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A jade stone weighing up to 50 tonnes unearthed at Hpakant has focused international attention on business, human rights and the rule of law in Myanmar. The Hpakant mines supply 90% of the world’s highest-quality jade. Famous for their mineral resources, their extraction has become famous for corruption, conflict and crime rather than economic growth.

Jade mining has devastated the regional landscape with entire mountains reduced to rubble and polluted artificial lakes spoiling rivers and streams. The military has been brought in to secure the unusually large find prompting accusations of ‘the fox guarding the henhouse.’ The region has always simmered with conflict. The Kachin Independence Organization’s (KIO) peace treaty twenty years ago opened a void for lawless exploitation. The role of the military, government backed businesses and armed groups complicate investment in the region.

The Union of Myanmar Economic Holdings Ltd (UMEHL), a military-run conglomerate that dominates many sectors of the country’s economy is a key player along with, Chinese businessmen working though local proxy companies, and privately owned companies headed by government cronies.

Despite estimated yearly exports worth $8 billion, only 34 million was officially recognized. What happens to the remaining income is open to speculation but it is certainly not reinvested in the local communities.

The Hpakant mining industry presents many lessons for the current government on how not to conduct development. This type of unaccountable and irresponsible investment reflects the lack of the rule of law under the previous military regime. The government now in power has stated that the rule of law, human rights and the environment would be at the centre of current development policy.

Indeed, most of the activity at Hpakant would be illegal under newly adopted investment law that requires social and environmental impact assessments (ESIA) done in conjunction with relevant stakeholders. Some of these ESIAs have been completed in new development sites and are now available online, including the ESIA for the controversial Lapadaung copper mine.

That these ESIAs are now completed and that problems still exist reveals that the rule of law is not yet established in Myanmar. Despite the newfound transparency, Lapadaung,, and others like it, have been the centre of protests and allegations of environmental and human rights abuse. There is a gap between new laws and their implementation as well as a lack of political will to tackle entrenched corruption.

The international community demands adherence to the UN’s guiding principles on business and human rights that rest on three pillars: the state duty to respect, the business duty to respect and the provision of remedies. None of these pillars provide a solid foundation in Myanmar.

The state duty to protect human rights has been badly neglected and reforms have not gone far enough to ensure rights at the national level. Basic rights violations remain commonplace, particularly concerning land grabs associated with development projects.

The rule of law’s absence makes it difficult for investors to respect human rights as very few protections exist and human rights abuses remain common at the local level where investment takes place. It is not possible to respect human rights standards that do not exist or are not yet enforced at the national level. Ethical companies remain wary of committing in the long term under present conditions.

The national judicial system remains linked to the executive and requires resources and continued reform in order to meet international standards that would qualify as an effective remedy for business and human rights violations. The inability to get a fair trial at the national level, aside from being a human rights abuse in itself, points to the lack of an international remedy for human rights violations associated with business.

A key aspect of the rule of is legitimacy. Local people, having suffered abuses linked with economic development for at least a generation, view investors and the newly privatized government companies with suspicion and fear. They do not yet trust the legal system to protect them.

With large scale development plans going forward all over the country, this is the opportunity for Myanmar to improve its reputation, follow its own new laws and adhere to international standards of best practice. Crucially, it must ensure that stakeholder’s rights are respected and that development benefits the majority rather than the well-connected minority alone.

Myanmar is keen to promote its Special Economic Zones (SEZs) to increase foreign investment. Improved legitimacy is vital to the development of thethe government is promoting. SEZs such as the one being developed in Dawei will be the testing ground for Myanmar’s commitment to the rule of law concerning business and human rights. In fact, it may turn out that SEZs maintain higher standards than the rest of the country in order to attract cautious investors.

The Dawei SEZ was begun under the former regime in conjunction with Thai and Italian investors but has stalled due to limited investment and concerns from the local community. While certain to contribute to regional economic development, serious human rights and environmental concerns need to be addressed in order to improve the perception of investment in the area. If not, the project may provoke instability, which is toxic to foreign investment.

Already there are signs of conflict over the relocation of villagers and the failure to work with the local Karen community. Foreign investors have been slow to commit to the SEZ due to confusion over land rights, fears of unrest and perceived complicity in human rights violations. Previous impact assessments conducted by JICA have been criticized by Karen NGOs as incomplete and impartial in favor of promoting Japanese investment.

Legitimacy and stability depend on perceptions of fairness and local consultation. In order to achieve these stated aims, new ESIAs should be conducted under the new laws of the country, with parliamentary oversight and include improved local participation. The entire process should be conducted in light of the UN Guidelines on Business and Human Rights and take into account international SEZ best practice. Importantly, the role of the UMEHL and other related local businesses must be clarified to improve the confidence of investors.

National solutions and good governance based on the rule of law are required. Myanmar’s economy is at a turning point and requires foreign investment. Investors demand stability and predictability before making commitments. The rule of law should provide a stable investment environment as well as access to justice for affected stakeholders.

It is in the best interests of the country to break with the past and move forward in an open and transparent manner in which investor’s property rights and people’s human rights are ensured by the rule of law. In the future, new investment should not be shrouded in mystery. A giant jade stone should attract excitement rather than concern and local communities should relish development rather than fear it.

For more on Hpakant and Dawei see: http://www.irrawaddy.org/burma/magazine-cover-story-burma/dawei-awaits-destiny.html; http://www.irrawaddy.org/burma/karen-group-criticizes-jica-development-proposals.html

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