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24 Nov 2014

Irene Pietropaoli and Bobbie Sta. Maria, Researchers, Business & Human Rights Resource Centre

Tracking foreign investment in Myanmar: A human rights imperative amid the sobering reality of promised reforms

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24 November 2014

When US President Barack Obama was in Myanmar’s capital Nay Pyi Taw two weeks ago for the 25th ASEAN Summit, he warned that more work is needed to complete the country’s transition to democracy, while expressing confidence over a “new day” in Myanmar: “We recognize that change is hard and it doesn't always move in a straight line, but I am optimistic about the possibilities for Myanmar.” Speaking at a press conference in Yangon a few days earlier, opposition leader Daw Aung San Suu Kyi sought to temper any "over-optimism" over Myanmar's reform process and said that the country had not made any real reforms in the last two years. In a joint news briefing with President Obama, she wished for “a healthy balance of optimism and pessimism.” Indeed, as the world watches Myanmar’s reforms – whether real or perceived – there is growing scepticism about their impact on the lives of ordinary people. 

Many in Myanmar’s civil society are dissatisfied with the state of reforms, claiming they have stalled or even regressed: Parliament’s refusal to allow constitutional change that reduces the power of the military or allows Daw Suu Kyi to run for president, endemic corruption and the absence of rule of law, arbitrary arrests and long prison sentences of media members and land rights activists, and on-going ethnic and religious conflicts being some of the factors leading to the current malaise. 

Equally troubling, fighting in the northeast of the country between the army and ethnic groups since 2011 – attributed in part to control over natural resources – has led to tens of thousands of internally displaced people and severe human rights abuses. The plight of the Rohingya Muslims in Rakhine State in the northeast has been labelled ethnic cleansing and “apartheid-like”, and international rights groups have asserted that “all the preconditions of a genocide are in place” for the country's 1.3 million Rohingya Muslims. Conditions for the estimated 140,000 Rohingya IDP’s in displacement camps have been described by the UN Special Rapporteur on Myanmar as deplorable, and have been widely condemned.

Reforms introduced after Myanmar President Thein Sein came to office in March 2011 – such as the release of hundreds of political prisoners, the passage and amendment of laws easing media restrictions, promoting foreign investments, and expanding labour rights, as well as the bi-elections in 2012 leading to National League of Democracy taking seats in parliament, and the promise of free and fair elections in 2015 – led to the lifting of most Western economic sanctions. Since that time, foreign companies have rushed in to the country, eager to tap into Myanmar’s underdeveloped market of cheap labour, abundant natural resources and 51 million potential consumers.

The recent rush stands in stark contrast to the decades of self-created isolation: first from former strongman Ne Win’s isolationist, socialist policies from 1962 to 1988 that closed off the country and drove it into poverty, and later from the military junta’s human rights record from 1988 to 2011 which led to near pariah status and concomitant economic sanctions and political isolation.

To get a sense of the immense pace of change in economic activity, from 1988 until 2012, only 477 foreign companies invested in the country, with investments totalling USD 41 billion. In the past two years – after the lifting of most western sanctions and the approval of a new foreign investment law – 551 foreign companies have invested in the country, with investments exceeding USD 50 billion, according to the Directorate of Investment and Companies Administration. The oil & gas and energy sectors account for most of the projects by dollar amount, followed by manufacturing, transport, communications, and mining. China has long been a key player -- while Daw Suu Kyi and President Obama were delivering their speeches, Chinese Premier Li Keqiang was signing deals worth USD 7.8 billion for energy, agriculture, telecommunications, infrastructure, and finance projects. Interestingly, while China has topped the list of foreign investors for decades, that place has reportedly been overtaken by Singapore. This partly thanks to US companies that, in order to circumvent some of the remaining sanctions against the country (such as doing business with companies linked to members of the former military junta), are registering in Singapore. The UK tops the list of Western foreign investors.  

The dissatisfaction over the current state of reforms echoed through the walls of the EU’s Parliament when it heard civil society testimonies in line with its negotiation of a bilateral investment protection agreement – something that EU Trade Commissioner Karel de Gucht claimed “could become an important accelerator for the reform process in Myanmar.” Jeffrey Vogt, Legal Adviser at the International Trade Union Confederation, pointed out that although Myanmar legalised labour unions in 2011, labour rights are still restricted and do not match international labour standards. “The country is seen as the next hub for low-cost manufacturing with workers receiving among the lowest wages in all of Asia,” he said. Sean Turnell, Professor at Macquarie University said that the country’s reform programme is “superficial, narrow, incomplete, and now largely coming to an end”. He highlighted that Myanmar does not have a market economy based on rights, but is still “largely a command economy whose private sector endures on permissions and concessions from the state”

The investment surge in the country, described as having weak property rights, has brought to the surface a history of unresolved land grabbing by government, military and private actors, particularly in ethnic areas. This is especially evident in industrial zones, agricultural plantations, and Special Economic Zones (SEZs) such as those under development in Dawei by the Thai and Myanmar Governments, and in Thilawa led by the Japanese.

Recently, the International Commission of Jurists found that local farmers and fisherfolk were being forcibly displaced and in effect impoverished to make way for the Dawei SEZ. Rights groups led by Dawei Development Association are calling on the Myanmar and Thai governments to ensure international environmental and social protections, and avoid involuntary resettlement before resuming work on the currently-suspended project. In Thilawa, Mekong Watch, Physicians for Human Rights and Thilawa Social Development group recently reported violations of international standards when families were forcibly displaced to give way to the SEZ, including the use of threats of court appearances and imprisonment, and inadequate compensation.

It is in the middle of this heightened scrutiny of the promised political and economic reforms that Business & Human Rights Resource Centre is launching the Myanmar Foreign Investment Tracking Project. Using respect for human rights as a starting point towards helping ensure that the surge of investment does in fact benefit the country as a whole rather than causing further suffering and impoverishment to many, we seek to enhance transparency and accountability by compiling in one place which foreign companies have recently started investing in Myanmar and are considering doing so; and urging those firms to publicly disclose the steps they are taking to ensure their operations respect human rights.

The project goals are: to allow for heightened scrutiny of companies’ human rights policies and procedures; to ensure that the people of Myanmar have access to human rights-related information on companies investing in their country; and to help ensure that Myanmar people are not adversely affected by the influx of investment. We will do this by inviting the companies to respond publicly to questions about their human rights commitments. The record of which companies have and have not responded will be publicly available, including in Myanmar language.

Most of the groups we consulted in the process of developing this project have conveyed a need for better access to information on what foreign companies are doing and how they could be reached. Through this tracking project, we hope to catalyse the efforts of civil society groups both on the ground in Myanmar and also internationally in holding companies accountable for their human rights impacts and pushing for improved conduct. 

We hope this project will encourage local and international groups to use the information that we will make available to push for improved company policies and conduct. This may include monitoring company practices, tracking abuses, engaging constructively with companies when beneficial to affected communities, or highlighting positive company efforts or initiatives.

Further information on the Myanmar Foreign Investment Tracking Project is available here.