Govt Taking Steps to Ensure Trickle Down: ILO

By Charlie Campbell 25 June 2012

RANGOON — The Burmese government is taking steps to ensure foreign investment in Burma results in jobs and training for local people, says the International Labour Organization (ILO).

The suspension of the majority of Western sanctions on Burma over the past few months has seen Rangoon fill up with business executives looking to take advantage of the nation’s enviable geographical location, abundant natural resources and low-paid workforce.

And Naypidaw has not been coy in courting foreign business interests—drafting a new investment law which is believed to include a five-year tax break for firms opening in Burma. Yet Steve Marshall, the ILO’s liaison officer for Burma, says that reformist President Thein Sein’s administration is also putting measures in place to ensure the benefits trick down to the general population.

“The government is concerned about [skills development] and last week gave us a draft piece of legislation and was seeking input,” said Marshall. “They are very aware that the human resources and skills that exist are going to be one of the key issues for the success of this initiative.

“[The ILO office] has been like a railway station. We’ve had all sorts of people coming in looking to do business in Myanmar. Companies have been right across the board—logistics, transport, business services, marketing as well as manufacturing.”

New condominium buildings on Rangoon’s Strand Road demonstrate a looming surge in foreign investment in Burma. (Photo: The Irrawaddy)

Opposition leader Aung San Suu Kyi recently highlighted the concern of youth unemployment and the need for investment linked to job creation during her address at the International Labour Conference in Geneva on June 14.

“It is not so much joblessness as hopelessness that threatens our future,” said the democracy icon. “Unemployed youth lose faith in the society. Restless, directionless youth agonize over the fruitlessness of their lives.”

And Marshall said that his report to Naypyidaw would include information regarding the impact of foreign investment in other countries so that Burma can hopefully avoid some of the pitfalls experienced elsewhere. Key factors include educational reform and vocational training while a minimum wage bill is also being drafted.

“My understanding is that legislation is being discussed which will permit skills coming into the country which can then be used for passing on information and knowledge, so that the knowledge transfers [to the native population],” he said.

“International investors would not be encouraged, or possibly not be permitted, to bring in their own non-skilled workforces. So the emphasis would be using the investment for the development of the human resources within the country. We understand that this is included, although we haven’t seen it yet.”

A spokesman for the Rangoon branch of the Grand Waku business consultancy firm confirmed that they have been helping lots of European Union firms invest in Burma, but said that the move is not for everyone yet.

“Some investors investing will need to wait for sufficient revenues a few years—not all companies have such conditions,” he told The Irrawaddy. “So partially Myanmar is the best solution for investors, but partially it is just a virtual investment location. No one wants to hear it now—but it is truth.”

“Lack of specialists, lack of internationally thinking people … and the labor organization problem is a big question.”

This view was echoed by Marshall. “Some [companies] are keen to invest while others are biding their time but that is not surprising as you’ll find different sectors would be in a position to move in different times,” he said. “For example, some of the companies may be holding off until the business services sector has been developed.

“A lot of companies have come and spoken to us among others and it is all part of an assessment for due diligence and establishing an investment environment—the labor market and stability issues as well as basic business services.”

Burma’s ILO membership was formally restored on June 14 after substantive progress in tackling forced labor. The suspension of the restrictive measures imposed in 2000 was seen as key towards inclusion in the European Union and World Trade Organization generalized system of preferences, which reduces tariffs for developing nations.

Yet humanitarian groups have been critical of this assessment and claim that forced labor is still a regular part of daily life for many ethnic minorities. Marshall, however, says there has been concrete progress including the key forming of a new working group made up of government, military and ILO representatives.

“We have authoritative reports from all over Myanmar—including Shan and Kachin states—that forced labor has been decreasing, both by the government and military,” he said. “The commander-in-chief has given an order that forced labor is not to be condoned and offenders will be dealt with in a criminal court rather than by the military.

“There are new attitudes and a new approach. In the past the government has been partially in denial and in ‘response mode’ to allegations. But now they have changed to be proactive to agree to a new strategy for the elimination of forced labor and we have put together an action plan.

“The previous regime was so insular and paranoid toward foreigners that it made it very difficult to build constructive relationships—this has now clearly changed. When I first arrived here in 2007 people were getting arrested just for carrying my business card but now we are working in partnership with the government. There has been a marked change.”

Thein Sein gave a speech last week which called for Burma’s Gross Domestic Product to increase threefold by 2015. And following on from the New Myanmar Investment Summit 2012 in Rangoon on June 20-21, the French embassy is also preparing for an investment event due for July.

“People are looking at the country and seeing the change and progress being made and I think there is optimism,” said Marshall. “I think that managed properly things are looking quite positive but there’s still a long way to go.”