Five new investment projects for Myanmar from the International Finance Corporation (IFC), the World Bank’s private-sector investment arm, may perpetuate economic inequality rather than alleviate poverty in Myanmar, critics here are warning. The majority of Burmese live in rural areas, after all, and agriculture is the livelihood of up to 70 percent of the population, according to Oxfam. Yet most of the IFC’s projects are focusing on urban areas. Experts say this is simply continuing a broader trend being seen in Myanmar since its economy began to open up.
“A significant factor contributing to the urban versus rural income inequality is that the vast majority of investment in Burma is concentrated in the urban sector, despite the fact that only one-third of the population lives in these areas,” Dennis McCornac, of Loyola University, stated in a recent essay.
In 2012, the U.S. Congress repealed sanctions prohibiting U.S. investment in Myanmar to signal its support for the country’s new nominally reformist government, which was slowly instituting democratic reforms after decades under military dictatorship. That same year, the Washington-based IFC opened its office in Myanmar and began to assess the country’s investment and business climate. Given that over 30 percent of the population lives below the poverty line, IFC officials decided that the country office’s goal would be poverty alleviation, and eventually proposed five investment projects aimed at achieving this goal.
Yet of those five, three of the projects involve the construction of luxury up-market hotels. one of the projects, which would develop four hotels, the IFC’s expected development impact is to “create 437 direct and indirect jobs (46 percent female) … and create demand for locally-sourced materials, services, and labour.” In addition, the project would “contribute to the domestic economies through increased tax revenue and foreign exchange inflows.” The goal of another project, to build a business complex and more hotels, is to install what the IFC calls “critical business infrastructure”. “The Project will add much needed supply of international standard office, retail and hospitality infrastructure to Yangon,” a project document states. “International standard business infrastructure such as these are of critical importance in attracting foreign investments in the country.”
Yet U.S. Campaign for Burma executive director Jennifer Quigley notes that the international business community has been flocking to the country since 2012. “And any problems are not for lack of hotel rooms – that’s not what Burma needs to have a thriving business environment,” Quigley told IPS.
Another of the IFC-proposed projects, known as Yoma Equity, would provide about 30 million dollars to a programme run by Yoma Bank, a national institution, to finance small- and medium-sized businesses. Yoma Equity is classified as FI-2, meaning that “its business activities have potential limited adverse environmental or social risks or impacts that are few in number,” according to the IFC’s website. Last year, an independent assessment by the Compliance Advisor/Ombudsman, an internal auditor, criticised the IFC’s regulations of financial intermediaries. The report looked, for instance, at a loan for 30 million dollars that the IFC gave to Corporation Dinant, a Honduran agribusiness company owned by one of the country’s richest men, Miguel Facusse. Dinant has been accused of killing, kidnapping or forcibly evicting peasants from land claimed by the company. In response, the IFC has admitted to missteps around Dinant.
In the case of Yoma Equity Serge Pun chairs the Serge Pun & Associates Group (SPA Group), one of Myanmar’s largest conglomerates, as well as Yoma Bank. Pun’s business dealings have raised social concerns in various sectors over the years. Indeed, the U.S. State Department recommended placing sanctions on Pun in 2008.
These never went forward, however, and as a result Pun has developed a reputation in Myanmar as a “good crony”: less corrupt than the others, and one of the few options for a local business partner. “Everyone is investing in him,” she says, “so the IFC is perpetuating the same oligarchy that’s in place. The IFC is coming in and reinforcing the status quo.”
“A significant factor contributing to the urban versus rural income inequality is that the vast majority of investment in Burma is concentrated in the urban sector, despite the fact that only one-third of the population lives in these areas,” Dennis McCornac, of Loyola University, stated in a recent essay.
In 2012, the U.S. Congress repealed sanctions prohibiting U.S. investment in Myanmar to signal its support for the country’s new nominally reformist government, which was slowly instituting democratic reforms after decades under military dictatorship. That same year, the Washington-based IFC opened its office in Myanmar and began to assess the country’s investment and business climate. Given that over 30 percent of the population lives below the poverty line, IFC officials decided that the country office’s goal would be poverty alleviation, and eventually proposed five investment projects aimed at achieving this goal.
Yet of those five, three of the projects involve the construction of luxury up-market hotels. one of the projects, which would develop four hotels, the IFC’s expected development impact is to “create 437 direct and indirect jobs (46 percent female) … and create demand for locally-sourced materials, services, and labour.” In addition, the project would “contribute to the domestic economies through increased tax revenue and foreign exchange inflows.” The goal of another project, to build a business complex and more hotels, is to install what the IFC calls “critical business infrastructure”. “The Project will add much needed supply of international standard office, retail and hospitality infrastructure to Yangon,” a project document states. “International standard business infrastructure such as these are of critical importance in attracting foreign investments in the country.”
Yet U.S. Campaign for Burma executive director Jennifer Quigley notes that the international business community has been flocking to the country since 2012. “And any problems are not for lack of hotel rooms – that’s not what Burma needs to have a thriving business environment,” Quigley told IPS.
Another of the IFC-proposed projects, known as Yoma Equity, would provide about 30 million dollars to a programme run by Yoma Bank, a national institution, to finance small- and medium-sized businesses. Yoma Equity is classified as FI-2, meaning that “its business activities have potential limited adverse environmental or social risks or impacts that are few in number,” according to the IFC’s website. Last year, an independent assessment by the Compliance Advisor/Ombudsman, an internal auditor, criticised the IFC’s regulations of financial intermediaries. The report looked, for instance, at a loan for 30 million dollars that the IFC gave to Corporation Dinant, a Honduran agribusiness company owned by one of the country’s richest men, Miguel Facusse. Dinant has been accused of killing, kidnapping or forcibly evicting peasants from land claimed by the company. In response, the IFC has admitted to missteps around Dinant.
In the case of Yoma Equity Serge Pun chairs the Serge Pun & Associates Group (SPA Group), one of Myanmar’s largest conglomerates, as well as Yoma Bank. Pun’s business dealings have raised social concerns in various sectors over the years. Indeed, the U.S. State Department recommended placing sanctions on Pun in 2008.
These never went forward, however, and as a result Pun has developed a reputation in Myanmar as a “good crony”: less corrupt than the others, and one of the few options for a local business partner. “Everyone is investing in him,” she says, “so the IFC is perpetuating the same oligarchy that’s in place. The IFC is coming in and reinforcing the status quo.”
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