Myanmar: Investing in the Future of Democracy and Human Rights

The results of Sunday’s historic elections in Myanmar appear to have given Aung San Suu Kyi’s National League of Democracy (NLD) overwhelming support in the 45 constituencies for which by-elections were held. Early indications suggest that even though most NLD leaders spent many years in prison, with some being released only a month before elections, the support the party enjoys among the masses has remained intact.

This electoral verdict may convince the European Union to lift sanctions, which were imposed on Myanmar after its military regime refused to recognize the results of elections in 1990. The sanctions have included travel bans, an arms embargo, and prohibitions on trading in timber, gems, and some chemicals. Now Western investors who have waited for more than two decades to invest in Myanmar say they are eager to flood the country with new projects promising economic and social development.

After spending last week in Yangon in meetings with business leaders, diplomats, academics, human rights activists, journalists, and development workers, to explore how new investment in Myanmar, once sanctions are lifted, can be consistent with international human rights standards so that economic activities promotes well-being and doesn’t undermine human rights, it is clear that the road ahead will be rocky. The Myanmar investors will find is very different from the one they might have imagined. The challenges they will face in making sure their investments are not only profitable, but also based on internationally accepted principles, are many.

Think of this country as a restaurant: newcomers won’t find an empty, though well appointed dining room, with waiters eager to serve, and chefs waiting to start cooking. Instead, they will find a busy, if rather messy restaurant, where many of the good tables are already occupied. Some of the patrons are eating with chopsticks, a few with their hands. The waiters are offering brisk service, even if they aren’t wearing the same uniform. They aren’t unionized, although there is talk the manager may allow them to form some kind of an association. It is not known if the chefs are working against their will, or the hours they keep. The food they buy is not organically grown, and much of it is imported and expensive. The service remains erratic, and there are unexpected and inexplicable surcharges. There are a few seats at the back, where tables are laid out with knives, forks, and napkins, with overpriced wine on the menu. This is how the bustling restaurant of Myanmar has been doing business for over two decades.

The “patrons” in this metaphoric restaurant are mainly companies from China, Korea, Singapore, Thailand, and Malaysia, and some from India. Their interests range from oil and gas to shipping as well as some manufacturing, and other resource-based industries. Their brands are largely unknown in the Western world. (There are no advertisements of Coke or Pepsi – although you can get them at luxury hotels – and the local cola is called Max-Plus).

What do the elections and the steps towards greater openness that Myanmar’s President Thein Sein began last year mean for new investors interested in Myanmar? Most potential investors remain cautious because for years the NLD has said Myanmar is not ready for investments. In her book, Letters from Burma, Aung San Suu Kyi said the best investment is one in the future of democracy. In the past, democracy campaigners have criticized companies that invested in Myanmar – Heineken and Triumph pulled out due to pressure, and lawyers representing victims’ groups have sued Unocal and Total for alleged human rights abuses in the country. Both companies settled the cases out of court without admitting wrongdoing.

Today, journalists and human rights activists talk of fertile land being grabbed from farmers for commercial purposes. Workers have begun to strike in the few plants operating in Myanmar. Concern over forcing people to work against their will persists. Too little is known about the antecedents of business partners. The country has enormous tourism potential, but questions about its impact on the people and the environment are widely heard.

The starting point for all investors should be the United Nations Guiding Principles on Business and Human Rights adopted unanimously in 2011 by the UN Human Rights Council. The Guiding Principles stress states’ obligation to protect human rights as well as the corporate responsibility to respect rights, and the need for remedies where governance gaps exist. This is why the Institute for Human Rights and Business is working with the Danish Institute for Human Rights to explore what a framework for applying the UN Guiding Principles might look like. We hope that when the time is right this might be endorsed by all investing Governments, Busineses and Investors as well as Burmese elected officials themselves.

The task ahead is to use the UN framework as the starting point for all investment related questions in Myanmar. For example, in the rush to acquire or use land, companies need to ensure that the human rights due diligence steps set out in the Guiding Principles inform their decisions including on securing the free, prior informed consent of those who are using the land, however poor, and whether or not they have legal title, in a country where arbitrariness is the norm. It also means recruiting workers without discrimination and recognizing their right to associate freely and bargain collectively. It means ensuring that investors do not perpetuate the past by allying with business groups that may have had an unsavory record and recognizing the importance of paying taxes to help build the capacity of the state to play its legitimate role in establishing the rule of law and governing the country.

Such sweeping changes to the way business is done in Myanmar won’t happen overnight. Even after sanctions are removed, there is no guarantee that new investments will begin to flow quickly – Myanmar ranks low in the corruption perceptions index of Transparency International, and the International Finance Corporation’s Doing Business Guide does not even rank it in its tables in 2011.

But one thing is certain: it is critical that all investments in Myanmar are made within a framework that respects human rights. That is the political aim of the party that emerged victorious yesterday – albeit in by-elections. Investors’ economic aims must not work at cross-purposes. There is an opportunity now to put respect for human rights at the heart of investment and development decisions. The people of Myanmar deserve no less.