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Burma faces heightened ‘resource curse’: report

Easing economic sanctions without revenue transparency is likely to exacerbate Burma’s resource curse and solidify the military’s control of the economy, a campaign group warned today.

Despite recent moves to discuss Burma’s budget in parliament, oil and gas revenues remain undisclosed and continue to be siphoned off by the military, according to a new report by Arakan Oil Watch.

“With new gas projects in the pipeline and more investors pouring in, Burma’s people urgently need to know where the gas money is and how it is spent,” said Jockai Khaing from Arakan Oil Watch. “A new influx of revenues without transparency will simply entrench military dominance of the economy.”

Gas revenues are set to increase by 60 percent to $US4.1 billion in 2013 with the completion of the Chinese-backed Shwe gas project and Thai M-9 has block venture. Campaigners warn that further investment could lead to increases in human rights abuses and conflict in ethnic minority areas, such as Karen state, where mining projects are on the rise despite growing community pushback.

“Burma is now in a peace-building process, and we are only at the first step of initial agreements on ceasefires,” Paul Sein Twa from Burma Environmental Working Group (BEWG) told DVB. “We worry that if they push forward with investment in these conflict areas at this fragile stage it will also contribute to more fighting and conflict and tension.”

The group is calling for greater community engagement and accountability on resource development projects. Burma currently ranks third to last on Transparency International’s Corruption Perceptions Index for 2011.

But its undemocratic constitution and legislation, including the Special Funds Law, grants the military absolute power over the country’s resource wealth, according to the report. The Special Fund Law, enacted last year, establishes reserve funds for “defending the Constitution and the State from external and internal threats.”

Twenty-eight out of 35 cabinet ministers are former military officers, including the Revenue Minister, U Hla Tun, and the heads of the energy, mining and electricity ministries.

Government and military-owned companies are exempt from paying tax and the only company authorised to partner with foreign companies for oil and gas exploration is the wholly state-owned Myanmar Oil and Gas Enterprise (MOGE).

“According to a former official of [MOGE], income from the sale of the Yadana gas never even enters Burma,” says the report, referring to the lucrative pipeline part operated by US company Chevron and France’s Total. “The payments are disbursed by Thailand through a third party to bank accounts in foreign countries.”

Campaigners believe that the military-run enterprise and arms dealer, the Union of Myanmar Economic Holding Limited (UMEHL), is a key player in Burma’s resource trade. “As oil and gas revenues are the single largest income source for the regime, it is widely believed that UMEHL has access to these revenues for the purchase of weapons,” warns the report.

Paul Sein Twa told DVB that the international community should not consider easing economic sanctions before there is substantial improvement on Burma’s resource management. “This is a critical time right now and there needs to be a warning to foreign investors in Burma.

“If sanctions are lifted it is the military cronies that will benefit. For the communities to benefit there needs be some transparency provisions.”


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