‘There’s a Huge Thirst for Knowledge and Human Capacity Here’

By Simon Roughneen 12 June 2013

Last July, General Electric was the first American company to invest in Burma after the US government eased sanctions on the former military-ruled country. That initial deal was to supply medical equipment to hospitals, but in the 11 months since, GE has begun training medical staff, commenced aircraft leasing in Burma and signed agreements to distribute lighting products and power alternatives to generators.

Stuart Dean, CEO of GE’s Asean division, spoke with The Irrawaddy at the recently concluded World Economic Forum (WEF) in Naypyidaw, and gave insight into how the one-time pariah country is to do business in its changed political and business environment. Dean discussed options for Burma to upgrade its electricity supply, which currently covers only about one-quarter of the population—mostly just in urban areas—and spoke about the need for, and interest in, more skills and leadership training in Burma.

Question: How does GE see the reform process in Burma so far, and how has it been for you as a company setting up operations here?

Answer: After this emergence of Myanmar on the world stage, which has really been a remarkable transformation in a short period of time, it seems now that continuing on the reform path requires meeting the needs of the population.

A lot of those needs revolve around getting the basic infrastructure in place—water, electricity, health care, transportation—so this is a huge opportunity for companies like GE to play a constructive role to help the country develop, meet the needs of its population and really reward the reform process. We really think of ourselves as trying to partner with the country on the reform path.

We’ve been very pleasantly surprised with their openness to work with Western companies, and get access to the technology and also the corporate governance that Western companies can bring. That’s encouraging us to do more here.

Q: Both the government and the opposition here have been talking about the need for jobs, and their hope that foreign investment can create jobs. Will GE’s investment here lead to many jobs being created?

A: There’s a huge thirst for knowledge and human capacity here, which is not surprising, given the long years of sanctions and isolation from many parts of the world.

We’ve been working with the Ministry of Health to train medical engineers in maintaining hospital equipment. We’ve trained 50 and we’ll do more. If you see our latest press release, there’s more there, but it’s overwhelmingly about improving human capacity and also general leadership skills, for both the government and for the private sector.

There’s a small direct hiring that GE will bring about here, but the much bigger piece is the indirect hiring we can help facilitate by making hospitals more professional, by upgrading hospital equipment, building power plants with partners, eventually upgrading water systems. We’re leasing aircraft here, which will create jobs in airlines.

Q: You mentioned power plants, and on a related issue, I was at a press conference earlier where the ADB [Asian Development Bank], Accenture and the Energy Ministry launched a new report on ways forward for the energy sector. One of the things said was a lack of coordination across the seven ministries they said were involved in the energy sector: Has navigating the bureaucracy here been a challenge for you?

A: That’s a challenge in every country we operate in and Myanmar is no exception. It’s a smaller government in some ways than others we deal with, and I think there’s better communication across ministries than in other countries. But their starting point is way behind other Asean countries. The ministries want to do the right thing, but there’s not a lot of depth there. They need training, they need skills, and this is something GE can provide in areas like electricity, health care.

They don’t have money to build power plants, they need private sector assistance there, but we have been amazed that there are companies here, now, working on this, and there’s investment right now in the power sector in Myanmar.

Q: So there’s competition for you here? Do you see this being a tough field to compete in?

A: There’s not a place in the world where we don’t have competitors and therefore it’s very important that GE offer a very competitive solution to the country. But what is very critical is that pretty quickly they have government policies in place to support private sector investment. It’s great that people are building power plants today, but they need to know how much power they can sell, at what price, but none of those things are there yet. The government knows this, but these are not easy issues to solve quickly, and the Parliament here has to see that taxpayers’ money is being spent well.

Q: The power supply is one area that needs money allocated. Maintenance and repairs to the existing system could do a lot to improve the current availability of electricity, according to the ADB report that I mentioned earlier. Does this assessment tally with what GE has found in its 18 months’ work here?

A: Because of sanctions, the gas turbines have not been adequately maintained. If those existing turbines could be refurbished, we could generate twice the amount of electricity with the same amount of gas. That was one of the recommendations from the energy summit yesterday, it’s low-hanging fruit and I think the government gets that. Longer term, they should want to diversify their sources. They’re blessed with gas and should find ways to divert more of it to the local market. Coal should be part of the base load options, hydro is great too but they can’t rely on that all year round.

But then you get to rural areas, where people are not connected to the grid, and there refurbishment doesn’t apply. Given the numbers [the ADB suggests that 84 percent of Burma’s rural populations lack electricity], it’s going to be at least a decade before you connect most of those folks. But there are so called ‘distributed power solutions,’ such as biomass, there’s solar, there’s wind. There are a lot of different options out there, but the government needs to find ways to get those financed.

I also suspect there’s stranded gas and oil fields in the country that could be tapped to increase supply domestically—that is something they did in Indonesia in recent times.

Q: That touches on something that Deputy Energy Minister Htin Aung said earlier: that in future, or for future contracts, the government will not export gas or oil unless there is a surplus and unless domestic requirements have been met first.

A: That came up yesterday when we met with the minister, and again Indonesia is an example here. In the past they were selling to Japan, to other countries, but they realized they had needs at home, and walked away from some export contracts, and that caused a lot of heartburn. They [the Burmese government] shouldn’t break contracts, but they can talk to people and say ‘we have a problem,’ if need be.