Brahma_Bull9
Pre-Show Stalwart
Environment of Business in Burma
The business environment in Burma appears to be changing rapidly, and for the first time in a century, towards realizing the great potential the nation possesses. It is situated strategically on the Indian Ocean rich in natural gas and precious gems, as well as a considerable amount of oil, and timber (1). Numerous questions remain however before the real growth can begin to come to fruition. One, will the inept military government be able to stay out of the way and be content with maintaining a low profile long enough for this to occur. Just examine the rice crop and one can get a view of the speed of developments, and the government getting in its own way in Burma. In 2009, Irrawaddy, a news agency in Burma reported that Rice exports have essentially quadrupled over 2008's number. Due in part to food shortages across the globe, and that Burma was selling rice at 25% less than Vietnamese exporters (2). At the same time, however, the domestic prises were rising. Fast forward to March of 2010 when the Wall Street Journal reported the government announcing it was halting exports to deal with a domestic shortfall(3).
The second question is, when will the numerous U.S. sanctions that harm the countries prospects of growth be lifted. The latter just being mentioned as 'when' and not 'if' gives great hope to the Burmese people, and speculators all over the globe. Unilateral American sanctions began in 1988, in which the U.S. stopped providing aid for the nation after the military crackdown on widespread domestic calls and riots for regime change. American aid over the period of 1946 to 2007 totalled over a trillion in economic aid, and a half a million in narcotic law enforcement aid (2007 dollars)(1). Over the course the tumultuous nineties civil crack downs resulted in stricter sanctions against the regime. In 1997 America announced that no Burmese military members would be eligible for visas, and an executive order prohibited American business investment. Later in 1997, after the Junta attacked an NLD caravan including Sung San Suu Kyi more sanctions would be piled on, the little Burmese assets in American banks were froze as the country was prevented from using any U.S. banking facility. Additionally, the visa restrictions were extended to military members families, and an estimated $356 million worth of Burmese imports were halted.
However, it seems now the corner has finally been turned in U.S. Burma relations with Secretary Clintons recent visit to the nation November 30th, 2011. Reuters reported that just after the visit, in Yangon, the former capital, a piece of property valued at $1.5 million increased to $1.8 million on the optimistic speculation(4). Despite the apparent U.S. centric attitudes, the tides started to change several years ago. Their was an up tick of an investment, and it appears to be culminating now. American companies are still on the side lines, and have revealed little about thoughts of doing business in Burma. Chevron remains the only U.S. company doing business in Burma as part of the sanctions allowing investment at the time of promogulation to remain(4). The picture being painted by some on the ground in Burma is that of a possible missed opportunity if inaction continues from the Americans. An American presence in Burma is huge not only as it provides influence in a highly contested region with other global powers, India and China, but also American business getting in now maybe crucial. Christian Oram, a British businessman who has worked in the information technology sector in Myanmar for 13 years and now plans a $30 million Burmeses focused fund investing in businesses. Ending the sanctions not only could go further to help other investments, and legalize investment in to a land of great potential in a critical stage, "The early growth phase promises potentially extraordinary returns. You can't get extraordinary returns in Vietnam anymore, or Thailand... In Myanmar we are just getting started" Oram stated(4).
In the wake of U.S. sanctions, other western investment declined, according to the U.S. State department. This pull out of western capital was motivated by a perception of an increasingly unfriendly business environment and mounting pressures from those not sympathetic to the Burmese regime. However, the development of neighboring Asian countries appears to be making up for the absence of western investment, pulling Burma into the beginning processes of modernization. According to Earth Rights Organization, India, China, Thailand, South Korea and Singapore are the largest sources of investment (5). In 2007, the beginning of the resurgence of foreign investment started, tripling the investment in the natural gas sector. Investment in natural gas infrastructure made up 90% of all foreign direct investment (FDI) that year. That was just the beginning, as of August 2007, twenty-six Chinese Multinational Corporations (MNC's) were working on sixty-two projects. Just a year later, in late 2008, sixty-nine Chinese MNC's were working on ninety projects in hydropower, oil, natural gas, and mining. On top of that, Reuters recently reported a $14 billion comprehensive Chinese funded project for more hyrdro-power dams and highway infrastructure. The countries arent just providing financing and making money off profits, but they are receiving desired resources. Numerous dams are providing power for Thailand, though Burma itself still struggles with frequent power shut downs. China received 40 million tons of nickel ore in exchange for its investment in an extensive mining operation. From all indications, the gains will only be greater as Burma continues to accept aid for exploratory mining, on and off shore drilling for natural gas and oil. All in all, foreign direct investment totals $20 trillion for 2011, up from a mere $300 million with Singapore and Thailand being the major contributors trailing China (5).
