Open for Business?

As Myanmar transitions to democracy after decades of military rule, its increasingly vocal civil society is scrambling to protect forests and farmland from rapacious development.

photo of people with raised fists demonstratingphoto Reuters / Soe Zeya Tun

Late last fall, the government-built irrigation pipelines in the village of Alwan Sok stopped pumping water to rice fields. Local officials governing this small farming area about 13 miles southeast of Yangon, Myanmar’s former capital, offered no explanation. The fall rice crop had been harvested already, but without irrigation farmers wouldn’t be able to plant the year’s second crop in the dry season. That was troubling. Rice is the farmers’ staple food, and most of them are heavily indebted to an agricultural bank where they buy seeds and fertilizer. Even 30-year-old Ko Aye Htay, whose family owns the most land in the village, says he borrows up to half his income on credit.

As the weeks without irrigation morphed into months, hope of a spring harvest evaporated. Some villagers began selling their cows and motorbikes to cover basic expenses, or sharing rice with those who were going hungry. Then, on January 31, hundreds of households in the village found notices posted on their doors ordering them to leave their land in 14 days or face arrest. “Some of us thought it would be better to be in prison, because at least there we could be sure to eat,” Ko Aye Htay says.

The villagers weren’t entirely surprised by the eviction notice. For decades, Burma’s military government had been trying to convert the fields around Alwan Sok into factories that would complement the adjacent Thilawa port – the largest deepwater port in the country. Back in 1982, officials confiscated a chunk of the village’s farmland, saying they planned to build an industrial park. The complex never materialized, but the government kept the land. In 1996, it confiscated another parcel and built a tin factory that has long sat idle. Residents were told that while they could continue farming, their land was state property. They knew there would be trouble again, but they didn’t know when.

In April 2012, the government signed a memorandum of intent with Japanese investors to build a 2,400–hectare “special economic zone,” or SEZ – a term coined by the Chinese government in the 1980s to describe sprawling industrial parks that woo foreign investors with tax incentives. By November, Japan had agreed to provide US$270 million for the Thilawa SEZ and other economic projects across Myanmar. Construction was scheduled to begin in early 2013. A total of 3,900 people in Alwan Sok and nearby villages were ordered to move.

Ten years ago, the villagers might have gone quietly. In this case, they protested. Their grievances were widely reported in the local media, which until last year was governed by draconian censorship laws. The international press has chimed in with occasional reports on the conflict, and a Yangon nonprofit, Paung Ku, has advocated for the farmers in consultations with investors and the government.

On February 14 – the day of the planned eviction – the government backed off. A private newspaper, The Myanmar Times, quoted an agriculture officer telling villagers that although the government technically owned their land, they would be treated fairly. But when I visited Alwan Sok a month later, the irrigation pipes were still shut off. Villagers said their only hope for a 2013 rice harvest was the annual monsoon that typically enables them to plant in June without irrigation.

“All of the newspapers and magazines are saying that Burma is changing, but the way the officials act, it’s like the old way of ruling the people,” farmer Ko Aye Htay told me, his voice tinged with anger as he sat cross-legged in a wooden hut beside a stack of newspaper clippings one sultry March afternoon. “They’re always talking about Burma’s history, about how things were done in the past. Well, we don’t feel that the changes are real.”

Activists say the Thilawa SEZ has elements of both the old Myanmar – the repressive, military dictatorship that ruled the country for a half century – and the new Myanmar that has attracted a flood of international attention and development aid since March 2011, when a quasi-civilian government came to power on the heels of the Southeast Asian country’s first general elections in 20 years.

The new government – which later introduced a series of landmark reforms including freeing political prisoners, legalizing labor unions, and passing several environmental laws – has raised hopes that the country’s days of suppressing dissent are coming to an end. But it is still unclear if the ostensibly pro-democracy government will respect the rights of its citizens and protect its ecosystems as it opens its doors to international investors. Or if it will sell them out to the highest bidders.

Observers say the answer depends to some degree on how it handles the Thilawa farmer’s protests and other land-acquisition conflicts that are flaring up across the nation.

