Fund giants warn against Burma trade

Burma's economy lags behind its neighbours

Eight investment giants, with assets of £400bn between them, have warned against the risks of investing in Burma.

The eight said firms should think carefully about doing business in Burma "in the light of the risks that such activity poses to shareholders".

Burma has been spotlighted by human rights groups since 1990, when the military set aside an election victory for the opposition National League for Democracy (NLD), refusing to permit it to govern.

Since then, opposition leader Aung San Suu Kyi has spent altogether more than six years under house arrest and faced other restrictions.

Campaigners accuse the military regime of using forced labour and other human rights abuses.

'Justify involvement'

The move will put pressure on companies such as UK exploration firm Premier Oil and French oil major TotalFinaElf, which have operations in Burma.

The list of big name companies that have pulled out of Burma includes soft drinks giant Pepsi, fashion clothing label Tommy Hilfiger and United States oil group Texaco, according to the Financial Times.

The investment funds want firms to "justify their involvement" in Burma, though they do not call on them to quit the country.

Firms operating there should "adopt responsible business practices" which do not contribute to human rights abuses and should publish risk and social impact assessments, the investment funds say.

The funds hint that those who do business in Burma are likely to find themselves left out of investment portfolios:

"Companies operating in unstable political climates can be exposed to loss of shareholder confidence," the funds say.

"In the case of Burma, there is also the possibility of a democratically elected government returning to power and penalising companies that supported the military regime".

There are very real risks for companies who do business there, John Bray, from Control Risks, told the BBC's World Business Report.

"In a country where the government is not answerable to a democratic constituency, it is capable of making somewhat arbitrary decisions...Commercial law is not very well developed," he said.

Top money managers

The eight include Europe's second biggest pension fund - the Dutch firm PGGM - and two other pension groups, the Co-operative Insurance Society and the Universities' Superannuation Fund.

The other investment firms in the initiative are Henderson Global Investors, Jupiter Asset Management, Morley Fund Management, Friends Ivory & Sime and Swiss group Ethos Investment Foundation.

"We cannot be written off as lefty fund managers as we £400bn of investment under our control," Rob Lake of Henderson Global Investors told the Guardian newspaper.

But Premier Oil's chief executive Charles Jamieson noted "They are not asking us to pull out, just to have a strategy in place for properly managing risk, and we have that".

Premier has given human rights training to Burma's military, police and home affairs ministry and "is at the forefront of corporate social responsibility", he told the Guardian.