How to Invest in Myanmar

[Myanmar]…does not exist, and never has, in the sense of being a peaceable homogenous whole,” the Myanmar scholar Justin Wintle writes in Perfect Hostage. Myanmar’s central core lies along the long, flat Irrawaddy Valley, home to the Burman majority that makes up an estimated 69 percent of the population. To the east are the Shan Hills, the domain of the Buddhist Shan people. To the north and northwest are rugged mountains extending to the Himalayas and dominated by ethnic groups such as the Chin and Kachin, who are both Christian. To the west, on the border with Bangladesh, live the Muslim Rohingya — perhaps Myanmar’s most persecuted minority. The Karen, which are Christian and Buddhist, inhabit the south and southeast hills bordering Thailand. All told, Myanmar’s ethnic minority groups comprise about a third of the population and cover half of its total land area.

Starting in the Middle Ages, one ethnic Burman kingdom ruled over the central valley of present-day Myanmar, while separate hill kingdoms — the Karen, Karenni, Shan, Kachin, and Chin — remained independent. For centuries, the independent kingdoms warred with the Burman capital, at various points grudgingly forging alliances with — or paying tribute to — Myanmar’s ruling kings. The British conquered Myanmar in 1885, only to see their colony collapse when the Japanese, seeking to control Myanmar’s oil and rubber and cut off overland access to China, invaded in 1942.

Burned by their British conquerors, the Burmans sided with the Japanese. The other ethnic groups allied with the United States and the United Kingdom. After the war, the hill tribes expected British Prime Minister Winston Churchill to reward their loyalty by making them independent territories. But Churchill lost a 1945 election to Clement Attlee, who invited the Burmese General Aung San to London and agreed to grant the whole region independence as a group instead, putting ethnic minorities at the mercy of the Burman majority.

Wanting to avoid the postwar violence of India, Aung San convened a meeting with the ethnic groups in the small Shan town of Panglong. There, he promised a power-sharing agreement and pledged that ethnic tribes could opt out of the union ten years after independence if the benefits failed to materialize. A few weeks later, though, Aung San was assassinated. The Panglong agreement never found its way into the new constitution, and the new country found itself in an ongoing civil war. Burman leaders convened another constitutional convention in 1962, proposing to assure equal representation to all ethnicities in national assemblies. The enraged military launched a coup, and with little relief since then, successive military juntas have waged an ethnic cleansing campaign deep in the jungles of Myanmar.

Although Myanmar has won praise for its recent move toward limited democracy, most of Myanmar’s 135 ethnic groups do not want democracy — they want freedom. Democracy, they say, simply locks in a status quo that has repeatedly led to genocide, far beyond the eyes of Western journalists and corporations.

Last October, a Buddhist anti-Muslim mob killed five Rohingya in the western state of Rakhine, including a 94-year-old grandmother who was paralyzed from the waist down. A few weeks later, government soldiers gang-raped a 15-year-old Kachin girl. A week after that, the Myanmar army attacked a village and forced 2,000 to flee, joining the half a million refugees in Myanmar and across the border in Thailand.

As horrific as these atrocities are, they are merely symptoms of a broader problem: a system of geographic apartheid, whereby citizens on Myanmar’s periphery are dehumanized on a daily basis. Consider that Rohingya infants are not issued birth certificates. When they grow up, they cannot marry without a sizeable bribe, or even travel outside their own villages. The government recently rejected a UN resolution calling for Rohingya citizenship, preferring to continue considering them “illegal immigrants” from Bangladesh, even though many have lived within Myanmar’s borders for generations. Similarly, inhabitants of Chin State cannot build their own houses of worship and must travel out of the country to attend a university — an obstacle that keeps all but a handful from higher education. Although Chin State is 86 percent Christian, Christians hold just 14 percent of state-level senior positions. And ethnic minorities were excluded from the referendum that resulted in the 2008 constitution, while their enemy, the military, maintains veto power over any constitutional changes.

