A.P. Moller-Maersk Group

Loading....

Loading....

Loading....

Loading....

Loading....

Full text

(1)

A.P. Moller-Maersk Group

The case describes the due diligence process by which A.P

Moeller-Maersk Group prepared their market entrance in Myanmar. Being

aware of major risks, A.P Moeller-Maersk Group build a coalition

with well renowned human rights organisations, government and

businesses to use UN Guiding Principles of Human Rights as a

framework for managing risks while building business and enabling

trade to grow in Myanmar.

Following speedy reforms and the lifting of the EU sanctions, Myanmar, home to about 60 mio. people, was opened for business in 2012 with companies from the US and Europe. Today a lot of companies are eyeing opportunities in Myanmar, but are equally wary of risks in a market, which are the focus of intense attention from international NGO's and the media.

After a process of three years, A.P. Moller-Maersk Group1 received its permanent license to

operate container business activities in Myanmar by February 2014. The business in Myanmar will encompass three brands which are Maersk Line, MCC Transport and Safmarine. The agency in Yangon is officially opened by May 2014 and is headed by My Therese Blank who has been working for Maersk in Myanmar since the last two years.

To do or not to do business in Myanmar?

The presence of Maersk in Myanmar goes back to 1992. Maersk established itself in the former Burma (now Myanmar) and is represented with Maersk Line, MCC Transport and Damco through the agency Win Trade. During the years under the harsh military junta and the comprehensive sanctions from both the US and EU, the company has kept a very low profile - they have basically been present in Myanmar without conducting any major business activities. Until 2011 the overall assessment from the Group was to reject any requests for conducting business in Myanmar. The risks of violating human rights were considered too high in the context of the very sensitive political environment in the country.

After the country was opened for business in 2010 for the US and EU, they have subsequently eased their sanctions. Companies within Maersk started to eye business opportunities since they were approached by more and more international customers who were requesting containerised trade facilitation.

With the launch of the new UN Guiding Principles in 2011, Maersk began reconsidering their approach to human rights and how to manage risks. The company asked themselves whether it could be possible to turn the previous approach to risk management upside down? Instead of a doing-no-harm approach, Maersk decided to investigate how to implement the UN Guiding Principles on Human Rights and to use them as a framework for a mere doing-good approach by enabling a sustainable development in Myanmar.

The decision was made: Yes, we will do it! Human rights and building a coalition

In 2011, Maersk was considered as a first mover among multinational companies in regard to implementing the newly launched UN Guiding Principles on Human Rights. There were neither any ready-made answers nor any how-to-do-tools. Maersk had to co-create answers and solutions in partnerships with leading human rights organisations, networks and governmental bodies. And that's what they did.

During 2011 and 2012 several meetings were held with the Global Business Initiative, the Danish Institute for Human Rights, the Institute for Human Rights and Business, the Danish Ministry of Foreign Affairs, a number of leading multinational companies, Myanmar

1 Hereafter named "Maersk"

(2)

government bodies and EU bodies.

Based on all these discussions and collection of information Maersk issued an internal risk-guide based on the UN Guiding Principles on Human Rights. The risk risk-guide advises Maersk companies on how to handle material risks related to their industry. Compliance to sanctions, labour rights and corruption were identified as the major risk areas in terms of negative impact. In practice Maersk in Myanmar has to screen business partners in relation to the US Sanctions, to check that own employees live up to internal policies and finally that suppliers have procedures in place to reduce negative impact and that their suppliers can prove to do the same.

In 2012 the Danish Institute for Human Rights and the Institute for Human Rights and Business started to lay the foundations for a resource centre on responsible business in Myanmar. The purpose of the resource centre is to guide companies on responsible business conduct in Myanmar. As part of this initiative representatives from Maersk Line, Damco and APM Terminals participated in a fact-finding mission to Myanmar in March 2012. This included meetings with NGOs, local companies and diplomats. In July 2013 "The Myanmar Centre for Responsible Business" was established and ready to begin its work with support from a number of European countries among others Denmark, Norway and UK.

