TRADE, FOREIGN INVESTMENT AND FOREIGN COMPANIES IN MYANMAR

MYANMAR TRADE

Myanmar is a member of the World Trade Organization. Trade to the European Union and the United States has risen when the political climate has been good and has declined when it has been bad. Trade virtually came to a standstill when the strictest sanctions were in place but has been gaining momentum as the political situation has improved under the new quasi-civilian government that came to power in March 2011.

Current account balance: -$891.2 million (2012 est.), country comparison to the world: 108; $96.1 million (2011 est.). Exports increased 19 percent in the fiscal year through March 2011, while imports surged 55.5 percent, according to JETRO, citing Myanmar government data. Thailand was the country’s biggest market, taking almost 33 percent of overseas shipments, followed by Hong Kong and China. China is the biggest source of imports, followed by Singapore and Thailand. About 70 percent of the trade between Myanmar and Thailand is conducted via the two countries four land border r checkpoints.

According to Countries and Their Cultures: “The difference in the value of imports and exports is covered in large part by revenue from narcotics and other illegal exports. Under British colonial rule, Burma was the world's leading exporter of rice, and rice remains the major legal export. Burma was once the world's largest supplier of illegal opiates (opium and heroin). The export of amphetamines has increased. Money from the illegal narcotics trade plays a crucial role in the national economy. Much of the production of illegal narcotics, however, is in the hands of ethnic rebels in Shan State. Recent peace accords between the government and some rebel groups have given the regime access to income from narcotics.[Source: Countries and Their Cultures everyculture.com ]

With mountains on three sides, Myanmar does much of it international trading by sea. Just after World War II, Rangoon's harbor had 10 berths. In the 1990s it had 13, even though Burma's population was 17 million in 1941 and over 45 million in 1995. One ship captain told National Geographic he had waited for a month before he could unload. Such delays raises prices and exacerbate shortages of crucial items such as medicines." [Source: Joel Swerdlow, National Geographic, July 1995]

Myanmar Exports

Exports: $8.529 billion (2012 est.), country comparison to the world: 98; $8.196 billion (2011 est.). Official export figures are grossly underestimated due to the value of timber, gems, narcotics, rice, and other products smuggled to Thailand, China, and Bangladesh. [Source: CIA World Factbook ++]

Exports - commodities: natural gas, wood products, pulses, beans, fish, rice, clothing, jade and gems. Exports - partners: Thailand 36.7 percent, China 18.8 percent, India 14.1 percent, Japan 6.6 percent (2011). ++

Exports to the United States were $356 million in 2002, about 85 percent of it textiles, clothing and footwear. This worked out to about one fifth of Myanmar’s official exports. In 2003, the U.S. beefed up sanctions to include nearly a ban on all imports from China. Exports to China rose 82.6 percent between 2001 and 2003.

Logging was important export in the colonial economy, but excessive harvesting and poor forestry management have resulted in a sharp drop in the availability of teak. China, Thailand, and India are their main markets for timber, but most wood is exported illegally. Burma is famous for rubies and jade, but since 1962, a lack of capital and expertise has hindered that industry. As with timber, most ruby and jade exports go through illegal channels.

Myanmar Imports

Imports: $7.137 billion (2012 est.), country comparison to the world: 111; $5.982 billion (2011 est.). Note: import figures are grossly underestimated due to the value of consumer goods, diesel fuel, and other products smuggled in from Thailand, China, Malaysia, and India. [Source: CIA World Factbook ++]

Imports - commodities: fabric, petroleum products, fertilizer, plastics, machinery, transport equipment, cement, construction materials, plant equipment, consumer goods. crude oil, food products, edible oil, Imports - partners: China 38.8 percent, Thailand 22.6 percent, Singapore 9.7 percent, South Korea 5.4 percent, Malaysia 4.5 percent, Japan 4.1 percent (2011), By one estimate China accounts for 70 percent of Myanmar’s $30 billion in annual imports. ++

Imports from China to Myanmar have been increasing more than 10 percent a year for more than two decades. China provides Myanmar with weapons, building materials, cheap consumer goods, condoms, textiles curry power, and computer software. Most of these items are brought to Mandalay along the former Burma Road from the Yunnan province of China. Thailand and India are also important sources of legal and illegal imported goods. Small amounts are also imported from other neighboring countries such as Malaysia, and Singapore.

