Burma investors under scrutiny
24 August, 2004 (BBC) - Even for a military dictatorship, the Burmese government has plumbed remarkable depths of unpopularity. The ruling junta, which has held onto power through force since losing elections to the opposition National League for Democracy in 1990, has been condemned by the US and the European Union, as well as the United Nations.
The regime is frequently criticised over its treatment of opposition leader Aung San Suu Kyi, who has been under house arrest for nine of the last 14 years.
But it is also accused of grave human rights abuses, including the torture of detainees, and the use of forced child labour.
The US and other industrialised countries have responded by suspending economic aid to Burma, and imposing limited economic sanctions on the country, also known as Myanmar.
Corporate cash
However, many private businesses in the West continue to see this resource-rich nation of 42 million people as an attractive investment opportunity.
Although Western governments - including the UK - have urged companies not to invest in Burma, the flow of private funds continues unabated.
According to the pro-democracy Burma Campaign, British companies alone have committed $1.4bn (£756m) to the country over the past 10 years, making the UK its second biggest source of foreign investment.
In an effort to choke off what it sees as one of the regime's main economic lifelines, the Campaign has for the past three years been trying to 'name and shame' Western companies into cancelling their Burmese investment projects.
The latest version of the list, published on Tuesday, features a total of 95 British, European and American companies, including 37 new entries.
Rolls-Royce and Lloyd's of London are among several UK companies added to the Burma Campaign's annual 'Dirty List'.
Timber importers and tour operators, who have long had a presence in Burma, are well represented once again.
But the updated list also features several well-known global multinationals, including jet engine maker Rolls Royce, and the Lloyds of London insurance market.
Rolls Royce and Lloyds told the BBC that their activities in Burma complied with all existing national and international regulations.
Backfire
Supporters of foreign investment in Burma say severing investment links will serve only to deprive the Burmese people of jobs, inflicting further economic hardship on a nation where average annual income stands at just $1,900 per head.
They also argue that by tying Burma more closely into the world economy, foreign investment could be a force for political liberalisation.
There is some evidence that the trade sanctions imposed by the US last year have hit ordinary Burmese hard, while doing little to undermine their military rulers.
Last year, American officials estimated that a ban on Burmese textile imports had cost 40,000 employees their jobs, forcing many of them to work in the sex industry instead.
But the Burma Campaign says it is acting in response to a call from the Burmese opposition to develop sanctions targeted at key sectors - including oil, gas and timber - which provide an important source of revenue for the military regime.
It stresses that such sanctions do not affect the Burmese people, as the bulk of these revenues are ploughed straight into military spending.
"Those arguing against sanctions are not the Burmese people," says the Campaign's John Framaner.
"It's big business that tends to argue that sanctions will hurt."
Reputational risk
The Burma Campaign says about 20 of the companies featured on last year's list - including cigarette maker British American Tobacco, advertising group WPP, and accountancy firm PwC - have since pulled out of Burma.
But political pressure groups such as the Burma Campaign are not alone in questioning whether investing in Burma is appropriate.
Major City investors are also highly dubious, although their concerns are not solely ethical.
One group of UK-based fund managers, controlling investments worth some £400bn between them, believes that investing in Burma is so risky that it is probably best avoided altogether.
The group, which includes Morley Fund Managers, Henderson Global Investors and Jupiter Asset Management, has urged businesses whose shares it owns - which include many of the UK's biggest listed companies - to be highly cautious when contemplating a deal in Burma.
"We have serious reservations about companies we are invested in operating in Burma because of the reputational and security risks," says Melissa Gamble, an analyst at Morley Fund Managers.
"Burma is quite unusual in that the democratically elected government has asked us not to go there."
According to Ms Gamble, companies that do get involved in Burma risk a backlash from consumers and shareholders, and could also face penalties if the country's democratic opposition replaces the military regime.
The group has urged companies involved in Burma to avoid forming partnerships with state agencies known to have committed human rights abuses, and to make sure that international labour standards apply throughout their local manufacturing operations.