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(AWSJ): U.S. Cos. Wary Of Burma As
- Subject: (AWSJ): U.S. Cos. Wary Of Burma As
- From: ider@xxxxxxxxxxxxxxx
- Date: Thu, 25 Apr 1996 02:49:00
Subject: (AWSJ): U.S. Cos. Wary Of Burma As Pepsi Cancels Project
(AWSJ): U.S. Cos. Wary Of Burma As Pepsi Cancels Project
By Fara Warner
HONG KONG (AP-Dow Jones)--PepsiCo Inc.'s decision to sell
its 40% stake in a joint venture in Burma isn't likely to affect
the handful of U.S. companies already doing business in the country,
say U.S. company executives and foreign observers.
But its decision, along with legislation now being considered
by local, state and federal governments in the U.S., could keep U.S.
companies from new investment in Burma, reports Thursday's Asian
Wall Street Journal.
PepsiCo officials confirmed Wednesday that the company would
sell its stake in Pepsi-Cola Products Myanmar Ltd. and move to a
franchise arrangement, most likely with PepsiCo's joint-venture
partner, Burmese entrepreneur Thien Ten. The move follows protests
on college campuses against PepsiCo's investment in Burma.
'Pepsi's move is significant because it's the first time a
U.S. company with direct investment has decided to liquidate its
holding, as opposed to an importer deciding not to source out of
Burma,' said a foreign observer in Burma.
Other companies are likely to weigh the political risk that
faced PepsiCo before they consider investing in Burma, he added.
By contrast, executives at Unocal Corp., the biggest U.S.
investor in Burma, said the Los Angeles-based company has no
intention of pulling out of the once-isolated country; they said
economic investment can only help the country move forward.
Unocal is one of four companies investing in a natural-gas
pipeline being built by Total, a French petroleum company.
'Unilateral sanctions won't have an impact,' because other
companies and countries will continue to invest, said Carol Scott,
director of corporate communications at Unocal's offices in Singapore.
'Economic development helps the country. Attempting to re-isolate
the country by pulling out does no good.'
Despite Unocal's corporate position, the company has been
pressured by activist shareholders to rethink its overall business
code of ethics, including its Burma investments. But Scott said
Unocal doesn't feel it needs to do that.
She added that Unocal has been setting up schools along the
pipeline and is involved in a malaria research project as well.
Even before protests against investing in Burma gained momentum
in the U.S., investment by U.S. companies had been dwindling.
According to World Bank statistics, direct foreign investment
from U.S. companies has dropped from a high of $83 million in the
year ended March 30, 1992, to just $16 million for the year through
March 1995.
Singapore, France and the U.K. are the top investors in the
country, followed by the U.S. and Thailand, according to the World
Bank statistics.
Mineral exploration companies have been the biggest investors
in the country, with petroleum companies mainly exploring offshore
fields. PepsiCo was one of the few globally recognized consumer-goods
companies that had invested in manufacturing in the country, says
the foreign observer.
But following protests by students and a push to boycott PepsiCo
products publicized on the Internet, PepsiCo bowed to the pressure.
'We are divesting in Burma due to business considerations and
public sentiment (against the Burmese government) in the United
States,' said Keith Hughes, a PepsiCo spokesman based at the
company's headquarters in Purchase, New York.
He didn't disclose the financial terms of the sale and said
the sale is pending. PepsiCo has been operating in Burma since
1991 under a joint venture with Thien Ten.
Thien Ten is expected to become the sole franchiser in Burma
if the sale of PepsiCo's equity stake goes through. 'Then we will
have no assets or employees in Burma,' Hughes said.
PepsiCo will supply syrup to the franchiser as well as allow
use of the Pepsi trademarks in Burma, which means PepsiCo products
will still be sold in the country.
Legislative moves could lead to tighter controls on U.S.
investment in Burma. Four municipalities already have local
ordinances that prevent them from buying products from companies
that invest in Burma. Five other cities and the state of
Massachusetts are considering similar legislation.
The U.S. Congress is also considering draft legislation that
would severely restrict travel on U.S. passports in Burma,
investments in the country and the import of products from Burma.
However, foreign observers in Burma say that none of the legislative
actions restrict companies from exporting their products to Burma.
(END) AP-DOW JONES NEWS 24-04-96
0015GMT