In response, Western investors could attempt to operate only in major cities and steer clear of the resource-rich ethnic areas. In fact, many U.S. companies reportedly remain cautious about making major investments in Myanmar’s rural areas, fearful of poor infrastructure and “political instability.” But even if they do tread carefully, it is virtually impossible to imagine Western businesses not becoming complicit in what the human rights advocate Tom Andrews calls “the building blocks of genocide.”

Fruits of Freedom

 For all Myanmar’s problems, there have also been encouraging signs of progress. Last November, the government and representatives of 18 rebel groups met for historic cease-fire talks that, although they ended without an agreement, established a measure of goodwill and set up a renewed round of negotiations for this spring.

One British diplomat told us that “everyone knows what the answer is — federalism.” Whereas some minority groups such as the Kachin still want outright independence, most hope for a system like the United States or, better yet, Switzerland, where ethnic cantons have autonomy within a federal structure. “To this day, we wish for the Burmese government to honor the agreements made in 1947,” a leader of the Kachin Independence Organization told a UN interviewer. In other words, they want the government to make good on the promise of Panglong.

Convincing the army to relax its stranglehold on the country will not be easy. “They have serious economic interests at stake as well as pride and animosity,” the British diplomat told us, “it is their guys who have been fighting the ethnic groups for years.” Still, countries from South Korea to Ghana have managed to transition successfully from military dictatorship to democracy, many with less going for them than Myanmar has today. And as one European ambassador points out, “A lasting reconciliation with the minorities could be politically rewarding in 2015’s national election. That is why the president is trying very hard.”

Although there is no alternative to direct government engagement with Myanmar’s ethnic minorities, Western business has its own role to play. In a few cases, firms with significant interests at stake may intervene directly and productively in peace talks. Last year, for instance, Chinese investors appealed to Beijing to help arrange negotiation between Myanmar’s leaders and the Kachin Independence Organization in support of a Chinese-owned pipeline expected to carry natural gas from Kachin State back to China. Similarly, the Dawei Princess Company, which holds logging and mining concessions in Karen National Union–controlled areas, underwrote peace talks and arranged cease-fire discussions in Karen State, according to a 2012 International Crisis Group report.

More likely, Western investors can play a critical role in policing bad business behavior and ushering the ethnic minorities into the twenty-first-century economy. Morally responsible private-sector players can expose unscrupulous actors who exploit ethnic minorities, while taking pains themselves to operate in a transparent, accountable, and mutually beneficial manner. Mitsubishi, for instance, could review the existing environmental and social impact studies conducted at the Dawei development project and insist that any yawning irregularities be brought in line with globally accepted standards before construction begins.

Additionally, Western business leaders — perhaps together with the U.S. Chamber of Commerce and other business associations — can take a page from the European governments and nongovernmental organizations that taught capitalism to citizens of the former Soviet Union after the Berlin Wall fell and help develop ethnic minorities’ business savvy, educating them to compete in a globalized, free-market economy. After all, one of those former Soviet states, Latvia, has just become the latest country to adopt the euro.

“We know that one of the biggest incentives to find peace with ethnics is to get more foreign investment in,” David Tharckabaw, the Karen National Union’s foreign minister, has said. But, he continues, “We have to make sure that proper consultation is done with the civilians and everything is done in a sustainable manner which benefits the ethnic civilians, not just the government and foreign investors.” In short, well-meaning Westerners must step up and see Myanmar not as an unopened market but as an unrealized country.

Could Myanmar turn its Catch-22 to its advantage? Aung San once remarked that if the Burmese area got one kyat — the Burmese currency — the minorities would get one kyat as well. It was a mark of the man’s character that he could envision his country’s ethnic minorities as equals. Only when the government and ethnic minorities settle on an equitable, federalist solution, spurred by the interest and investment of the West, will they — and the world — enjoy the fruits of a Myanmar that is not just democratic but free.

Stanley A. Weiss is a global mining executive and the founder of Business Executives for National Security, in Washington, D.C. Tim Heinemann is a retired Special Forces officer and a mobile training team leader at the U.S. Department of Defense for counterterrorism professional development of U.S. allies around the world.

 

This article also appeared on Foreign Affairs on January 17, 2014.