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Newswire: Burma Investment Dilemmas

 Foreign funds weigh ethical dilemmas over Burma
    By Caroline Brothers
    LONDON, May 15 (Reuter) - Foreign investors said on
Wednesday allegations of human rights abuses would not put them
off investing in Burma, arguing that contact, not isolation,
would help bring about change.
    But most said they would not like to be publicly associated
with the military-ruled country, and said allegations of slavery
and child labour would slow down capital inflows.
    "We take the view when judging a political situation, you
would definitely back away from any market where that sort of
activity is rife," said Kevin Smith, fund manager and a director
of the Asia desk at Foreign and Colonial.
    "It would certainly slow down flows of money into the
    Most foreign fund managers say Burma, the subject of a
hard-hitting television documentary broadcast in Britain on
Tuesday, does not figure very highly in their list of
pre-emerging economies.
    Daiwa Securities Co has been negotiating with the Burmese
government to set up a stock market in Rangoon, but until that
is established most investment will be either direct or via
joint ventures with local companies.
    But fund managers say they are keeping watch on the country
as potentially the next high growth area, following in the
footsteps of Thailand, Taiwan and Korea.
    The TV programme, made by award-winning film-maker John
Pilger, showed footage of the 1988 military crack-down on
pro-democracy protesters and examples of child labour.
    Asia fund managers said association with Burma would be bad
publicity for most foreign investors. "An association with Burma
is not desirable for any fund manager," said one, who declined
to be named.
    He said the country had great development potential, but
added his fund had no immediate intention of investing money
there. "We have to look at it from an investment point of view
on behalf of our clients," he said.
    Kerry Investment Management, however, set up the
Burma-dedicated Myanmar Fund in October 1994, attracting
interest from global institutional investors.
    It currently has $47 million invested in the pre-emerging
economy, chiefly in hotels, industry, paper and property.
    Fund manager Richard Neville said involvement was the best
way to encourage change. "If you're trading and investing with a
country you have much more leverage," he said in a telephone
interview from Hong Kong.
    "Whether it's the tourist dollar or foreign investment or
trade, the rapport would be more substantial and your opinion
would be considered more substantially (if you are involved),"
he said.
    Burma's Asian neighbours have largely followed a policy of
non-interference. But Bangkok Bank, Thailand's largest, said on
Wednesday that investment there was worth considering.
    "Although investing in Myanmar (Burma) has its risks, it is
still a place of considerable interest," it said.
    But it echoed foreign fund managers in describing political
risk as having a negative effect on investor confidence.
    Sean Kelly, Asia fund manager at Gartmore Investment Ltd
which has some 2.0 billion pounds ($3.03 billion) invested
across Asia, said other pre-emerging economies provided more
immediate prospects for investment.
    "Vietnam is probably in front of the queue," he said.
    Foreign and Colonial's Smith said Burma had to effect
considerable change before investors would really move in.
    "It has got to change substantially in terms of market
forces, democracy, and opening up the economy," he said.

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                 |     Shimojima Ichiroo      |