Saturday, 26 April 2014

A longview on Myanmar: Transparency tests Rangoon

Aung San Suu Kyi visits the Letpadaung copper mine. Photo©Khin Maung Win/AP/SIPAThe extractive sector has become a focus for reform efforts under President Thein Sein, leading to cautious optimism about compliance in the region as a whole.

 

Under President Thein Sein, Myanmar is making a rapid transition away from military rule. Since the former military commander became president in March 2011, reform has been rapid, if a little bumpy.

The peace process with border regions is ongoing. Work on a large-scale China-funded hydro-project on the Irrawaddy River – the Myitsone Dam – was suspended due to community protest, and discontent over the extension of a large copper project at Letpadaung led to a commission of enquiry headed by Aung San Suu Kyi that recommended a more sensitive approach.

This level of responsiveness to protest is unprecedented, giving regional groups courage to begin mentioning the 'f' word: federalism.

Pressure is mounting to devolve governance and to agree on more equitable benefit-sharing arrangements, particularly in the extractives sector.

Not surprisingly, this sector has become a focal point of reform efforts.

Myanmar has abundant natural resources, including oil and gas, copper, nickel, gold and gemstones. Gas revenue for 2011/2012 was just under $2bn for the Yadana/Yetagun fields.

Two large-scale projects came onstream in 2013, and the government is evaluating offers from a bidding round for 18 more licences.

More significant still is the jade trade. The best quality jade in the world is found in northern Myanmar, a fact well known for centuries in China.

The Harvard Ash Center estimates that total revenue for the jade trade is $8bn, with approximately 50% of this accrued via unofficial exports to China.

In 2013, the United States government renewed its ban on jade imports from Myanmar.

Minds are focused

Under the Framework for Economic and Social Reforms, the government of Myanmar committed to implement the rules of the Extractive Industries Transparency Initiative (EITI), which, via the updated 2013 standards, emphasise implementation according to national priorities and innovative ways of going beyond the minimum requirements.

A presidential decree late in 2012 committed Myanmar to signing up to EITI by the end of 2013. While it missed the deadline, minds within government, the private sector and civil society have been focused.

The level of interest in transparency and accountability among key oil and gas and mining companies is high.

While operators with a track record in Myanmar, such as Total and Chevron, can draw on deep international experience of EITI from within their organisations, other large companies such as PTT Exploration and Production, Petronas and Daewoo are on a learning curve.

Meanwhile, prospective operators such as Shell and BG are eager to support EITI, and hope for a transparent bid process.

China moves closer

At a recent meeting between the EITI co-ordinating body and the extractive sector players, Chinese mining company Wanbao expressed its desire to participate in EITI.

Association of Southeast Asian Nations neighbours such as Indonesia, the Philippines, East Timor and Vietnam are either implementing or considering signing up to the initiative.

The Chinese government has been required to take a view on EITI through regional proximity and the reporting obligations of its companies.

China's ministry of foreign affairs invited the watchdog Global Witness to present on EITI last year.

While it's possible to tell a convincing story of Myanmar's initial journey to- wards cleaning up its extractives sector, the challenges that lie ahead should not be underestimated.

The peace process involves many actors – including regional non-state armed groups that have mining interests – and discussions over benefit sharing could easily derail.

The pressure to devolve governance could also be compromised or fail to find the right balance between the centre and regions.

There are several legal instruments still in place that limit the freedom of association, which have led to prison sentences for activists.

The jade sector in particular has many vested interests who are unlikely to be supportive of reform.

Finally, the reform process itself is finely balanced, with limited capacity within government to deliver on mandates and civil society groups obliged to partner with the government after decades of disappointment.

Certainly, in terms of EITI there is a seriousness of purpose of those around the table that inspires hope that the mountainous challenges that lie ahead will meet with success. ●

Source: http://www.news.myanmaronlinecentre.com/2014/04/26/a-longview-on-myanmar-transparency-tests-rangoon/

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