Foreign Investment in Myanmar

According to to Bloomberg: More political freedom and loosened economic controls have attracted companies such as Ford Motor Co., MasterCard Inc. and Unilever NV. Unilever has said Myanmar could be “another Vietnam” in 20 years. The company is already selling its products through 100,000 outlets in the country, he said in an interview last month. Myanmar may attract as much as $100 billion in foreign direct investment over the next two decades if it spends enough to achieve its economic growth potential, McKinsey Global Institute said in a report in May 2o13.

China was the largest foreign-direct investor in Myanmar between from 2007 through 2011, pumping about $19 billion into economy, followed by Thailand and South Korea, according to data on the Central Statistical Organization’s website.

The top eleven investors into Myanmar between 1988 and the middle of 1995 were 1) Britain ($634 million); 2) France ($464 million); 3) Thailand ($418 million); 4) Singapore ($337 million); 5) the U.S. ($226 million); 6) Japan ($101 million); 7) the Netherlands ($83 million); 8) Austria ($72 million); 9) Austria ($72 million); Malaysia ($70 million); South Korea ($61 million) and Australia ($28 million).

Between 1988 and 1995. Myanmar received pledges of about $3 billion in investments from foreign businesses. Most of the investments have come from ethnic Chinese in Singapore and Thailand as well as from Japan and the U.S. According to some reports only about $1 billion of the pledges had actually been delivered as of spring 1996.

Myanmar is part of one of the world's most lively economic markets—Southeast Asia. But for a long time was largely left out. Myanmar accounted for only $123 million of the $13 billion in foreign direct investment in Southeast Asia countries in 2001. Thailand by contrast received $3.8 billion. Foreign money that has flowed into Myanmar has been invested in hotels, real estate, mining and manufacturing. Since the new quasi-civilian government that came to power in March 2011 foreign investors have shown more interest in Myanmar. In January 2012, U.S. billionaire George Soros visited Myanmar.

Myanmar needs “responsible investment” of foreign capital as it seeks to accelerate economic development, opposition leader Aung San Suu Kyi said. The country also needs to improve its rule of law and democratic reforms must take place soon, not by 2015 when general elections will be held, Suu Kyi said at a conference in Singapore. “If you are going to try to revive the economy, you need capital,” Suu Kyi said, when asked whether investors should wait for more political stability before committing resources to the country. “I wouldn’t advise you to draw out. I would like you to continue your investments. But make them as responsible as possible.” The country needs clean courts, a more efficient law enforcement and an independent judiciary, which is “one of the first requirements for the rule of law,” Suu Kyi said. Establishing a firmer rule of law will include changes to the Myanmar constitution, she said. [Source: Klaus Wille, Bloomberg, September 21, 2013]

China Tops Thailand as Biggest Investor in Myanmar

In February 2011, Associated Press reported: “China, already Myanmar's closest diplomatic ally, is now also the country's largest foreign investor, a report said. The Myanmar-language Weekly Eleven says that China poured more than $3 billion into the country from November last year through January this year, bringing its cumulative investment since 1988 to $9.6 billion, compared to Thailand's $9.56 billion. [Source: AP, February 21, 2011 **]

Thailand had been the largest investor for the past seven years, mostly in the energy sector. Hong Kong is the third biggest investor, with $5.9 billion. The report said China's major new investments were in hydropower projects. Another major Chinese investment is the Shwe natural gas project in Myanmar's western Rakhine State, which involves China importing gas from offshore Myanmar wells and oil from tankers from the Middle East through a 750-mile (1,200 kilometer) oil and gas pipeline. **

