma) lack political or corporate power with which to fight other parts of the state apparatus, and are an easy target for blame-laying,” it said in a statement.
James Finch, a partner at the Southeast Asian law firm DFDL-Mekong’s Rangoon office, said that in recent meetings with Burmese government officials he had “been given the impression that they are eager to develop a reputation as a country that respects the assets of foreign investors.”
Burma’s legal difficulties are one reason SNC-Lavalin is remaining cautious, said Denom.
“That being said, urgent measures to alleviate electricity shortages in Rangoon and elsewhere in the country are clearly needed and we stand ready to participate in Canadian or international initiatives to address this issue if called upon.”
Scheduled blackouts in Burma have gotten so bad that demonstrators recently took to the streets in Rangoon, Mandalay and other cities. In response, the New Light of Myanmar ran advertisements calling for foreign investment in power generation.
“The government should have a Plan B,” says Wai Muu Thwin, a protester who joined about 2,000 others holding candles in front of the gold-leafed dome of Sule Pagoda in downtown Rangoon.
Sitting crossed-legged on the floor of his sparse living room dressed in a longyi, a traditional Burmese sarong, he explained how his apartment in central Rangoon only receives 10 to 12 hours of electricity a day. A sleek, black flat-screen television and a battered DVD player, imported from Japan and China respectively, are wired up to a car battery and a voltage regulator.
“If business owners have to use generators, it pushes prices up — this also affects the people,” he says.
For many Burmese , jobs remain as elusive as reliable electricity.
At the Hi-Mo wig factory, things are looking up.
On June 5, after a month of striking there and at four other factories in the Hlaing Tharyar Industrial Zone, the South Korean owner of Hi-Mo agreed to the workers’ salary demands, local media reported. Salaries in the new deal are to range from 27,000 kyat (about $31) for trainees to about 83,000 kyat (about $96) for experienced workers. But the changes have yet to take effect.
Things are slow to change for Zayar Myo, too.
The 27-year-old left Burma in 2009 for Malaysia, where he found work in a seat-belt factory. He returned to Burma five months ago, hoping the new openness would mean more opportunity.
Looking bored as he reads a comic book, Myo waits as his application is processed at a busy employment agency on the ninth floor of a tower block on the outskirts of Rangoon.
Employees scuttle around him handling stapled forms as they receive 5,000 kyat from young job applicants. Agency manager Nwe Yoe says that in return they will get interviews with prospective employers — but jobs are not guaranteed.
“Three years ago there were no jobs under the military government,” says Myo. “Now there is democracy, I think there could be more prospects.
“I’ll take anything I can get.”
For Ivanhoe, Burma’s a no-go
Canadian resource firms are eagerly eyeing expansion into Burma — but not Ivanhoe Mines, one of Canada’s biggest mining companies and a former investor in the country.
The company says it has “no plans to invest in Burma,” perhaps not surprising given the ethical and commercial difficulties it encountered last time round.
After starting operations in Burma in 1992, the Vancouver-based firm set up a 50-50 joint venture with state-owned Mining Enterprise. That enterprise soured for many reasons: Ivanhoe was criticized for working with a government accused of human rights abuses, and the mines were plagued by power shortages, government bureaucracy and financial restrictions due to sanctions by the West.
In February 2007, Ivanhoe announced it had sold its 50-per-cent stake in the mining venture.