Real Estate is another market in Burma that is very unpredictable and quickly changing. Many already believe the speculation has built a bubble in Yangon already, and investors are shying away from the city. The land, just a few years ago could reportedly be purchased from the government for just 250 kyat a square foot(the local currency), now the price is over 7,500 kyat per a square foot (4). Additionally, economic success is expected to open up other avenues. A struggling tourism industry already built off Singapore and Thailand mega chain hotels wait patiently to expand.
Environmental Issues in Burma
The environmental issues concerning Burma have no easy resolutions at this time, like most environmental issues. However, it seems Burmas very existence continues to compound the issues it faces. The two main problems are deforestation, and water contamination. As mining becomes more prevalent in the nation its impact will grow, compounding other environmental issues. The mismanagement of an abundance of water is a worsening situation and continues to as other practices side effects contribute to the deterioration of water resources.
Burma is home to half of the remaining forests in South East Asia (6). It was estimated that in 1930 over 70% of Burma was covered by forestry, however, only 30% of that remained. This is due in part because Burma provides very rare timber, such as teak trees, and its trees are known to handle humidity as well as termites very well. In short, the timber is a sought after product, especially by neighbors. The domestic fracture in Burma provides the desperation needed to put large scale deforestation into action. Resistance armies perched on the borders bear the brunt of the blame, accused of making illegal trades with China, Thailand, and Singapore to continue their existence. It was estimated that a truck used to enter into China every 7 minutes loaded with Burmese timber, an estimated $350 million yearly by Global Witness (7).
However, the government has it share of responsibility to. It was believed that upon reaching a cease fire between oppositions and the Junta that deforestation would ease, but the trends have not supported that. In the immediate aftermath of the peace treaty, 1989-1993 an estimated 31,000 hectares were burned, compared to 15,000 the previous ten years. Today in Burma, almost two-thirds of domestic energy is dependent upon wood. The deforestation is rampant, the Pinduang Wildlife Sanctuary, Burmas first preserved land established in 1918 is now depleted. Pinduang was protected well until 1950, the 200,000 hectare plot was home to rhinos and an estimated 800 elephants (6). Now, under half of the forest remains, and the biodiversity is in shambles. Since 2005, however, China has cracked down considerably on illegal timber. Statistics show a 70% decrease in illegal timber trade into China from Burma since the crackdown. Even with Chinese concern, it appears the Junta has little to protect the forests (7).
The development of mining in Burma has also contributed to deforestation. Gold mining in the state of Kachin resulted in deforestation causing streams to dry up. Kachin, due to its location, was one of the last remaining nearly untouched forests in the world. That is no longer the case. In addition to deforestation, mining has increased pollution. Mercury poison is becoming prevalent in the absence of storage for toxic waste, and it is discharged into the land. Contributing to water issues in Burma, mining operations have diverted riverbeds for water blasting techniques to remove sediments. This has disrupted the natural flow of water, creating floods in one area, and a shortage of water in other areas (8).
