Foreign Investment, the Extractive Industry, and Burma

"The following content was contributed by a guest blogger. The opinions expressed or implied herein may not be the opinions of Green Communities Consulting." 

By: Ellen Bryna

 http://www.ogj.com/articles/print/volume-96/issue-14/in-this-issue/petrochemicals/thailand-rules-yadana-pipeline-must-proceed.html

A few weeks ago, Revenue Watch Institute released The 2013 Resource Governance Index, which measures the quality of governance in the oil, gas, and mining sectors of 58 countries, including Burma. Burma received a failing grade, falling in last place among all the countries surveyed in the index. Burma’s composite index score of 4 is based on scores in four main categories: institutional and legal setting, reporting practices (such as revenue and contract disclosures), safeguards and quality control, and the broader governance environment (rule of law, government effectiveness, corruption, and democracy).[1]

Burma’s abysmal ranking comes as no surprise to those who have even casually followed Burma's extractive industries, which are notoriously opaque and riddled with corruption. Burma does not require environmental impact or social impact assessments for extractive projects, and it does not require the disclosure of revenues or contracts, making it very difficult for communities to understand the potential impacts of projects and hold anyone accountable for those impacts. In addition to problems with cronyism, opacity, and poor regulations, extractive projects in Burma have also been blamed for land grabs, loss of livelihoods in affected communities, massive environmental damage, egregious human rights abuses, and for exacerbating of conflict between the Burmese military and ethnic militias.[2] 

The gas, oil, and mining sectors are crucial components of Burma's national economy, accounting for 39 percent of exports in 2010. With its offshore oil and natural gas reserves estimated at 10 trillion cubic feet, and large amounts of untapped mineral resources including precious gems and industrial minerals, the extractive industry is expected to expand its contribution to Burma’s gross domestic product from $8 billion in 2010 to $21.7 billion by 2030.[3] 

The vast majority of Burma’s population lives in rural and impoverished conditions, depending on small-scale agriculture to make their livings. Only about 26 percent of the population has access to electricity, and even those with electricity access experience consistent blackouts.[4] Some argue that Foreign Direct Investment (FDI) in Burma’s vast natural resources can help decrease poverty rates and improve infrastructure and access to services. Burma’s score in the Resource Governance Index, however, suggests that it is unlikely that the people of Burma will benefit at all from this investment unless the government makes sweeping reforms in its policies surrounding oil, gas, and mining. 

The government has recently made small moves to improve transparency in the sector, such as stating its intent to join the Extractive Industries Transparency Initiative (EITI – a voluntary reporting and transparency standard for countries and companies involved in extractive industries), but ongoing projects, such as the Shwe Oil and Natural Gas Pipelines and the Letpadaung Copper Mine, suggest that business in Burma’s extractive industry will continue as usual for the foreseeable future. 

[1]See http://www.revenuewatch.org/rgi/ 
[2]For more information on abuses and conflict associated with Burma’s extractive industry, good places to start are: http://www.shwe.org/ and http://www.earthrights.org/campaigns/burma-project 
[3]“The Rush to Tap Myanmar’s Energy Promise” in Bloomberg Business Week, June 7, 2013, at http://www.businessweek.com/articles/2013-06-07/the-rush-to-tap-myanmars-energy-promise 
 [4]Myanmar In Transition: Opportunities and Challenges, Asian Development Bank, August 2012, pg 22 available at http://www.adb.org/publications/myanmar-transition-opportunities-and-challenges?ref=countries/myanmar/publications