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).

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