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30 Mar 2016

Vani Sathisan (International Legal Advisor, International Commission of Jurists) and Bobbie Sta. Maria (Senior Researcher for Southeast Asia, Business & Human Rights Resource Centre)

Myanmar: New government inherits problems and promise of special economic zones

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This is a long form version of this article published by Reuters on 1st April 2016.

More than half a century of military rule ostensibly comes to a close on April 1, when Daw Aung San Suu Kyi’s National League for Democracy (NLD) officially takes over Myanmar’s government and the first civilian President since 1962 starts leading the nation. Despite these extraordinary developments, daunting challenges remain in Asia’s second poorest country. Myanmar’s military still controls key governmental functions; the country is barely emerging from decades of civil conflicts; rule of law and institutions are weak; the economy is fragile and dominated by crony companies; corruption, and human rights abuses remain stubbornly persistent.

The outgoing government initiated a number of significant changes, including efforts to encourage economic development through foreign trade and investment. This strategy included heavily promoting foreign investment through three major special economic zones (SEZ): a Japanese supported zone focused on manufacturing in Thilawa, near Yangon; a Thai supported zone initially focused on heavy industry including petrochemicals in Dawei in the south; and a Chinese supported zone in Kyaukphyu in the northwest, envisioned as a trade corridor connecting the Chinese, Indian and ASEAN economies. These were said to build on Myanmar's strategic location and low-cost production base for export destinations in the region.

The NLD recently announced that while it supports the zone in Thilawa, it will reconsider the continuation of the Dawei and Kyaukphyu SEZs, study commitments made by the former government to investors, and speak with relevant stakeholders. This is a crucial process and many hope that the NLD does not lose sight of its commitments in its Election Manifesto, including encouraging “foreign investment in line with the highest international standards”, and laying down “paths for economic cooperation that can bring sustainable long-term mutual benefits”.

In both Dawei and Kyaukphyu, as well as Thilawa, affected communities have repeatedly raised their voices about the need to address the human rights and environmental impacts of the projects. Communities have complained about a lack of transparency as well as inadequate consultation, compensation for losses, and participation of affected local communities in project-related decisions.  Communities in Dawei have expressed concern that the zone is being pushed by Thailand in an effort to relocate their dirty industries outside their borders, as domestic opposition has made these harmful projects untenable. It would be unwise for the NLD to ignore these voices in their process of re-evaluation.

Early this month, local civil society organization, Dawei Development Association, released a report that reiterated the developers’ lack of transparency and reluctance to meaningfully engage with local communities. The report also described the project’s likely land and livelihood impacts based on a survey of over 1,500 households; a huge majority of the respondents have or stand to lose their agricultural lands (with a number of those who lost land still left uncompensated), and over 80% claimed that they have not been provided the opportunity to voice their wishes and concerns related to the project. DDA estimates that 20 to 36 villages housing 22,000 to 43,000 people will be affected by the project, which was initially planned to cover 196 square kilometers. 

Dawei is home to the Dawei or Tavoyan indigenous group; as such, international standards and Myanmar domestic law — which incorporate international best practice on involuntary resettlement and indigenous peoples for investment projects — require the free, prior and informed consent of affected indigenous peoples be obtained before any relocation takes place.

In Kyakphyu, a region wracked by inter-religious strife and grinding poverty in Rakhine State, local residents continue to protest the planned SEZ despite pledges from the developer to implement best practice on environmental and social protections. One hundred and seven local groups called on the project to be suspended in late 2015 because it was not being implemented responsibly and according to the wishes of local residents.

A report by the consultancy firm BMI Research warned that the Kyaukphyu SEZ’s development will be disrupted by security risks “stemming from ongoing ethno-religious tensions, environmental concerns and opposition to Chinese investment”. Rakhine State is an impoverished and troubled region that was the site of violent conflict between Buddhists and Muslims that has left dozens dead, and hundreds and thousands of Rohingya Muslims displaced in squalid camps with poor access to basic needs. Rakhine State is also the site of a number of resource extraction projects, which locals have resisted for their harmful impacts on their livelihoods and the environment.

