Thursday, May 17, 2012

Business and Human Rights in Burma: The Danger of Lifting Sanctions and Uninformed Investment

For businesses, the suspension of sanctions by the European Union and Canada could lead to the possibility of cheaper production bases and a new stock of natural resources (Businesses Cautiously Optimistic…).  Foreign investment from 2010 to 2011 was 9 times the cumulative foreign investment between 2006 and 2010, mostly in the energy and extractives industries (Not Open for Business, 2).  Investing without investigation into the current conditions in Burma could also mean the exacerbation of human rights abuses and poor living conditions including mass poverty, electricity blackouts, and violent confrontations between civilians and the Burmese military.  Another risk factor to take into account would be the lack of infrastructure that would inhibit any new economic development. 

The current business climate is hardly conducive to productive practices.  According to the current constitution, there does not exist any judiciary assurances that will protect property or investments.   In addition, the military continues to dominate the largest sectors of the Burmese economy. For example, it controls the Union of Myanmar Economic Holdings which manages the gem trade and the banking and construction industries. It also oversees the Myanmar Economic Corporation which controls economic activities as varied as tourism, trading companies and billions of dollars worth of petroleum and natural gas (Not Open for Business, 2).  Meanwhile the average Burmese wage is $1.1 USD per day. 

Foreign businesses should be aware of Burma’s history of disregard for the rule-of-law and a lack of transparency and accountability.  For example, “a budget drafted in 2012 by the president was submitted to Parliament for some debate on allocation decisions, which was an improvement over the previous year. However, the source of budget revenues, including revenues from the sale of oil and gas, remain undisclosed. This makes it impossible to calculate whether all gas payments have been entered into the budget and, if so, at what exchange rate. This lack of transparency makes it impossible to allocate gas revenues for specific expenses, such as social spending” (Burma’s Resource Curse, 5).

Those that choose to blindly invest in Burmese companies may be inadvertently funding the military, which will to continue abuse its dominance of the civilian populace through tactics such as land confiscation, forced labor, etc.  There is probably no guarantee that local authorities and the military will uphold the rights of civilians when it comes to their interests in growing industries, projects and corporate activities. 

In a May 2012 letter from large sustainable business advocates, they “do not believe that a broad, immediate relaxation of U.S. sanctions would best serve the goal of achieving progress toward democracy and respect for human rights in Burma” (Investor Letter to the White House).
Non-US corporations set to or already operating in Burma can take the opportunity to positively impact average Burmese from new job opportunities, investing in local communities and ensuring respect for human rights and environmental protection.

Burma has vast oil, gas, hydropower and mineral potential, located mainly in the ethnic minority regions which continue to be areas of conflict. This together with increasing foreign presence coupled with the lack of local benefits from such projects is contributing to rising local resentment, putting investments under threat of retaliatory attacks. The abuses associated with such projects have led to lawsuits, consumer boycotts, and withdrawal of shareholders, ruining the reputation of investing companies. (Resource Curse, 6).

Tuesday, May 8, 2012

News Round-Up – April & May

 Impact of Reforms:

1. Media freedom in Burma still limited

Democratic Voice of Burma
April 6, 2012

 “Censorship is still engrained in Burma’s judicial system and the military retains overall control of the media, according to the International Freedom of Expression Exchange (IFEX).”
“For example, the Electronics Act enforces jail terms for people who send unauthorised information over the internet, while the government’s Press Scrutiny and Registration Division (PSRD) must approve all press, television, radio and cinema content before it’s published.”

2. New openness may take heavy toll on environment of Myanmar, one of Asia’s least spoiled places

Associated Press
May 7, 2012

“Myanmar has avoided the rapid, often rampant development seen in Thailand and other parts of Asia because of decades of isolation brought on by harsh military rule. But as foreign investors begin pouring in, activists in what was once known as Burma say endemic corruption, virtually nonexistent environmental laws and a long-repressed civil society make it “ripe for environmental rape.”
“The rush is already on. Airplanes bound for Yangon, the nation’s largest city, are booked up with businessmen looking for deals, along with throngs of tourists. Singapore dispatched a delegation with 74 company representatives in March while the Malaysians sent a high-level investment mission focused on property development, tourism, rubber and oil palm plantations.”

1. Sanctions and a ‘civilian’ government

Democratic Voice of Burma
By Zaw Nay Aung
April 13, 2012

 “The NLD won the elections again this year, but they will be forced to work in a parliament that has 25 percent of its seats in the hands of the military.”
“Lifting too many sanctions too early would leave western countries will little leverage to continue to push the Burmese government to make further concessions and release the country’s remaining political prisoners.”

Kaladan News
May 8, 2012
“Chittagong, Bangladesh:  Hundreds of Rohingyas, demanding refugee status, have set up a protest camp at the United Nations High Commissioner for Refugees (UNHCR) , in Vasant Vihar, South Delhi. The protestors, a Muslim ethnic minority persecuted in Burma, have been camped by the rear compound wall of the office, since April 9.
The  Rohingyas in India are being discriminated against because of their religion, said Mamoon Rafique, a protestor at the camp.”