“The space has opened up,” says Paul Donowitz, campaign director for Earth Rights International, a Washington-based nonprofit that supports Myanmar activists campaigning for social and environmental justice. “The level of opposition is definitely new.… That’s why we’re seeing protests popping up around major projects.” However, he adds, there still is no community consultation process around big development projects, nor any debate at the highest levels over whether such projects should go forward.

Investors view Myanmar, formerly called Burma, as Asia’s newest “frontier market.” A central part of the appeal is the country’s 55 million people – a potential consumer market – and the vast natural resources that once made the country a jewel of the British Empire. Although profits from timber, minerals, oil, and gas have been a key source of funding for Myanmar’s junta, the country’s half-century of isolation also meant that much of its natural resources remained undeveloped.

Today Myanmar still has huge swaths of intact forests, sizeable offshore oil and gas deposits, and a vast catalog of rare and endangered species. But as the US and the European Union have lifted or conditionally suspended long-standing economic sanctions, many worry that an influx of foreign capital may set off a rush to extract resources that could cause significant environmental damage and negatively impact, rather than improve, the lives of ordinary citizens.

Faced with these complex challenges, activists say they are encouraged by a growing network of civil society groups that appear willing to speak out about simmering land and resource conflicts. The groups range from Paung Ku, an umbrella organization that operates from Yangon with assistance from embassies and development agencies, to grassroots groups that are fighting proposed hydropower dams and oil and gas pipelines in Myanmar’s restive hinterlands.

Casual observers of the country’s politics might think its civil society remained silent throughout its long era of military rule. Not so: There were high-profile uprisings against the government in 1988 and 2007, and community groups rallied to help the country recover from natural disasters like the devastating 2008 Cyclone Nargis. Still other groups have been working quietly for years to fill gaps in government-provided social services by hosting municipal blood drives, or raising funds for families that can’t afford to bury their dead. Although the military government regarded civil society groups with suspicion, activists say officials weren’t categorically opposed to grassroots advocacy work – so long as it didn’t threaten the regime.

What’s new, activists say, is a sense that they can now be more politically outspoken. Local journalists, too, feel empowered thanks to recent laws that have eradicated some, though not all, censorship. And the new government, hungry for foreign investment, appears eager to make a good impression. For example, the country is preparing to join the Extractive Industries Transparency Initiative, a voluntary agreement by more than 30 countries that governs environmental safeguards and financial disclosure requirements for natural-resource-extraction projects.

International investors are scrambling to get a share of Myanmar’s natural resources.

On the flip side, activists say, business in this largely rural and densely forested country tucked between China and India is still primarily driven by crooked officials who strong-arm farmers off their land to build industrial parks, copper mines, and other large-scale economic projects. Activists complain that most of the new laws that are supposed to protect the environment and the poor are weak, and that many politicians in Myanmar’s parliament lack the capacity or desire to implement them.

To what extent political reforms and increased media attention will translate into victories for Myanmar’s poor and marginalized is still unclear, says Kyaw Thu, director of Paung Ku and one of Myanmar’s leading activists. His group is advocating a slow, methodical pace of development that will give all stakeholders – foreign and local companies, the Myanmar government, and affected citizens – enough time to assess new projects.

“The speed and scale of reform and investment is quite huge,” Kyaw Thu told me. “We still have weak laws and poor knowledge of dealing with international players. It’s too much for us.… We don’t need to rush.”

Ruled for half-a-century by a military junta that overthrew a democratic government in 1962, Myanmar has long been seen as a pariah state. For decades the junta pillaged the country’s vast natural resources while allowing basic civil services like schools, roads, and hospitals to languish. As Myanmar’s neighbors developed their economies, the junta’s widespread human rights abuses led Western governments and aid agencies to impose economic sanctions against the repressive regime, although some investment did trickle in – mostly from China and other Asian countries. Tourists largely steered clear.

As the decades wore on, Myanmar became increasingly isolated and impoverished, even as its leaders grew richer on their citizens’ backs. Today, parts of central Yangon look decrepit, as if a tropical storm has just torn through. Weeds sprout inside its abandoned British colonial buildings, and at night a handful of streetlights cast an uneasy, florescent pallor over trash-strewn alleys. According to Transparency International, Myanmar is among the most corrupt places on earth, beating only Sudan, Somalia, Afghanistan, and North Korea in a ranking of 176 countries.

