SINGAPORE – Foreign business in Myanmar is struggling to operate in an increasingly volatile environment, as the military uses lethal violence against a growing protest movement against last month’s coup and much of the country’s workforce goes on strike .
Bank workers and port workers are not attacking, part of a massive civil disobedience campaign aimed at putting pressure on the military regime to restore the elected government. This paralyzed Myanmar’s financial system and logistics arteries, with executives struggling to figure out how to pay wages and import raw materials.
Migrant workers are fleeing industrial areas near Yangon, the country’s largest city, since security forces shot down at least 37 protesters on March 14 and flames hit Chinese-owned clothing factories amid chaos.
Total SE and Chevron energy giants Corp.
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, who have commercial ties to a state-owned company, are under pressure to prevent revenue from flowing to the government-controlled army.
“For companies in general, the conditions are quite unfeasible,” said a senior UN official based in Myanmar. “There is a sense of impending doom.”
The February 1 coup ended Myanmar’s decade-long transition towards democracy. Police and soldiers responded with terrible violence to the protests that followed, killing at least 247 people, according to the Association of Assistance to Political Prisoners, a nonprofit organization that monitors arrests and deaths.
Clothing factories – such as the one in Yangon last May – produce about a quarter of the country’s exports, but manufacturers say it is becoming more difficult to contract them.
Photograph:
Associated Press
The reduction in investments by foreign companies may not change the military calculation, say analysts focused on Myanmar, because the army seems more motivated by political primacy than by economic development. The generals have resisted decades of economic sanctions – gradually lifted over the past 10 years during democratic change – and are used to governing in international isolation.
Still, an economic meltdown caused by widespread strikes, potentially amplified by a threat of withdrawal from foreign investors, would create challenges for them. Sectors such as clothing and infrastructure have attracted substantial investments in the past decade, especially from Asian countries, and employ hundreds of thousands of workers.
Some foreign companies are relocating employees who live near protest sites to secure hotels and encouraging non-essential expatriate employees to leave the country, according to Jack Mullan, chief executive of Singapore-based risk management company Barber Mullan and Associates , which advises foreign companies there.
Even the basic tasks have become complicated. Companies that normally transfer money from other parts of Asia to pay wages are finding that, with many banks closed in Myanmar, transfers are not taking place. Mullan said a transfer he made to a private bank in Myanmar on March 2 has yet to be released.
“It’s a lot of stress for many companies – how are they going to get money at the end of the month?” he said.
Dale Buckner, chief executive of Global Guardian, a security services company based in McLean, Va., Said his company has an alternative solution to help its seven major corporate clients in Myanmar: transfer funds to a Singapore-based broker who has money in Myanmar, and the money is then delivered in packages to the offices of Myanmar customers. The total delivered reached about $ 2.5 million, and the broker’s fee rose to 25%, Buckner said, from 12% six weeks ago.
Since the beginning of March, clothing brands that buy clothing from Myanmar, such as Hennes & Mauritz HM.B from Sweden -2.02%
AB and Italy’s Benetton Group SRL have discontinued new orders, citing concerns about instability. Clothing manufacturers, whose production accounts for about a quarter of the country’s exports, say it is becoming increasingly difficult to occupy factories. Thousands of workers have fled two industrial suburbs in Yangon since the March 14 protests that left dozens dead.
Amid the chaos of the deadly March 14 protests in industrial areas near Yangon, a fire hit some Chinese-owned clothing factories.
Photograph:
Associated Press
“My parents are worried about us,” said Ma Thida, 33, a seamstress at a Chinese factory, who returned to her family’s home in the countryside.
Despite the risk, protests against the group attracted citizens from all walks of society. A western businessman in Yangon said that some of his employees work with them regularly during working hours. “It is very difficult to tell them not to go,” he said.
Workers at the Dutch beverage giant Heineken HEINY 0.60%
NV, which has a brewery in Myanmar, pressured the company to stop handing over the income tax it deducts from employees’ salaries to the government as a way to deny military funding, according to Heineken officials in Yangon.
A business analyst in Yangon, familiar with the situation, said that companies like Heineken face a dilemma: breaking the law by failing to hand over tax money or risking being considered pro-military – and perhaps boycotting – by handing over it under objections from officials.
“All companies are having this problem,” said the analyst. “Employees are saying, ‘We don’t want to pay income tax’. “
A Heineken spokeswoman later said that this article was initially published that the company was “committed to complying with the law and paying taxes to ensure that we can continue operating”, but added that “given the current situation in Myanmar”, the company requested a deferral of your tax payments.
Some are finding a third way. A Western lawyer based in Yangon said he knows of several companies that are offering protesting employees the option of becoming independent contractors, making workers responsible for handing over their own income taxes to the government. They can choose not to do so, without compromising the company.
Multinationals that work with state-owned companies are finding it more difficult to escape scrutiny. Activists and a group representing Myanmar-deprived lawmakers have asked the French energy company Total – whose operations in Myanmar waters supply gas for the domestic market and for export to neighboring Thailand – to stop transferring revenue to its state partner Myanmar Oil and Gas Enterprise. The group of lawmakers said in a letter to Total that continued payments would finance the junta.
Human rights activists are asking energy companies in the country, such as Total and Chevron, part of the venture with Total, to put the revenue in court accounts until the civilian government is restored.
Western oil and gas companies fear this could be a breach of contract and are calling for legal reprisals against local officials, according to one person familiar with his thinking. There are no easy options for leaving the country, the person said. Negotiating a sale to leave the country can take months or years, and the quick delivery of the fields to a new, unprepared operator can lead to power outages, the person said.
Chevron said it is working to “ensure safe and reliable energy for the people of Myanmar in times of crisis and during a pandemic.” Total declined to comment. The company, along with other foreign companies, signed a statement in mid-February saying it was following developments in Myanmar with “growing and deep concern”.
Two symbols of the protests – a three-finger salute and images of detained civil leader Aung San Suu Kyi – on display in Yangon on March 12.
Photograph:
Agence France-Presse / Getty Images
Write to Jon Emont at [email protected]
Corrections and amplifications
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