May 03

2013

Investment opportunities in Burma/Myanmar and the corporate responsibility to respect human rights: what does the immediate future hold?

Over recent weeks, the EU lifted the last of its trade, economic and individual sanctions against Myanmar. This follows similar steps taken by the United States in 2012. The World Bank, the Asian Development Bank and the UNDP have all recently commenced local projects in the country. Such political events potentially open up the final, vast untapped Asian market of 60 million people to multinational corporations – from both western and eastern developed economies – for the first time.

Yet although rich in oil, minerals and other natural resources, Myanmar is one of the world’s poorest countries, plagued by rampant corruption, ethnic conflict and high unemployment. It ranks 146th out of 186 countries in the Human Development Index ranking and 172nd out of 176 countries in Transparency International’s Corruption Perception Index.

Recognising the fragility of the democratic reforms in the country, and acknowledging both the volatility of inter-ethnic relations and the under-developed legal, commercial and communications infrastructure, efforts are being made to temper the rush to invest in Myanmar with an understanding of human rights responsibilities.

Initiatives to ensure companies abide by the United Nations Guiding Principles on Business and Human Rights and other international normative standards are on the increase. The UK government pledged £600,000 to support responsible investment in the country. Both the U.S. and the EU have indicated that they expect all businesses investing in Myanmar to comply with the UNGPs – in the case of the U.S, any company investing more than $500,000 or in the state-owned energy company Myanma Oil and Gas Enterprise must file reports on their human rights policies and procedures.

Recent publications such as SHIFT’s Conducting Meaningful Stakeholder Consultation in Myanmar and the Institute for Human Rights and Business’s paper Responsible Investment in Myanmar: The Human Rights Dimension have also flagged the pressing human rights issues to be taken into consideration by all investors.

It is still very early in Myanmar’s reform processes to be able to say with any certainty how multinational economic involvement will affect the country. What studies such as the SHIFT paper underline, however, is the real need for transnational companies to properly understand the domestic context, and to calibrate the significant human rights risks of investment.

Myanmar’s significant ethnic minorities – which make up a third of the country’s population – live in areas of considerable mineral and natural resource wealth yet in extreme actual poverty. Equally critically, armed conflicts persist, both of an inter- and intra-ethnic nature, in which scores of people continue to be killed to this day.

The influential international NGO Human Rights Watch has recently criticised the EU’s lifting of sanctions as too hasty and as capable of compromising the slow progress on human rights in Myanmar. HRW has also alleged that there is credible evidence of crimes against humanity being committed in the country.

Over the coming months, Global Diligence will be visiting Myanmar to speak to stakeholders, companies and other organisations to gauge the fast-moving economic and political developments and to gain first-hand insight that we can pass on to our clients. We plan to issue a series of articles discussing the in-country events and analysing international efforts to invest responsibly. Our unique expertise in high risk and conflict-affected environments will enable us to offer a particular perspective on the complex challenges, which we hope will both contribute to the debate and assist our clients.

If your business is investing in Myanmar and you wish to talk to us about human rights risk management, please contact us at info@globaldiligence.com.

[Posted by Alex Batesmith, partner, Global Diligence LLP]