“How do these new Investment Rules protect Indigenous People in Myanmar? How can we be sure that investors will respect the principle of Free, Prior Informed Consent before they bring investments to our land?”
A Karen activist from POINT (Promotion of Indigenous and Nature Together) asking the panel at the first of two rounds of public consultation on Myanmar’s draft Investment Rules in January and February 2017.
The panel was comprised of the Director-General of the Directorate of Investment and Company Administration (DICA), representatives from the World Bank, the International Finance Corporation (IFC) and its private law consultants. Over the course of the two consultations, they addressed questions and concerns from a range of participants: lawyers representing investors in Japan and Singapore, local land rights and indigenous activists, Members of Parliament, domestic investors and environmental specialists.
The diversity of the agenda at these public consultations reflects the vast reach of Myanmar’s new Investment Rules and the effects they will have across the country. The Rules are about land use, human rights, decision-making in conflict areas, anti-corruption, transparency, biodiversity, labor rights, community grievance mechanisms, private investment disputes and increasing decentralization of power into Myanmar’s regions and states.
Since it was sworn-in April 2016, Myanmar’s NLD-government has been anxious to attract higher levels and more diversified forms of foreign direct investment into the country. After former U.S. President Obama dropped the last remaining economic sanctions against Myanmar, lawmakers and ministries have rushed to enact a new streamlined legal regime for investment permits. The Investment Law was hurriedly passed through Myanmar’s Parliament just three weeks after Daw Aung San Suu Kyi’s state visit to the U.S. in October 2016, despite no public consultations on the final draft of the Law and little debate in both houses of Parliament.
The Investment Rules, which implement the Investment Law and provide for its more specific details, are currently in draft form and open to public consultation. Despite the tight deadline by government leaders to finalize the Rules by April 2017, the IFC and DICA – which are working together to draft the Rules – have undertaken some public consultation. In addition to the two public consultation rounds, DICA released a call in December 2016 for content proposals, and have been accepting written submissions on the draft Rules.
As drafts of the Rules are released, civil society groups and NGOs have made suggestions for amendments to the Rules, which in some cases have been heeded by the drafters. An earlier draft, for instance, did not impose a duty on the Myanmar Investment Commission (MIC) to make summaries of proposed investments publicly available. After receiving ample commentary from civil society groups on that point, the draft rules were changed to include such a duty (although worryingly, the rules do not require this to be done before a permit it awarded). The latest draft of the Rules also incorporates annual reporting requirements for investments holding a permit, that will hopefully be developed in the image of the U.S. Burma Responsible Investment Reporting Requirements. These are crucial steps forward in the struggle for a more transparent investment regime, and signals at least a partial recognition on DICA’s behalf that investment decisions can no longer be made behind entirely behind closed doors.
Another notable addition to the draft Rules is a requirement that when the MIC is deciding whether to award a permit to a large investment, it must consider whether the investor is of good character and business reputation. In making that assessment, the MIC may consider whether the investor ‘has committed an offence or other contravention of the law of the Union or another jurisdiction, including any environmental, labor, anti-bribery and corruption or human rights law.’ If this provision is taken seriously by the MIC and operationalized properly (for example, by allowing civil society to submit briefs to the MIC on investors’ character), it holds the potential to be a significant bulwark against harmful businesses operating in the country.
However, barriers to meaningful public participation remain. Iterations of the draft Rules have taken longer to be released in Myanmar language, meaning some local civil society organizations have only an extremely short amount of time to prepare for the public consultations and submit written comments. Moreover, the consultation rounds only took place in Yangon, and were held with unrealistically short notice, restricting the opportunities for participation for groups based outside of the country’s largest city.
Substantively too, the draft Rules still have a number of significant gaps which could undermine responsible investment in Myanmar. There are no references to Free Prior Informed Consent to protect the rights of Indigenous Peoples, and there remains a risk that permission to obtain a long-term (50 year) lease over land could be given without appropriate scrutiny of the investor.
Given the far-reaching impacts of private investment in Myanmar, creating a legal regime which safeguards human rights and the environment is vitally important – and meaningful public participation in the creation of that regime is a good place to start. These key ideals of public accountability, transparency and inclusive reform should be borne in mind as the more challenging task of implementing the Law and Rules lies ahead.
The final Rules are expected to be released on 1 April 2017. We are eager to see Myanmar take the responsibilities of both foreign and domestic investment seriously, by creating solid rules that protect Myanmar’s people and environment.
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EarthRights International has been providing written submissions to IFC/DICA on the draft Investment Rules, together with Oxfam International, the International Commission of Jurists and the Myanmar Centre for Responsible Business.