But Myanmar also feels like a nation in transition. New construction projects are sprouting up in Yangon and property values are soaring. (International businessmen are paying $4,000 a month for two-bedroom serviced apartments in a country where the average annual income is about $1,400.) Oil and gas prospectors are vying for offshore energy blocks and international aid is flowing in. The Asian Development Bank is planning to overhaul the country’s crippled road infrastructure; educators from American universities are preparing to help rebuild the country’s creaky university system; multinational brands are staking claims to potential factory space. Thousands of imported cars are rolling through Yangon’s pot-holed streets, adding to growing traffic jams that are typical in Southeast Asia’s megacities.

These changes mainly kicked off in 2011, a few months after Burma’s junta surprised the world by holding its first general elections in 20 years. For most of 2010, it wasn’t clear to international observers if the junta was serious about reform, or how it would deal with its outspoken political foes – notably Nobel Peace Prize recipient Daw Aung San Suu Kyi, who had been held under off-and-on house arrest since 1989. Her party, the National League for Democracy (NLD), had won a landslide victory in Myanmar’s 1990 elections but the junta refused to accept the results and arrested and imprisoned many NLD leaders. Six days after the 2010 election brought to power Thein Sein, a former general and self-professed reformer, he freed Suu Kyi. Two years later, the NLD, which had boycotted the 2010 elections, won 43 of the 45 parliamentary seats it contested. Newly elected Suu Kyi went on a tour of Europe and the United States, meeting with world leaders and attracting large, adoring crowds. In November Barack Obama made the first visit to Myanmar by a sitting American president.

Suu Kyi’s release and subsequent election were a key justification for the US and the European Union to loosen their longstanding economic sanctions. But observers remain wary of the Thein Sein government, which is still dominated by the military. The constitution, written by the junta in 2008, reserves a quarter of the seats in both chambers of parliament for the military, and requires three crucial ministries – defense, interior, and border affairs —to be held by generals. (Amendments need more than 75 percent of votes to pass.) It also bars anyone with a foreign spouse from running for president – a clause that applies to 67-year-old Aung San Suu Kyi, whose late husband was British. And rights groups have accused the government and military of fueling sectarian violence that has flared up across Myanmar in recent months. Given the junta’s continuing hold over the government, observers wonder whether the policy reforms will improve the lives of everyday citizens like the farmers of Alwan Sok and help responsibly manage the country’s rich natural resources.

Meanwhile, the race is on for Myanmar’s natural resources. A hotly anticipated foreign investment law, passed in November, allows international firms up to 100 percent ownership in most ventures and offers companies five-year tax holidays and 50-year land leases. International investors are now scrambling to get a toehold. The biggest investors so far are China and Thailand, which have committed $14.2 billion and $9.6 billion respectively for mining, hydroelectric, and mega-SEZ projects. The World Bank has approved at least $480 million in “support credit” and community development grants. Companies such as Nestle, Unilever, DuPont, Carlsberg, Ford, PepsiCo, Coca-Cola, and General Electric have all signed distribution deals. Although many other international investors are hanging back, the World Bank predicts the country’s economy will grow by more than 6 percent this year.

photo of a woman smiling, riding in a motorcadephoto Reuters / Soe Zeya TunNobel laureate Daw Aung San Suu Kyi, free after 15 years of house arrest, now holds
a seat in the Myanmar Parliament.

As the government clears land for investment projects, public resentment appears to be growing. The conflict over the Thilawa SEZ is just one example. Last year, a police raid of villagers protesting the expansion of a military-backed copper mine sparked nationwide outrage. (Anger was later directed at Aung San Suu Kyi, who tried to persuade the farmers to stop protesting and allow the mine to go forward.) And near the coastal city of Dawei, residents concerned about environmental and public health impacts are pushing hard against a proposed deep-sea port and a 155-square-mile SEZ that would include steel mills, power plants, refineries, and a petrochemical plant. The project – funded mainly by a Thai company and slated to be Southeast Asia’s largest industrial complex – would be a key transport link connecting Southeast Asia with India, Africa, and the Middle East. It also would displace about 30,000 people, mostly poor rice, cashew, and rubber farmers.

