Burma Accepted for EITI Scheme, But NGOs Remain Concerned

By Paul Vrieze 3 July 2014

RANGOON — The Extractive Industries Transparency Initiative (EITI), a global anti-corruption scheme, announced on Wednesday that Burma has been accepted as a candidate country. The decision means Burma has to comply with an international transparency standard for oil, gas and mining earnings in the coming years and marks an important step toward addressing corruption in the country.

“[Burma]’s admission to the EITI comes at a critical time as the country is now opening up its vast natural resources for foreign investment. By implementing the EITI, the government has made a commitment to the people of [Burma]: that they will have the right see how these resources are managed,” EITI chair Claire Short said in a statement.

Zaw Oo, the government’s national coordinator for EITI, said, “EITI gives us a useful tool to design our escape from the resource curse; and it is an important catalyst for ongoing reforms. We pledge to overcome many challenges facing the implementation of EITI standards.”

Burmese civil society groups warn, however, that they have serious doubts over the government’s commitment to ensuring a safe environment for NGOs that are supposed to participate in the international scheme.

EITI sets a global transparency standard for extractive industries to combat high-level corruption, and governments that want to join the international scheme are required to publish oil, gas and mining project payments in accordance with EITI stipulations.

The scheme recommends disclosure of details of company ownership, contract terms, state-owned extractive industries, and allocation of resource revenues. The EITI statement said Burma has committed to implementing these recommendations and will also reveal the ultimate ownership of companies that won the 2013-2014 oil and gas bidding round.

International NGO Global Witness criticized the oil and gas bidding last week and said it was marked by high levels of corporate secrecy, as only 13 of 47 companies responded to questions about ownership, with only two companies revealing who ultimately owned them. The UK-based transparency campaign group said such secrecy is often used to hide high-level corruption.

Joining EITI has been a key reform measure by President Thein Sein’s government as it seeks to attract foreign direct investment and shake off Burma’s reputation for large-scale corruption and mismanagement in extractive industries under the former military regime.

In March, Thein Sein said his government wanted to join EITI “to encourage responsible investments, [and] to ensure that investment related to extracting natural resources will not affect the environment and socio-economic situation.”

For decades, Burma’s rich resources, which comprise an estimated 2.5 trillion cubic meters of gas and 3.2 trillion barrels of oil reserves, abundant mineral wealth, jade and gemstones, large-scale hydropower potential and vast forests, were plundered by the military regime and its business cronies. Resource revenues were pumped into the military, or siphoned off and pocketed by senior officials, while education and health care spending was kept at a minimal level.

Oil, gas, mining, agro-industry and dam projects have also been tied to ethnic conflict and militarization, as much of Burma’s resources are located in ethnic areas, while the projects often also have heavy social and environment impacts on local communities. EITI, however, focuses on revenue transparency and does not include requirements on addressing such project impacts, or the need for authorities to seek prior consent from communities.

In recent months, the government has worked with oil, gas and mining firms active in Burma as well as local civil society groups to prepare the country’s application for EITI candidacy. Burma has now joined a group of 44 countries, including Indonesia and the Philippines, that are EITI candidates, and it could become a “compliant” EITI member by 2017. Currently, there are 29 full EITI member countries.

EITI, based in Norway, is supported by international governments, and candidate states can receive donor support for implementation of EITI requirements and the creation of laws, regulations and rules that promote revenue transparency. About 80 of the world’s largest oil, gas and mining companies also take part in the scheme.

Civil Society Concerns, Scope of Transparency

Now that it has been accepted as a candidate, Burma is bound by a timetable to implement EITI requirements. It has to complete its first report within 18 months and will be reviewed for full compliance by Jan. 2, 2017.

Civil society involvement is central to EITI, and the government, private sector and NGOs are required to cooperate in a multi-stakeholder group that implements the EITI process. The multi-stakeholder group will have to agree on the exact scope of EITI transparency standards and whether it wants to apply these to other sectors beyond oil, gas and mining.

“We have to do a lot of work, but nobody is ready,” Tayar Maung, national coordinator at The MyanmarAllianceforTransparencyandAccountability (MATA), told The Irrawaddy.

“We are not yet decided on what scope we are going to work with—the multi-stakeholder group will have more discussions. CSOs for the moment want to include oil, gas, hydropower and forests. The government seems ready to accept inclusion of oil, gas and some mining sectors, such as jade and gems.”

Juman Kubba, of Global Witness’ oil, gas and mining team, said, “Whether the scheme actually makes a difference depends on whether Burma is willing to go beyond bare minimum EITI.”

“In the coming months, Burma has the chance to show it is serious about transparency by committing to an EITI which generates the information citizens need to hold government officials and companies to account,” she said. “If that doesn’t happen, there is a risk that EITI will be treated as a tick-box exercise which offers a veneer of reform behind which looting proceeds unchecked.”

A key point of concern for Burmese NGOs is whether the government is committed to implementing EITI standards regarding civil society. The scheme requires governments to guarantee “an enabling environment” for NGO participation in EITI, respect NGO representatives’ rights, and ensure open public debate on the scheme.

In the weeks leading up to the review of Burma’s EITI application, Parliament eased restrictions on NGOs in the country. Lawmakers passed the Association Registration Law, which requires NGOs to register with the government but carries no punishments if they fail to do so. Parliament also amended the Peaceful Assembly Law, reducing prison sentences for unauthorized protests from six to three months.

MATA warned EITI’s International Board in a letter earlier this week, however, that EITI conditions regarding civil society freedoms are not being met. “CSOs feel that there is no security for local-level CSOs activities in the whole country, especially in Shan and Karen States. Local CSOs receive constant threats and [are under] surveillance” by local authorities, the letter said.

MATA, an umbrella organization for 470 national and community-based NGOs, stopped short of asking the board to delay Burma’s EITI application, but said the government had failed to guarantee necessary civil society freedoms.

The national government’s commitment to improve an “enabling environment for CSOs is very weak in its implementation,” the letter said, adding that a cabinet order stating that the government would work with NGOs on EITI was not sent to regional authorities, nor publicly released.

“We are requesting the government to fully implement [EITI conditions] and inform the public and authorities,” said Tayar Maung, of MATA.“They said yes, but they never apply it. That’s why we are wondering, are they playing a game with us?”

MATA urged EITI to “put more pressure on the government to make happen the real EITI [process] and to create a real enabling environment for Myanmar CSOs.”

Shwe Gas Movement director Wong Aung said NGOs are concerned that the government wants to become an EITI candidate to brandish Burma’s international reputation, while dragging its feet on improving civil society freedoms, reigning in local authorities and addressing rights abuses and social impacts caused by extractive industries.

“We have tried to raise a series of issues related with extractive industries… but the government has not taken any steps to address these concerns in a meaningful time frame,” said Wong Aung, who is a member of Burma’s EITI multi-stakeholder group. “I do not think they have the political will to handle these problems in the short term. They are just trying to get a good international image to attract foreign direct investment through the EITI process. The government is very smart.”

“The improvement of the resources sector is going to be a very long path,” he added.

Multi-stakeholder group chairman Maung Maung Thein and government spokesman Ye Htut did not respond to emailed queries by The Irrawaddy about the NGOs’ concerns.