By Jørn Stave
At the furniture factory Scansia Myanmar outside Burma's capital Rangoon, the effects of boycott calls from Western countries are now making themselves felt. Over the past months, more than 200 workers have lost jobs at the factory, which is owned by the Malaysian company Scansia Sdn Bhd. The Norwegian furniture entrepreneur Arve Varleite is the main shareholder in Scansia Sdn Bhd.
- This ought to delight Norwegian politicians, Arve Varleite says heatedly.
This plainspoken businessman started the furniture factory in Burma in 1993 and has earlier made sceptical comments on Aung San Suu Kyi and her democracy movement. Varleite does not mince words when describing Norwegian government policy on Burma.
- Norway is a country with such a double set of morals that I get sick. It's easy sitting back home, criticising the military dictatorship, while the little people in Burma lose their jobs. I know that a lot of Burmese timber is imported to Norway, but we don't hear anything about it, because a real boycott would threaten Norwegian jobs.
When NorWatch was in touch with Arve Varleite a year ago, he was playing a slightly different tune. At that time, the furniture factory in Burma had doubled its production of garden furniture and the number of employees had reached 400. Varleite thought that this had been caused, indirectly, by critics back in Norway.
- I have had to look for other markets after exports to Norway and some other European countries stopped. Now I'm selling garden furniture to countries like Israel and Argentina, who have a far longer summer season, Varleite said at the time.
Now, however, it seems the Norwegian furniture factory in Burma is noticing the effect of the consumer boycott. This is partly due to the disappearance of lucrative markets in Europe, but also to the junta's compensating lost export earnings from the West with increased trade with China.
- After Chinese buyers have secured most of the timber, little is left for the furniture industry. The huge pressure has at times caused Scansia to suffer from a lack of raw materials, and besides, timber prices have risen considerably, Varleite explains.
Scansia is still exporting furniture to Israel and Argentina, as well as to the US, Australia, New Zealand, and regional markets in Asia, but Varleite concedes that operating in Burma is generally difficult at the moment.
In November last year, the International Labour Organisation (ILO) called for sanctions against Burma. That was the first time the ILO had ever proposed sanctions against a member country, in reaction to Burma's failure to comply with ILO's recommendations on ending forced labour in the country.
- The ILO recommendation makes for even more uncertain future prospects for businesses in Burma. Scansia has therefore chosen to focus on our factories in Vietnam, Varleite says.
If other investors were to appear, Scansia would be interested in selling shares in the Burmese factory. According to Varleite, this depends on what offers might turn up, but Scansia will at any rate drastically reduce production in Burma in the time to come.
Back in Norway, the campaign against teak furniture from Burma has been led by the Rainforest Foundation and the Future In Our Hands. The two organisations have run a Garden Furniture Campaign in co-operation with the Norwegian Society for Conservation of Nature, Association for International Water and Forest Studies, The Environmental Home Guard, and (starting last year) the Consumer Council of Norway. The aim is to inform consumers about the origins of garden furniture on sale in the Norwegian market. Similar campaigns exist in Sweden, Denmark, Germany, and the UK.
NorWatch first turned the spotlight on Scansia Myanmar and the company's Norwegian customers in 1996 and 1997. According to the Central Bureau of Statistics, garden furniture has not been imported directly from Burma since 1997.
Timber from the junta
The Scansia factory buys most of its timber directly from the Myanmar Timber Enterprise (MTE), owned by the Burmese military junta. The MTE has a monopoly on forestry in Burma, and the income from timber sales goes straight into the junta's pockets.
Most of the timber is teak (Tectona grandis), a tree sort that has gone nearly extinct in the neighbouring countries. According to the World Resources Institute (WRI), Burma holds about 80% of the world's remaining naturally growing teak. After the military junta seized power in 1988, however, the annual rate of deforestation has doubled and teak now represents the country's second largest source of income - after illegal drug sales. The junta has a monopoly on timber exports, and WRI estimates that 1,500-3,750 tons daily cross the border to China.
Arve Varleite says he can confirm that huge amounts of teak cross the Chinese border, and indicates a figure of several hundred lorries of timber a day in the dry season. This places great strains on the resource base and contributes, according to Varleite, to raising the price of timber for Burma's furniture factories.
- China is rubbing its hands over the West's attempts to stop imports from Burma. The Chinese market is enormous and the Government will continue logging just as before. Instead of the regime being hit, the serious-minded furniture industry has to pay the price for the boycott calls, Varleite complains. He claims that Scansia contributes to breaking the vicious circle of developing countries providing raw materials to the West and he views the furniture industry as Burma's saviour.
- Most of the timber is exported to the neighbouring countries of India, Thailand, and China, and there are only a few furniture factories in Burma. A boycott of garden furniture from Burma will have zero effect on logging, Varleite says with a swipe at the environmental movement.
