The business world beats a quiet path to a pariah’s door

'Business, you know, may bring money, but friendship hardly ever does.' – Jane Austen

yangoonsouthWhile the world for the last three weeks has had China in its gunsights for its economic support of Burma's repressive junta, the fact is that under the radar, half the countries in Asia are helping to prop up the dictatorship, either through government help or through the sub rosa support of their business communities — including Singapore, Malaysia, Korea, Japan, Thailand and India, among others.  That is a partial list at best, evading sanctions put in place by western governments, many of which ultimately are the end users of the products coming out of Burma in the form of re-exports from China and other countries.

Burmese expatriates and protesters have been holding demonstrations, candlelight vigils, online petitions and other expressions of support in the Philippines, Indonesia, Thailand, Australia, Finland, the US, the UK and other countries. But in the meantime, business is business. As the pariah government prepared Friday to intensify its crackdown, which so far has killed at least 10 people and probably many more, sealing off Buddhist monasteries and dragging hundreds of nonviolent protesters off to prisons, business appears to be continuing as usual.

On September 23 India’s petroleum minister Murli Deora visited Burma as tens of thousands of protesters thronged Rangoon’s streets. He made no statements or observations to either the domestic or foreign press.  However, during his visit, three bilateral agreements for deep exploration in oil blocs were signed. ONGC Videsh, a subsidiary of India’s state-owned Oil & Natural Gas Corp has pledged to invest nearly US$150 million for gas exploration in the Rakhaine coast of Burma.


Burma’s extractive industries — crude oil, natural gas, tropical hardwoods, minerals such as zinc, copper, tungsten, lead and others — are far too precious for the region’s businesses and governments to pass up. According to the CIA World Factbook, updated to 2006, Burma’s annual exports amounted to only US$3.56 billion, a paltry amount that is probably grossly underestimated because of the value of vast amounts of timber, rice, narcotics and precious gems such as jade that are smuggled to Thailand, China, and Bangladesh. After China, Thailand and Singapore are listed by Burma’s Ministry of Commerce as the country’s second and third largest trading partners. Among those after the resources, according to Human Rights Watch, are Daewoo International, Korea Gas Corp., Gas Authority of India (Gail), ONGC Videsh, Essar Group of India, and many, many more.


The Thai junta leader Sonthi Boonyaratglin got it about right when he stunned human rights activists with his blunt comments this week that Thailand wouldn't oppose the junta because they would lose out on natural resources.  "In fact, the Burmese government has many friendly nations who stand ready to help, including China and Korea, because Myanmar is a nation with a wealth of natural resources; many superpowers want to go in," the general told TITV. "Therefore, no matter what happens to that country, many countries are secretly protecting it. This is the intelligence of some superpowers with whom we [Thailand] are friendly. If we get involved, our relationship with them may be damaged." (Read more.)

His comments were roundly criticized in the Thai press, including leading English-language daily Bangkok Post.

"Gen Sonthi's comments belie the fragile nature of our own respect for basic human rights and freedoms," the Post said. "While no country, the US and the UK included, has a completely clear conscience to lecture on the rights set out under the UN Charter, defending such brutal suppression of innocent civilians, political opponents and monks is unacceptable."

Even so, Sonthi does have a point. Thailand receives about a third of its natural gas from Burma's Gulf of Martaban. Without it, millions would go without electricity until Thailand switched its power plants to run on costly bunker oil, which would increase everyone's monthly power bills. Burma plays a significant role in Thailand's energy future, just as it does for China and South Korea. So although Sonthi's comments were appalling, he managed to say in public what other leaders would only say in private. Thailand takes a full 38 percent of Burma’s external trade.

 

Singapore in particular is a significant contributor to Burma’s economy and has been virtually since 1988, right after the original crackdown, when Singapore government companies including Singapore Technologies, the state-owned supplier of military arms and equipment, was first into the field according to Andrew Selth, an Australian political analyst and one of the world’s leading authorities on the Burmese military. But more, Singapore Inc, as the country’s government-linked businesses are known, has been investing in hotels, airlines, resorts and other infrastructure. For the 2006-7 financial year ended in March, Singapore was listed by Burma’s Ministry of Commerce as the third-largest trading partner behind Thailand and China, with bilateral trade for the year totaling $1.21 billion. The government is also believed to have provided crowd control equipment and sophisticated telecoms monitoring devices, for which Singapore itself is famous for spying on its own citizens. As Asia Sentinel reported on Sept. 4, Singapore’s banks are believed to be the repositories of vast amounts of laundered cash. Asia World, a Singaporean company, is a major construction contractor, and much of Singapore’s investment in Burma is linked to that company.

