Tue 15 Jan 2013
Filed under: Business / Trade,Opinion
José Manuel Barroso, president of the European Commission, British foreign secretary William Hague, US secretary of state Hilary Clinton and most recently American president Barack Obama have all visited Burma in recent months. Their visits confirm the international community’s belief that there is a genuine transition process from military dictatorship led by former military commander and Burmese president Thein Sein. The Nobel peace laureate and opposition leader Aung San Suu Kyi, whose epic struggle is vividly told in the 2011 film The Lady, is now a member of the Burmese parliament, and democratic elections are scheduled for 2015.
The EU, the US, the Burmese government and Aung San Suu Kyi, all now emphasise that there are big opportunities for inward investment, and that international businesses entering or re-entering Burma, can play a major role in helping to modernise the economy and improve appallingly low living standards.
A third of the population lives in poverty and Burma is the poorest country in south-east Asia. Per capita GDP was just $1,300 (£810) in 2011 based on purchasing power parity, ranking Burma the 204th country in the world for per capita GDP.
Yet Burma is rich in natural resources such as oil, gas, jade, timber and gold. There are major business opportunities in infrastructure, energy, education, financial services and tourism. And this untapped potential is reflected in the more than 800 trade missions from around the world in recent months.
It has not just been political leaders and business people who have been rushing to Burma. Civil society leaders too have been busy. Among these, is the excellent Institute for Human Rights and Business (IHRB), which has embarked on a multi-year project to help ensure that existing and new investments in Burma are consistent with international human rights standards and best practices.
IHRB’s activities in Burma are supported by the UK Foreign and Commonwealth Office and the GE Foundation; and they are working with a number of local and international partners including the Danish Institute for Human Rights, and the British Council. IHRB have appointed a project manager in Yangon (Rangoon) and established a resource centre in Burma to provide information on corporate legal obligations and operational responsibilities.
A guide to help investors
A valuable briefing paper, Responsible Investment in Burma: The Human Rights dimension, provides a potted recent history of the country; the political, economic and social challenges Burma now faces; and the major issues that any inward investors will face such as corruption, unclear land rights, and finding local business partners not contaminated by association with the dictatorship and/or linked to human rights abuses.
Any international company entering or re-entering Burma, therefore, has no excuses for failing to do a thorough human rights risk assessment. The IHRB guide should help investors to ensure that at every step, they are monitoring their progress against international human rights frameworks (also known as the Ruggie Framework).
On 23 April 2012, EU governments iterated their expectations that their companies would follow this framework The US government has gone further and has put in place a mandatory reporting requirement that reflects this same UN business and human rights framework.
Business-led corporate coalitions
Reading the IHRB paper, however, is also to be reminded of just how important responsible businesses can be as a force for economic and social progress, and for helping to reinforce a democratic market economy. They will be vital to Burma’s progress.
The IHRB draws comparisons with South Africa’s transition to majority rule after 1990. In the case of South Africa, of course, there was already a strong and well-established business community. Moreover, some of South Africa’s leading business figures at the time were brave enough and far-sighted enough to realise that the then frozen apartheid system was not sustainable. They were prepared to reach out and promote dialogue with the African National Congress and other groups then banned.
This led to a business-led coalition of responsible business leaders: the Consultative Business Movement (CBM) which played a crucial role in brokering peace talks between the apartheid government and the ANC and its allies. Such was their honest broker role, that the movement was subsequently asked to provide the secretariat for the constitutional talks which paved the way for majority rule. The CBM later merged with another business-led organisation, the Urban Foundation, to create the National Business Initiative – a powerful, business-led corporate responsibility coalition still active today.
However, the IHRB Burma report also notes the parallels for Burma with another Asian country that transitioned from dictatorship to democracy: Indonesia. In Indonesia too, a business-led corporate responsibility coalition – Indonesia Business Links – has been active in promoting a responsible business agenda.
Although the IHRB paper does not mention the corporate responsibility coalitions and the roles they played in South Africa and Indonesia, such coalitions can be a valuable part of the “architecture” promoting responsible business practices.
Business-led corporate coalitions are defined as independent, non-profit membership organisations that are composed mainly or exclusively of for-profit businesses; that have a board of directors composed predominantly or only of business people; that are core-funded primarily or totally from business; and whose dedicated purpose is to promote responsible business practice.
From only a handful in 1990, there are now more than 110 national and international generalist business-led CR coalitions and several hundred more sector – and issue-specific ones around the world – including in more than two-thirds of the world’s 100 largest economies.
It may well be that at an appropriate moment, a coalition of responsible businesses operating in Burma could play an important role in supporting the democratic transition, building the enabling environment for a functioning market economy, and advancing sustainable development.
A Burma corporate responsibility forum, supported by one or more of the international corporate responsibility coalitions, could help both indigenous Burma businesses and international companies moving into/returning to Burma. Such a forum might help to promote relevant international standards and sectoral good practice, as well as providing a safe space where issues specific to Burma can be explored and good practice tested.
A forum could also be a vehicle for co-ordinating collective business contributions to re-building Burma, in partnership with the government.
David Grayson is professor of Corporate Responsibility and director of the Doughty Centre for Corporate Responsibility at the Cranfield School of Management. His is co-author of Corporate Responsibility Coalitions: The Past, Present, and Future of Alliances for Sustainable Capitalism, published in February by Stanford University Press and Greenleaf