4-10 July 2014edge review

Delegates at an EITI-led conference on natural resource governance in Myanmar (EITI).

Myanmar advances in effort to boost transparency in natural resources sector

Public sector corruption – an area Myanmar scores poorly on – rarely dissuades investment in extractive industries around the world. But the reformists within Myanmar’s government are nevertheless keen to increase investor confidence by boosting transparency, creating the appearance of a clean break with the country’s opaque past.

In December 2012, Myanmar’s president, Thein Sein, announced his intention to have Myanmar adhere to the Extractive Industries Transparency Initiative (EITI), a set of internationally recognised, voluntary standards on revenue reporting and resource management.

On Wednesday, Myanmar officially became a candidate country for EITI compliance; it will have to make its first submission for validation within 30 months. If the EITI board finds that Myanmar has ticked off the requisite boxes, the country will then be granted compliant status – but this can be revoked if subsequent audits find Naypyidaw in breach of the initiative’s standards.

Moves toward increased transparency are undoubtedly welcome in Myanmar, where back-room dealing and under-the-table kickbacks have long been the norm. But although Naypyidaw has now agreed to open its books to unprecedented public scrutiny, it still has a long way to go.

No evidence of corrupt practices has surfaced relating to Myanmar’s recently concluded oil and gas tendering process, but it wasn’t entirely transparent. While the government published a list of winning firms – via Facebook – it did not disclose the “signing bonuses” those firms would have to pay or detail the beneficial ownership of the firms. While disclosure of this information isn’t necessary for compliance with EITI standards, EITI guidelines recommend that various stakeholders in the implementation process “should consider” disclosing such information.

Last week, resource governance watchdog Global Witness announced the results of a survey it conducted of the winning companies in the tendering process. It asked for information on the beneficial owners of the companies, or the individuals and entities that ultimately profit from their activities. Only 11 of the 47 companies it survey responded to their query. For many, governmental transparency is a crucial benchmark for the durability of democratic reforms. “Citizens have the right to know who has been granted access to their most valuable resources, and companies should seize the opportunity to show they have nothing to hide,” Juman Kubba, an analyst at Global Witness, said in a statement.

Even though the government did not make this information publicly available at the conclusion of the bidding process, it will invariably surface as Myanmar moves towards EITI compliance, a consultant close to the multi-stakeholder group responsible for implementation claims. “It would be stupid to try to implement EITI and ignore the bidding round that happened this year,” the consultant said.

The relative lack of transparency in the oil and gas awards – while still an improvement over past practices – sits in stark contrast with a telecommunications tendering process that ended last year, and which many felt at the time heralded a new era of government openness.

Exemplary standards implemented by one ministry, however, don’t necessarily translate into good practices across the board, a fact that should not be surprising given the factionalised nature of Myanmar’s fragile political system. “There’s no strategy, there’s no inter-ministerial [consultation]. This is completely ad-hoc,” the consultant said. “There’s so much going on so quickly, and I think it’s difficult to manage.”

The multi-stakeholder group responsible for implementing EITI guidelines is comprised of delegates from the government, industry and civil society. EITI rules say that countries must have an “enabling environment” for civil society participation, and so far, Myanmar has done rather well on this count. The civil society participants include Wong Aung, the coordinator of the Rakhine State-focused Shwe Gas movement, which, despite its offshore bounty, remains one of the country’s poorest areas and a hotbed of sectarian strife.

But the government retains an array of tools to clamp down on civil society if it wants to. If it moves to restrict the participation of civil society in the EITI process, this means Myanmar may miss reporting deadlines and jeopardise the implementation of EITI standards. In 2010, Ethiopia’s application for EITI candidate status was rejected because of a rule limiting civil society groups from access to foreign funds, a move that Anthony Richter, a member of the EITI board, told a U.S. government hearing was “the only such instance in the history of EITI where a country has failed to be admitted” on “clearly rights-based” grounds.

A subsequent application by Ethiopia was accepted in March, which stirred controversy because civil society remains tightly controlled under repressive, one-party rule, despite recent overtures from the government towards increased inclusiveness. Ethiopia has yet to go through the 30-month validation process, so it remains to be seen if continuing worries surrounding civil society participation will eventually jeopardise its candidacy.

If Myanmar’s government decides to crack down on dissent in the run-up to elections next year, Naypyidaw may also find its candidature threatened – a troubling signal to investors that it does not particularly want to send.

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