Faced with a barrage of industrial projects, local activists and civil society groups are trying to decide what to fight for, how to organize advocacy campaigns, and what policy reforms to realistically expect. “People are braver about showing their feelings and desires, but what do they want to be? They don’t know,” Bo Bo Aung, a 29-year-old activist with Dawei Development Association, a coalition of 50 grassroots groups that is pressing for more transparency about SEZs, told me at a Yangon café. Part of the problem, he said, is that activists opposed to development projects often don’t propose alternative ways of creating jobs or boosting Myanmar’s economy.

Thein Sein’s government has taken a few environmentally favorable steps: suspending until 2015 the construction of the Chinese-sponsored Myitsone dam on the Irawaddy River; canceling a proposed coal-fired power plant in Dawei; and banning mining within 100 meters of Myanmar’s four largest rivers. But analysts say Myanmar still needs better laws that are strongly enforced. The country’s first environmental conservation law, which passed last year after languishing for years in parliament, has been widely criticized for being too weak. (Firms are not required to conduct international-standard environmental impact assessments before beginning construction.) Environmental activists say while it is positive that the Myitsone dam has been suspended, six others are going forward – all of them in hotbeds of sectarian violence.

Tobias Jackson, a forester at Oxfam who is advising a local Yangon nonprofit that works with marginalized farmers, says most citizens are yet to see tangible benefits from policy reforms. Some new laws, he adds, have troubling implications. For example, he says a 2012 land use law designed to clarify procedures around “vacant” farmland may be used by developers as a pretext for seizing land from small-scale farmers who don’t hold land titles.

“All of the laws are open to interpretation,” Jackson says. “You could interpret them to be pro-industrial agriculture, pro-big business, and sometimes you could interpret them to actually be supportive of smallholder [farmers]…. But in a country where the rule of law has not been a strong point – where an independent judiciary does not exist – those interpretations, in our assessment, are often unlikely to favor smallholders.”

Back in Alwan Sok, two older farmers – U Aung Tint and U Sein Htay – agreed to show me around the Thilawa port and the site of the planned SEZ that could upend their lives. We climbed into my rented car and drove toward the port, which lay across a large expanse of barren fields. It was mid-March, weeks before the annual monsoon, and the empty land looked parched.

As we drove by the port on a two-lane road, I saw a large parking lot full of brand-new Toyotas. The government had recently loosened car import duties, and my driver said Thilawa has become the entry point of most new cars coming into the country – including the one we were in. As some trucks peeled away from the port carrying Camrys, others drove in loaded with thick logs. In the early twentieth century, Myanmar’s forest-management policies were among the world’s best, but now illegal logging is business as usual. Security guards shooed me away as I tried to take pictures.

RTR3CV51.jpgphoto Reuters / StringerIllegal logging is business as usual in Myanmar today.

We moved onto a roadside shack for lunch. As we ordered tea and some fermented meats and fish, the farmers told me they were hopeful that the dispute would be settled in a way that gave them a place to grow rice, whether in their current village or a new one. They didn’t seem angry, just deeply disappointed.

I asked U Aung Tint, who is 61, whether he would consider working in a factory at the SEZ. His answer was complicated.

Local officials had promised that when the industrial park is built he and his neighbors would have jobs. But the officials didn’t say how long it would take for the facility to be built, or how much the farmers would be compensated for their land. He said the officials had made it clear that they wouldn’t find the farmers a new place to live. Because many of the farmers are sharecroppers without cash or assets, the idea of buying new land – in an area where it is now valued at between $10,000 and $20,000 per acre – was daunting. And while most of the factory jobs would require an eighth-grade education, most of the village’s older residents stopped school in fourth or fifth grade.

As our plates were cleared, U Aung Tint sipped his tea and looked at the road as trucks whizzed by the roadside eatery, kicking up stones and dust. “They’ve made an impossible promise,” he said.

Mike Ives is a freelance journalist based in Hanoi. He last wrote for the Journal about the environmental movement in China.

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