3. Burma-China Pipelines Bring Benefits, Complaints

Daniel Schearf
May 4, 2012
“Senior monk U Sein Di Tha says local farmers are too afraid to speak out.
"The government will take their land and continue pipeline construction whether they agree to it or not," he said. "That is why they try to be content with the compensation. Nobody wants to give up their land."

To win over local critics, China National Petroleum Corporation is donating several million dollars to build new health clinics, wells and schools.

In Hman Pin Village, a new school for 300 students was welcomed by Hla Myint, the village head.”      

4. E.U. suspends most Burma sanctions

Washington Post
Justyna Pawlak and Sebastian Moffet
April 23, 2012

"One E.U. diplomat said that suspending the sanctions did not imply that Burma was a fully democratic country, and that it was up to the people there to work out problems like the oath.
The suspension, which does not apply to a separate arms embargo, is likely to go into effect this week. It will allow European companies to invest in Burma, which has significant natural resources and borders economic giants China and India."

Election Analysis & Reactions (post-event)

May 3, 2012

 “The NLD received 2.686 million, or about 65.6 percent, of the 4.092 million eligible votes cast, while the USDP received 1.123 million, or 27.5 percent. That’s a huge gap.”
“Aung San Suu Kyi and her colleagues are likely to find quite a lot of common ground, particularly on their short-term priorities, such as improving provision of health and education services. The key will be to first pursue those goals that more closely align with the government’s: For example, participating in peace negotiations rather than immediately pushing for amendments to the constitution to get the military out of parliament.”
“If there is one thing the election showed, it is that politics remains dangerously personalized; too much is reliant on the understanding between President Thein Sein and Aung San Suu Kyi, as well as Lower House Speaker Shwe Mann."

2. US Encouraged About Burma Reforms

State Department
Scott Stearns

“Washington has lifted its ban on the export of U.S. financial services and investment, and is preparing to nominate an ambassador to Rangoon, along with a full U.S. Agency for International Development mission and a normal country program for the United Nations Development Program.”

3. Suu Kyi embraces new role and compromise

May 4, 2012

 “For over two decades pro-democracy leader Aung San Suu Kyi defied Burma’s army rulers with steely resolve, but analysts say she has now embraced compromise, even if that means putting principles aside. The Nobel laureate was sworn in Wednesday as a member of parliament, a week after initially refusing to take the oath of office over the wording of the army-drafted constitution.”
“But Egreteau says there are indications of a divide within the NLD between hardliners reluctant to work with the military, and a more pragmatic group that Suu Kyi is increasingly inclined to join.”

4. Burma's Suu Kyi Takes Office With Political Plans Still Unclear

Voice of America
Daniel Schearf
May 2, 2012

“ ‘We would like our parliament to be in line with genuine democratic values," she said. "It is not because we want to remove anybody as such.  We just want to make the kind of improvements that remain - a national assembly, a truly democratic one.’ “
“Analysts say the opposition has a lot to learn about politics. Aside from amending the constitution, the NLD has only vague platforms of supporting rule of law, peace with ethnic rebels, and development.  Vahu Development Institute analyst Aung Thu Nyein says the NLD is still a party of activists, in need of help with political strategy.
‘But one of the strong points for the NLD is they got popular support," said Aung Thu Nyein. "It is not that difficult [for] the NLD to organize a kind of consultative section - maybe retired bureaucrats or the other economists, academics and the other strategists.’ ”

5. Myanmar begins new era as Suu Kyi is sworn into parliament, takes office for first time

Washington Post
Associated Press
May 1, 2012

“But some analysts see her entry into the legislative branch as a gamble which will achieve little beyond legitimizing a regime that needs her support to end years of isolation from the West and get lingering sanctions lifted.”
“But she will have an official voice in government for the first time, and the chance — however faint — to challenge and influence public policy from within.
Her National League for Democracy party’s legislative debut comes 24 years after it was prevented from taking power after a landslide electoral victory in 1990. Suu Kyi was under house arrest at the time, and the army annulled the poll result, staying in power until last year.”

Economic Future:

1. IMF consultation report highlights Burma’s weaknesses

May 8, 2012

“The [IMF] report said: “Myanmar could become the next economic frontier in Asia if, with appropriate reforms, it can turn its rich natural resources, young labor force, and proximity to some of the most dynamic economies, to its advantage. Delivering on these expectations is already under way.”
“It cited a number of “key obstacles” that must be put in line with international standards, such as the deposit-to-capital ratio, onerous collateral requirements, administratively set interest rates, and segmented banking activities.
These controls and the exchange restrictions lead to a large unregulated ‘shadow financial system.’ ”

2. With reforms, Burma eyes economic boom

May 8, 2012
“In its first-ever “Article IV” review of the economy, the IMF praised the initial moves to free up its currency in recent months and encouraged the government, politically isolated for a quarter-century, to stick to the path of reform.”
“But the Fund cautioned the government, now starting to enjoy a gush of foreign investment as it opens up, to take each step carefully with a focus on maintaining economic stability.”
“The economy grew an estimated 5.5 percent last year and will pick up pace to about 6.0 percent in the current year, with inflation rising to 5.8 percent on average.”

*Disclaimer: I refrain from editorializing because the reporters referenced above have the qualifications to cover the events fairly and objectively.  My selection is based on the POV of an American pro-democracy supporter.