Perhaps the most stark and descriptive development of the vicious cycle in environmental issues facing Burma is the case of Lake Inle. Lake Inle is the second largest source of in land water in Burma. It is a great tourist attraction, known for floating villages and gardens. Those very floating gardens are a big part of the problem. A documentary named The Floating Tomatoes exposed the after effects of the chemical fertilizers and pesticides on the lake (9). As a result of the use, farmers, villagers, consumers, fisherman almost anyone who comes in contact with the lake becomes sick. The other main trade on the lake, fishing, has been hard hit. A 2007 University of Tokyo report detailed the extent of the damage and the unsightly transformation the lake has gone under . In 1968, their were nine known fish species unique to the lake. At the time of the report in 2007, only one, a carp, could be found. The drop off in fish has caused fisherman to turn to cultivating floating gardens, or larger ones as they cannot afford land. It is estimated there are now a near 100,000 floating farm gardens in the lake. With the decrease in fish profits, the farmers cannot afford to lose the chemical fertilizers and pesticides as they double the yields farmers desperately need. As less and less people can fish, more turn to the gardens, killing more fish and forcing more into gardens. On top of the increase in the amount of farms, what was once seasonal work is now contributing pollutants to the lake year round as more and more fisherman becomes fulltime farmers (10).
Chemical fertilizers and pesticides are not the only problem facing the lake, the deforestation poses its fair share of problems for the lake. Located in the mountains, the lake is surrounded by lush forestry of the Shan state. The deforestation causes silt to build up on the surface of Lake Inle which has resulted in a prolonged shortage of rainfall. The same 2007 University of Tokyo report found that the lakes area decreased by more than one-third in sixty-five years . However, it pointed to the gardens as the main culprit blaming them for 93% of the decrease in size. The lake has gone from being fifty eight kilometers long to now only eighteen, and the width of the lake has decreased to six and a half kilometers wide from thirteen. This is a startling trend with major implications for not only the village and people directly dependent on the lake, but those in major cities like Mandalay who buy the crops and fish from the region (10). Additionally it is one of the focal points of a tourist industry that already struggles from bad press and the lack of infrastructure.
Finally, and possibly the most wide spread and serious problem facing Burma is the water quality. It is estimated that 40% of people in Burma do not have access to clean water, and that another 57% do not have access to basic sanitation facilities(11). The people in these areas struggle using the same limited amount of water for everything until it dries up, then they must turn to merchants. Additionally, the monsoon flooding that brings much of the water to these areas for the year is what contaminates the water. Diarrhea is the second leading cause of death for children under 5, and one in three experience serious diarrhea yearly. Of those, 50% are children who fight death in many circumstances (11).
The business environment in Burma appears to be changing rapidly, and for the first time in a century, towards realizing the great potential the nation possesses. It is situated strategically on the Indian Ocean rich in natural gas and precious gems, as well as a considerable amount of oil, and timber (1). Numerous questions remain however before the real growth can begin to come to fruition. One, will the inept military government be able to stay out of the way and be content with maintaining a low profile long enough for this to occur. Just examine the rice crop and one can get a view of the speed of developments, and the government getting in its own way in Burma. In 2009, Irrawaddy, a news agency in Burma reported that Rice exports have essentially quadrupled over 2008's number. Due in part to food shortages across the globe, and that Burma was selling rice at 25% less than Vietnamese exporters (2). At the same time, however, the domestic prises were rising. Fast forward to March of 2010 when the Wall Street Journal reported the government announcing it was halting exports to deal with a domestic shortfall(3).
The second question is, when will the numerous U.S. sanctions that harm the countries prospects of growth be lifted. The latter just being mentioned as 'when' and not 'if' gives great hope to the Burmese people, and speculators all over the globe. Unilateral American sanctions began in 1988, in which the U.S. stopped providing aid for the nation after the military crackdown on widespread domestic calls and riots for regime change. American aid over the period of 1946 to 2007 totalled over a trillion in economic aid, and a half a million in narcotic law enforcement aid (2007 dollars)(1). Over the course the tumultuous nineties civil crack downs resulted in stricter sanctions against the regime. In 1997 America announced that no Burmese military members would be eligible for visas, and an executive order prohibited American business investment. Later in 1997, after the Junta attacked an NLD caravan including Sung San Suu Kyi more sanctions would be piled on, the little Burmese assets in American banks were froze as the country was prevented from using any U.S. banking facility. Additionally, the visa restrictions were extended to military members families, and an estimated $356 million worth of Burmese imports were halted.
