Thursday, August 17, 2017

China launches local charm offensive

One day after Myanmar’s new government took office, China’s Wanbao Mining – joint operator of the controversial Letpadaung copper mine in Sagaing Region – released a public relations video.

Kachin people gather on the fourth anniversary of the Myitsone dam project suspension in Myitkyina on October 10, 2015. Photo: EPAKachin people gather on the fourth anniversary of the Myitsone dam project suspension in Myitkyina on October 10, 2015. Photo: EPA

“A New Dawn” is a 10-minute film explaining why the project was suspended in 2012. In some ways, it is an apology for the harm it caused local residents. It also focuses on the importance of what Wanbao calls the “social licence” to do business.

“If we do not take social risk into account,” deputy general manager Luo Daqing says to camera, “if we don’t serve the local community well, and ensure stability, then without the support of local people, no matter how much money we have, or how good our technology is, the project will not succeed.”

For decades when Myanmar was under military rule, China dominated foreign investment and, like the Tatmadaw, felt no need to engage local communities. It could do business with support from the junta, while sacrificing the goodwill of those forced to give up their land and livelihoods.

In 2011, when U Thein Sein’s quasi-civilian government took over, China’s fortunes changed. It became a scapegoat. Cancelling Chinese projects was an easy way for the military to seem committed to reform. As communities spoke out against ill treatment, projects were suspended.

While countless jade mines, real estate developments and logging activities continue undisturbed, many of China’s largest schemes in Myanmar – a US$8 billion dam in Myitsone, a $20 billion railway across the country, and the Letpadaung copper mine – were called off.

The former government was reluctant to approve any new major Chinese-backed projects until the final days of its term, but China finds itself now with a rare opportunity. Two major projects were approved in Kyaukphyu and Dawei. Suspended projects such as Letpadaung, Myitsone, a coal plant in southern Shan State and other smaller hydropower dams are back on the table.

At first glance it seems China might be serious about corporate social responsibility. In early April, state-controlled China Daily ran a six-page special on Myanmar. Its front-page headline declared, “Lending a hand: Chinese firms realise the value of helping local communities as they focus on building a long-term presence in Myanmar.”

Its message: Gone are the days of Chinese companies stealing land and natural resources and destroying the environment. China, it said, has understood the importance of responsible investment.

Chinese Foreign Minister Wang Yi, visiting Nay Pyi Taw in April, was enthusiastic about improving economic relations through investment. “We agreed to solve issues amicably and through friendly relations,” he said after meeting Foreign Minister Daw Aung San Suu Kyi.

Read more: Chinese foreign ministry hosts industry tours

Yet despite smooth talk from Beijing, which is worried about a perceived bias against Chinese investment, rhetoric among China’s companies is inconsistent.

Upstream Ayeyarwady Confluence Basin Hydropower, a developer of the Myitsone hydropower project, has a new website aimed at busting “myths” about the controversial dam. Among its links to research and editorials there is a recent article by the Centre for China and Globalisation.

“For poor and weak Myanmar,” it begins, “electric power construction is the basic premise of national development.”

It dismisses criticism of the project as “based on imagination and prejudice”, and blames Japan for controlling “many important media in Myanmar” and making “many false criticisms of Myitsone Hydropower Project through these media”. Local communities are called “unsophisticated mountainous villagers”.

It is a less-than-polished exercise in public relations. Yet it offers some insight into the thinking behind China’s new community engagement campaigns, not just in Myanmar.

The problem faced by China is explained by the Beijing-based think tank as follows: Asia’s largest economy has “incontestable” hard power in infrastructure and development, but lacks the corresponding soft power “such as media, religions and social organisations”.

To solve this “imbalance”, it says, work related to media and social organisations must begin in Myanmar and elsewhere.

“In the construction of the Belt and Road [a strategy of developing overseas markets through huge infrastructure projects] China shall pursue not only the smooth road networks but also the smooth human networks, and realise not only the production output but also the favourable impression output,” it concludes.