There have been no major new Western investments in recent years because of tough economic sanctions imposed by the United States and Washington to pressure the military government to restore democracy and improve its human rights record. **

Foreign Investment Soars After New Government Arrives and Sanctions Ease in Myanmar in 2011

In June 2011, three months after the new quasi-civilian government that came to power, Myanmar received a record $20 billion in foreign investment pledges, a 70-fold increase from $300 million in 2009. Momentum continued after the U.S. dropped economic sanctions and U.S. President Barack Obama authorized U.S. businesses to invest in Myanmar in July 2011 after elections and other democratic moves in 2010 and 2011

Rakteem Katakey of Bloomberg wrote: “Myanmar, shunned since the 1990s for tolerating corruption and human trafficking, is set for record foreign investment in 2012 led by oil companies. The country plans its biggest auction of exploration blocks for oil and gas by year-end. Oil & Natural Gas Corp. (ONGC) of India probably will bid, an ONGC executive said. France’s Total SA (FP), one of the few foreign companies that operated under the old dictatorship, said it bought 40 percent of an offshore permit, while Coca-Cola Co. made its first shipment in more than 60 years to Yangon. [Source: Rakteem Katakey, Bloomberg, September 17, 2012]

The deals carry extra risk for investors in a nation that’s seeking to emerge from 50 years of economic and political isolation. Ranked No. 180 of 183 nations in Transparency International’s 2011 corruption index, Thein Sein’s government will be challenged to find a balance between attracting capital and limiting a flood of money from mostly benefiting an elite. “Companies will be careful before investing because many policies are still very uncertain, and once in place there’s no certainty they won’t change,” Andrew Gilholm, Singapore-based head of Asia analysis at Control Risks, a global business risk consultancy which also advises companies investing in Myanmar, said in an interview in New Delhi Sept. 13. “A stable and secure investment environment is a long-term project.” “Foreign investment is crucial for Myanmar’s economic growth,” Ba Hla Aya, Charge d’Affaires of the Myanmar embassy in New Delhi. “But the economy faces challenges in terms of shortage of human resources, lack of efficient services and non-availability of adequate financing facilitates.”

Klaus Wille of Bloomberg wrote: “Myanmar’s shift to democracy after five decades of military rule has attracted interest from companies including Google Inc., Coca-Cola Co. and Unilever Plc, while MasterCard Inc. (MA) in September 2012 became the first payments network to issue a license to a bank in the country. Chinese and Japanese companies are also investing in the nation, which borders India, China and Thailand. Still, the investment scene in the Southeast Asian nation “is not as bright as people had hoped it would be” and investors “are not sure that their investment will be safe and secure because there isn’t a rule of law,” Suu Kyi said. [Source: Klaus Wille, Bloomberg, September 21, 2013]

“You all truly are pioneers,” Derek Mitchell, the U.S. ambassador in Burma, said at the October 2013 launch of the chamber of commerce, which will help companies scope out opportunities and weigh in on policy issues with the Burmese government.

Myanmar’s New Foreign Investment Rules

In March 2013, Myanmar’s parliament approved new regulations on foreign investment that will allow foreigners up to 80 percent ownership of ventures in restricted sectors including natural resources. The regulations supplement a new law passed in November 2012 that aims to draw foreign investment to the resource-rich country. That law banned 100 percent foreign ownership in 11 restricted sectors including natural resources and the environment; agriculture, livestock, and fisheries; manufacturing and services operations that Burmese “are capable of handling”; and industries that could “affect public health” such as those dealing with toxic waste. But under the rules approved in the March 2013 law, foreign investors will be allowed to have up to an 80 percent share in ventures in those sectors, while Burmese nationals must hold the other 20 percent. [Source: Radio Free Asia, March 18, 2013 <<]

“The proposal from the Upper House of parliament for the 20-80 ratio beat out one from the Lower House that would have allowed up to 51 percent foreign investment. In a vote including both houses of parliament, lawmakers voted to reject a draft of the regulations that backed the 49-51 ratio favored by the Lower House. “We got 235 votes for, 306 against, and 10 abstaining on the draft law committee’s proposal,” Speaker of the Upper House Khin Aung Myint said. <<

