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Burma

This month the National League for Democracy released its new economic policy, and stated it seeks to attract more foreign investment. Given that the NLD has inherited inadequate land regulation and an ineffective judiciary, it is unclear how increased investment would be reconciled with NLD policy to address the land rights of people in Myanmar.

Foreign governments want their investors to cash in on the investment boom but have no confidence in Myanmar’s regulatory framework and its judiciary. Many, such as the European Union (EU), are busily negotiating Bilateral Investment Treaties (BITs).

These treaties guarantee investor’s interests as ‘rights’ and give their investors access to Investor-State Dispute Settlement (ISDS) mechanisms outside of Myanmar. ISDS enables foreign companies to challenge new laws and policies that they view adversely affect their profits, including future land reforms.

Myanmar has entered into BITs with Japan, South Korea, the Philippines, China, Laos, Vietnam, Thailand, Israel and India and is party the ASEAN Comprehensive Investment Agreement, all of which include ISDS provisions that undermine the sovereign “right to regulate”.

Myanmar has a land regulation problem requiring legal reform. For decades the government expropriated land with impunity. Doling out land to crony businessmen and unscrupulous foreign investors became the norm. An influx of recent investment has increased demand for land, raised prices and further enriched those with connections. Poor land regulation means that some investors continue to be granted land obtained illegally or under dubious circumstances.

Under the current land laws more than half of Myanmar’s land users do not have legal tenure leaving them vulnerable to land grabs and forced eviction. The current land laws were designed to encourage large-scale land use and promote economic growth. The procedures for land acquisition under antiquated laws in Myanmar are rarely followed in practice. People have little or no access to justice, as the courts have proven reluctant to address sensitive cases. Instead, many communities find themselves charged with trespassing on land on which they have lived for generations.

The NLD government was swept into power promising to reform the land law and deal with widespread land grabbing. In order to protect land rights, the new government will need to create new law and policy restricting such practice and holding those who benefitted accountable.

But new law and policy on land redistribution and the recognition of communal land rights may conflict with the interests of foreign investors and give rise to costly disputes under BITs. In relation to ‘land grabbing’, ISDS could protect one-sided land deals that complied with bad national law and resulted in forced evictions. Investors could obtain market value compensation even if they acquired the land at less than market price.  Just the threat of litigation may be enough to dissuade needed land reform.

There are a number of international examples where new laws and regulations passed by democratically elected governments have been challenged by foreign investors through ISDS. These are costly disputes – some arbitral awards run into the billions of dollars. Recent challenges by tobacco giant Phillip Morris against Australian and Uruguay plain packaging cigarette laws were unsuccessful but cost millions in Lawyer’s fees. Australia reportedly paid 50 million USD to defend its law.

Myanmar lacks the legal and financial capacity to defend repeated challenges by deep-pocketed investors. In Myanmar, this money could be better spent improving the dire state of health and education.

Many states have turned against the inclusion of ISDS in BITs. South Africa, Bolivia, Ecuador, Venezuela, and Indonesia have started to cancel or phase out existing BITs. Others, including India, are reviewing current BITs and rethinking future negotiations. From Australia to Europe and North America, BITS are now part of public debate. Civil society is voicing its concerns with the ISDS system, questioning the rationale of the global investment protection system itself. Besides, there is not even clear evidence that ISDS and BITs actually increase foreign investment.

Economic investment should contribute to the rule of law and human rights. In order for this to happen, Myanmar must align policies with a vision of development based on local and national aspirations, placing people, and their rights, at the centre of the process. BITs are often negotiated behind closed doors with little public or parliamentary oversight. These are important decisions that impact on the rights of people in Myanmar.

Public participation is essential to the law reform process. Try telling farmers that investors should have access to special courts to protect their interests while their land can be taken without adequate compensation and without due process. Civil society has not yet had the opportunity to participate in genuine and informed consultation on Myanmar’s BITs. Relying on EU consultation procedures, for example, is not good enough.

BITs should refer to the various legal regimes, including international human rights law, to which Myanmar has legal obligations. This will help ensure that ISDS cannot be used to override Myanmar’s other legal commitments. Myanmar has recently signed the International Covenant on Economic Social and Cultural Rights, signalling its willingness to put in place policies to progressively achieve healthcare, education and social security. These rights are also protected in Myanmar’s constitution. ISDS threatens the ability of government to fulfil these rights.

