Energy firms’ departure will damage Myanmar financially and politically: Experts

Fourteen foreign firms have left since February, but observers say others are waiting to take their place.
2022.01.28
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Energy firms’ departure will damage Myanmar financially and politically: Experts Burmese activists protest at Total headquarters in Paris, France, March 25, 2021.
Reuters

An announcement by two major energy firms of plans to close their operations in Myanmar mean a significant loss of tax revenue for the junta and highlight a growing exodus by large companies concerned about indirectly funding the military’s suppression of the Burmese people, according to experts.

Late last week, U.S.-based Chevron and France-based Total, which pay millions of dollars in annual taxes to the junta to produce oil and gas in Myanmar, announced that they will be shuttering their operations in the country.

The companies cited serious human rights abuses and worsening rule of law as the reason for their departure and the announcement came a day after Total called for international sanctions on Myanmar’s key oil and gas sector.

Nearly a year after seizing power, the military has detained 8,800 civilians and killed 1,500 others, mostly during nonviolent protests of its Feb. 1, 2021 coup, according to the Bangkok-based Assistance Association of Political Prisoners. 

Speaking to RFA’s Myanmar Service, Soe Thura Tun, Minister of Electricity and Energy for Myanmar’s shadow National Unity Government (NUG), said that Chevron and Total paid around U.S. $40 million in taxes to the junta in December related to their work on the Yadana Gas Project in Tanintharyi region, and that their exit would impact the junta both politically and financially.

“The amount varies, depending on their gas production, but their withdrawal will surely affect the junta’s income,” he said, acknowledging that the firms “could be replaced by someone else.”

“Either way, the withdrawals [of the two companies] will surely have more of an impact on their political image.”

Following last week’s announcement, junta Deputy Information Minister Maj. Gen. Zaw Min Tun rejected claims that the companies’ decision was based on the political situation in Myanmar. He said that if international energy companies leave the country the junta will find a way to work with other partners.

“There are many different reasons [companies might leave]. There are also those who are directly putting pressure on them,” he said.

“Another thing that is really happening is the decline in natural gas production. So, they might have considered this and decided to leave. What I want to say is that we will continue to work with partners who can work together with us.”

Zaw Min Tun said that although foreign investment had declined immediately after the coup, it had recently stabilized. He blamed “terrorist attacks” in some parts of the country, where the military is fighting prodemocracy militias, for tarnishing the junta’s political image and driving away foreign investment.

Earlier this month, the Myanmar Investment Commission approved 10 new ventures in the livestock and fisheries sectors, manufacturing sector, mining sector and services sector. It said the total investment of these businesses surpassed U.S. $241 million and would create more than 2,600 jobs in the country.

Waiting in line

Than Soe, an economist who worked with the deposed National League for Democracy (NLD) government, said that while the departure of foreign companies could hurt the junta’s political reputation, other firms are waiting to take their places.

“It doesn't really work. Such measures were not effective during the previous [military regimes],” he said.

“If a company has set up many subsidiaries in Myanmar … it sells its stakes to its subsidiaries and when the political situation improves, it will come back.”

He noted that during previous military regimes, companies from Western nations were replaced by those in nations allied with the junta, such as China, Thailand and Vietnam.

Soe Tun, a Yangon-based businessman, said it was worrying that big companies like Total and Chevron plan to leave but anticipated that business will continue as usual.

“It seems to be very worrisome for investors. There might be some direct impact,” he said.

“But we recently saw [Norwegian telecom firm] Telenor leave our country. When it left, its market share was transferred to someone else. And now, although Total and Chevron are leaving, I don't think things will stop.”

Business in Myanmar

Rights groups have tried to make a difference by highlighting the problems with doing business in Myanmar.

On Jan. 1, Myanmar-based watchdog Cut Off Blood-Money wrote to U.S. President Joe Biden and French President Emmanuel Macron urging them to stop Chevron and Total from paying taxes to the junta because of its rights abuses and has urged other nations to do the same.

Human rights groups say some 50 percent of Myanmar's foreign exchange earnings come from the energy and oil and gas industries – money that could be used by the junta to buy weapons and suppress the public.

“What we are pointing out is that [the junta] is illegal – they are not our government. There is no rule of law. So, we want to stop [firms] from paying the junta,” a spokesperson for the group told RFA, speaking on condition of anonymity.

“There is evidence that some of their money was used to buy weapons and people were killed with these weapons. If these companies continue to pay, they will be accomplices in the committing of war crimes.”

Earlier this week, New York-based Human Rights Watch warned that the military will continue to collect massive revenues from natural gas and other extractive sectors unless new targeted sanctions block foreign currency payments supporting the junta’s abusive rule.

In a statement, the group warned that while Chevron and Total had announced plans to leave Myanmar, “natural gas revenue to the junta will continue because other companies will take over their operations.”

Reporting by RFA has found that at least 14 foreign companies have left Myanmar since the coup. In addition to Chevron, Total and Telenor, Australian telecom Myanmar Mytel, Singapore tobacco producer Lim Kaling, Thai real estate firm Amata, and Malaysian oil firm Petronas have also made their exit since the coup.

Reported by RFA’s Myanmar Service. Translated by Khin Maung Nyane. Written in English by Joshua Lipes.

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