Intro
Southeast Asia is a key area of China's overseas direct investment. According to the Ministry of Commerce latest statistics, in 2013 Southeast Asia accounts for 70.1% of China's foreign direct investment flows, 67.7% of the stock. Among the top 20 investment destination by investment flow, 7 are Southeast Asia countries. Investment institutions predicted that there will be a huge space for development in infrastructure renewable energy and e-commerce in Southeast Asian countries. In addition, Indonesia Ministry of Finance tells the media that in the next five years there will be an over 400 billion USD funding needs in infrastructure, among which Chinese companies promised 45 billion USD. It’s clear that Southeast Asia is a prospective area for Chinese enterprises ‘going out’ strategy. Recently, Aung San Suu Kyi, the chairman of the Myanmar National League for Democracy, visited China. Although there were frictions in the investment cooperation between China and Myanmar, Suu Kyi’s visit conveys the willingness of mutual understanding and cooperation between China and Myanmar. Meanwhile we should not ignore the environmental and social impacts of investment. The Sri Lanka Port City project, signed last year when Chinese President Xi Jinping visited Sri Lanka, was suspended in March this year due to environmental and local law issues. Up till now, Sri Lanka has a panel of public officials to research and consider whether work should resume. In this issue we present the progress and challenges concerning China's overseas investment and projects in Southeast Asia.
Alert
- After suspension, Sri Lanka may let China resume work on Port City project
- China Voice: Suu Kyi's China trip a boost for mutual understanding
- The investment cooperation between China and Thailand went on well; Double-track railway project between China and Thailand will officially start construction at the end of this year(CH), Chinese enterprises can enjoy duty-free and other benefits when investing in Thailand(CH)
- CGN (China General Nuclear) to train ASEAN nuclear professionals
- G-7 calls for high standards at China-led AIIB
View
Xin Hua: Since 2010, China-Myanmar relations have witnessed some disturbances, with several key cooperation projects, including a water dam and a copper mine, being brought to a standstill. The two countries have made progress in addressing these undesired events and both sides have the will to keep things going that way. As an important politician in Myanmar, Suu Kyi must have a very thorough understanding of the special bond between the two countries, as shown by the famous comparison she drew: not like married couples who could always get a divorce if they do not get along, nothing can be done to change the fact that China and Myanmar are each other's neighbor.
Resources
- Report: Guidelines for Overseas Investment: Southeast Asia(CH),MOFCOM(summarized by Greenovation Hub)
- Report: 2020 Four ASEAN Countries’ infrastructure investment needs brings opportunities for China ,Goldman Sachs
- Case Analysis:MMG LIMITED Sepon Copper & Gold Mine, Laos (P.22),Greenovation Hub
- Case Analysis:Rovieng Iron Ore Mine & Railway Project, Cambodia (P.40),Greenovation Hub
- Case Analysis:The OKI Pulp and Paper Mill in Indonesia (P12),Friends of the Earth
- Case Analysis:Lower Sesan Dam II in Cambodia (P.22) ,Friends of the Earth
- Conference Recommodation:The Transparency and Risk Management of Chinese Overseas Investment in Extraction Industries(CH)
Case Study
Letpadaung Copper Mining Project Research
The author of this paper is Diane Tang-Lee. Diane Tang-Lee is a PhD candidate at University of Manchester. For comments and questions, please contact: diane.tang@postgrad.manchester.ac.uk
Executive Summary
This paper examines the corporate social responsibility (CSR) program of the Letpadaung copper mining project, funded by Wanbao Mining Corporation, a subsidiary of China’s state-owned weapons manufacturer, China North Industries Corporation. In particular, it analyzes community engagement and consultation processes, and identifies some of the inadequacies. While the new CSR initiatives demonstrate the company’s commitment in improving community relations, engagement needs to be deepened and broadened beyond and below local village elites. There is also a misalignment between CSR efforts and villagers’ imminent needs.
In the aftermath of the violent demonstrations prompted a parliamentary investigation on the feasibility of the project, Myanmar Wanbao embarked on many notable CSR initiatives, with a commitment to invest USD 2 million annually to ensure international standards of environmental protection and 2 percent of its net profit for corporate social responsibility activities. It initiated a CSR programme, engaging a Community and Social Development (CSD) team that comprises of village leaders and leaders, with the stated goal of better understanding the needs of the neighbouring villages. The company published multiple documents including the Environmental and Social Impact Assessment (ESIA), created a Facebook page, and became more open to receive media interviews. These efforts are indications that company decision-makers are apparently well aware of the need to engage with the project-affected communities and ensure open communications with the media. However, while these are significant strides of change that deserve recognition, many villagers nonetheless remain oblivious to how these changes can positively impact their life.