Varleite claims he set up Scansia Myanmar at a time when the Norwegian Government was giving Burma the same treatment as China, and foreign investment was considered an important means of influencing undemocratic regimes and developing poor countries. When the international community started calling for a Burma boycott, the factory was already running.
- If there is a pinch of honesty left among Norwegian politicians, powerful pressure should rather be put on China. That would be the most efficient way of paralysing Burma, since most of the Government's income stems from trade with the corrupt neighbouring country to the north-east, Varleite argues, before drawing the lines to the boycott of South Africa.
- It is naive to believe that a boycott of Burma would work the same way as the trade sanctions against the apartheid regime in South Africa. Whereas South Africa was dependent on international, overseas trade, and was therefore badly hit by the trade boycott, Burma can lean on China, who will never accept an international boycott of the military junta.
Varleite therefore believes - contrary to Burma's own democracy movement, as well as Nobel Prize-winning economist Amartya Sen - that trade sanctions are not a very efficient means of forcing reforms in Burma.
The recent talks between the junta and Aung San Suu Kyi, however, show that Burma's military leaders take the ILO's calls for sanctions very seriously.
- The only alternative
The UN, which has appointed a special rapporteur for Burma, has on several occasions condemned the gross violations of basic human rights. The international labour movement estimates that 800,000 Burmese may be suffering forced labour at any given time, particularly in agriculture and the logging industry.
The Norwegian Burma Council thinks politicians should adopt a ban on investments and trade with Burma, and points out that this is in accordance with the recommendations of Burma's own democracy movement.
- All other means than an economic boycott have been tried, says Christian Moe of the Norwegian Burma Council. - Based on what we know about Burma's economy, a boycott will first and foremost affect the regime's currency earnings, and not as in Iraq the civilian population. That is no guarantee that innocent individuals will not be affected, but the worst thing that could happen to Burma's civilian population is another ten years of military rule.
Moe points out that Scansia's furniture manufacturer in Burma gets its raw materials from the military regime's timber enterprise MTE. According to the ILO, the military is probably using forced labour in the production of timber.
- Any industrial enterprise can always argue local processing and local employment, but if it is processing unsustainable raw materials, possibly extracted by forced labour, and contributing to strengthen an oppressive rule, it does not benefit the people in the long run.
Arve Varleite strongly dislikes that the debate on the junta's use of forced labour is invoked in connection with his furniture manufacturing in Burma.
- My factory has nothing to do with this. I'm not saying that instances of forced labour - or voluntary community work, as it ought to be called - cannot occur in other places in Burma, but personally, I have never witnessed anything of the sort, Varleite firmly says.
When the situation in Burma was discussed in the Norwegian Parliament before Christmas, International Development Minister Ann Kristin Sydnes stated that the Government did not plan to introduce unilateral Norwegian sanctions. Sydnes did, however, repeat the Government's appeal against trading with the regime.
Thus, it is left to trade and industry to make sure that the calls for boycott are followed.
Scansia in Burma
The furniture factory Scansia Myanmar Ltd., which is located outside Burma's capital Rangoon, is wholly owned by the Malaysian company Scansia Sdn Bhd. The Norwegian furniture entrepreneur Arve Varleite controls about 70% of the shares in Scansia Sdn Bhd., while the rest is owned by Varleite's Scottish business partner. The factory buys Burmese teak from the timber company Myanmar Timber Enterprise, which is owned by the country's military junta, and exports garden furniture to countries such as Israel, Argentina, the US, Australia, and New Zealand, as well as to some European countries and parts of Asia.
The conflict in Burma
Burma is a country consisting of many different ethnic groups, ruled by the military junta SPDC (State Peace and Development Council). After a period of economic prosperity following the independence from Great Britain in 1948 until the introduction of a one-party state in 1962, Burma is now one of the world's poorest countries. In 1988, mass protests broke out against the ruling regime and a strong democracy movement arose, led by Aung San Suu Kyi. The rising was, however, put down by the military junta that seized power. The junta allowed free elections in May 1990, but did not hand over power when Aung San Suu Kyi's NLD party (National League for Democracy) won the elections. Suu Kyi has since spent long periods in house arrest and was not able to go to Norway to accept the Nobel Peace Prize in 1991. The military junta is oppressing the population with brutal means, and controls most foreign trade. The popularly elected NLD is therefore calling for an economic boycott of Burma.
"Norway is a country with such a double set of morals that I get sick. It's easy sitting back home, criticising the military dictatorship, while the little people in Burma lose their jobs. I know that a lot of Burmese timber is imported to Norway, but we don't hear anything about it, because a real boycott would threaten Norwegian jobs."
- Arve Varleite, Scansia Myanmar, January 9, 2001
"Based on what we know about Burma's economy, a boycott will first and foremost affect the regime's currency earnings, and not as in Iraq the civilian population."
- Christian Moe, Norwegian Burma Council, January 12, 2001
Norwatch Newsletter 1/01