June 11, 2013
Aron Cramer, President and CEO, BSR
Having participated in the World Economic Forum’s East Asia Summit in Nay Pyi Taw, Myanmar last week, I had a unique opportunity to observe up close the remarkable transition this country is undergoing.
Myanmar’s recent history—a devastating military dictatorship that plunged the country into impoverished isolation—is well-known. What may be less known is that before the regime took the country off the grid, it was, in many ways, the most advanced in Southeast Asia. Education levels were very high, and it was the world’s largest rice producer, known as the rice bowl of Asia. Long before Ban Ki-moon assumed office, the UN’s first Asian Secretary-General was Burmese diplomat U Thant.
This history is one reason why business is looking with great interest at this country of 60 million people; it is routinely considered the last great frontier market (sorry, Kim Jong-un). Indeed, the WEF summit attracted PepsiCo and GE executives, who served as co-chairs, and countless other companies, including Microsoft, Telenor, Nike, Unilever, and Marriott, sent senior executives to the meeting.
The challenge of developing Myanmar is hard to overstate. Political turmoil remains close to the surface, with full reconciliation between the government and the main minority ethnic groups continuing to present a monumental challenge. Aung San Suu Kyi now has entered more fully into the messy post-junta political fray with the announcement that she intends to run for president in 2015. Religious tensions (and at times violence) also persist, and the space for open debate and unfettered media is opening up, but still forming. Practical concerns also prevail. Power shortages are frequent. Infrastructure is ancient and creaky. Human capital development is desperately needed. Agriculture is frozen in the past: On the road to the airport, I saw hundreds of oxen tilling the fields, and just one piece of mechanized farm equipment. Internet penetration is at 5 percent, and less than two years ago, a SIM card still cost US$2,500.
International business has a crucial role to play in helping the people of Myanmar achieve a more prosperous future. Whether that becomes a reality depends on how investment proceeds in the country.
Based on BSR’s work in the country over the past year, as well as what I heard the past few days, there are several key steps for investors to consider.
Understand your partners: The web of personal, political, and business connections is incredibly complex. Many of the leading businesses, and most important government figures, were also influential members of the military government. Aung San Suu Kyi and her colleagues in the National League for Democracy, now the most popular legislative party, were the silenced opposition. Many civil society leaders were once political prisoners. The legacy of this history is not erased overnight. There are several organizations working in the country that have keen insights into such matters, and the many bilateral donor agencies active in the country also will be good resources.
Conduct due diligence, especially on human rights: BSR has worked with several member companies to conduct due diligence, much of it focused on ensuring that their investments are consistent with the Guiding Principles on Business and Human Rights. This country has faced obvious and significant human rights violations during the period of military rule, and these issues have not disappeared. It is essential for companies investing in Myanmar to understand the implications of their decisions and fully prepare to manage both risks and opportunities responsibly. Free expression, freedom of association, resettlement and land use, corruption, and revenue transparency are among the issues that can challenge even the most well-meaning companies.
Support institutional development: One of the concerns I heard expressed over and over again in Myanmar was that international investment, and the arrival of foreign NGOs and funders, could easily thwart the necessary development of Myanmar institutions. One NGO leader told me that salary structures were rapidly being distorted by the arrival of well-meaning international NGOs, forcing him to lose staff and hence the opportunity to build local capacity. Myanmar’s development requires Myanmar institutions, not just the presence of well-meaning members of the “international community.”
Many companies, including Intel, PepsiCo, and others, are investing in local institutions, and this is of the utmost importance. GE is investing in local talent development and helping nurture future leaders. It is, of course, equally true that public-sector development should follow international best practice. Myanmar’s planned participation in the Extractives Industry Transparency Initiative is a good sign, and other opportunities, such as the country’s eventual participation in the ILO’s Better Work program would also be positive. Finally, businesses have a unique role to play through capacity-building and procurement in developing local business partners that ensure that Myanmar’s inevitable economic rise builds healthy and responsible local enterprises.
Support balanced development: Finally, companies should do all they can to help the country achieve rising prosperity without some of the ills experienced by neighboring countries. The price of land and the rate of rents around Yangon have quickly reached Singapore and Hong Kong levels. Traffic in Yangon has skyrocketed already, suggesting that the worst aspects of life in Jakarta or Bangkok have arrived. Similarly, plans to develop in greater Yangon may overwhelm the open green space so crucial to balanced life in a city. Cultural diversity is also one of Myanmar’s great assets, and that, too, can be under threat as development unfolds. Businesses would do well to promote a development model that considers what Myanmar will look like in 50 years, not just the next five years.
Myanmar is a beautiful, diverse country whose people deserve far better than they have had over the past half century. Business has a fundamental role to play. Done the right way, the last country in the region to join the global economy can do it best.
Read our follow-up blog on corporate collaboration to tackle sustainability challenges in Myanmar.
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