“Foreign firms are chomping at the bit to gain access to rapidly reforming Burma’s large population and huge amount of natural resources—particularly in the extractive sector—but have complained about the country’s lack of a clear legal framework for doing business there. Lawmakers and rights groups have expressed concern about how to ensure the Burmese people benefit from economic development as the country opens up to foreign investment following decades of military rule, with some warning about a potential “land-grabbing epidemic.” <<

In November 2012, Aung Hla Tun of Reuters reported: “Myanmar's new foreign investment law allows overseas firms to fully own ventures and offers tax breaks and lengthy land leases, state media said. The law, approved by President Thein Sein on Friday, had gone back and forth between the legislative and executive branches since March in a tussle involving a government eager to attract foreign investment, tycoons determined to protect their monopolies, and small businesses keen not to be shut out. [Source: Aung Hla Tun, November 3, 2012 \^/]

“The details in Myanmar-language state newspapers said joint ventures between foreigners and Myanmar citizens or the government would be permitted with any stake ratio agreed between the partners. Foreigners can still own 100 percent of businesses without the need for a local partner, as in the previous law dating from 1988. But there could be restrictions in some areas. A previous draft had said foreigners would only be able to hold a maximum 50 percent of a firm in certain sectors deemed sensitive, including agriculture, and that foreigners would have to hold at least 35 percent of any start-up joint venture. \^/

“Under the new law, foreign investors can lease land from the government or from authorized private owners for up to 50 years, depending on the type and size of the investment, and the deal can be extended twice, for 10 years each time. The old law did not define land lease periods but in practice contracts tended to cover 30-year terms, extendable for two periods of five years. Foreign firms may be entitled to a tax holiday for the first five years of operation and other forms of tax relief may be available depending on the investment, if deemed in the national interest. The old law allowed for a three-year holiday.Foreign manufacturing companies may be entitled to tax relief of up to 50 percent on profits made from exports. Tax exemption or relief can be granted providing it is reinvested in the business within one year. \^/

“The new law states that output can be used for "both export promotion and import substitution". The old law stressed export promotion. Like the old law, the new legislation guarantees that an enterprise formed under this law will not be nationalized during the contract term or its extension. A previous version had raised concern by also saying that, if a company were nationalized in the public interest, compensation would be offered. This clause has now been dropped. However, one clause says an enterprise allowed under the law will not be stopped "without sufficient reason" before the contract expires.As under the old law, foreign investors will be entitled to withdraw capital on expiry of the contract in the foreign currency the original investment was made in. \^/

Foreign Investment Jumps Fivefold in Myanmar in Fiscal 2012-2013

Foreign investment in Myanmar in fiscal year 2012-13 was almost five times higher than the previous year, with much of it going into the garment industry. “Local and foreign investment in Myanmar increased by five times in 2012/13,” official newspapers reported President Thein Sein as saying. “Over $1.419 billion foreign direct investment was made for 94 enterprises while local investors made 1.1 trillion kyat (US $1.3 billion) for 65 enterprises, creating a total of 82,792 job opportunities,” he said. Most of the investment in fiscal 2012/13 came from China, Hong Kong, Japan, South Korea and Singapore. [Source: Reuters, May 13, 2013 ///]

A senior official from the Myanmar Investment Commission told Reuters Burma had attracted about $300 million in foreign direct investment (FDI) for 11 enterprises in the previous fiscal year starting in April 2011. “The significance of last year’s FDI was 78 out of 94 proposed enterprises were in the labor-intensive manufacturing sector, mostly garment factories,” he said. “And the realization rate of proposed enterprises was unprecedentedly high,” he said, noting that since 1988 some $42.31 billion had been pledged for 563 enterprises but only $32.28 billion had actually been invested. ///

