Myanmar has passed a new foreign direct investment law. Now a cease-fire in the country’s Karen state has some entrepreneurs hoping to attract foreign investment.
HPA’AN, MYANMAR – Shar Phaung established Shar Mu Lar Mining Co. just two months ago, scenting opportunity in war-torn Karen state close to the Thailand-Myanmar frontier.
The Karen National Union (KNU) has fought the Myanmar government since the late 1940s, an on-off jungle conflict that has driven hundreds of thousands of people from their homes over the decades and left thousands maimed by landmines.
Now a ceasefire coupled with Myanmar President Thein Sein’s pledge to prioritise economic reform in a country ranked as one of Asia’s poorest means that even in this ramshackle riverside town of around 50,000, a six hour drive from Yangon on the 1,749 mile Salween river, commercial green shoots could soon spring up to match the region’s verdant landscape.
For Shar Phaung, sitting in his upstairs office in Hpa’an, the lull in fighting means a chance to do business. “The KNU and the Government have the ceasefire so we can go to the places like Kyaiseikgyi near the Thailand-Myanmar border where there is the antimony,” he says, referring to a potentially-lucrative element mostly-used in flame retardants.
Antimony is but one of an array of natural resources prompting a surge in investor interest in Myanmar, which is better-known for its gas, gemstones, timber and oil. Given that antimony is also used sometimes in bullets, it makes for a grim irony given that Shar Phaung could soon be mining in a region home to what is commonly-described as the world’s longest-running civil war.
Susanna Hla Hla Soe of the Karen Women’s Action Group was an observer at last weeks’ peace talks here in Hpa’an, when troop positions were discussed. She says “overall we can say things are improving as this is the third time the government and KNU meet, and publicly the government praises the KNU.”
Both Susanna Hla Hla Soe and Shar Phaung acknowledge that a political settlement is a long way off. “It is just ceasefire for now, they have many things to discuss still,” says Shar Phaung.
The Karen and several of Myanmar’s other large ethnic minorities have long sought substantial devolution of central control to their regions, something the Myanmar authorities have resisted, saying that minority regions could try break away from Myanmar.
Big issues await discussion, and, even settling on the names of places and peoples could be problematic. Just as Burma is the old name for Myanmar – the official country name imposed by the ruling military in 1989 – ‘Kayin’ and ‘Hpa’an’ are official names for what are better-known as Karen state and Pa’an respectively.
Moreover it will take more than peace to facilitate significant economic change in Karen state.
“We need outside investment, outside technology,” says Shar Phaung, dropping onto the table a contract – as yet unsigned – between his company and the government. “We are hoping to get a bigger foreign partner to work more effectively,” he says. “We can only mine by hand right now, we don’t have machines to do this properly yet.”
A new foreign investment law could help bring in the know-how and equipment Shar Phaung is after. The law awaits the approval of Myanmar’s President, but was passed by parliament on Friday after several months debate, during which western countries relaxed or suspended economic sanctions on Myanmar. The law scratched several some potential investment-deterring provisions from the original draft, such as a US$5 million minimum initial spend for any foreign company wanting to invest.
Even so, the law by itself will not prompt a rush of investors into Karen state. Says Alessio Polastri, managing partner at P&A Asia, a consultancy that offers legal advice to companies seeking business in Myanmar, “foreign investors are looking to see the extent to which peace can be brokered, achieved and maintained in conflict areas prior to commitment of resources.”
Another sticking point is the current mining law, which require 30-70 profit sharing between an investor and the Myanmar government, which also seeks royalties and tax. The law is another likely deterrent to the sort of partner Shar Phaung wants, adds Alessio Polastri, but one the government says it will revise soon.
However for others in Hpa’an, the lingering effects of war mean a daily struggle to make ends meet, rather than big plans to mine Myanmar’s abundant resources.
Speaking behind an ornate, museum-piece sewing machine, Jerome Na makes shirts and dresses from the living room of her family home in a quiet, semi-rural street on the outskirts of town.
8 years ago she brought her family 40 miles from Kama Maung due to the constant dangers of jungle skirmishes there between the army and the Karen National Liberation Army (KNLA), the KNU’s armed wing. “There are landmines around, and back then it was not safe and there was no way to earn a living,” she says.
Due to lack of opportunity in Myanmar, many youth from the region cross the border to Thailand to work – often in grim conditions in factories and on fishing vessels – some of the estimated 2-3 million migrant workers from Myanmar now living in their more prosperous neighbour.
Jerome Na says that the family did not have running water or electricity in their home village, typical of most of rural Karen state. Asked whether the ceasefire has made any difference, so far, to day to day life and commerce in Karen state. “Business is still the same for me as it was last year and the year before,” she says. “I think it is the same still for most people, we are still very poor.”Show