Chinese firms face changing Myanmar society

By Bi Shihong Source:Global Times Published: 2014-3-27 19:43:01

Illustration: Liu Rui/GT

Dozens of protesters started a march Sunday in northern Myanmar, demanding a cancellation of the Chinese-invested Myitsone hydropower dam on the Irrawaddy River, which has been suspended for nearly two and a half years after a hasty decision of the Thein Sein administration in September 2011.

One of the direct consequences of the dam suspension has been a sharp decline in China's investment in Myanmar. Foreign direct investment introduced in the country grew by 160.2 percent to $2.78 billion in 2013, but China ranks only fifth with an input of $31 million, much less than before the dam halt when China poured in $4.35 billion in 2010 and $8.27 billion in 2011.

A prime reason why Chinese investment in Myanmar is growing slowly is the shifting domestic and international situation that Nay Pyi Taw faces.

Since Myanmar's political transition in 2011, it has aimed at moving away from its reliance on China to securing a balance among powers. Chinese enterprises face heated competition, given countries like the US and Japan are clamoring to get their services and products to this market, and Western companies with their high moral ground, mature corporate systems and developed international networks are more appealing to Myanmar.

After the relaxation of government controls, civil society has begun to surge, in which populism is fanned by some radical opposition groups attempting to score political points and build clout.

Chinese-backed projects such as the Myitsone dam and Letpadaung copper mine are victims of this.

The relatively close relationship between Chinese State-owned enterprises (SOEs) and the Myanmar military government in the past years left Myanmar public with an impression that Chinese SOEs came to benefit the officials rather than the public themselves, causing some to vent their dissatisfaction with the government against China.

Moreover, Chinese enterprises didn't pay enough attention to public relations. And they had no voice in Myanmar media, while Chinese projects in this country were demonized.

The Chinese government and companies have realized the severity of these problems and have made some improvements. Now companies must win over local people's support by presenting convincing environment impact assessment and social impact assessment reports in compliance with international practices.

They are also asked to comply with local laws, respect local customs and break away from a past of bribery and overlooking ecological and cultural protection.

Major companies have taken the lead in carrying out social responsibilities through donating in the building of roads, hospitals, schools for the locals and creating more jobs.

In general, Myanmar society has a relatively rational attitude toward foreign direct investment, and knows there are some irrational ingredients eroding investors' confidence.

Part of the Myanmar public pinned big hopes of investment growth on Western countries, while others are aware that the present-day Myanmar market is not ready for massive investments to flood in.

What Myanmar needs most is financial and technological support in areas of agriculture, infrastructure construction, medical and financial reforms.

Chinese enterprises should pay heed to the economic situation and the governmental policy guidance on this new economic frontier, leaning to projects related to agriculture, infrastructure construction, manufacturing, and healthcare services.

As an agricultural country, Myanmar particularly welcomes investment in farming and scientific and technological support. China should unlock this potential.

We could also seize opportunities to boost cooperation with Myanmar in manufacturing, and produce products of good quality for locals to better their lives.

Chinese companies need to do more to improve their image. They should actively integrate into the local community, create a better public opinion environment, increase the participation of locals in projects, and provide them with sustained skill training.

We have to continue pressuring the Myanmar government over the Myitsone dam project since the unilateral tearing up of the agreement caused a severe loss to the Chinese side. The project shouldn't be a tumor in the bilateral relationship.

Both countries should reach a consensus over whether the construction of the dam can be resumed and, if so, how to restart as soon as possible.

The author is a professor at the School of International Studies at Yunnan University.

Posted in: Viewpoint

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