Burmese officials, in addition to allegedly squirreling their money away in Singaporean banks, also visit regularly. The 74-year-old junta strongman Than Shwe has been treated for intestinal cancer in Singapore government hospital. According to The Nation newspaper in Bangkok, Than Shwe flew his wife and other members of his family out to Singapore before the current situation in Rangoon got bloody. Soe Win, Burma’s prime minister is being treated in a Singapore hospital today.

Korea is also a major player, both officially and not. As Asia Sentinel reported in mid-August, Daewoo International Corp., which holds 60 percent of three natural gas fields in Burma, announced that it had found as much as 219.2 billion cubic meters of exploitable gas, the biggest gas reserve that a Korean company has ever discovered. Daewoo International said at the time that it was then in talks with the Burmese government on how and to whom to sell the gas produced there — just about the time the first serious protests got underway in Burma over the five-fold increases in energy prices the government suddenly introduced. The Korean government wants the gas to be liquefied and delivered by ship to Korea, which imports most of its oil and gas. The state-run Korea Gas Corp. has a 10-percent stake in the fields. The remaining 30-percent stake is held by two Indian companies — Oil & Natural Gas and state-owned Gail India Ltd.

According to Daewoo International’s statement, Gaffney, Cline and Associates, an international energy consultant with offices in the UK, the US, Singapore, Australia, Argentina and Russia, certified that three fields in the western sea off Burma have about 4.5 trillion to 7.7 trillion cubic feet of exploitable gas in total. The company discovered the fields between 2004 and 2006. Based on that estimate, Daewoo International said it could supply 600 million cubic feet of gas per day, or 3.7 million tons of liquefied natural gas per year, for 20 to 25 years. The company added it would take less money and time to provide the gas to neighboring countries through pipelines.

In addition, in December 2006, 14 officers of seven Korean companies were charged with allegedly exporting defense equipment and technology to Burma in violation of Korea’s export control laws, using export documents that prosecutors said listed the equipment as for purposes other than military use. The 14 are currently on trial. A government official told Korean media that eight had admitted that they had built the illegal arms factory, but that they didn’t know it was illegal.

In particular, the Korean prosecutors identified Daewoo International Corp and Doosan Infracore as two of the companies, which allegedly struck a deal in 2002 with the Burmese government to manufacture at lest six types of artillery shells in the tens of thousands of rounds. The other companies were alleged to have provided technology and equipment for components of the shells. The contract allegedly covered the weapons plant, related and equipment worth US$133 million.

From Hong Kong, Hutchison Whampoa Ltd, the flagship of tycoon Li Ka-shing, operates Myanmar International Terminals Thilawa (MITT), a major port in Burma. It describes these port terminals as “strategically positioned to facilitate and service Myanmar’s international trade.” Kerry Logistics Group, owned by the Kuok Group, is a goods transport logistics company with branches in 12 countries, including the UK. Kerry Logistics also operates in Burma, facilitating the export of Burmese goods. Kerry Logistics is part of the Singaporean conglomerate, Kuok Group. From Japan, Mitsui is a Japanese conglomerate with interests ranging from metals and mining to electronic goods, insurance, clothes and chemicals. Mitsui is in a joint venture with the Burmese regime in the Mingaladon Industrial Park, which was set up to attract foreign investors to Burma. Mitsui OSK Lines a global business concerned with marine shipping and logistics in what it calls a ‘truly borderless transportation network that brings goods to market all over the world’. Rangoon is described as one of the company’s major calling ports. Mitsui Sumitomo Insurance, one of Japan’s largest non-life insurers with a workforce of over 13,000 and a net income in 2006 of over 124,000 million yen, maintains a representative office in Rangoon.

From Malaysia, Petronas, the state-owned oil and gas company, has several oil and gas contracts to extract and explore for oil and gas in Burma. In addition, in 2003, Fortune Magazine reported that Malaysian diplomat Razali Ismail, the UN special envoy to Burma, with a remit to nudge the country’s military rulers towards a transition to democracy, was chairman of Iris Technologies, a Malaysian company that is introducing electronic-passport technology at Rangoon’s government-run airport. Razali is also a director of Wah Seong, a Malaysian engineering group that owns a trading company with real estate interests in Rangoon, and of Leader Universal Holdings, a cable, fiber-optics, and telecom-equipment firm that at the time was seeking business in Burma. A Leader spokesman confirmed to Fortune that senior executives were meeting with junta leaders. A fourth company on whose board Razali sits, water treatment group Salcon Engineering, has exhibited at a trade show in Yangon. Razali did not respond to Fortune’s requests for an interview.


With additional reporting by Daniel Ten Kate in Thailand, Eric Ellis in Indonesia, Nava Thakuria in India, and A. Lin Neumann in Korea

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