Reuters reported: “The outlook is bright, especially after the easing of trade and investment sanctions imposed by Western countries on the military regime that ran Myanmar until March 2011. “The EU is planning to grant Myanmar GSP status very soon and now more and more potential foreign investors are coming to us from all parts of the world,” the investment official said, referring to the Generalised System of Preferences (GSP) that offers trade advantages to poorer countries.The investment climate has also been clarified by a new foreign investment law passed in November 2012.” ///

Concerns About Investing Myanmar

Joseph J. Schatz wrote in the Washington Post, “Although Ford, Coca-Cola and General Electric have established a presence here, other U.S. firms have been slow to enter amid lingering sanctions, political uncertainty and a host of more practical impediments, such as unreliable power supply and a poorly educated workforce. U.S. investment in Burma has totaled less than $250 million since 1988, the baseline year the Burmese government uses to calculate investment, compared with the $14.2 billion that China has sunk into Burma over the past quarter-century.” [Source: Joseph J. Schatz, Washington Post, January 5, 2014]

Myanmar has yet to develop regulations to protect intellectual property or set clear procedures for investments by foreign corporations. “It has become more difficult recently for small and medium-sized foreign companies to make investments,” a Japanese business source said. [Source: Yomiuri Shimbun, October 31, 2013]

Naomi Rovnick wrote in Quartz, “Most investment is set to come from other emerging markets in Asia or beyond, where companies are more comfortable dealing with corruption and ethically questionable partners. “Despite recent reforms, doing business in Myanmar is still a murky affair. Take, for example, the country’s gas stations—potentially a great investment in a frontier market where many people are poised to grow rich enough to buy mopeds and eventually even cars. A local lawmaker has claimed 247 state-owned stations that were privatized in 2010 were sold at “very low prices” to a military-owned trading company and other firms with close ties to the generals. Getting into bed with the military and former junta officials could be a reputational risk too far for Western corporations. The junta leaders were responsible for gross human rights violations such as conscripting child soldiers (which still happens) and colluding with drug and people traffickers. A deal with such partners raises the risk of a boycott at home or a US Foreign Corrupt Practices Act investigation. [Source: Naomi Rovnick. Quartz, April 11, 2013 =*=]

“It is extremely hard to find Burmese business partners that do not have strong junta connections. German non-profit Bertelsmann Stiftung reported that “military conglomerates and cronies…continue to monopolize the economy under the new government.” Although foreigners are allowed to fully own Myanmar businesses in many sectors , it is considered unwise to operate there without a local partner, as getting business done is very much driven by personal relationships. The nation does not have a strong rule of law or courts that can be relied on to independently protect assets or contracts. “You need a local partner, otherwise you get killed,” hotel developer Richard Friedman said in this 2012 interview. =*=

“A Hong Kong-based private equity fund manager who has spent time in Myanmar looking for deals told Quartz: “There are very few businesses or business people that our Western investors would consider to be clean. I met one prominent businessman there who has what the Myanmar people call ‘white money’ as opposed to money from military connections. Everyone is chasing him. The terms he would require for doing business with us would not be advantageous.” So the country’s economic future is likely to be carved up between the generals and ex-junta tycoons, and emerging-markets investors without Western investors or stock market listings. The Bertelsmann Stiftung report, noting that foreign investors were cautious about their public image, concluded that “neighboring Asian countries (including Thailand, China and India) have invested heavily.” =*=

Simon Denyer wrote in the Washington Post, “These days, a tourism boom is the most obvious sign of the country’s opening to the West, with flights and hotels virtually fully booked. However, an anticipated flood of foreign investment has yet to arrive, with most Western investors adopting a “wait and see” stance, unsure of how deep-rooted the reform process is. Burma’s business elite have been investing some of their wealth by erecting hotels and office buildings in Rangoon and other cities. But outside these gleaming new buildings, cycle rickshaws still ply the streets, and there are few signs of a more general boom. Small- business owners and shopkeepers say consumer demand remains tepid. [Source: Simon Denyer, Washington Post, March 26, 2013>>]

