Beyond Yangon : Myanmar’s Firms Struggle With Democracy, Sanctions

Martin Pun has watched with interest as this country’s military government took its political cues from the same Chinese leaders who banned him to the fields during the Cultural Revolution.

Pun, a Yangon businessman who was born here and raised in China and Hong Kong, is a major proponent of Myanmar’s decision to follow this Chinese model of economic reform--embracing market economics but still resisting a democratic government. Pun doesn’t think the country is ready for a Western-style democracy and its inevitable political dissent.

“This country is not ready for chaos,” said the chief executive of Serge Pun & Associates. “Unfortunately, for Americans, democracy is chaos.”

Pun and other Burmese businessmen have watched in dismay as the few remaining Western companies have begun to pull up stakes, reacting to growing international concern over the repressive politics of Myanmar’s

ruling State Law and Order Restoration Council, or SLORC.

They fear the international campaign for even stiffer economic sanctions will succeed, further hampering the efforts of this long-isolated Socialist country to transform its inefficient, centrally controlled economy along the lines of China, its giant neighbor and benefactor.

Myanmar is feeling the heat, according to Western and Burmese business leaders and economic experts here. In recent years, a number of prominent U.S. and European firms--including Macy’s, Eddie Bauer, Apple Computer and brewers Heineken and Carlsberg--have pulled out of the country, citing consumer boycotts, corruption and the government’s poor human rights record.

Critics also have succeeded in getting U.S. and European tour groups to cancel visits, forcing a sharp reduction in tourism revenue during what the government is elaborately promoting as “Visit Myanmar Year.” Tourism is a key source of foreign currency here, and much of the country’s foreign investment has gone into hotels.

Joseph Pang, one of Myanmar’s largest garment manufacturers, has felt the wrath of the international community. He was a major producer of apparel for Macys, Liz Claiborne and Eddie Bauer until they canceled their contracts under pressure from human rights groups.

Pang, who is based in Hong Kong and operates four companies in Myanmar, said those U.S. apparel companies made up nearly all of his business here. Although he has been able to get replacement contracts from Asian companies, they aren’t as profitable.

Myanmar’s smaller garment manufacturers won’t be able to stay in business much longer, he predicted. He said there are approximately 65,000 jobs at stake in the textile and apparel business in Myanmar.

Burmese businessmen say their factories pay fair wages, offer good working conditions and have introduced modern technology. They deny using forced labor or child labor, as some human rights groups have charged.

“If we from the outside shut the door to this country, it may close for another 30 years,” Pang argued.

“They’ll be 100 years behind. Is this human rights or human wrongs?”

But that is just what supporters of opposition leader and Nobel laureate Aung San Suu Kyi see as the best hope for crippling the military regime that took power in 1988. They want the Clinton administration, which recently instituted a travel ban on Myanmar government officials and their families, to cut off all new investment into the country.

One Western economic expert said the passage of selective purchasing laws by the state of Massachusetts and a half-dozen U.S. cities--including Santa Monica, San Francisco, Berkeley and Oakland--has the potential to inflict far more damage on the Myanmar economy than a unilateral investment ban.

If the Clinton administration halted new investment into Myanmar, any good business deals would probably be snatched up by Asian and European investors.

But selective purchasing laws have a wider reach, prohibiting the purchase of goods from any company that does business in Myanmar.

In San Francisco, for example, European, Japanese and U.S. firms bidding on major contracts for telecommunications and airport construction recently came under scrutiny after it was alleged that their business in Myanmar was in violation of that city’s selective purchasing law.

“In the presence of increasing trade sanctions, the ability of anybody to do business here is problematic,” the Western economic expert said.

Although the economic impact of this campaign can be measured in GDP figures, foreign reserves and trade levels, it is far more difficult to judge any political effect on the Myanmar government.

“All of these things have a lot of economic bite, but what the political impact is no one knows,” one well-placed source in Yangon said. “The inside of the SLORC is a black box.”

Rebuilding the Myanmar economy was one reason many of today’s Burmese businessmen abandoned successful careers in the West to return home.

Martin Pun left his job as a managing partner in the Honolulu office of New York Life Insurance Co. in 1994 to join his brother, Serge, in starting up an investment company in Yangon.

The family also owns Yoma Bank and a development company, which last year completed a $5 million retail and office complex next to the city’s large central market.

Pun said the privately financed office building is 90% leased, primarily to Japanese banks, construction companies, lawyers and accountants.

His firm is also developing a large residential project outside Yangon and is the local distributor for Nissan automobiles and Suzuki motorcycles.

Pun remains optimistic about Myanmar’s future, citing the country’s vast holdings of minerals and timber, a legal system left over from its days as a British colony, a strong work ethic and a young population.

The country also is well-placed to serve as an entry point to landlocked China.

“What is lacking is the experience doing business,” he said.

Bernard Pe-Win, the former vice president of American Express’ Asia operations, said the political environment has eased considerably in Myanmar since he first returned here in 1989.

Back then, he said, Myanmar’s government officials were not even allowed to talk to foreigners without permission.

Now, he said, those same government officials are much more relaxed, having been exposed to foreign business executives through their economic pursuits.

Like other businessmen here, Pe-Win, who has interests in several Yangon hotels, voiced fear that if democracy is introduced too soon the country will go the route of Russia or Bosnia, given its turbulent history of ethnic rivalries and territorial disputes.

“We are in a transition,” said the chairman and chief executive of Myanmar Investment Holdings Ltd.

“When we come out of a centrally planned to a market economy, that process will create more free-thinking, entrepreneurial thinking. . . . There is no shortcut to it. But one day, we’ll have the democracy the way the U.S. wants.”