Building new opportunities in Burma's Karen State

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Media captionMany local residents travel long distances to work in Rangoon or Thailand

Hpa-an, the little capital of Kayin, or Karen, State is set among jagged, green limestone hills along the banks of the Salween River.

It's a glorious location and a strategic one too - about 60km (37 miles) upstream from the port of Moulmein on the Andaman Sea, and around 150km from the Thai border.

There's plenty of traffic in the early morning around the bus stop, close to the old clock tower in the town centre.

But most of the people are leaving, not arriving; young Karen women, squeezed into converted pick-up trucks, heading to Thailand to work in garment factories or as domestic servants, and men transferring from the overnight bus from Rangoon, off to work on construction sites in Bangkok.

For all of Kayin State's promising potential, the only jobs there have been in the antiquated and badly-paid agricultural sector.

That is not just due to the chronic under-development which afflicted all of Burma under military rule. Much of the state has also been a war zone for the past 60 years, its forested frontier areas battlegrounds between government forces and Karen insurgents.

The border with Thailand has offered the only economic lifeline; as an escape to employment, however menial, or as a route for smuggling. Men who did not take those choices often ended up fighting, either as insurgents for the Karen National Union (KNU) and other splinter groups, or as soldiers for the Burmese army.

Fifty-year-old widow Hla Win is typical. Her husband was a government soldier killed in battle 25 years ago. She is waiting in the back of a pick-up truck for the rough, six-hour ride to Myawaddy. From there she will walk across the border to the Thai town of Mae Sot, and take a bus to a smaller town where she works as a house-maid for around $100 (£61) a month.

"If possible of course I would love to come back and live here," she said. "But I don't have a job, I don't have a house - where would I live?"

'Local jobs needed'

But a few kilometres outside Hpa-an, the sound of hammering, drilling and sawing heralds the promise of a new era in Kayin State.

Image caption Investment is starting to trickle in as Burma continues to reform

In an area of scrubby ground that was still subject to occasional skirmishes between the army and the KNU just a year ago, the foundations are being laid for Hpa-an's first industrial estate. The very first factory opened in early November, employing 150 local people.

The man who built it is U Myint Htay, a Burmese entrepreneur who founded a garment manufacturing company, UMH, in 1996. He already has two garment factories operating in Rangoon.

The story of the Burmese clothing industry is closely tied to the country's recent political journey.

After the mass uprising against the eccentric, isolationist military regime of General Ne Win in 1988, which was brutally put down, the ruling generals realised they needed foreign investment to end Burma's dire poverty, and they changed the law to make this possible.

With cheap labour, and a location close to global transhipment ports like Singapore, clothing was an ideal first step, and offered investors an alternative to China.

Companies, mainly based in Hong Kong and South Korea, built factories doing the simple tasks known in the industry as CMP (cutting, making, packing), where the materials were all imported, and simply sewn and then re-exported, mainly to Europe and the US.

At the industry's peak, in the year 2000, there were around 300 garment companies in Burma employing around 300,000 workers.

But the imposition of US and EU sanctions from 2003, together with consumer boycott campaigns, hit the industry hard. Some went out of business. Others, like UMH, managed to switch to new Asian markets. Today U Myint Htay makes garments exclusively for the Japanese market.

Investing in Hpa-an would have been unthinkable without the political changes in Burma over the past 18 months. The new government has launched initiatives to end the ethnic conflicts, which have continued since independence in 1948, resulting in a ceasefire a year ago, and peace talks between the government and the KNU.

It is still a very uncertain environment in which to invest more than $1m. But U Myint Htay sees two strong reasons to do so.

"I want the people of Kayin State to be able to find jobs here, close to their families, rather than go across to Thailand where they do not have real security," he said. But he also sees the potential of Hpa-an's geographical position.

Image caption Young women are being taught the basics of garment production

He has opened a sewing school to train local people who have never done any kind of industrial work before. But he is also benefitting from workers choosing to come back from Thailand, bringing their skills with them.

Among the women busy at their machines in his factory was 22 year-old Myat Weet Yeewai, who used to work with her two sisters at a factory in Mae Sot. She said she was much happier now she could live close to her mother in Hpa-an. Her pay is lower than it was in Thailand, but so are her hours.

The UMH factory in Hpa-an is producing very basic white clothing, for Japanese restaurants and hospitals, although U Myint Htay says their standards are very high. His margins are very tight, and shipping out of Rangoon port is expensive, because its facilities are limited. Shipping through Thailand, even with bad roads, saves him significant costs.

'Wait and see'

Another sign of the changes in Kayin State is the KNU liason office in Hpa-an, where representatives from the insurgent group can interact with those of the Burmese government. Its establishment in September has been a source of dispute inside the KNU, some of whose factions still do not trust the government.

Inside I met the deputy head of the office, Captain Mann Thein, who has been fighting for the KNU in the jungle since 1976. Now, looking slightly uncomfortable in his civilian surroundings, he is giving the new government some credit for its changed stance.

"I can see the government is doing a lot for our state, bringing us development," he said. "But we still have to wait and see how far this peace process will go."

Burma's unhappy history inevitably preaches caution. But the sight of rows of humming sewing machines in what, until last year, was a battleground, is reason enough to believe that life for the people of Kayin State is improving.