US Investors in Burma will be 'Sensitive to the Environment': Hormats

By Lalit K Jha 25 July 2012

The reporting requirement for US companies is not a deterring factor in their decisions to  invest in Burma, a senior Obama administration official said on Tuesday, arguing that it would increase their credibility in the eyes of the Burmese people.

“We do not think it is a deterrent. In fact, in one sense, we think it will be positive,” the US Under Secretary of State for Energy, Growth and the Environment, Robert Hormats, told foreign journalists at a news conference in Washington where he briefed reporters about his recent trip to Burma.

Under the administration’s recently relaxed conditions for US companies to invest in Burma, officially known as Myanmar, Hormats said these companies would be required to report to the US government on a range of issues.

“The gist of them is that these companies, when they do make their investments, need to provide information to the US government on who they are dealing with, on their labor practices, their environmental practices, how they’re dealing with issues of land acquisition, and how they address human rights considerations, particularly as it relates to ethnic minorities in Burma, which is traditionally a very sensitive issue,” he said.

Such a reporting requirement, many experts say, would be a deterrent for US companies to invest in Burma, and would make American companies uncompetitive compared to those of other countries. Hormats however disagreed with such an assessment.

“They will do better in the country and establish credibility in the country by demonstrating very publicly that they are concerned about the environment, and sensitive to the environment,” he said. “It’s a big issue in Burma, the environment, because a number of these raw material investments have not been quite as sensitive to environmental considerations,” he said.

“The people of the country want to know that cultural minorities’ rights are being protected and that these companies reflect the sensitivity of cultural minorities, particularly about raw materials on their land or putting pipelines through their territory,” the US official said.

Referring to the reporting requirements on labor rights, Hormats said labor rights are a very important issue. “They haven’t really had labor rights in Burma. Now they do. They want companies to subscribe to those and support those. So I actually think the progressive companies who are thinking of investing there think that they can turn some of these into an advantage; it improves their credibility with the people of the country,” he said.

“And the people of the country are going to see that these kind of companies are committed not just to extracting stuff and taking it out of the country, but are there for the long run, of course to make a profit, but as they make a profit to do so responsibly and respond to the concerns of the country,” he said.

“I think that to the degree to which American companies are sensitive to these local considerations and to these environmental considerations, they will actually get a very good reception, and they’ll be able to do better business than if they were not,” Hormats argued.

“There will be penalties for people who are working against the reforms or violating human rights on an individual basis,” he said. “Their assets will be blocked. Then there’s a list called ‘special designated nationals’ where, if people are violating human rights or are impeding the process of improving relations with cultural minorities, there will be penalties on them that the government can impose,” he said.

“The transparency is designed to let us know what companies are doing and to make them understand that what they do will be very transparent, and people in the country and people here will see what they’re doing,” he said.

This is for the first time that the US has made such a reporting requirement for its companies to invest in any country.

“This is very different from anything we’ve done in the past,” said Hormats. “But the fact is that it’s a complicated country with all the complications that I’ve been mentioning throughout the last hour. We want them to take these complexities of this country into account when they decide to make their investment, as they negotiate their investment to let us know, and to provide, in most cases, relatively broad public access to a lot of what they’re doing. And we think that will achieve the results we’re talking about.”

Hormats said none of the US companies interested in investing in Burma have voiced opposition to such a regulation. “I don’t really find this a negative thing, and I think it will actually cause them to have more support in the country and in our country than they otherwise would, because Americans will know what they’re doing and the people in the country will know what they’re doing,” he said.

“The opposition in the country, the civil society in Burma, will know what they’re doing,” he concluded. “I think it’ll actually give them a stronger base for the future and greater public buy-in because of the transparency that’s connected with their investments.”