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Asian companies invest in peace

group gathered around a model of the region
Experts from China, Cambodia, Myanmar, and Laos visit the resettlement site of a dam project to assess impacts on the environment and communities. Photo: AFSC

Foreign companies’ rapid development in the least developed countries of Southeast Asia has fanned the flames of several local conflicts during the past decade. Thanks to efforts by AFSC and its partners, companies are beginning to consult local communities before they build—and as corporations prioritize peace, local communities are benefiting.

When beginning many of Myanmar’s multi-million dollar hydropower projects, foreign investors have secured contracts with the government without consulting communities. Violence and even civil war has erupted around these projects, particularly those built in areas adjacent to cease-fire lines between armed groups.

Conflict is regularly exacerbated in this way by foreign investment projects in Southeast Asia’s least developed countries—Myanmar, Laos, and Cambodia—where companies from China, Japan, and South Korea have all advanced major infrastructure, real estate, and natural resource projects in the last decade.

Myanmar, Laos, and Cambodia stand to benefit from the influx of overseas investment—but there is work to be done to transform cross-border investments from drivers of violent conflict into forces for peace and well-being.

AFSC, in working closely with local civil society partners, has recognized that foreign investors start projects without considering local conflict dynamics.

Businesses from China (the top foreign investor in all three countries) generally follow Chinese foreign policy protocols that emphasize engagement with government. As a result, they have no interaction with civil society leaders and grassroots peace-builders. Governments dissuade companies from interacting with civil society in some contexts, especially Laos.

In Cambodia, foreign businesses dealing directly with government officials knowingly or unknowingly finance projects that displace communities and privatize critical natural resources.

“We never really thought about the relationship between our operations and conflict or that partnering with civil society might help us prevent conflict,” one senior Chinese manager based in Phnom Penh, Cambodia, told AFSC staff.

The lack of a strong legal framework and social and environmental safeguards have resulted in repeated displacement and conflict at the community level, particularly when land rights are concerned.

In reaction, many civil society organizations in Myanmar, Laos, and Cambodia have worked to advance public awareness campaigns and advocacy around development projects and displacement issues.

“We do not have any other option besides protest,” said one NGO representative. “Only by protesting can we get companies to listen to our concerns.”

AFSC found that few organizations protesting development had fair channels or the necessary know-how to engage companies in open dialogue. They could not help them analyze local contexts and build approaches to prevent conflict. Predictably, the lack of open dialogue built up tensions as development progressed.

The result is that Chinese managers often see local NGOs as obstacles to investments. “We have built roads and schools,” a Chinese manager in Cambodia said, “but these organizations…block roads, kidnapping workers or even attacking us.”

Building without considering the dynamics of local conflict increased the risk of violence for local armed groups and the businesses’ employees. And in one study that AFSC reviewed, researchers found that interruptions from conflict cost a $3 billion mining project about $20 million each week. These statistics quickly caught the attention of AFSC government partners in Northeast Asia.

Starting in 2011, AFSC began building partnerships and developing resources to open dialogue among businesses, civil society, and communities. In particular, representatives of the Chinese Academy for International Trade and Economic Cooperation and the Chinese Chamber of Commerce in Cambodia recognized the need for new and different approaches, and began working with AFSC and its local civil society partners in Southeast Asia.

Working with think tanks associated with the Chinese Ministry of Commerce, the National Development and Reform Commission, and the Ministry of Environmental Protection, AFSC has initiated cooperative research on a number of cases involving investments in conflict sensitive areas in Southeast Asia.

Representatives from these Chinese partner organizations, who have traveled to conflict hotspots, identified a key gap in company operating procedures: the lack of any tools or guidance with respect to conflict. On the basis of this finding, AFSC and partners in China and Southeast Asia have developed resources on conflict sensitivity for Chinese investors.

In September 2013, these efforts led to the Beijing New Academy of Transnational Corporations (NATC) publishing a book that is now helping to transform these otherwise unhealthy and dangerous dynamics.

The book, “Out of the Mine Fields and Blind Areas of Overseas Investment Security,” incorporates careful research on the relationship between business and conflict in Myanmar. It was developed in collaboration among AFSC staff; technical experts from the Corporate Engagement Program of CDA, a Boston-based peacebuilding organization; and a range of grassroots peace builders from Myanmar, Cambodia, and Angola.

The book’s prescription for preventing conflict: adopt a range of techniques to strengthen consultation and relationships with local communities. “During the initial stages of a project, many investors lack knowledge of the local situation, and their activities can unintentionally exacerbate conflict,” it states. “In extreme cases, a project might advance the interests of one party in a way that can transform latent social cleavages into violent conflict.”

Published in Chinese by the China Economic Publishing House, the book offers Chinese companies guidance on how to engage in conflict-sensitive investment, emphasizing the importance of building strong relationships with grassroots actors.

AFSC and NATC have shared the book with business leaders in Cambodia and Myanmar. Some Chinese businesses in Cambodia have already begun to apply the principles by training staff in conflict analysis and business guidelines. One company manager based in Cambodia reported back that it had established a grievance department to accept complaints from communities, and sought AFSC’s assistance in organizing meetings with local NGOs and community members in Cambodia.

New partnerships like this are helping AFSC’s East Asia Quaker International Affairs Program to promote conflict-sensitive approaches to business across Asia and transform foreign investment into a force for peace.

At an AFSC-facilitated meeting in 2013, a Myanmar NGO participant noted, “We can help Chinese investors and the general public understand the risks of operating in Myanmar, and the need for social and environmental protections…however this will mean finding a way to do things differently.” With AFSC’s help, companies and NGOs are finding ways to do this.