Although the CSD team was introduced for the purpose of ensuring CSR projects are driven by local people, it is still top-down and elite-driven. CSD team members are village leaders and may not always represent the poorest and most marginalized. When the CSD team was first established, the CSD members are either existing village leaders or those who are closely related to them. What is observed at the villages surrounding the Letpadaung mine site is that ordinary villagers generally feel that village leaders do not represent their interests well, and look after only the interests of those with close familial and personal ties. Therefore, many are doubtful towards whether the CSD members have an interest in representing them and bringing their demands to the company.
The pattern of top-down, elite driven communication is reflected not only in the structure of the CSD team but also how the public meetings were conducted. Several public meetings have been held to make announcements regarding the project and the ESIA reports, as well as to seek suggestions from the locals. Villagers perceive that only village leaders and important people were invited to the public meetings at the township level. Other villagers joined the meeting on their own initiative without invitation.
While this kind of public meeting did not even occur before the demonstrations in 2013, and since then improved in quality gradually (with people feeling they can express themselves more openly), more could be done in terms of extending the invitation to a wider spectrum of stakeholders. This includes ordinary villagers, the media, and other concerned civil society and professional organizations from outside the village.
When it comes to smaller scale communications though, most of the interviewees mentioned that Wanbao employees have visited them more than once at their villages. It is a noteworthy improvement, which did not happen at all before the demonstrations. This is a good start, but is marred by problems of inadequate or inappropriate responses from the company.
Although most interviewees expressed they feel free to express themselves in public meetings or when company staff visit their village, one follow-up remark that all interviewees who are not CSD members always added was that the company did not respond to their demands promptly or at all. It is at least partially due to a mismatch between what the company intends do with its CSR campaign and what the villagers really need.
From the CSR reports and websites of the company, one can easily find much information about the development projects Wanbao initiated. It gives the impression that the company is indeed concerned about the well being of the villagers, but villagers’ complaints about inaction still abound. Schools and hospitals do not solve the immediate needs of the villagers. After the farmland and water sources have been either taken away or polluted, their immediate concern is their livelihood; how they can continue to make a living. Corporate charity efforts that ‘repair with the right hand what [they] ruined with the left hand’ (Zizek, 2009) are proven again by this case to be insufficient and fundamentally inappropriate.
This is not to say that development projects should be scrapped – some villagers do express that they do not have enough electricity and need funding for it, but these development projects alone are insufficient to ensure the well-being of the villagers which are minimally affected by the mining project. Wanbao promises job opportunities in proportion to the amount of land lost per household, but it has not yet been able to provide as many jobs to fulfill this promise. Social accountability requires the extractive project to be concerned with villagers’ needs from the early planning stage of the project.
There is no doubt that the company puts in efforts in the development projects, and even consults villagers about their demands regarding these projects. Stakeholder engagement has visibly increased after the Investigation Commission Report in 2013. However, it also takes an overall responsible mining model for the findings of stakeholder consultation to translate into solutions feasible for the company to carry out. If the company’s current business model, structure, resources, and capacity can only entertain development projects such as schools and hospitals, findings from stakeholder consultation will not generate much improvement on the lives of the villagers, nor will they mend the relationship between them and the company. Improvements will be seen only if the company business model is transformed to incorporate social accountability as its priority.
Several issues have been identified in this article, but an important point to note is that the course of stakeholder engagement action that Chinese companies can choose is heavily determined by the local political environment, its contingencies and restrictions. Decisions regarding which stakeholders to invite to public meetings, what level of information to disclose to the public, which village representatives to include in the CSD team, which community development projects to fund, are all by no means at the sole discretion of Wanbao. This issue of local governance is entangled with politics within local authority.
Read the Full Paper: Myanmar Letpadaung Copper Mining Project
Observation on China's Oversea Investment wish to present multiple views and perspectives to enhance understanding concerning China's overseas investment and global footprint, so as to promote China's "going out" in a more responsible and more sustainable way.
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