Session

Responsible Business in Myanmar, Asia’s Frontier Market

Democratic reforms since 2011, the lifting of U.S. sanctions in 2012, and a marked increase in foreign investment ahead of the 2015 elections—given these positive changes, international business is becoming much more involved in Myanmar. But will these developments truly enhance the prospects for an inclusive, sustainable economy? While a flurry of “ethical” investors is focused on Myanmar, many have looked, listened, learned, and left. Meanwhile, capital inflows from China and other regional investors are filling the gaps. How can responsible business proactively engage with stakeholders in Myanmar to catalyze sustainable development? With insights from companies operating in or considering investing in the country, this one-hour conversation will highlight the tremendous opportunity to get things right from the beginning in Myanmar. It will focus on proactively seeking localized, collaborative solutions through transformative partnerships and transparent dialogue with a wide range of stakeholders.

Speakers

  • Marcus Chung, Vice President, Social Responsibility and Vendor Compliance, The Children’s Place
  • Fiona Sadler, Director, Ethical Sourcing, Marks & Spencer
  • Jeremy Prepscius, Vice President, Asia-Pacific, BSR (Moderator)

Highlights

  • The current context in Myanmar presents many challenges for companies looking to source from or operate in the country that need to be addressed so that they may invest responsibly.

  • The challenges to operating responsibly in Myanmar include the need to build human resource capacity, strengthen land rights, and address child labor.

  • The BSR Responsible Investment in Myanmar Working Group has provided a platform for companies to explore the risks and opportunities of operating in and sourcing from the country.

Memorable Quotes

“Myanmar is Asia’s frontier market.” —Jeremy Prepscius, BSR

“The interesting thing is that the government, civil society, and trade unions are willing to change.” —Fiona Sadler, Marks & Spencer

“[Telenor has] chosen to be very open about all of the challenges [of operating in Myanmar].” —Mai Oldgard, Telenor Group

“We want to be a source for positive change [in Myanmar].” —Marcus Chung, The Children’s Place

Overview

Prepscius opened the session by noting that BSR has been doing some interesting work in Myanmar over the course of the last few years. This work started with research, which came out of BSR’s learnings from operating in Cambodia, Bangladesh, and China. The research has led to publications on responsible sourcing in Myanmar.

Prepscius then introduced the speakers and asked them to share their thoughts on what Myanmar means to them.

Sadler began by mentioning that Marks & Spencer is a part of the BSR Responsible Investment in Myanmar Working Group and through this group and independently has been involved in examining the potential for operating in the country. This has included scoping trips with suppliers, active dialogue with civil society groups, and taking a close look at industry issues in the country. Currently the country is lacking an audit framework, with no sophisticated systems or human resource management systems. She emphasized the importance of working together to shape governance, rules, and laws from the beginning to establish a foundation upon which to operate responsibly in the country.

Next, Oldgard explained how Telenor has recently launched mobile telephone operations in Myanmar and noted that sustainability has been a part of their approach from the beginning, especially given the huge risks of entering the market. To address these risks, Telenor worked with BSR on a human rights due-diligence report that highlighted the risks and opportunities for operating in the market. Oldgard explained that Telenor faces six primary risks related to operating in Myanmar: the legal framework is outdated and institutional capacity is limited with many reforms needed, corruption is rife, health and safety is challenging, land rights are weak, ethnic conflicts are rife, and child labor is widespread.

Then Chung spoke about The Children’s Place approach exploring the possibility of sourcing from Myanmar and the risks that presents. While the company is not yet sourcing from Myanmar, it is trying to understand the risks and the landscape through participating in the BSR Working Group and through diligence and preparation. Chung noted that this exploration has forced the company to collaborate across departments and that risks in Myanmar have forced the company to come together and share different perspectives.

Prepscius added that collaborative working in Myanmar is valuable and interesting as the country opens up as a sourcing destination for companies. The country presents interesting challenges, with its changing laws, upcoming elections, and questions of stability—all part of the local context that informs businesses’ approach to operating in the country.

Prepscius then introduced three topics to be discussed in small breakout sessions: human resource capacity building, land rights, and child labor.

In the breakout session on human resource management, Prepscius opened by highlighting the need to have a localization of ownership and to address the risks of having foreign managers and Burmese workers. Sadler continued by emphasizing the need to get the relationship between the foreign supervisors and Burmese workers right from the beginning to address problems with discrimination and to avoid duplicating the problems found in Bangladesh. She noted that companies should work collaboratively on training and capacity building to avoid the situation of the same factory having to conduct multiple trainings on the same subject to comply with brands’ requests.

In the land-rights breakout session, BSR manager Rosa Kusbiantoro opened by explaining that in Myanmar the government ultimately owns all of the land. Currently there are challenges with farmers being pushed off their land and the land being illegally transferred to businesses. She noted that, given this context, it is important to conduct due diligence and know whether your business partner is operating on legal land. Oldgard shared the three-step process that Telenor goes through to understand land ownership: document check, random spot checks, and a permitting process with local authorities. Telenor also has a complaint system that is acted upon immediately.

In the breakout session on child labor, BSR associate Paolo Fresia highlighted how zero tolerance for child labor in Myanmar is not the solution. He highlighted the need for partnerships to understand and address the sources of child labor and transparency to demonstrate the existence of systems to address the issue. Chung agreed and noted that creative solutions must be found to address the issue of child labor in the country give

Date

November 4, 2014