Foreign investment in Myanmar could greatly benefit the country if its people are not left behind.
This July, the Obama administration finally acted on statements made by Hillary Clinton in May, issuing general licenses allowing for new investment in and the export and reexport of financial services to Myanmar.
General Electric (GE), which had been conducting behind-the-scenes research and negotiations in Myanmar for quite some time, quickly finalised a sale of hospital equipment
to private hospitals in Myanmar with the first US ambassador to Myanmar
in 22 years, Derek Mitchell, presiding over the signing. This was a
good opening gesture: while doctors in Myanmar are reasonably
well-trained compared to probably every other occupation, there is a
severe shortage of modern equipment.
Coca-Cola, which had issued a press release in June
saying that it intended to reenter Myanmar after 60 years upon the
issuance of the general licenses, scaled back its earlier enthusiasm
somewhat, saying that it needed to debate how it would reenter the
country and that it needed to perform "proper due diligence".
Western companies have been chomping at the bit for
the past few months. American businesspeople have been voicing concerns
they would fall behind European and Australian companies (whose
countries have been relatively faster in suspending sanctions). And the
interest of other Asian countries that had invested less in Myanmar in
the past (including Japan and India) has been piqued by the gold rush to extract Myanmar's abundant natural resources. These countries want to develop the country's prehistoric infrastructure and eke out a bit of growth
in the age of austerity. With the recent suspension of US sanctions and
the impending passage of an update to the foreign investment law, the
road to Myanmar's riches will soon be well-beaten.
So long as Western companies bring improved labour,
environmental, anti-bribery practices, and robust corporate social
responsibility initiatives to Myanmar, much good can result from an
influx of Western foreign direct investment (FDI). Myanmar is a country
where people lack even the most basic goods and services that many
Westerners take for granted. Mobile and internet penetration
rates are both below 5 per cent; rolling blackouts occur on a daily
basis even in its most developed city, Yangon; and the streets, without
adequate drainage, regularly flood to knee-high levels during the rainy
season. Public health is very poor, with high malaria and HIV rates and a
Ministry of Health that is understaffed and underskilled to deal with
all of these issues. And, of course, there is ongoing ethnic conflict
and the tragic fate of the internally displaced Rohingya people, whom
many local Myanmarese have noted are among the poorest people in the
country.
But FDI had been flowing into Myanmar well before the
Obama administration officially suspended sanctions in July. China,
Thailand, and Hong Kong have been investing billions of dollars in
Myanmar for years, mostly in the natural gas and crude oil extractive
industries. During this period, per capita income for the Myanmarese
people has remained low while state-owned enterprises, military holding
companies, and Chinese, Thai, and Hong Kongese companies have benefited
from the extraction deals. Crony capitalists became rich from the
lucrative government construction contracts the junta doled out. Goods
and services provided to the Myanmarese people have remained poor and
unemployment has remained high.
Education system crippled
The education system has been crippled since the
famous student protests of 1988, with various colleges dispersed far
from each other in order to prevent students from bonding together and
using their youthful energy for protest. Yangon University, once the
finest university in Southeast Asia, has been relegated to dustbin
status. As a result, even if foreign companies were interested in hiring
locals, local citizens don't have the skills required for
higher-productivity jobs. Those few, frustrated Myanmarese who do have
high-end skills have fled to Thailand, Singapore, Malaysia, and the West
to make a living.
This FDI picture is not destined to change simply due
to the reentry of the West into Myanmarese business. Though the Obama
administration has taken the positive step of imposing reporting requirements
for new investment exceeding $500,000, and the proposed FDI law has
provisions providing for the employment of Myanmarese workers, there is a
concrete fact that cannot be ignored: the people of Myanmar lack
skills, capacity, and experience. The fear is that market forces will
likely incentivise Western companies, just as they have incentivised the
Chinese, Thai, and Hong Kongese companies before this year, to act only
out of profit-maximising self-interest, only employing skilled citizens
of their own countries as workers and exporting most of Myanmar's
resources for refining and sale outside of its borders, largely cutting
the Myanmarese people out.
For example, who is going to comprise the majority of the oil and gas engineers in deals Shell Oil and Chevron
broker with the Myanmar Oil and Gas Enterprise (MOGE)? By a MOGE
engineer's own admission, "we cannot do the high-end, sophisticated
work, so we will need workers from the US and UK to come in".
It is also unclear whether crony capitalism will
fade. Rent seeking will likely remain an issue for quite some time. I
have observed businesspeople bringing in expensive gifts to government
officials in exchange for preferential treatment.
Real benefits
There are likely real benefits that will accrue to
the Myanmarese people from FDI. If companies like GE focus on energy,
millions of Myanmarese can benefit by having stable electricity and
running water. In turn, improvement in the energy sector should enable
improvements in the telecommunications sector, and mobile phone use
should increase exponentially, allowing individuals to be able to
contact someone far away in times of trouble or need.
Improved telecommunications should result in an
improved banking sector, giving individuals sorely needed access to
money in this mostly cash-based economy. Low-end manufacturing and
textiles stand to improve, providing jobs for low-skilled workers. But
if these improvements come without substantial investment in education
and the training of a young, large, and unskilled workforce, per capita
income and domestic demand can only grow so much. Without attention to
these areas, Myanmar will experience an expansion of what it has been
for so long - an extraction vein for Asia to the West.
Johns Hopkins University, which wishes to open a school
in Myanmar to train local Myanmarese, has the right idea in mind.
Unfortunately, Hopkins has not secured financing yet. But the best
chance for Myanmar to become Asia's next tiger will be through a
combination of investment in Myanmar's education system and a concerted
effort on the part of foreign companies to hire and train Myanmarese
workers. Here's to hoping that Western companies realise there are
greater goals than mere profit, and that they adopt a synergistic
relationship with Myanmar's people - rather than the exploitative regime
on display from multinational companies that has prevailed up to this
point.
Michael
Lwin is a Yangon-based consultant for the Myanmar Medical Association
(MMA) and domestic companies run by Myanmarese citizens.
Source: Al Jazeera
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