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Associate Professor Dr. Nigel Finch of the University of Sydney Business School is an expert on economic development in South East Asia with a particular focus on extractive industries.
DVB reporter Angus Watson spoke to Dr. Finch about transparency in foreign investment in Burma and the relationship between the extractive industry and the Burmese people.
Q:What do tender bidding processes say about the development of the political economy of Burma?
A: It says much about improvements in the political economy especially in the areas of transparency and accountability. This, in turn, greatly improves Burma’s ability to compete for and attract foreign capital.
Q: Have Chinese firms lost their advantage in Burma?
A: China has benefited from early involvement in Burma’s economy and played a pivotal role in the growth that has been realised to date. China will continue to have an important relationship both as a trade partner and as foreign investor.
However we shouldn’t presume they want to participate in every corner of the economy. For instance, last year Burma set about a bidding process for 16 onshore oil and gas blocks and China did not submit a bid.
I think Chinese firms will compete where they have an advantage. While they clearly have experience and capability in oil and gas exploration, they may not be ready for the disclosure and transparency obligations that may accompany ownership of a license, whereas many Western firms may claim that their disclosure practices form part of their competitive advantage.
Q: Do such open processes spell an end to cronyism?
A: Open processes such as tender bidding don’t spell an end to cronyism but they are certainly a step in the right direction. Tender selection criteria and processes are still subject to political interference but a consistent and transparent approach is welcome. Burma has come a long way and experience and capabilities need to be built up in these areas and there is still much to do.
Q: Are we likely to see an improved relationship between local people and international firms operating in Burma? (With reference to the ongoing petition by local individuals and groups against extractive sector projects such as Latpadaung, Myitsone, Dawei)
A: Relationships with extractive industry firms and the communities they operate in are often troublesome. Where the expectations of government and stakeholders on the activities of the mining firms are realistic, the relationships will inevitably be easier to manage. What will influence this the most is fairness in education, media and politicking.
Q: Australian firm Woodside Energy is among the bidders for a 30-block offshore gas exploration award announced this month, how do you rate their chances?
A: Woodside is an experienced and credible firm and, in my view, has just as good a chance as every other world-class firm. These exploration licenses have attracted much attention and the bidding is likely to be very competitive. Last year’s onshore license bidding attracted 78 foreign firms for only 16 blocks, and in this round, 30 offshore blocks are being offered. Regardless of the outcome for Woodside they will benefit from the experience of continued participation, which will only assist them in bidding for future projects.
Q: The potential for growth in Burma’s labour market has been noted as an opportunity for foreign investors. How can Australian businesses, promote fair and equitable growth?
A: Australian firms have a good record in the area of labour development especially through mining and infrastructure projects. The opportunities include skills training in areas as diverse as engineering, transport, workplace safety and even administration. The vocational training sector in Australia can play a role in building an apprentice-style training culture in Burma that infuses practical training and knowledge embedded with real workplace experience. By developing greater skill in Burma’s human capital, foreign firms will increase their ability to deliver projects at lower costs and assist is reducing execution risk.