Burma's Do-Good Investors
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After decades in house arrest, Burmese opposition leader Aung San Suu Kyi, finally got to accept her Nobel Peace Prize last weekend, 21 years after it was awarded. As Suu Kyi travels on her first overseas visit in decades, she has touched on the controversial topic of investment in Burma.
The U.S. restored full diplomatic relations with Burma in May, also opening the door for American investment there for the first time in a quarter of a century. Though promising, such investment is also ethically touchy.
American sanctions were originally imposed 15 years ago because of Burma’s oppressive government and dismal human-rights record. Even before that, Burma had gained such a bad reputation that publicly traded companies like PepsiCo Inc. (NYSE: PEP) and Apple (NASDAQ: AAPL) closed down shop there.
Throughout the last year, the government has released some political prisoners (Suu Kyi being the most prominent), expanded political representation to include oppositionists, and eased up limits on free speech and assembly.
These reforms have attracted foreign guests. The number of international visitors increased by 30 percent last year, totaling 816,000. Some, of course, were backpackers looking for a glimpse of pure Asian culture. But many more were prospective investors, looking to profit as Burma made its economic debut.
Because of Burma’s abundant natural resources, investors rightly see lucrative possibilities. The country’s energy sector is especially promising. In the last decade alone, natural-gas production has more than tripled, generating more than 12.1 billion cubic meters by 2010. (That’s about a tenth of what China puts out—and China is the biggest regional natural-gas producer.)
Nevertheless, as Human Rights Watch has pointed out, “the government still failed to seriously address the dire human rights situation in the country.” Political prisoners still languish in Burmese prisons; human-trafficking is a thriving industry; and political and ethnic violence continues.
All this gives investors (especially the PR-savvy) pause for thought.
But there’s a wrong and a right way to take advantage of the new opportunities to invest in Burma. As Suu Kyi said earlier this month at the World Economic Forum in Bangkok: “We do not want more investment to mean more possibilities for corruption. Our country must benefit.”
Fortunately, some Western companies are doing a decent job of balancing economic and ethical concerns. Chevron (NYSE: CVX) and Total SA (NYSE: TOT) in particular have been “sensitive to human rights and environmental issues,” Suu Kyi noted.
Chevron and Total have partnered on developing Burma’s Yadana gas field and a natural-gas pipeline. These projects employ around 855 native Burmese, and the companies spends millions to train them, providing them with marketable skills.
Moreover, the companies’ community-investment programs provide free health care and immunizations to thousands of Burmese citizens. The Yadana Project also funds numerous large-scale charity projects.
This might be the model for Coca-Cola Co. (NYSE: KO), which announced last week that it will market its products within Burma for the first time in 60 years. This is a symbolically important vote of confidence; Cuba and North Korea are the only other countries where Coke has refused to do business. Already, Coke has announced a $3 million grant “to support women’s economic empowerment job creation initiatives” in Burma.
Of course, any company that chooses to invest in Burma will face other obstacles. Most notably, rule of law is still lacking, and corruption is rampant.
But smart investors may also see a chance to prove that foreign investment has a humanitarian side. Done responsibly, it can provide opportunities and generate wealth for Burma’s repressed and impoverished citizenry.
JillianKayM has no positions in the stocks mentioned above. The Motley Fool owns shares of The Coca-Cola Company. Motley Fool newsletter services recommend Chevron, The Coca-Cola Company, and Total SA. (ADR). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.