FT Letter – Western companies have many allies in Myanmar

Originally Published in the Financial Times

February 28, 2012

From Mr Romain Caillaud.

Sir, Joshua Kurlantzick warns western companies to “Beware talk of business-friendly Myanmar” (February 21). I found parts of the article particularly pessimistic and somewhat inaccurate.

I would disagree with the assertion that Upper Myanmar is “dominated by powerful ethnic insurgencies and narco-trafficking organisations”. There are some areas of limited size where the government-like structures set up by these entities prevail. However, beyond these zones, authority is rather in the hands of the central and provincial administration and of the army. I would concede that this authority is very much contested by multiple non-state actors, but not that the latter prevail over the state.

Regarding the comparison with Vietnam, I understand it took more than one decade for growth and investment to pick up there, from a dire situation when Doi Moi reforms were introduced in the mid-1980s. I am also aware through discussion with colleagues who specialise in Vietnam that foreign investors still face numerous challenges there. However, it is partly because foreign investors have an interest in solving such challenges that many have been resolved.

In the 1990s, Myanmar’s junta reacted to the deepening of the trade deficit by adopting an “import first” policy and setting up a trade council. However, it was not only these measures that led to the departure of western companies from Myanmar. At the same time that the Asian financial crisis was unfolding, growing consumer and political pressure led to the progressive strengthening of restrictive measures against Myanmar by the US and the European Union. Such developments were powerful deterrents for western companies in Myanmar.

Western companies clearly have many allies among Myanmar’s business and political elite as well as among the broader population, and many more will appear once these companies establish a presence in the country. Having lived and worked in Yangon for more than four years now, I can say that western companies have a positive image here. Their investments are expected by many Myanmar nationals to be made in a more responsible manner than that displayed by some Asian companies not blocked by sanctions, which, in the longer term, are unlikely to face political and consumer pressure to behave more responsibly in Myanmar.

Romain Caillaud, Chief Representative, Vriens & Partners Yangon Representative Office, Myanmar