Why Dealing With Burma Is A Very Bad Idea


It is time that Australian businesses operating in Burma took a hard look at themselves.

Australian investors are helping to prop up a military dictatorship that has one of the worst human and labour rights records in the world. Undaunted by international revulsion at its brutal crackdown on the peaceful "Saffron Revolution" movement two years ago, Burma’s military continues to repress the kinds of everyday activities that you and I take for granted. Only last week, monks and students issued a statement calling for international help, and for an end to the state-sanctioned use of violence against ethnic minorities.

Burma is an international pariah state which tolerates no dissent, represses its people and wields absolute power in the face of international condemnation and sanctions.

The country is notorious for its massive and systematic violations of human and workers’ rights. There are numerous reports of the widespread use of forced and compulsory labour, with infrastructure projects linked to foreign investments also involved in this abhorrent practice.

Unfortunately the world can sometimes demonstrate a short attention span when it comes to longstanding human rights abusers, and the tendency to turn a blind eye is evident among those representing powerful business in countries outside Burma — which, sadly, includes Australian businesses.

But make no mistake: companies that do business in Burma are helping to fund the military dictatorship’s long-term financial viability and its systematic human rights violations. Despite the international outrage and calls for sanctions that followed the crackdown, for some businesses, the resource-rich country with its vast reserves of natural gas, teak, gems and metals is still seen as a lucrative investment option.

Oil and gas brings the military dictatorship billions of dollars worth of income each year.

Human rights advocate Burma Campaign Australia has calculated that the Burmese Government could earn US$2.5 billion through royalties, income tax and an equity stake in a joint venture project with one Australian company alone — Twinza Oil.

By itself, this contract with an Australian company promises the Burmese junta enough money to run roughly one quarter of its military — the world’s 12th-largest — for a decade. Twinza Oil, a company associated with Western Australia’s wealthy Clough family, signed a Production Sharing and Exploration Contract with the military-owned Myanmar Oil and Gas Enterprise (MOGE) in November 2006.

Other Australian companies with business interests in Burma include Andaman Teak Supplies Pty Ltd, Chevron, Gecko’s Adventure, Jetstar Asia, Lonely Planet, Millers, and Sri Asia Tourism. This week Australian unions and churches will write to each of these companies, urging them to wake up to the ongoing atrocities in Burma and withdraw all business interests.

Some well-known Australian companies have already recognised that dealing with Burma is not best business practice, and have voluntarily withdrawn from investing in or sourcing from the country. They include QBE Insurance, Woolworths, and Downer EDI.

Apart from the moral reasons, there are also financial, reputational and investor risks for any company operating in Burma.

Key sectors of Burma’s economy are controlled either directly or indirectly by the military regime and people connected to the regime. Corruption and economic mismanagement are widespread, and the country is at the center of the illicit drug trade, and is widely regarded as the world’s second-largest opium producer.

Foreign companies that ignore these problems fail to meet international accounting standards as they are not able to ensure that financial transactions are carried out in a transparent and accountable manner.

Financial and investment risks are compounded by a lack of the rule of law in Burma. Companies that do business there run a heightened risk of having their assets taken away without compensation as a result of a deficient and unpredictable investment regulatory framework, irregular law enforcement and endemic corruption. The assets of any company doing business in Burma could be seized or the company could be forced by the military regime to leave the country.

Such companies also face a financial risk arising from litigation or sanction-busting. For example, the US Office of Foreign Assets Control (OFAC) closely monitors Burma’s financial transactions, along with those of other countries it maintains sanctions against. And it uses these powers — recently, the OFAC fined ANZ Bank US$5.75 million for money transfers and finance transactions with Sudan and Cuba.

Those Australian companies doing business in Burma, and their stakeholders, need to face up to their part in Burma’s plight. Unconditional investment in Burma reduces any incentive for the regime to implement urgently needed reforms. The people who benefit from these business dealings are the military junta, not the 90 per cent of the population that the UN estimates is subsisting on less than 65 US cents a day.

The US, Canada and the EU have longstanding and broad trade and investment sanctions against Burma, but Australia maintains only targeted financial sanctions against members of the regime.

In a situation like this, how can the companies that stay in Burma expect their reputations to remain untarnished, and their business unaffected, when the money and expertise they bring offers a lifeline to an internationally reviled military regime?

Launched in 2004, New Matilda is one of Australia's oldest online independent publications. It's focus is on investigative journalism and analysis, with occasional smart arsery thrown in for reasons of sanity. New Matilda is owned and edited by Walkley Award and Human Rights Award winning journalist Chris Graham.