However, it seems now the corner has finally been turned in U.S. Burma relations with Secretary Clintons recent visit to the nation November 30th, 2011. Reuters reported that just after the visit, in Yangon, the former capital, a piece of property valued at $1.5 million increased to $1.8 million on the optimistic speculation(4). Despite the apparent U.S. centric attitudes, the tides started to change several years ago. Their was an up tick of an investment, and it appears to be culminating now. American companies are still on the side lines, and have revealed little about thoughts of doing business in Burma. Chevron remains the only U.S. company doing business in Burma as part of the sanctions allowing investment at the time of promogulation to remain(4). The picture being painted by some on the ground in Burma is that of a possible missed opportunity if inaction continues from the Americans. An American presence in Burma is huge not only as it provides influence in a highly contested region with other global powers, India and China, but also American business getting in now maybe crucial. Christian Oram, a British businessman who has worked in the information technology sector in Myanmar for 13 years and now plans a $30 million Burmeses focused fund investing in businesses. Ending the sanctions not only could go further to help other investments, and legalize investment in to a land of great potential in a critical stage, "The early growth phase promises potentially extraordinary returns. You can't get extraordinary returns in Vietnam anymore, or Thailand... In Myanmar we are just getting started" Oram stated(4).
In the wake of U.S. sanctions, other western investment declined, according to the U.S. State department. This pull out of western capital was motivated by a perception of an increasingly unfriendly business environment and mounting pressures from those not sympathetic to the Burmese regime. However, the development of neighboring Asian countries appears to be making up for the absence of western investment, pulling Burma into the beginning processes of modernization. According to Earth Rights Organization, India, China, Thailand, South Korea and Singapore are the largest sources of investment (5). In 2007, the beginning of the resurgence of foreign investment started, tripling the investment in the natural gas sector. Investment in natural gas infrastructure made up 90% of all foreign direct investment (FDI) that year. That was just the beginning, as of August 2007, twenty-six Chinese Multinational Corporations (MNC's) were working on sixty-two projects. Just a year later, in late 2008, sixty-nine Chinese MNC's were working on ninety projects in hydropower, oil, natural gas, and mining. On top of that, Reuters recently reported a $14 billion comprehensive Chinese funded project for more hyrdro-power dams and highway infrastructure. The countries arent just providing financing and making money off profits, but they are receiving desired resources. Numerous dams are providing power for Thailand, though Burma itself still struggles with frequent power shut downs. China received 40 million tons of nickel ore in exchange for its investment in an extensive mining operation. From all indications, the gains will only be greater as Burma continues to accept aid for exploratory mining, on and off shore drilling for natural gas and oil. All in all, foreign direct investment totals $20 trillion for 2011, up from a mere $300 million with Singapore and Thailand being the major contributors trailing China (5).
Real Estate is another market in Burma that is very unpredictable and quickly changing. Many already believe the speculation has built a bubble in Yangon already, and investors are shying away from the city. The land, just a few years ago could reportedly be purchased from the government for just 250 kyat a square foot(the local currency), now the price is over 7,500 kyat per a square foot (4). Additionally, economic success is expected to open up other avenues. A struggling tourism industry already built off Singapore and Thailand mega chain hotels wait patiently to expand.
Environmental Issues in Burma
The environmental issues concerning Burma have no easy resolutions at this time, like most environmental issues. However, it seems Burmas very existence continues to compound the issues it faces. The two main problems are deforestation, and water contamination. As mining becomes more prevalent in the nation its impact will grow, compounding other environmental issues. The mismanagement of an abundance of water is a worsening situation and continues to as other practices side effects contribute to the deterioration of water resources.
Burma is home to half of the remaining forests in South East Asia (6). It was estimated that in 1930 over 70% of Burma was covered by forestry, however, only 30% of that remained. This is due in part because Burma provides very rare timber, such as teak trees, and its trees are known to handle humidity as well as termites very well. In short, the timber is a sought after product, especially by neighbors. The domestic fracture in Burma provides the desperation needed to put large scale deforestation into action. Resistance armies perched on the borders bear the brunt of the blame, accused of making illegal trades with China, Thailand, and Singapore to continue their existence. It was estimated that a truck used to enter into China every 7 minutes loaded with Burmese timber, an estimated $350 million yearly by Global Witness (7).