Last year, in a Yangon restaurant, Wang Ping, the company’s head of public affairs for Myanmar, passionately defended the dam. The crux of his argument was Myanmar’s need for power. He repeatedly stressed that the company was providing a public service.

He brushed over concerns that the project had exacerbated conflict between the Tatmadaw and the Kachin Independence Army, saying that Myanmar would need to work hard to win back investor confidence. He appeared perplexed that the dam had been suspended at all, saying, “It’s a matter of national pride. Why do they not restart it?”

He also pointed the finger at the former military regime. “In the old Myanmar, the old government era, you couldn’t talk freely, and everything was done on a government-to-government basis. You couldn’t check with families about their wishes or whether they were willing to relocate.”

Families maintain they are not willing to relocate, however. Last November residents of Aung Myin Thar new village, a compound built by the Chinese developer, told The Myanmar Times they hoped the new government would cancel the project, allowing them to return home.

Vicky Bowman, director of the Myanmar Centre for Responsible Business, wants to give credit where credit is due, noting that some Chinese companies are moving in the right direction.

State Power Investment Corporation, a developer of the Myitsone hydropower project, has the most comprehensive website and “the most sophisticated approach to stakeholder engagement” of all Chinese companies in Myanmar, Ms Bowman says.“They identify both national and local-level opinion-formers, including those who are hostile to the project.”

Myanmar Yangtse Copper Ltd, a sister company to Wanbao, get marks for its Sustainability Report for the S&K mine which Ms Bowman says is “more extensive than most reports produced by any other investor in Myanmar, certainly any other mining company”.

Wanbao, at the centre of the Letpadaung dispute, is one of the few mining companies in Myanmar to have undertaken and disclosed a comprehensive Environmental and Social Impact Assessment which is downloadable in both Myanmar and English. However its Environment Management Plan is said to need further development.

In a further sign of engagement, China National Petroleum Corporation sent representatives to the launch of the latest report by the Myanmar China Pipeline Watch Committee in January, which was critical of the twin pipelines project. 

“Their presence and willingness to engage was appreciated by civil society representatives, who had previously found the company difficult to approach,” Ms Bowman says. – Guy Dinmore

Last December, CITIC Corporation, one of China’s largest conglomerates, won a bid with five other firms to build a deep-sea port and industrial zone in Rakhine State’s Kyaukphyu.

The state-owned giant operates two pipelines that carry oil and gas from an offshore platform in the Bay of Bengal across Myanmar into Yunnan. In Kyaukphyu where the pipelines come ashore and groundwork for the industrial zone is being laid, the company began offering financial incentives to isolated villages last year.

It is confident the project will be well received, according to the China Daily special report, and plans to preserve the environment, improve local infrastructure, and share the dividends with Myanmar’s government and local people.

It will provide training opportunities, anti-disaster and emergency rescue centres, “50 clinics and 50 schools” and a social development fund to support local government and residents.

Yet not all villagers seem convinced. Ma Su, 30, told The Myanmar Times last year that some well-connected individuals had ended up with K2 million and others only K50,000. “That’s only enough money to buy one piglet,” she said.

Similarly in Letpadaung, local people last week protested angrily outside the copper mine, denouncing the seizure of their land, inadequate compensation and damage to the environment. For all its polished videos, Wanbao still refuses to speak to the Myanmar media.

U Maung Maung Lay, vice chair of trade federation UMFCCI, says that despite better public relations, the overriding problem is that “some Chinese companies are neither ethical nor responsible”.

“Being a huge country, the Chinese government cannot control them. China itself is suffering in many areas due to this and tarnishing its image worldwide,” he said.

Together with local companies in Myanmar, including the economic branch of the military, Chinese firms have “dumped substandard ... products and services into our country”, he said.

Now that Beijing understands the need for an image overhaul, the “PR has started”, he added. Still, if companies can genuinely become ethical and responsible, then progress is possible over time, he said.

“We cannot ignore our great neighbour,” he said. “We can be complementary to each other. We can benefit and grow further with her assistance and investment. The world, even the US, cannot ignore China.”