Thai company sees harsh reality of Burma’s investment climateBy Francis Wade Aug 01, 2011 7:18PM UTC
In early 2009, the Washington DC-based EarthRights International released a statement warning energy multinationals that “[n]ew investment in military-ruled Burma’s oil and gas sector could actually cost a company more than to stay away from the country”. Its premise was fairly simple, that “unreasonably high reputation and material risks” accompany most infrastructural projects in Burma, where corporate social responsibility (CSR) and environmental impact assessment (ERI) policies are non-existent, or at best cosmetic.
At the time of the statement, Burma was a slightly different kettle of fish, insomuch as armed conflict was more or less confined to Karen state and southern Shan state. Today vast swathes of the northern and eastern frontier region are experiencing upheaval as more ethnic armies fend off aggression from the central government. The ties between the latest wave of conflict and Burma’s booming, largely foreign-financed, energy projects (particularly in Kachin and Shan states) have been extensively analysed, but given its distance from the main areas of conflict, most people have tiptoed around the issue of the massive Tavoy deep-sea port development in the far south.
As the Thailand-based Karen News reports, however, the proverbial wolves are closing in: 50 workers from the Thai engineering giant behind the project, Ital-Thai, were forced to flee to Thailand last week after fighting broke out close to a road being built to link Tavoy with the Thai town of Kanchanaburi – a prime example of the “material risks” ERI warns about. Karen News also said the construction camp was hit by artillery.
The Karen National Union, which the Burmese government has been battling for six decades and whose attack on a Burmese army camp triggered the Ital-Thai exodus, later warned that “[a]ny company that does not get KNU official permission and confiscates land belonging to villagers will be regarded as military dictatorship-backed companies”. Chinese workers at hydropower sites in Kachin state have also experienced similar animosity from armed groups.
One of the chief accusations levelled at foreign companies working in Burma is that their money helps to keep rulers and business cronies in positions of power, thereby maintaining the status quo. ERI deftly turned the focus onto the pockets and (red) faces of these companies, whom despite seeing major profits from working in such a poorly regulated environment have faced boycotts, problems with in-country mobility of staff and vitriolic animosity from civilian populations. Seldom, however, has one been mooted as a military target – meaning that Ital-Thai, which candidly admitted that 10,000 people will be displaced in and around Tavoy, potentially faces greater hurdles.
What these energy-related conflicts also nurture is greater scrutiny by the general public over investment in Burma, aided by growing networks of civil society monitoring groups inside the country and campaigners and journalists outside. As ERI notes, this heightens reputational risks for multinationals (Ital-Thai has already been driven out of the Map Tha Put project in Thailand), as was the case for oil giants Total and Chevron, who generated $US969 million in revenue for the junta in 2007, the same year that Burmese troops shot and killed around 100 protesting monks and civilians.