Through this project Maersk is able to fulfil several of their sustainability ambitions: they can build their own business, mainly for Damco, APM Terminals and Maersk Line, mitigate risks and help their customers do the same. Finally, they can support the opening of one of the world’s last untouched markets helping Myanmar gain access to global trade through improved infrastructure.

Market entry in Myanmar - how to?

The market entry has very much been a step-by-step approach for Maersk. Even though it could have been tempting just to rush in due to a promising growth rate in container trade of 17 % over the last five years and a huge interest from global customers, the strategy has been to do things right from the beginning and to ensure business to be successful in a long-term

perspective.

After the decision of market entrance was made Maersk has sent teams of high-level specialist to Myanmar during 2012 to review business opportunities, business risks and how to mitigate legal framework and tax regulations. Later on in 2012, the present Country Manager was sent to conduct a three-month in-dept market entrance research. A significant part of this research was an in-dept report on major risks related to sustainability and compliance.

In view of the fact that legal framework is changing rapidly and since reliable information is rather scarce, the best method to assess the situation is to go and see by yourself. It is necessary to talk to people at all levels and reach your own conclusions. It is of utmost importance to bee involved in day-to-day business and to stay in Myanmar for a while in order to really

understand the risks and opportunities related to sustainable business conduct. Screening of local business partners

With a new sustainability strategy adopted in 2014, the Group’s sustainability vision is to aspire to unlock growth for society and A.P. Moller-Maersk through a strategy based on three pillars: efforts to reduce barriers to trade, investment in education and improved energy efficiency of supply chains.

In terms of Maersk in Myanmar the first and foremost initiative is to be a responsible business partner. It means that all suppliers and customers undergo a screening process by Maersk. Even though EU and US trade sanctions have been lifted there are still business entities and persons who are sanctioned by the US Treasury in Myanmar. To ensure compliance with international regulations the internal risk-guide, as mentioned above, is integrated into Maersk's local business processes in Myanmar to ensure that customers and suppliers are acting as responsible business partners. The screening process is first and foremost based on the US Sanction tool - a comprehensive list of 500 pages of persons and business entities sanctioned by the US Treasury.

(3)

Transportation of military cargo and precious stones are among the commodities which are not accepted and therefore not allowed to be transported in a Maersk container.

Among the sanctioned entities is one of the largest container terminals in the Port of Yangon due to the owners’ involvement in illicit activities. It is the firm decision of Maersk not to conduct business with this particular container terminal until the sanctions are lifted. Sharing knowledge and expertise with business partners in Myanmar

One of the main advantages of Maersk as a worldwide conglomerate is their unique experience and expertise within containerised trade. It is not just about being a role model for

responsibility, it is also about changing and inspiring local partners to do the same and thereby be better equipped to enter the global market economy.

In order to enable trade Maersk in Myanmar frequently provides knowledge, expertise and technical support to suppliers and to global and local customers.

The Maersk Line representative is commonly assisting global customers with market entry information as well as knowledge about opportunities and challenges in regard to doing responsible business in Myanmar.

On the local level Maersk is educating local customers and suppliers in areas such as cargo handling, packaging of sensitive commodities, efficient depot planning, container stacking and installation of "Garment on Hangers" in accordance with international standards. Moreover Maersk are pioneers of an E-com solution making it possible for customers in Myanmar to book containers online.

In Maersk’s business safety is at the core and in Myanmar, Maersk is working closely together with local suppliers to increase knowledge and awareness in order to promote a safe working place at the terminals and depots. Sometimes these requirements are met with a lot of resistance. However, the operational staff was among the first to wear safety equipment while working at the terminal and the depot.

All these are concrete and practical initiatives and tools that improve supply chain stability, increase efficiency, reduce costs for local business and strengthen the competitiveness of Myanmar on the global market.