However, the government has it share of responsibility to. It was believed that upon reaching a cease fire between oppositions and the Junta that deforestation would ease, but the trends have not supported that. In the immediate aftermath of the peace treaty, 1989-1993 an estimated 31,000 hectares were burned, compared to 15,000 the previous ten years. Today in Burma, almost two-thirds of domestic energy is dependent upon wood. The deforestation is rampant, the Pinduang Wildlife Sanctuary, Burmas first preserved land established in 1918 is now depleted. Pinduang was protected well until 1950, the 200,000 hectare plot was home to rhinos and an estimated 800 elephants (6). Now, under half of the forest remains, and the biodiversity is in shambles. Since 2005, however, China has cracked down considerably on illegal timber. Statistics show a 70% decrease in illegal timber trade into China from Burma since the crackdown. Even with Chinese concern, it appears the Junta has little to protect the forests (7).
The development of mining in Burma has also contributed to deforestation. Gold mining in the state of Kachin resulted in deforestation causing streams to dry up. Kachin, due to its location, was one of the last remaining nearly untouched forests in the world. That is no longer the case. In addition to deforestation, mining has increased pollution. Mercury poison is becoming prevalent in the absence of storage for toxic waste, and it is discharged into the land. Contributing to water issues in Burma, mining operations have diverted riverbeds for water blasting techniques to remove sediments. This has disrupted the natural flow of water, creating floods in one area, and a shortage of water in other areas (8).
Perhaps the most stark and descriptive development of the vicious cycle in environmental issues facing Burma is the case of Lake Inle. Lake Inle is the second largest source of in land water in Burma. It is a great tourist attraction, known for floating villages and gardens. Those very floating gardens are a big part of the problem. A documentary named The Floating Tomatoes exposed the after effects of the chemical fertilizers and pesticides on the lake (9). As a result of the use, farmers, villagers, consumers, fisherman almost anyone who comes in contact with the lake becomes sick. The other main trade on the lake, fishing, has been hard hit. A 2007 University of Tokyo report detailed the extent of the damage and the unsightly transformation the lake has gone under . In 1968, their were nine known fish species unique to the lake. At the time of the report in 2007, only one, a carp, could be found. The drop off in fish has caused fisherman to turn to cultivating floating gardens, or larger ones as they cannot afford land. It is estimated there are now a near 100,000 floating farm gardens in the lake. With the decrease in fish profits, the farmers cannot afford to lose the chemical fertilizers and pesticides as they double the yields farmers desperately need. As less and less people can fish, more turn to the gardens, killing more fish and forcing more into gardens. On top of the increase in the amount of farms, what was once seasonal work is now contributing pollutants to the lake year round as more and more fisherman becomes fulltime farmers (10).
Chemical fertilizers and pesticides are not the only problem facing the lake, the deforestation poses its fair share of problems for the lake. Located in the mountains, the lake is surrounded by lush forestry of the Shan state. The deforestation causes silt to build up on the surface of Lake Inle which has resulted in a prolonged shortage of rainfall. The same 2007 University of Tokyo report found that the lakes area decreased by more than one-third in sixty-five years . However, it pointed to the gardens as the main culprit blaming them for 93% of the decrease in size. The lake has gone from being fifty eight kilometers long to now only eighteen, and the width of the lake has decreased to six and a half kilometers wide from thirteen. This is a startling trend with major implications for not only the village and people directly dependent on the lake, but those in major cities like Mandalay who buy the crops and fish from the region (10). Additionally it is one of the focal points of a tourist industry that already struggles from bad press and the lack of infrastructure.
Finally, and possibly the most wide spread and serious problem facing Burma is the water quality. It is estimated that 40% of people in Burma do not have access to clean water, and that another 57% do not have access to basic sanitation facilities(11). The people in these areas struggle using the same limited amount of water for everything until it dries up, then they must turn to merchants. Additionally, the monsoon flooding that brings much of the water to these areas for the year is what contaminates the water. Diarrhea is the second leading cause of death for children under 5, and one in three experience serious diarrhea yearly. Of those, 50% are children who fight death in many circumstances (11).