Burma an ‘Extreme Risk’ for Business and Rights Abuse

By William Boot 19 December 2012

Just two weeks after the violent police crackdown on peaceful copper mine protests, an international business investment assessor has included Burma in a top-10 league of countries at “extreme risk” for human rights abuses.

Burma was ranked sixth in the bad league behind only Sudan, the Democratic Republic of Congo, Somalia, Afghanistan and Pakistan, the UK business advisory company Maplecroft said in its “Human Rights Risk Atlas 2013.”

Despite reforms of the past 18 months in Burma, the risk to foreign investors concerned about their public image remains extremely high, Maplecroft said.

The warning comes as Western and Japanese multinational businesses weigh up prospects for investing in Burma, especially in infrastructure development and mining, oil and gas exploration.

So far, recorded abuses such as land confiscations and forced labor have been linked to Burmese military-connected firms or Chinese companies such as China National Petroleum Corporation, which is building controversial oil and gas pipelines through the length of the country.

But as pressure mounts for economic growth, more cases are coming to light.

The Bangkok-based human rights body Altsean–which groups NGOs across member states of the Association of Southeast Asian Nations (Asean)–has listed recent cases of public protest or intimidation within Burma relating to the loss of land or earnings over business activities.

A snapshot of recent cases includes inadequate compensation to scores of farmers whose land was taken for a hotel at Chaung Tha Beach, near Pathein in Irrawaddy Division; protests against land confiscation for an industrial zone in Rangoon’s Botataung Township; and the intimidation, beating and arrest of mine workers from Moehti Moemi gold mine in Mandalay Division over an alleged failure to honor an employee agreement.

Maplecroft also reported rising abuse elsewhere in Asia, naming Burma’s fellow Asean members Indonesia, Vietnam and the Philippines, along with its western neighbor Bangladesh.

Globally, it said there had been a “significant jump in human rights violations” in recent years, with 32 countries this year included in the extreme risk category out of 197 countries surveyed.

Maplecroft attributed the rise in rights violations to a combination of factors, including:

• Growing social tensions due to uneven distribution of wealth around the development of extractive projects and agro-commodities production,

• Increased digital inclusion that has galvanized protest movements and accelerated the spread of public discontent,

• And action against protesters and political dissent by increasingly violent security forces acting with impunity.

“Multinational corporations are particularly vulnerable to allegations of complicity in human rights abuses, due to their complex supply chains,” said Maplecroft chief executive Alyson Warhurst. “Business investment is deeply rooted in emerging economies and many of these countries are affected by social tensions.

“A decline in the human rights risk landscape is not only an unacceptable situation; it is also a forecaster of political risk and business disruption.”

Maplecroft, which advises companies on the risks associated with investing in a particular country or industry sector, said its survey had revealed “growing socio-economic and political instability in the growth economies due to increasing levels of public dissent against governments and business interests.”

It said a worsening global human rights situation was “leaving foreign investors exposed to high levels of operational, financial, legal and reputational risks.”

In Burma, evidence suggests army units have been used to help some companies achieve their business ends; the police and biased local government officials have acted against aggrieved local communities; and state agencies have remained tainted with the former military regime’s monopoly of key profitable industries, such as the Myanmar Oil and Gas Enterprise (MOGE).

“Some smaller Western oil businesses are beginning to take a chance on investing in [Burma], but the big multinational companies which are more nervous of their reputations, especially if these come under scrutiny by Western governments, remain extremely cautious,” Bangkok regional energy industries analyst Collin Reynolds told The Irrawaddy on Monday.

“There are continuing reports linking the state MOGE agency with land seizures on the China pipelines, and this is something the Burmese government really needs to sort out if it expects big investment other than China in the country’s offshore gas development.”

There may be some rays of light poking into Burma’s murky corners.

A government-ordered commission into widespread complaints of illegal land seizures by business interests will reportedly consider more than 300 cases drawn from more than 4,000 reports. However, it is not clear what final authority the commission will have or how open the investigations will be.

President Thein Sein’s dramatic suspension of the massive hydroelectric dam project by Chinese companies on the Irrawaddy River at Myitsone one year ago seemed to set a new standard for Burma, but the rule of law remains haphazard at best at the local government level.

“Until now, the [Thein Sein] administration has been harvesting low-hanging fruit,” US economist and Burma specialist Lex Rieffel said in a recent assessment. “Rapid political, social and economic progress in the years ahead will depend on successfully resolving a large number of challenging policy issues.”

This week, local protesters against the Chinese-run copper mine in theLetpadaung mountains of northwest Burma near Monywa, Sagaing Division, returned to their vigil, calling for an end to land grabs and environmental pollution. More than 7,000 acres have been taken from farming families to expand operations since mining began there.

Governments, businesses and human rights groups will be watching closely to see how Thein Sein tries to resolve that problem.