Can you privatize development aid? Germany is trying, in Myanmar

Germany’s development ministry wants more private businesses to get involved in international projects. A visit with one such project in Myanmar highlights the opportunities — and the pitfalls.

The richest and most famous people in Mandalay are all here. They’re meeting on the top floor of a decrepit shopping center: the gold mine owner, the jade mine manager, the hotel proprietor and the son of Aung Win Khaing, the city’s most successful entrepreneur, to whom the mall belongs. The Myanmar townspeople are electing the leader of their local chamber of commerce. But there is one person among the group who really stands out: a German businessman, dressed in a tidy suit.

Patrick Jung shakes hands all round and hands out business cards. The 42-year-old has come to the Southeast Asian nation all the way from the chamber of trade and industry in Reutlingen, a town in the German state of Baden-Württemberg. And he has two jobs today. First, he wants to help the Mandalay locals modernize their own chamber of commerce. And second, he’s here to make contacts that might be useful to German industry — preferably German industry in Reutlingen.

Mr. Jung’s project is funded by Germany’s federal ministry for economic cooperation and development. It’s all part of a potentially controversial shift in the ministry’s new development policy. “The money we give for development won’t resolve the challenges we face,” Development Minister Gerd Müller has said. “We need the private sector!”

Instead of spending federal funds on building bridges and wells, Berlin wants to encourage private investment and trade in places like Mandalay, which, up until now, have mostly missed out on the effects of globalization. In this city of 1 million inhabitants, the most visible international investment clearly comes from China. As yet, there is no direct German investment here. Mr. Jung is here to change all that.

“It is a wild era here, like it was [in Russia] after the Soviet Union,” Mr. Jung says, noting the potential to do business here. This is nothing like classic development aid; it’s about business, says the German businessman, who speaks Russian and Turkish and who has also worked in economic development in the Caucasus republics of Armenia and Georgia.

That wild era involves promising dealings with people like Aung Win Khaing, whose biggest project is an industrial park in the city and who has “young, English-speaking staff and capital,” says Mr. Jung. But even such promising examples come with problems: Human-rights organizations say that the industry park will displace 1,000 families. They have not received proper compensation for the loss of their properties, advocates claim.

In January 2016, just as the cooperation between Mr. Jung’s employer in Reutlingen and the Mandalay chamber of commerce was starting, local farmer Koo Win Oo was building a well on his property. To his surprise, a police car pulled up while he was digging and officers arrested him “like an animal,” he says. Mr. Oo remained in jail for three months on suspicion of rape and murder. The farmer denies any wrong doing and believes his real crime was to protest the building of the industrial park — on his land. Instead of buying the land, Mr. Khaing, a very influential man around town, allegedly had Mr. Oo harassed by the police.

And this is where the German government’s outsourcing of economic development projects to the private sector could run into a few issues.

“I only really get about 10 percent of what goes on behind the scenes,” Mr. Jung admits. He’s been busy helping Mr. Khaing market his industrial park to German businesses. They are hoping to draw a German manufacturer of small cigars to the park, to operate alongside a Chinese carmaker and other Chinese factories that will employ around 10,000 people, as well as a cactus-lined golf course that Mr. Khaing says he built especially for European guests. The locals working on the golf course will earn slightly above the minimum wage here, €3 ($3.70) a day.

Mr. Jung believes that when it comes to business, it’s important to look to the future and not the past. “[Mr. Khaing] might be a scoundrel motivated by profit. But he is the only one who could really bring jobs to this region,” Mr. Jung argues.

Besides, Mr. Khaing was never on any sanctions list and even the World Bank is about to help him build a harbor here, he adds. “It doesn’t matter whether the cat is black or white,” Mr. Jung says. “What matters is that the cat catches mice.” One can only hope that Mr. Jung knows that he is quoting the late Chinese premier, Deng Xiaoping, former chairman of China’s Communist party and the architect of his country’s economic reforms of the 1980s and 90s.

It’s certainly a good time to be doing business in Myanmar. After 40 years of military dictatorship, the country has been more open to the world ansince 2012. Western sanctions against the country formerly known as Burma have been relaxed since then and international business has arrived. Just five years ago a SIM card for a mobile phone was unaffordable for most. Today, by contrast, Norwegian company Telenor runs multiple mobile phone networks and the economy is boasting growth of around 7 percent. The country, with a population of about 50 million, also has gas, gold, precious stones and an extremely useful location, between economic giants China and India.

Mr. Jung has been here for a year and a half and has built up an informative network of good contacts. His job has involved helping local companies who want to export products or produce like mangoes or legumes. He has helped set up an IT system for the Mandalay chamber of commerce, with the objective of improving transparency and communication between members. And he helps bring German experts and consultants to local trade schools and companies.

On one visit, he brings along Stefan Bonin, another German and the local representative of Rieckermann, a Hamburg-based industrial machine and plant-development company. The pair is meeting a local couple who run a biscuit factory here. They’d like to start exporting their wares to Japan and want to invest in better production facilities. But the visit is not particularly successful. The family doesn’t even have a diagram of their factory and everything has to be translated twice. The Germans find some mysterious machines in the corner and nobody knows what they’re really there for.

Mr. Bonin, who is based in Yangon, says he’ll keep in touch. But, as Mr. Jung says, somewhat crestfallen, “there’s not a lot that German companies can really do with family-owned businesses like this.” It’s all about finding the right partners, he adds.

Source : Handelsblatt Global

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