Before agreeing to further BITs, Myanmar must adopt and enforce a new land law in line with international standards recognising the tenure of land users. In future BITs, Myanmar must prevent ISDS being used to challenge legitimate public purpose legislation. It should revisit old BITs that already allow investors to do so.

Ensuring legal certainty for foreign investors does not require empowering companies to challenge public-interest policies. Attracting foreign investment should not compromise government ability to regulate in favour of the rights of its people.

Re: Burma Responsible Investment Reporting Requirements

We write in response to the public reports submitted by U.S. companies in compliance with the Burma Responsible Investment Reporting Requirements (“Reporting Requirements”) issued by the US Department of State.

Composed of 60 eminent jurists and lawyers from all regions of the world, the International Commission of Jurists promotes and protects human rights through the Rule of Law, by using its unique legal expertise to develop and strengthen national and international justice systems. The ICJ appreciates the U.S. government’s efforts to promote responsible investment in Myanmar and to ensure that U.S. companies are responsibly managing their business activity in the country. We support your decision to continue to sanction businesses under the National Emergencies Act barring U.S. individuals and companies from investing or doing business with people linked to human rights abuses under the army’s military rule.

The ICJ urges caution over the United State’s recent decision to allow for an exception to the sanctions regime for people who have already been documented as having links to the military regime and implicated in human rights violations.1 This caution reflects the ICJ’s work with the Directorate of Investment and Company Administration, the Attorney General’s Office, and the Union Supreme Court of Myanmar, as well as civil society organizations, to strengthen and support local efforts at ensuring that investment protects and promotes the rule of law, human rights and the environment. In this regard, the ICJ has visited and researched on the human rights and environmental impacts of investments in the 3 Special Economic Zones (“SEZ”), as well as other non- SEZ sites, in the country.

We believe that future reporting must be strengthened to ensure that U.S. companies comply with the Reporting Requirements, conduct due diligence and disclose adequate information transparently about the impact of their business practices on human rights in Myanmar. This is especially crucial in light of significant reporting gaps in July 2013. Failure to strengthen the requirements will undermine the goal of the Reporting Requirement to be a tool for promoting investment that reinforces those political and economic reforms that are compliant with the rule of law and human rights and help to empower civil society.

The full document will be available on the ICJ webpage at: http://www.icj.org later today. The full document is attached here: Myanmar ICJ Letter to US State Dept 25Jan2016

Article by by  | 02 Nov 2015

Burma citizens are experiencing an unprecedented degree of economic and political freedom, but the balance of power has changed little.

http://bigstory.ap.org/article/ad5147753401412fac8d88324b610952/myanmar-reforms-have-long-way-go-change-power-balance

RANGOON — The sweeping reforms Burma announced in 2011 after a half-century of crushing military rule seemed too good to be true to much of the outside world. And to some degree, they were.

Burmese citizens are experiencing an unprecedented degree of economic and political freedom, but the balance of power has changed little. Most of those in charge are former military men who have just swapped their khakis for suits and longyi—the sarong-type skirt traditionally favored by both men and women in Burma.

Opposition leader Aung San Suu Kyi, whom the junta kept under house arrest for years, now tours the country stumping for votes. But even if her National League for Democracy wins the Nov. 8 election in a landslide, the odds are that the generals and their cronies will continue to dominate both politics and the economy.

Many familiar with Burma’s government say that while it has made significant reforms in the past five years, it still faces a long journey to achieve a stable, prosperous democracy.

“This is a huge improvement and we have to keep it in context for what it is,” said Daniel Aguirre, legal adviser in Rangoon for the International Commission of Jurists. But he adds, “The prevailing narrative of ‘open for business and everything’s fine’ is completely, way off.”

For the full article see: http://bit.ly/20pRFF2

The Business and Human Rights Resource Centre has launched a useful project that aims to track foreign investment in Myanmar. It highlights human rights law violations and criticism of foreign investment while allowing companies to respond.  The strength of this project is its balanced approach providing a forum for open discussion of business and human rights issues.

As of February 2015, the project has we have reached out to 108 companies from various sectors and regions. Out of those, 57 companies have responded. The record of responses and non-responses is useful for civil society to gauge which investors are willing to cooperate and invest in an open and transparent manner. It also shows us which companies are not cooperative.

Company responses can be important advocacy tools as civil society works to hold investors to their responsibility to respect human rights. These responses indicate their commitment. Their activities should be monitored to ensure that they fulfil these public commitments. The BHHRC will continually update the database.

The Project’s Webpage is available here: http://business-humanrights.org/en/myanmar-foreign-investment-tracking-project

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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