Burma took another step forward in committing to improve resource revenue transparency generated from its rich oil, gas and mining sectors on Tuesday by announcing plans to sign up to a set of global standards.
The former pariah nation plans to implement the Extractive Industries Transparency Initiative (EITI), a sign of its commitment to the reform process, said Jonas Moberg, head of the EITI International Secretariat.
“Many countries haven’t seen huge benefits from their natural resources,” Moberg told reporters at the press conference at the British Council headquarters in Rangoon on Tuesday.
“We’ve seen a paradox of plenty or a resource curse,” he said, adding that without the right checks and balances in place, rich resource reserves have sometimes led to corruption, imbalanced economies while fuelling and contributing to conflicts.
Moberg said the Burmese government’s commitment to EITI was a “reflection to what appears to be a genuine reform effort” and he was “very encouraged” by the government’s response that was “well above expectations.”
The initiative serves as a tool for the public to be able to better hold the government to account for how it is managing revenue from these sectors, Moberg told reporters in Rangoon at the close of a two-day visit to Burma where he met with senior government officials, including Minister of Industry Soe Thein, opposition leader Aung San Suu Kyi, and several civil society organisations.
EITI sets the global standard for transparency in the oil, gas and mining sectors and has been adopted by 36 countries, including several countries in the region.
As a voluntary initiative implemented by governments, EITI requires companies to publish all payments made and governments to disclose sums received, while an independent administrator oversees the final figures to ensure they match up.
Moberg stressed that while the Burmese government’s commitment to EITI would help rebuild public trust and confidence, it was just one small step on the road towards reforms and genuine democracy.
“Transparency is not an end in itself,” said Moberg.
“It is a means to other ends, it is a means to improved accountability, to fight corruption and hopefully to build trust and confidence amongst citizens in how this so often so critically important sector is managed and governed,” he said.
Burma’s President Thein Sein and Minister of Industry Soe Thein, who also runs the Myanmar Investment Commission (MIC) that oversees all new foreign investment, have been vocal in their support of the EITI.
“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.
“EITI is one part of the puzzle of effectively managing natural resources,” said Jared Bissinger, a PhD student at Australia’s Macquarie University who is studying Burma’s economy.
“But it’s not everything. You also need a well-informed populous, a strong civil society that can help hold government accountable, and mechanisms through which these groups can hold the government accountable,” he said.
“It’s also helpful if the government can spend resources efficiently and produce tangible benefits for the people.”
However, standard EITI reports don’t extend to cover social spending and countries aren’t required to report on how they spend the money earned from extractive industries, said EITI country manager Dyveke Rogan.
Resource revenue allocation is a government responsibility in accordance with the initiative, although in some cases countries had voluntarily extended their reporting to include information on how resource revenue was spent on local communities.
“There are countries where the reporting covers some sub-national transfers such as revenue-sharing agreements between central and regional governments,” said Rogan.
“But that’s really up to the multi-stakeholder group and the commission to decide whether they want to implement those things,” she said.
Maw Htun, an independent researcher on foreign investment said the Burmese government’s move will be welcomed by the many international companies eyeing the Southeast Asian nation’s vast natural gas reserves and mining sector.
“Previously, such companies would face heavy reputational risks for engaging with Myanmar [Burma] due to concerns over rights abuses, lack of transparency and corruption, but the announcement to sign up to the EITI will be seen as a positive step for both the government and for foreign investors,” said Maw Htun said.
“Transparency is becoming a precondition for such investments,” said the researcher.
Burma’s opposition leader Aung San Suu Kyi previously requested foreign investors not to engage with a state-owned enterprise with close links to the military government Myanmar Oil and Gas Enterprise (MOGE), due to concerns over lack of transparency.
Last week the US government signalled the green light for American firms to invest in Burma, including the notoriously murky MOGE, on the conditions firms adhered to strict reporting requirements.
However, Moberg said he’d raised the issue of MOGE complying with international best practice guidelines – through engagement with the EITI – with Suu Kyi during his two-day visit to the country.
“We discussed this topic and I think she too would say it’s a good start – but it’s not the place to stop,” he told reporters.
Open and transparent reports on resource revenue will also be powerful tools of reference for communities, parliamentarians and civil society organizations, said Maw Htun, adding there were yet-untested opportunities for independent and active civil society participation as part of the multi-stakeholder group.
However some foreign analysts have expressed doubt over the ability of the Burmese government to effectively create a functional, independent multi-stakeholder group to oversee the EITI process, stating lack of capacity and pervasive corruption as two key issues.
“It’s extremely problematic that civil society requires a significant amount of capacity building in order for EITI to function properly. In addition, the government certainly lacks the technical capacity to properly negotiate the parameters of EITI and to comply,” said one International expert in conflict analysis who spoke on the condition of anonymity.
“Given the high level of corruption and pervasive crony-ism, it’s hard for EITI to exist to its fullest potential,” the analyst said. “These concerns are not necessarily the ‘fault’ of EITI but rather the fact that Burma was/is not ready for a large amount of rapid investment.”
-Kate Kelly is a pseudonym for a journalist working inside Burma.