5 December 2014
Open-cast copper mining in Myanmar (Roger Price/Flickr).
Forcing businesses to be environmentally and socially accountable is tough amid Myanmar’s investment boom.
M
yanmar’s investment climate is undergoing growing pains, and one of the biggest is convincing businesses – both foreign and domestic – to dump decades of abusive practices that have caused huge environmental damage and steamrolled the country’s most vulnerable citizens.
Foreign direct investment (FDI) has mushroomed – it hit a record of nearly US$41 billion in October – yet there are still few formal legal mechanisms compelling companies to clean up their act.
Official environmental impact assessment (EIA) procedures exist in draft form, and although implemented on an ad-hoc basis, it is almost entirely up to companies to do this voluntarily. As 2015 approaches, a proposed end-of-year deadline for legislation is becoming increasingly remote.
“In effect, until they come out, companies can say, ‘there are no procedures, so we don’t have to do this’,” says Vicky Bowman, the former UK ambassador to Myanmar and the head of the Myanmar Centre for Responsible Business, which advocates for transparent practices from both local and foreign companies.
She notes, however, that the Myanmar Investment Commission has begun to demand that companies produce EIA reports before investments are given the go-ahead.
Most FDI is earmarked for large-scale projects, with the oil and gas, mining and power generation sectors accounting for a combined 75 per cent, government statistics show.
The draft EIA framework is just one part of the shambolic puzzle that is Myanmar’s legal system, a hodgepodge of colonial-era edicts and new laws that still leave much to be desired.
“The key concern, really, is that there are very few environmental laws and national standards in place,” Bowman said. “You can’t just ‘do’ an EIA – you have to do it [in the context of] a national legal framework.”
Moreover, oversight for the EIA process falls under the auspices of Myanmar’s Ministry of Environmental Conservation and Forestry, which suffers from a severe lack of resources.
“Really, the only thing you’re going to be able to do in the short term is if donor governments can supply mentors to look over the shoulders of officials and point out, ‘this is where the company is failing’,” Bowman said.
It was such failures that led to the first major test of the reformist government’s legitimacy. In November 2012, a peaceful protest against the Letpadaung copper mine – a joint venture between the military and the Chinese state-owned firm Wanbao Mining – was violently broken up by police, whose phosphorous bombs badly injured dozens, including monks.
Marking the two-year anniversary of the incident, Amnesty International released a statement last week criticising the government for failing to hold security services accountable and claiming that “thousands of farmers remain under the threat of forced evictions since their lands were acquired for the mine in a flawed process characterized by misinformation.”
The statement also criticises Wanbao’s environmental and social impact assessment, claiming it “has critical gaps, including the failure to include the final designs of waste storage and other environmentally sensitive infrastructure”.
The EIA for Letpadaung conforms to the standards set by the International Finance Corporation (IFC), the World Bank’s private enterprise arm. Despite criticism of the procedures surrounding the mine, Bowman feels it is positive that the environment ministry appears to be aware of its own limitations and is compelling investors to adopt IFC standards in the absence of comprehensive national ones.
But the IFC’s footprint has also stirred controversy. Myanmar is the only ASEAN country to have separate rules governing local and foreign investment; a pending attempt to harmonise them, with the IFC’s input, has raised human rights fears.
A recent opinion piece by researchers Kevin Woods and Daniel Aguirre noted that the proposed law gives foreign investors the right to international arbitration, “while the people of Myanmar must rely on the underdeveloped national legal system that does not provide adequate access to justice.” This is particularly problematic where land issues are concerned, the authors assert.
As capacity gaps threaten to make effective resource governance increasingly difficult, civil society will have to play a role in keeping companies accountable. “It’s not impossible, but it won’t come through just the ministry putting up its hand and saying ‘it’s not good enough’,” Bowman said. “It will come through public protest as well.”