18 – 24 June: Business as Usual for Burma

June 25, 2012

With the gold-rush for Burma’s plentiful resources already on us, the New Myanmar Investment Summit that was held in Rangoon last week was an opportunity for Thein Sein’s government to show the world that Burma is indeed ready for a rapid increase of foreign investment. In a televised speech President Thein Sein announced that a new foreign investment law will be enacted soon. The same week, news emerged that foreign companies will be granted a five-year tax holiday and will be allowed 100% ownership in certain sectors, though not including energy. The reality, however, is that Burma is far from ready, and warnings have already been sounded.

One such warning was issued by Daw Aung San Suu Kyi in a speech for the International Labour Organisation in Geneva, “The Myanma Oil and Gas Enterprise [MOGE] … with which all foreign participation in the energy sector takes place through joint venture arrangements, lacks both transparency and accountability at present.” Previous investment in the oil and gas sectors has resulted in increased militarization around projects leading to human rights abuses such as land confiscation, forced displacement, torture, rape, and even killings. That MOGE, the same entity that was directly responsible for these violations, will now be dealing with any foreign investors in the oil and gas sectors has not been a deterrent. Nine overseas firms from Asia and Europe signed exploration deals with the state owned company since March. Daw Aung San Suu Kyi’s warnings, it appears, will not be heeded by resource hungry energy firms desperate to capitalize on Burma’s opening, regardless of any moral concerns.

The business environment in Burma, however, may yet show its true colors. One such example was at the investment summit whereby bureaucratic incompetence and confusion over visa issuance led to many investors being turned away from Rangoon airport and having to purchase new flights back home. As one businessman summarized, “What does this mean for openness and investment in [Burma] – if investors can’t even get through the airport gates.”

It is also worth noting that along with this lack of capacity to deal with the influx of new arrivals that have been announced such as Coke, and 7-Eleven, Burma is still ranked as 180 out of 182 in Transparency International’s Corruption Perception Index. Rhetoric encouraging foreign investors by President Thein Sein does not change this. With corruption ingrained at every level of authority, investors are likely to get their fingers burnt.

What does this mean for the people of Burma? With all this talk of investment, more and more reports of land confiscations have emerged over the last few months, leaving people with inadequate compensation or simply homeless as those with power seek to gain from the imminent flow of money. With the rule of law still extremely weak, these people have no credible avenue to seek redress. The gold-rush therefore, particularly in the oil and gas sectors, has the potential to further disenfranchise the people of Burma as political reforms have yet to make an impact for the majority of people on the ground. It is vital that foreign investors take into account that the unaccountable system lacking in transparency that they will be dealing with if they invest in Burma too soon has the potential to further exacerbate human rights violations, thus implicating themselves in such abuses.