“Burma’s business elite have been investing some of their wealth by erecting hotels and office buildings in Rangoon and other cities. But outside these gleaming new buildings, cycle rickshaws still ply the streets, and there are few signs of a more general boom. Small-business owners and shopkeepers say consumer demand remains tepid. The business elite, say critics such as Zaw Aung, a former political prisoner who is a research fellow at Thailand’s Chulalongkorn University, have the power to crush potential competitors, corner the benefits of Burma’s reform process and prevent a new, more diverse middle class from emerging. >>

Burma’s Ethnic Violence ‘Poses Threat to Foreign Investment’

Joseph J. Schatz wrote in the Washington Post, “Many American firms remain reluctant to invest here, and experts say uncertainty about the peace process is adding to questions about whether a recent wave of economic and political reforms truly is gaining traction. With hostilities continuing, mistrust is rampant and ethnic groups doubt that the government will agree to the concessions they have demanded, including a sharing of mining revenue, or to a constitution that grants them more autonomy. [Source: Joseph J. Schatz, Washington Post, January 5, 2014]

William Boot wrote in The Irrawaddy: “Continued religious and ethnic violence in Burma could deter much-needed investment by fostering a “wait and see” attitude among foreign companies and entrepreneurs, according to a study of the recent spate of anti-Muslim rioting and arson in the country.“Failure to prevent the spread of sectarian violence could dampen the influx of critical foreign investment,” the briefing on Burma by British business risk consultants Maplecroft said. The report identifies the booming tourism industry as the most vulnerable, with the negative impact quickly spreading to the retail and infrastructure sectors. [Source: William Boot, The Irrawaddy, April 11, 2013]

“[Burma] has attracted significant interest from investors since the US and EU pared back sanctions in 2012. However, stakeholders remain cautious about making significant investments in the country, preferring to wait and see how the reform process moves forward,” said Maplecroft’s principal Asia analyst Arvind Ramakrishnan. “The important oil and gas industry is unlikely to be directly disrupted by the present level of sectarian trouble but it could cause problems for supporting logistical work, such as transport,” the Maplecroft study said. Further widespread violence “could create hazards to personnel operating in the vicinity of riots,” which would be an additional disincentive for commercial development.

The Ministry of Energy has signaled that it plans to hold an international auction this month for up to 20 offshore exploration licenses to hunt for oil and gas off Burma’s coast, where large volumes of natural gas are estimated to exist beneath the sea floor. Many of these sea blocks are adjacent to the coastal Arakan region where many of Burma’s Muslims live. The auction has been delayed already.

“While a coup remains very unlikely, the government has shown an inability to completely contain the situation. Civilian control over the military remains non-existent. This was highlighted by the military continuing its campaign against Kachin rebels earlier this year, in spite of calls from Thein Sein to end the campaign,” said Maplecroft’s Ramakrishnan.

Foreign Companies in Myanmar

Companies doing business in Myanmar include TotalFnaElf, Tiger Beer (Singapore), Rothmans (a British tobacco company), the Japanese conglomerates Sumitomo and Mitsui, Clough Engineering (Australia), Ivanhe Mines (Canada). In the 1990s billboards in Yangon advertised Toshiba computers, Daewoo Air conditioners, Lucky Strike cigarettes, and Hang Ten clothing.

In the mid 1990s many Western companies fled Myanmar as sanctions and a variety of economic, political and business problems scared them off. Bloomberg reported: “PepsiCo Inc., under pressure from shareholders and activists to withdraw from Myanmar because of human rights violations there, stopped operations in 1997. Apple Computer Inc., Carlsberg A/S, the Walt Disney Co. and Hewlett-Packard Co. were among companies that also pulled out at that time.” [Source: Rakteem Katakey, Bloomberg, September 17, 2012]

Companies from Singapore are among the largest investors in Myanmar. They have invested in hotels, breweries and Myanmar Airways International, the country's international airlines, garments, defense supplies, banking and travel services. A representative from a Japanese trading company told Newsweek, "The location of Myanmar could make a great base for distribution and transportation. It can connect China with other countries in Indochina as well as Singapore."