On the horizon: Further enabling global trade in Myanmar

Maersk opened its own agency in Myanmar by May 2014. Besides increasing their business activities and integrating them to Maersk's global blue print, it provides the company with a far better position in terms of being in control over all business activities and to ensure compliance with company policies and local regulations. It gives an even better opportunity to work closely with customers and suppliers to improve standards and thereby increase global

competitiveness.

95 % of all Myanmar’s export and import of goods are transported through the Port of Yangon. Through a stronger presence in Myanmar Maersk is to an increasing extent able to connect Myanmar to all the corners of the world through their global network of transportation. However, the narrow size of the river and significant tidal and draft restrictions make Yangon one of the most challenging river ports in the world as vessels are only able to berth during daylight hours and with a limitation of the vessel size of only 167 meters.

To really enabling trade Maersk is eliminating trade barriers, which is one of the three pillars in the new Maersk Sustainability Strategy. The company is also exploring the opportunity of launching a project together with the Myanmar Port Authority to increase vessel size and vessel draft to improve market accessibility, reducing cost of transportation as well as reducing CO2 emissions. If this project will be realised it is a considerable contribution of Maersk to the global competitiveness of Myanmar and thereby creating value by contributing to sustainable development and growth.

(4)

Fact boxes

Company profile

The A.P. Moller - Maersk Group is a worldwide conglomerate with core focus on shipping and energy industries.

A.P. Moller – Maersk Group started as the shipping company Dampskibsselskabet Svendborg, founded in 1914 by captain Peter Mærsk-Møller and his son Arnold Peter Møller in Svendborg, Denmark.

Maersk Group has four core businesses, which include Maersk Line, APM Terminals, Maersk Oil and Maersk Drilling. Through these companies and several others, the group employs roughly 89,000 people, and generated 47 billion US dollars in revenue in 2013.

Facilitating global containerised trade

The A.P. Moller - Maersk Group is the world’s largest container shipping company. Together with the container terminals and logistics businesses the company handles a large share of the world’s containerised trade. The A.P. Moller - Maersk Group is the parent company of APM Terminals, Damco, Maersk Line and Maersk Container Industry.

Supporting the global demand for energy

The A.P. Moller - Maersk Group supports global energy needs through the exploration, extraction and transportation of oil and gas. The focus is on developing and providing safe and high-efficiency drilling and oil production services as well as building experience in operating in some of the most challenging environments. The A.P. Moller - Maersk Group is the parent company of Maersk Supply Service, Maersk Oil, Svitzer, Maersk Drilling and Maersk Tankers. Sustainability Strategy

The objective of the Group’s sustainability strategy for 2010–2013 was to integrate

sustainability into business processes and systems through a systematic approach. The purpose was two-fold: to mitigate and manage risks, and to strengthen the Group’s competitive

advantage.

With a new sustainability strategy adopted in 2014, the Group sustainability vision is to aspire to unlock growth for society and A.P. Moller-Maersk through a strategy based on three pillars: efforts to reduce barriers to trade, invest in education and improve energy efficiency of supply chains.

Timeline

1992 The A.P. Moller - Maersk Group establish itself in Burma (Myanmar) through the agency Win Trade.

2011 Meeting with Global Business Initiative to conduct an informal discussion with member companies on the implications of business and human rights in regard to Myanmar.

2011 The A.P. Moller - Maersk Group decides to serious investigate how to plan a market entrance in Myanmar. A.P. Moller - Maersk,

Group Sustainability meets with The Danish Institute of Human Rights and Institute for Human Rights and Business.

2012 Meeting with The Danish Ministry of Foreign Affairs to discuss how Danish businesses can contribute to a sustainable development in Myanmar. Discussions amongst European countries on how to ease EU sanctions against Myanmar.

(5)

2012 The A.P. Moller - Maersk Group, The Danish Institute of Human Rights, Institute for Human Rights and Business participate to a high level roundtable discussion in London to identify how businesses can contribute to sustainable development in Myanmar and minimize negative impact on Human Rights.

2012 A.P. Moller - Maersk Group Sustainability issues an internal risk guide based on UN Guiding Principles on Human Rights.

