Economy

Coca-Cola Pops the Top on First Burma Bottling Operation in 60 Years

By Andrew D. Kaspar 4 June 2013

RANGOON — Bottles rolled down the assembly line in packs of 12, the first Coca-Cola products made in Burma in more than 60 years, as the US beverage behemoth became the most high-profile international company to date to re-enter a market long closed off to Western investment.

Coca-Cola on Tuesday inaugurated a bottling facility in Rangoon’s Hmawbi Township, pledging to employ 2,500 people directly and create 22,000 jobs across its supply chain.

“As global as Coca-Cola is, we operate a local business in more than 200 nations around the world,” Coca-Cola CEO Muhtar Kent said outside the new bottling plant on Tuesday. “And the cornerstone, the key success factor for being a local business, is producing, distributing, selling and employing locally.”

Coca-Cola is partnering with local firm Pinya Manufacturing in the venture, and plans to invest more than US$200 million in its Burma operations over the next five years. The company will open up a second factory in Burma within the next month, Kent said before a gathering that included Myint Swe, Rangoon Division’s chief minister, as well as Rangoon Mayor Hla Myint and former US Secretary of State Madeleine Albright.

“This is an important moment for Myanmar, a moment not just for the Coca-Cola Company, but for the city of Yangon as well,” Myint Swe said, describing the partnership as a “blueprint” for future responsible investment.

Coca-Cola began shipping its globally recognized bottles and cans into Burma in September, also for the first time in more than six decades.

Plans for a bottling plant inside the country were made public in June of last year, and Tuesday marked a realization of that aspiration, reaffirming the company’s reputation as a first mover into emerging markets—however risky the enterprise might be.

In the case of Burma, those risks are notable. Political uncertainty, frequent blackouts, underdeveloped infrastructure and the government’s poor human rights record all pose potential challenges for the plant in Hmawbi Township.

Last month, Human Rights Watch cautioned US companies against rushing to invest in the former pariah nation, saying: “Doing business in Burma involves various human rights risks that the US rules do not fully address,” referring to recently enacted requirements from the US government that dictate conditions that US companies investing in Burma must meet.

HRW said those risks “include the lack of rule of law and an independent judiciary, major tensions over the acquisition and use of land, and disregard of community concerns in government-approved projects. The military’s extensive involvement in the economy, use of forced labor, and abusive security practices in business operations heightens concerns. Corruption is pervasive throughout the country.”

Coca-Cola appears intent on heading off such concerns.

“The Coca-Cola Company’s well-established global standards for corporate ethics are being incorporated into Coca-Cola’s business practices in Myanmar,” it said in a statement on Tuesday. “This includes strict adherence to its global human and workplace rights policy, supplier guiding principles, code of business conduct and anti-bribery policies.”

The US beverage maker has never been one to shy away from frontier markets. In a June 2012 announcement that the company’s charity arm would partner with an NGO in Burma, Kent touted Coca-Cola’s pioneering spirit.

“From the fall of the Berlin Wall to the establishment of normal US relations with Vietnam to the positive changes we are seeing today in Myanmar, Coca-Cola has proudly been there to refresh, invest, partner and bring hope for a better tomorrow,” he said.

On Tuesday, the company touted those charitable works in Burma, where since last year the Coca-Cola Foundation has given $3 million to the women’s empowerment NGO Pact.

Kent said on Tuesday that 10,000 women in Burma had begun their own businesses in the year since Coca-Cola inked the partnership with Pact. Their joint effort, known as Swan Yi, aims to empower 25,000 women over three years, with a focus on “financial literacy, entrepreneurship and business management.”

With the company’s entry into Burma, Cuba and North Korea remain the only two nations in the world where Coca-Cola is not legally manufactured or distributed.

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