12 June 2018:
Big Tobacco returns following the lifting of sanctions
When confronted with the false choice between public health and tobacco-fuelled economic development, Myanmar’s policymakers have opted for the latter, Ross MacKenzie writes.
In July 2013, British American Tobacco (BAT) announced it would be returning to Myanmar. The company had withdrawn from the domestic market a decade earlier, following criticism by human rights groups, non‐governmental organisations and the UK Government of its commercial links to the country’s military regime.
Prior to selling its 60 per cent share of the Myanmar operation in November 2003, BAT officials argued that the company could not be held accountable for the host government’s human rights record, and cited its ostensible contributions to health, education and other causes.
The return of BAT and a number of other western companies to Myanmar has been facilitated by recent reforms to the country’s political, economic, and social systems.
These reforms include the release of Aung San Suu Kyi from house arrest, the National League for Democracy’s 2015 general election victory, and discussions with the International Monetary Fund, the World Bank and Asian Development Bank on economic direction. Among other reforms, they have been sufficient indication of rehabilitation for western governments to lift or suspend sanctions that had been put in place against the military regime.
BAT, Coca‐Cola, Kirin, Heineken and other companies whose products are linked to the global rise of non-communicable diseases have been among leading investors, raising significant concerns around the potential impact of their operations for the local population.
Such concerns, however, appear to be outweighed by the government’s determination to attract foreign capital. The health ministry’s opposition to cigarette manufacturers returning to the country was, for instance, over-ruled by the Myanmar Investment Commission, allowing Japan Tobacco International, Hongyun Honghe Tobacco Group (China’s largest manufacturer), as well as BAT, to establish operations in the country.
For its part, BAT has emphasised the benefits of its new $50 million manufacturing operation, and noted that it was “truly excited with the post‐sanctions development in Myanmar” and “keen to play an active part in the country’s economic and social advancement”.
Such statements are less than reassuring given the tobacco industry’s record of promoting the economic benefits of its operations to governments of low and middle-income countries via “lopsided assessments” that disguise the costs of economic development. Typically, the tobacco companies rely on misconceptions among policymakers regarding the economic benefits of tobacco employment and investment, while downplaying the social and economic costs of consumption. This effectively creates what has been described as a “false choice between health and economic wellbeing.”
For the tobacco industry, Myanmar represents a valuable commercial opportunity at a time of declining markets in many other parts of the world. Tobacco availability, consumption and related regulation in the country has changed little since BAT withdrew in 2003. High smoking rates of 44.8 per cent among men and 7.8 per cent among women 15 years and older, the widespread popularity of hand-rolled cigarettes, and perceived aspiration among young adults for western products and lifestyles, all make the local market an attractive proposition.
Domestic tobacco control policy and regulation is limited and poorly funded, and although Myanmar ratified the World Health Organization’s Framework Convention on Tobacco Control in 2004, it ranked last in a 2016 survey of implementation among Association of Southeast Asian Nations member states.
It is also apparent that the domestic political situation has changed less than has been widely perceived or hoped for. The military retains extensive influence and power, and the “hybrid regime” that has emerged from the reform process is neither wholly democratic nor wholly authoritarian. Many restrictions on freedoms of expression, association and assembly remain. Together with the widely-condemned, enforced displacement of Myanmar’s Rohingya population this situation is worryingly reminiscent of the country’s history under direct military rule, and raises serious concerns regarding the government’s commitment to human rights.
Events in Myanmar have reportedly caused unease among potential investors. How international governments and civil society respond to the Rohingya situation and other concerns may have implications for corporations that have already established themselves in the country. For example, Burma Campaign UK, a key actor in the previous campaign that led BAT and other companies to quit the market, is considering reviving its “Dirty List” of companies directly or indirectly linked to human rights violations in the country.
Confronted with the false choice between health and economic wellbeing, Myanmar’s policymakers have apparently opted for the second of these options. More than 70,000 annual deaths are attributable to tobacco use in the country, and the return of global cigarette manufacturers to a largely unregulated market suggests that the country faces an impending tobacco‐related disease epidemic.
This article is based on the author’s paper, “An example for corporate social responsibility”: British American Tobacco’s response to criticism of its Myanmar subsidiary, 1999–2003, which was published in Asia & the Pacific Policy Studies in May 2018. All articles in the journal are free to read and download.