06.11.13

Health Implications of Coca-Cola Investment in Myanmar?

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Sean Havey / The Irrawaddy

Sean Havey / The Irrawaddy

This post was written by Benn McGrady, Project Director of the O’Neill Institute’s Trade, Investment, and Health Initiative.  It was originally published on the O’Neill Institute’s Trade, Investment, and Health Initiative Blog.  Any comments or questions about this post can be directed to bm363@law.georgetown.edu.  

To much fanfare in the US media Coca-Cola has announced approval of a joint venture with a local bottler in Myanmar to resume bottling coke in the country. The fanfare might be explained partly by a photo of Madeleine Albright chugging a coke at an inaugural ceremony there. Albright’s endorsement gives Coca-Cola some great political cover against those who might criticize it on human rights grounds because she played a role in the design of trade and other sanctions against earlier regimes. Christian Science Monitor even ran a well placed article about how Albright has been removed from a ‘blacklist’ in Myanmar.

The Coca-Cola investment is a great case study in the political economy of foreign investment and health. Myanmar wants to open itself to foreign investment and Coca-Cola has seen the opportunity to seize market share before its competitors beat them to a market of 60 million consumers. The investment comes with some benefits for Myanmar in the form of an estimated 22,000 jobs and a three-year corporate social responsibility program targeted at assisting women improve their financial literacy. In this context, and with human rights, ethnic conflict and other issues overshadowing health, the possible health impacts of Coca-Cola bottling in Myanmar barely rate a mention.

The core concerns of the public health community ought to be that the prevalence of soft-drink consumption will increase and that total consumption by existing consumers may also increase (ultimately leading to increases in morbidity). The Coca-Cola announcement made it clear enough that market expansion is a goal when it stated that “[l]ocal teams took to Yangon City this week for a grassroots sampling campaign, refreshing many people with their first-ever sips of Coca-Cola.” Notably, the expansion of the market has begun with full calorie versions of coke and sprite.

What role does law play in this?

  1. In its quest to attract foreign investment Myanmar chose not to refuse the investment on health grounds, which is possible under its new investment law.
  2. Myanmar has been offering five-year tax holidays to foreign investors. If offered to Coca-Cola this would further reduce production costs, permitting the company to stimulate demand through low prices.
  3. These and any other incentives offered by Myanmar may limit policy space under Myanmar’s international investment agreements or even under contracts (depending on how Coca-Cola has structured its investment). In short, we should not expect to see a new excise tax on soft drinks any time soon in Myanmar. Whether the government has legally tied its own hands in other ways is not apparent because interactions between the government and investor are not transparent. Either way, firms that move quickly like Coca-Cola are protected from regulation because the government wants to use them as examples of satisfied foreign investors.

None of this is intended to comment either way on whether Myanmar should have accepted the investment. It would be interesting to know, however, on what terms the investment was made and how that might affect policy space for public health interventions to address the harms associated with Coca-Cola products. The classic scenario in cases like this is policy incoherence characterized by investment authorities having little or no concern for public health.

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The views reflected in this blog are those of the individual authors and do not necessarily represent those of the O’Neill Institute for National and Global Health Law or Georgetown University. This blog is solely informational in nature, and not intended as a substitute for competent legal advice from a licensed and retained attorney in your state or country.

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