UK stitched up by Burma junta

BBC special correspondent Sue Lloyd-Roberts examines how the generals have made a killing in European trade

Colonel Aung Sann summed up Burma's economic prospects with obvious relish. "Business with America is difficult. But there are no problems trading with Europe and now we have been invited to join Asean, the future of our government is secure. We can ignore the critics."

Burma's generals might be particularly pleased with British enthusiasm for business in their country. According to their figures, Britain is in second place after Singapore in the league table of investors, with over $660m (pounds 388m) of British investors' money invested last year.

Most of this is accounted for by stakes in giant gas and oil projects, but at the manufacturing level Rangoon is festooned with British logos and trade names. At a garment factory outlet in a Rangoon shopping centre you can find labels such as, British Colony, Bay Trading, Casual Club and, most prominently, Burton.

After fish, clothes are Britain's main import from Burma. There are few American labels to be found. Leading US garment manufacturers, responding to consumer pressure, withdrew from Burma well before President Bill Clinton told them to go in May. The US clothing giant, Levi Strauss, said: "It is not possible to do business in Burma, without directly supporting the military government and its pervasive violations of human rights."

Links between the clothing business and the military are not hard to find. Posing as a manufacturer, I found the garment section of the military government's joint venture division housed in the same building as the Department of Defence Procurement, next door to Rangoon military headquarters.

When I showed Colonel Aung Sann, who is the senior officer in the Burmese military government's joint venture department in Rangoon, the list of factories which make clothes for the British market, he claimed he controlled them all.

When asked about costs and if he could compete with neighbouring Thailand which pays its garment workers an average $2 a day and China $1, he laughed, saying: "We are lower than that here, less than $1 sometimes."

At one factory run by the military, the girls said the army routinely takes half their earnings as the price of keeping their jobs. At another, where they dared protest, two truckloads of armed soldiers appeared and threatened to arrest them if they failed to return to work.

At the Unimix factory, which makes shirts supplied to Burton, a former employee says the jobs go to the families of the army.

Burma's democracy leader, Aung San Suu Kyi, says Western companies are fooling themselves if they believe they are aiding the well being of the people by manufacturing in Burma. "The only people who benefit", she says, "is the military class." Britain is on the way to doubling its imports from Burma this year

While companies operating in Thailand and the Philippines wrestle with child labour laws, Burma with its "laissez faire" attitude is increasingly attractive. If human rights in Burma deteriorate, Britain has promised to raise the issue of sanctions against Burma with the European Union. But Burma's people could be forgiven for wondering how bad it has to get.

Burton was asked to comment but at the time of going to press had not responded.

Sue Lloyd-Roberts' report from Burma will appear on Newsnight, tonight at 10.30 on BBC2