Burma considers joining transparency drive for extractive industries

Burma considers joining transparency drive for extractive industries

Senior government officials met this week with a delegation from the Extractive Industries Transparency Initiative (EITI) to discuss plans for Burma to implement the global anti-corruption drive, which would require the notoriously secretive regime to disclose all payments received by energy and mining companies.

EITI head Jonas Moberg met with union ministers, led by Industry Minister Soe Thane, opposition leader Aung San Suu Kyi and civil society representatives over Monday and Tuesday to explore the feasibility of Burma to join the initiative seen by many as the leading standard for transparency in the extractives.

It follows public pledges by both Soe Thane and President Thein Sein to improve transparency in Burma’s endemically corrupt natural resource sector, as the country anticipates an influx of foreign investment in the wake of its much-lauded political reforms.

“We are preparing to be a signatory to the Extractive Industries Transparency Initiative to ensure that there is maximum transparency in these sectors and try to make sure the benefits go to the vast majority of the people and not to a small group,” Thein Sein told the Financial Times last week.

Moberg welcomed the decision as a critical step in Burma’s democratic transition.

“As the government embarks on reforms and continues to welcome foreign investments, it is important that secrecy is replaced with transparency,” he said ahead of his visit.

Sam Bartlett, EITI’s Regional Director for Asia, told DVB that although the government appeared “serious” about the commitment, it would take “quite some time” before Burma was ready to join EITI. In order to become a candidate country, Burma would first need to fulfil five conditions, including setting up collaborative political mechanisms.

“We don’t expect them to formally submit a candidacy application at this stage,” he said. “There’s quite a detailed sign-up process.”

“A key variable is for the government to work together with industry and civil society and although things are opening up, a lot of work still needs to be done to build trust and confidence.”

This echoes concerns expressed by campaigners, who say that Burma’s civil society still lacks the freedom to openly challenge or work with the government.

“While EITI in theory is a model that can positively contribute to improved resource governance, we remain concerned that civil society in Burma is not adequately prepared to participate in this multi-stakeholder initiative,” Paul Donowitz, Campaign Director at Earth Rights International (ERI) told DVB.

Exiled NGOs working on revenue transparency have also been excluded from the process so far. Jockai Khaing from the Thailand-based Arakan Oil Watch told DVB that he only learned of the meeting through EITI’s media release. On Tuesday, the state-run New Light of Myanmar published its first story about Monday’s roundtable with government ministers, but offered little information to the public.

The EITI has itself been criticised as “slow”, “lacking teeth” and indulging in “transparency for transparency’s sake”. In a nutshell, companies must publish payments made, while governments disclose sums received, and an independent administrator reconciles them.

“In a number of countries that have announced their intentions to join EITI, the disclosures under the reporting template have not provided the level of information civil society needs to assess the payments and receipts, and instead have served as an inducement for increased investment with little benefits,” said Donowitz.

In the Burmese context, its implementation is likely to be particularly complex, since most of the country’s vast natural resources are found in the conflict-torn ethnic border regions, such as Kachin and Karen state. Greater transparency of revenue flows – particularly at the sub-national level – could empower ethnic communities to hold the government to account, but it is not likely to be either a smooth or speedy process.

Some of the key challenges will be to establish which groups to engage with and through what mechanisms. An inside source told DVB that what the government is “sure to prefer is union building processes rather than state independence discussions” but that “if it is transparency and accountability that is important to exile groups, then the process offers good prospects.”

The timing of the government’s announcement is broadly seen as tied to the removal of western sanctions. Last week, the US government controversially gave the green light for investment in Burma’s energy sector but insisted on mandatory reporting requirements for payments exceeding $500,000.

During her recent trip to Europe, Suu Kyi repeatedly slated the state-owned Myanma Oil and Gas Enterprise (MOGE) for its lack of transparency. MOGE has well-established links with the military and its cronies, and faces long-standing allegations of siphoning off millions of kyat into offshore bank accounts.

“If there’s going to be more investment in the oil, gas and mining industries, a lot of people will be asking about the safeguards that ensure revenues contribute to development in Myanmar [Burma] and they will be looking for international best practices in this regard,” said Bartlett.

“It is interesting that the government is enthusiastically exploring this idea, but a lot more still has to be done before it can start to have a meaningful impact.”

Burma currently ranks 180 out of 182 on Transparency International’s Corruption Perception Index.

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