April 2012 Fact-finding mission to Myanmar with the participation of The A.P. Moller - Maersk Group, The Danish Institute of Human Rights, Institute for Human Rights and Business. Decision to establish a resource centre to support businesses in responsible business conduct.

June 2012 Maersk Line stations a project with participation of 12 internal specialists from the Maersk representation in Thailand to study the local market in Myanmar.

September 2012 Maersk Line and MCC Transport station Owners Representative in Yangon to develop business and enable trade.

February 2013 Approval by the Board to proceed with perspective of Maersk Line and MCC Transport to open a representative office.

July 2013 MCC Transport launches A.P. Moller - Maersk Group' s first vessel in Myanmar. Damco, a separate company within the Group receives permanent license to operate its own agency in Myanmar. October 2013 Director to The Myanmar Centre for Responsible Business is

appointed and the centre starts operating. The centre is co-founded by UK, Norway, Sweden, Denmark, and Netherlands.

February 2014 The A.P. Moller - Maersk Group receives a permanent licence to operate in Myanmar.

May 2014 The A.P. Moller - Maersk Group opens office in central Yangon, Myanmar

Three good pieces of advice

1. Go and see for yourself - talk to people at all levels and draw your own conclusions. You need to bee involved in day-to-day business and to stay in Myanmar for a while in order to really understand the risks and opportunities.

2. Do things right from the beginning - it pays off in the long run.

3.

Be patient and support your business partners to increase their CSR

standards.

Quotes

My Therese Blank, Owners Representative, Myanmar:

"My best advice is to businesses who are considering to start up - that is to go and see for yourself. You need to talk to people at all levels and to draw your own conclusions. You need to bee involved in day-to-day business and to stay here for a little while in order to really

(6)

My Therese Blank, Owners Representative, Myanmar:

"I think that the most important way in how we are creating value for Myanmar is our contribution to enabling trade and to improve the competitiveness of the country in comparison with the other SEA countries".

My Therese Blank, Owners Representative, Myanmar:

"We create value for Myanmar by insisting on doing things right from the beginning". Jens Munch Lund-Nielsen, Head of Emerging Market Projects:

"We started to ask ourselves, whether it is possible to turn our approach to risk management up side down? Instead of a doing-no-harm approach, we decided to investigate how to

implement UN Guiding Principles and to use them as a framework for a doing-good approach". Jens Munch Lund-Nielsen, Head of Emerging Market Projects:

"We try not to talk about human rights since it is rather abstract. We take the UN Guiding Principles on Human Rights to an operational level and in our business context it has mainly to do with health and safety-issues, aspects of labour rights and corruption".

Interviewees My Therese Blank Myanmar Country Manager Maersk Line and MCC Transport 705, Olympic Tower

Bo Aung Kyaw Street Kyauktada Township Yangon, Myanmar

E: My.Therese.Blank@maersk.com T: +95-1-245617 / +95-1-254854 M: +95-9-421157441

Jens Munch Lund-Nielsen Head of Emerging Market Projects Lead, Enabling Trade

Group Sustainability A.P. Møller - Maersk Esplanaden 50 DK-1098 Copenhagen E: jens.munch.lund-nielsen@maersk.com T: +45 363 1918 M: +45 2961 3039 Read more www.maersk.com

The A.P Moller Maersk Group's Sustainability Report 2012 - Going for Growth:

www.maersk.com/Sustainability/Documents/Maersk_Sustainability_Report_2012.pdf The A.P Moller Maersk Group's Sustainability Report 2013:

www.maersk.com/Sustainability/Documents/Maersk_Sustainability_Report_2013.pdf www.maerskpress.com/LATEST-PRESS-RELEASES/maersk-facilitates-global-trade-in-myanmar-with-permanent-business-license/s/cf44d347-42f7-4fbe-8d46-b476be910eb0 The Myanmar Centre for Responsible Business: www.myanmar-responsiblebusiness.org

Figure

Updating...

Related subjects :