An exciting opportunity exists in Myanmar for consultants with experience in the development sector: the country is full of investors who want to bring development projects to local communities in order to secure their investments. China’s woes have made it clear that investors need buy-in from local stakeholders in order to protect their investments from public discontent. The Myitsone Dam, which is one of China’s largest infrastructure investments in Myanmar, was put on hold after Naypyitaw came under pressure from local communities who criticised the dam’s perceived injustice. More recently, China’s Kunming-Kyaukpyu railroad appears to be in jeopardy for similar reasons. That Myanmar has essentially nixed two large Chinese projects is alarming. It shows that local communities’ discontent can ultimately imperil the contracts upon which large infrastructure projects are based.
An effective way for investors to secure their investments is to bring development projects to local communities that align with business interests. By supporting local communities’ goals for self-development in a manner that also advances business goals, investors can at least partially insulate their investments from political, economic, and security turmoil. There are also many macro factors that jeopardise investments’ security, such as lack of regulatory control and poor long term government planning, but these issues are largely beyond investors’ ability to affect.
A development project that supports business interests can take many forms, but the essential point is to identify and pursue a project that benefits both stakeholders and investors. For example, a project could provide technical skills training that both improves community members’ employment prospects, and, at the same time, lets a company replace expensive foreign workers with cheaper local labour.
Board room members understand the utility of such development projects, but they lack in-house capacity to design and implement them. While some of the larger companies have offices devoted to marketing, government relations, communications, and Corporate Social Responsibility (CSR), more specific and complex skill sets are required. For the smaller companies, implementing development projects without external assistance is simply beyond their capacity.
This is where consultants with development experience, or “development officers,” can step in and provide valuable consultancy services. The benefits for development officers are both idealistic and pragmatic: they can use corporate funds to catalyse meaningful change, and, assuming they successfully carry out a project, they can assure themselves of plenty of future employment opportunities.
Accessing corporate capital
To access corporate capital, development officers need to follow four steps: identify capital inflows, sell development services, facilitate engagement, and implement a project. Identifying capital inflows means to identify where investors are already so invested that they are willing to pay money for a development project in order to secure that investment; development officers seeking corporate capital should pursue development projects only when they can be aligned with pre-existing corporate interests.
The second step is to “sell” development services to investors. Investors appreciate the utility of development projects, but they need to be convinced to sacrifice capital to carry them out. Development officers must explicitly demonstrate the ROI of doing so. To support this argument, development officers should attempt to quantify the potential costs of a company’s poor stakeholder engagement. They also need to put a price tag on a development project. The point is to numerically justify a relatively small expenditure upfront in order to avoid a potentially bigger loss later.
After selling their development services, development officers need to facilitate engagement between investors and stakeholders. Both parties need to be co-owners of development projects. Additionally, projects need to attain buy-in from the government, without which they will be stillborn. Note that this is fundamentally different than the scattershot approach often taken by companies in frontier markets. As has been shown by the China case, a figurative tossing of money bags to make people happy does not necessarily improve public perceptions of large infrastructure investment projects.
There are numerous potential dilemmas facing development work with which any experienced development officer will be familiar. Typical problems include: cycles of dependency, enflaming conflicts, project overrun and unsustainability, stakeholder marginalisation, unrealistic expectations, and underestimated budgets. These dilemmas are deep-rooted and difficult to solve. Development officers, however, are far better-equipped to deal with these complex quandaries than CEOs or CFOs, who cannot possibly begin to fathom the intricate web of potential pitfalls intrinsic to development work.
Entrepreneurial development officers can take advantage of the situation to find meaningful work in Myanmar, a country that desperately needs both corporate investment and sustainable development. Development projects would benefit the types of investments that are already facing significant stakeholder resistance: extractive- and energy-related infrastructure investments in economically marginalised areas. However, opportunities exist throughout the country and will become more common as Myanmar’s entry into the global market continues to disrupt its traditional social fabric. Development officers can ease this process to the advantage of all parties.
Nicholas Borroz is an independent analyst of energy geopolitics and investment strategies, specialising in energy-related infrastructure. He works for a DC-based risk consultancy and has previously worked for the US government in international affairs with a focus on development, energy and economics. You can reach him on Twitter at @NBorroz or on his blog, www.nicholasborroz.wordpress.com.
The views and opinions expressed here are the author’s own and don’t necessarily reflect Myanmar Business Today’s editorial opinion.