By Jason Tower
In Asia, companies are learning how to avoid inflaming conflict.
In 2007, public protests erupted in the Koh Kong province of Cambodia. Community members were demonstrating against China’s Union Development Group (UDG)’s multibillion-dollar deal with the Cambodian government to develop a new city in the impoverished province.
Although the Cambodian government praised the project, local communities had never been consulted by the company. That’s despite the fact that more than a thousand families would be affected—and in many cases, displaced—by the massive development.
Tensions worsened when it was discovered that funds marked for compensating and resettling families had been mismanaged by local officials, with large sums missing. And the dispute continued to escalate over the next several years, as UDG failed to share project plans—or even talk—with local communities. At least one protest turned violent when armed security forces clashed with families.
The Koh Kong project is just one of many well-documented examples of how international business operations—which have the potential to benefit local communities—can also be a catalyst for conflict and violence.
AFSC’s Business and Peace Program is trying to change that. In vulnerable communities in some of the poorest countries in the world, we’re applying peace-building strategies to transform the way communities, governments, and businesses interact. And we’re finding that this approach can improve community rights, support justice, and increase economic growth.
In dollar terms, foreign direct investment in most countries outweighs aid spending by a ratio of seven to one. That is a powerful force for economic development.
But given its tremendous economic footprint, these business investments also present tremendous risk, especially in places where the state and political institutions are weak—as was the case in Koh Kong.
International corporations can use the help of civil society groups like AFSC. An AFSC study found that Asian companies largely fail to accurately measure the cost of conflict. They do not devote sufficient funds to building relationships with local communities, instead relying on governments, even when those governments have no capacity or interest in representing or resolving community problems. Our study also found that companies lack staff and internal structures to prevent conflict in their operations.
The result is an ad hoc approach—companies fighting fires as they emerge, often at great cost to both community and company.
Without peaceful intervention, broken company-community relationships can fuel vicious cycles of violence. Once tensions start, companies increasingly view the community as a threat and deploy securitized responses, such as armed guards, more walls, or working through local authorities to police neighboring communities.
As the relationship further deteriorates, open violence can break out. That’s what happened in the case of the Wanbao Letpadaung mining operation in Myanmar in 2013. Community members protesting company practices camped out in front of the main gate of the operation for several days, until security forces violently cleared the crowd. In another example, community members and representatives from local nongovernmental organizations (NGOs) in Cambodia have been repeatedly detained by authorities, which recently forced the shutdown of several human rights organizations working to stop hydropower and sugarcane projects.
Few peace-building organizations work with investing corporations to prevent conflicts like these—or to explore how they might contribute to peace. And few nongovernmental organizations have a deep understanding of business administration or try to engage the corporate sector.
“We tried what no other group attempted—to talk to the investor about the problem.”— Pouy Keang, Business and Peace Coordinator
Many civil society organizations do try to address these issues by raising community awareness of rights and training government officials. While important, those efforts have not addressed the underlying conflict between company, community, and government.
AFSC’s work shows signs of breaking cycles of violence and oppression—and making positive contributions to peace. Our Business and Peace Program educates businesses on the costs associated with conflict. We also show how strong relationships with local communities and contributing to peace-building initiatives benefit not just the local population, but also the company’s bottom line. It’s a wise investment.
Today, the Koh Kong project shows how progress can be made. In 2013, AFSC helped facilitate quiet dialogue with policy advisors from the Chinese Ministry of Commerce and assembled a fact-finding team, including staff from the Chinese Ministry and local NGOs, to investigate restoring peace and justice to Koh Kong. The findings led to a high-level seminar for 32 Chinese companies in Cambodia, including UDG, on preventing conflict in overseas investment projects. Representatives learned a lot about the costs businesses incur when they don’t assess community needs.
UDG also asked AFSC and local partners for help in building relationships with local communities. With AFSC’s guidance, UDG has opened direct dialogue with communities, made fairer its process for compensating residents who relocate, and is exploring partnerships with NGOs to improve community conditions and mediate outstanding conflicts created by years of overlooking local concerns.
We’re preparing further technical resources that can help companies see the value of such efforts in reducing costs. And we’re training large groups of community members and organizations in Cambodia and Myanmar on how to effectively engage businesses.
As my colleague, Business and Peace Coordinator Pouy Keang, observed: “We tried what no other group attempted—to talk to the investor about the problem. It turned out that they had no information about local groups, and no resources to build local relationships. They now understand that they cannot have security if the local people are missing security.”
AFSC’s work to build bridges between business and communities has had an impact, but we know that this is a delicate process, requiring patience, resilience, and long-term financial support to ensure sustainability. We hope to build on this success throughout Asia—and beyond.