In Thilawa, displaced residents have likewise organized themselves to raise concerns related to living conditions in the resettlement areas. In 2014, they filed a complaint under Japan International Cooperation Agency’s (JICA) procedures for harms related to the project including loss of access to farmland, loss of livelihood opportunities, impoverishment, loss of educational opportunities, substandard housing and loss of access to clean water. While improvements have been made, the local community continues to raise grievances related to the quality of life in the resettlement areas.

While SEZs are supposed to drive Myanmar’s economic growth, at the moment it looks as if this growth disproportionately rewards businesses and investors, and not the communities displaced and impoverished to make way for them. 

As the NLD-led government considers its investment and development strategy and priorities, it should live up to its party’s ideals and place democratic principles, especially respect for human rights, citizen participation, transparency and accountability at the center of economic considerations. This involves ensuring that the policies and laws are fair and equally applied and cover fundamental rights protections, and that processes allow for the meaningful participation of local communities.

The previous government has made some progress in legislating rights protections. For example: Myanmar law now requires environmental impact assessments (EIAs) for investments in certain industries; the Myanmar Foreign Investment Law and the Myanmar Citizens Investment Law specifies that the duties of a domestic investor include not causing environmental pollution or damage; the  EIA Procedures, which cover environmental and social impacts, incorporates international best practice on involuntary resettlement and indigenous peoples; and the new National Land Use Policy refers to participatory, transparent and accountable processes, and reiterates the need for EIAs and social impact assessments. Though imperfect, the Labor Organization Law and the Settlement of Labor Disputes Law have given rise to increased union organizing and more active conversations on labor grievances.

The previous government made some progress in legislating rights protections. For example: Myanmar law now requires environmental impact assessments (EIAs) for investments in certain industries; the EIA Procedures, which cover environmental and social impacts, incorporate international best practices on involuntary resettlement and indigenous peoples; and the new National Land Use Policy refers to participatory, transparent and accountable processes.

The problems surrounding SEZs are significant and urgent, and this period of re-evaluation provides the new government an opportunity to build on some legislative gains and take further steps that will protect affected communities against unjust land acquisitions, build community support for projects, and avoid costly delays. Among the things it could do are pass the requisite by-laws, and ensure that the newly formed Ministry of Resources and Environmental Conservation will enforce environmental laws and procedures for all future SEZ development, while complying with international laws and standards. The new government also has the opportunity to amend the SEZ law to ensure that investment projects are planned, designed and undertaken with respect for the fundamental principles of participation, transparency and accountability. While land issues are undoubtedly complex, the prevalence of land-related grievances presents a challenge for the new government to take bold steps towards the protection of land rights, including addressing historical land grabs and making real efforts to meet international standards for compensation and resettlement.

International human rights organizations such as Business & Human Rights Resource Centre (BHRRC) and the International Commission of Jurists (ICJ) are engaged in efforts to encourage greater public accountability among foreign companies for their human rights impacts, and to ensure that they cooperate with civil society and the new government in achieving high standards of inclusive and rights-compliant development.

In 2015 and 2016, the ICJ wrote to investors, developers, international audit companies and the SEZ Management Committee, highlighting concerns of affected communities documented in field consultations and seeking public disclosure on projects in the Dawei and Kyaukphyu zones. The ICJ has provided guidance on relevant international human rights laws and standards to these stakeholders. In the coming weeks, BHRRC will expand its outreach to foreign companies investing in Myanmar’s SEZs, tracking them on the nature of their investment, and their efforts to avoid negative impacts. The responses and non-responses will be compiled in a public database. This will serve as a resource in assessing whether companies are doing and communicating enough especially in the area of human rights. 

By design, SEZs are meant to lure businesses through friendly conditions. But this goal must not be pursued at all costs, especially not in ways that will lead to irreversible environmental damage, abuse of rights, or the further impoverishment of locals. The challenge to govern carries with it the responsibility to listen, respectfully engage, and ensure the protection of the human rights of all individuals and communities in Myanmar.