Published in Mizzima Business Weekly on 13 March 2014

Josephine Price, director of Anthem Asia

Josephine Price, director of Anthem Asia

Josephine Price is a director of Anthem Asia, an independent investment group which was established two years ago and adheres to the United Nations’ principles of responsible investment. Anthem Asia made its first investment in Myanmar in September last year – a US$1 million office rental firm called Hintha Business Centers. Ms Price was originally a lawyer and prior to cofounding Anthem Asia, she spent three decades working in investment in frontier markets across Asia. She talks to Mizzima Business Weekly about why sustainable investment matters in Myanmar.

What exactly is “responsible investment”?
There’s often a lot of jargon thrown around in terms of being “responsible” and “sustainable” when it comes to investing. So let’s start with what we mean by “sustainable:” businesses that create value within the community in which they’re investing and that are sustainable in the long term. For us its’ a commercial approach – we’re not an NGO. We want to make money, but we want to make it responsibly.

Sometimes people assume that sustainability means that you reduce your investments return. We believe that gradually, people will start costing their environmental and social impact into their investment, which means that investments which are sustainable should have a higher long term value, because the risk profile is reduced. It’s not free to take things from the earth and it’s not free to pollute. Well, it may be now, but it won’t be forever. So having a sustainable investment is a better business model because the risks are a lot lower.

This sounds like the idea of the “triple bottom line,” a phrase that was coined in 1994 by British consultant John Elkington. Is your concept about factoring in more than traditional notions of profit?

Sort of – it’s one of the benchmarks for measuring the environmental, social and corporate governance (ESG) of a company. However while there are hundreds of academic papers on how this is achieved, when you look and who is doing it and how, you find that the practical demonstration on the ground is much less frequent than academics seem to suggest.

Could you provide an example of a successful case study of responsible investment?

In the commodities sector, there are some big players working with farmers to improve crop yields and to improve how their products are being purchased so that farmers get a better deal. Usually a farmer is in a vicious cycle of borrowing to buy seed at an appalling interest rate and then has to sell their seed to someone who takes a big cut as the middle man. This leaves farmers in a cycle of poverty. So some of the big commodity companies have been working to improve yields and trying to buy crops directly from farmers, at fixed prices. This is more sustainable because farmer become better educated about their business and there’s a more effective use of fertilizer and so forth – you create a much more beneficial cycle. There’s been a lot happening across Southeast Asia in working more sustainably with farmers.

One of the sector’s Anthem Asia works in is tourism – what’s your take on Myanmar’s tourism industry?

At this stage we’ve had limited experience in tourism but we believe it’s going to be a great sector. What will be difficult is how to manage to the large volume of tourists that will be coming without destroying the environment. We like to work with those who are working with local partners and are sensitive to local communities. We also believe that tourists like it. I think this makes commercial sense and it’s more sustainable: the entire tourist dollar shouldn’t be leaving Myanmar and with little or no benefits going to the local community.

We held a workshop two weeks ago and have been talking to members of the government along with development agencies about how to cooperate on a range of issues, such as conserving the environment and providing better training for staff in the tourist sector. I think the government is very willing to work in cooperation and is trying to get a working group together, which is positive.
Obviously, plonking down big hotels in the middle of nowhere has a lot of unfortunate consequences. But just to reiterate, we aren’t an NGO – our mission is to do what we do right, to try to no do no harm. We’re not out to change the world but to change the little bit that we deal with.

How do you convince potential clients to do the right thing in a country such as Myanmar, where it may be somewhat easier to simply go down the “pure profits” path?

It’s no different from anywhere in the world – we find clients through networking. We tell people what we do, and I actually don’t believe it’s a hard sell here in Myanmar. There’s a culture of giving back to the community, whether it’s by setting up a schools or making merit – you should try it in places like China. Here, I think there’s a lot of sensitivity to the idea of investing sustainably. However do bear in mind that we target small to medium business, not huge, complicated, well-connected businesses.

How does Myanmar as a frontier market compare to the likes of China, Vietnam and Indonesia, when they were first opening up to foreign investment?

Many of the challenges are similar – issues such as a lack of rule of law, a limited understanding of how contracts work, terrible accounting, very few people are paying tax… But what’s unique about Myanmar is that political reforms are coinciding with political ones. China opened up to business without opening up politically, which was the same case in Vietnam. Indonesia opened and then had its revolution. So the fact that the two things are coinciding here is a good thing, but it’s also very complicated because of the regulatory uncertainty – there’s ongoing political debate at the same time as trying to work out new commercial laws.

A recent report by Reuters described Myanmar as the poorest country in Asia after Afghanistan. When do you believe it will become a middle income country?

Not soon. At least 10 to 15 years. And remember that being “middle income” is still quite poor. Myanmar is starting off with such a low base. However I’d also that due to the fact there’s a lot of black money here, the size of its economy is very difficult to gauge.