Companies doing business in Myanmar when the sanctions were in place said their money stimulated the government into making reforms. Pro-democracy leaders disagree, They said that companies should withhold their investment as an incentive for the government to loosen up. Chinese companies moved in to take advantage of opportunities that Western companies could not pursue because of the sanctions. Manufacturers from China set up shop in Myanmar to take advantage of labor that was even cheaper than labor in China.

Among the companies that began making significant moves into Thailand after the new quasi-civilian government that came to power in March 2011 have been Suzuki, Ford and a number of Chinese, Japanese and South Korean companies. , Coca-Cola, GE, PepsiCo, Caterpillar and Carlsberg have signed distribution deal in Myanmar.

Pepsi, Boycotts and Foreign Companies Pull Out of Myanmar in the 1990s

In the 1990s Human Rights groups called for a boycott of Burmese goods. Among the companies that took their business out of Myanmar were Macy's, Eddie Bauer, Liz Claiborne, Levi Strauss and Amaco. Eddie Bauer said it pulled out because of human rights violations. Macy said it was appalled by government corruption. Activists wanted Western companies to apply the same kind pressure of Myanmar they applied on the apartheid government in South Africa. With money coming from other sources such as Singapore and Thailand, the generals, at least on the surface, were not deterred. After a meeting with the generals U.S. representative Bill Richardson told Newsweek, "They said, 'Screw You.’ We don't need you. If you drop your investments we'll get them from someone else."

Student activists in the U.S. asked motorists on the West Coast to avoid Unocal gas station because their involvemen in natural gas projects in Myanmar. A spokesman for Unocal responded that the gas pipeline it was building in Myanmar "provides significant benefits to the people of Burma" even though villagers were required to move to make way for the pipeline and forced labor was probably used to build the railroad that brought in supplies for building it.

To protest the presence of a Pepsi bottling plant in Yangon. Harvard canceled plans to switch from Coca-Cola to Pepsi in its dining halls and students at Penn Sate unfurled a banner with the slogan: "Pepsi/ The Choice of a New Genocide." Students across the U.S. have called also for a boycott on products and companies with ties to Pepsi such as Pizza Hut, Taco bell, Kentucky Fried Chicken, Doritos and Lays potato chips.

Responding to the pressure, Pepsi decided sell its joint venture in Myanmar in 1996 even though it controlled 80 percent of the soft drink market in Myanmar. A spokesman for the company said: "We're really doing this for two reasons, both driven by business considerations and public sentiment.” Pepsi changed the joint venture into a franchise arrangement in which it sold the bottler cola syrup. Pepsi earned $8 million Myanmar in 1995, a small fraction of its international sales of $3 billion. In 1997, Pepsi pulled out completely y refusing to sell it syrup in Myanmar.

Other Western companies that responded to the threat of boycotts included Levi Strauss, Amaco, Texaco, Shell, Adidas, Reebok, Apple and Eastman Kodak. Levis shut down three factories in Burma. Spokesmen for the company called Myanmar "one of the leading violators of human rights in the world." The NBA pulled sweatshirts made in Myanmar from its stores. The Swiss lingerie maker Triumph International also pulled out over worries about consumer boycotts. One of the biggest companies to pull out was British American Tobacco. It withdrew its stake in a Yangon tobacco firm. It cigarettes, however, continued to be manufacture through a deal with a Singaporean company. One analyst called the move “more smoke than substance.”

Image Sources:

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, Lonely Planet Guides, The Irrawaddy, Myanmar Travel Information Compton’s Encyclopedia, The Guardian, National Geographic, Smithsonian magazine, The New Yorker, Time, Newsweek, Reuters, AP, AFP, Wall Street Journal, The Atlantic Monthly, The Economist, Global Viewpoint (Christian Science Monitor), Foreign Policy, burmalibrary.org, burmanet.org, Wikipedia, BBC, CNN, NBC News, Fox News and various books and other publications.

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© 2008 Jeffrey Hays

Last updated May 2014

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