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Myanmar Investment Commission accused of transparency failures

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Exclusive: Multiple transparency failures by the Myanmar Investment Commission to publicise proposed infrastructure projects are exacerbating tensions between local communities, the government and big business.

An investigation by The Myanmar Times shows that more than two years since the Investment Law came into force, legal requirements for disclosure by both the MIC and investors are still not met.

“People have a right to know what is proposed in their communities before any project is approved by the authorities. The lack of transparency in doing businesses will escalate potential violations, corruption and exploitation of local communities and resources,” said rights activist Ma Thinzar Shunlei Yi in response to the investigation.

The absence of reliable information exacerbates the “trust deficit” between business, government and the public, she added.

The findings come as the National League for Democracy-led government is making a big investment push to shore up support for economic growth. In particular, infrastructure initiatives are a priority for both Nay Pyi Taw and Yangon’s executive.

Yet regional parliaments and local stakeholders are feeling excluded by the MIC, particularly on large-scale projects. Regional MP U Aung Kyaw Thu opened an enquiry in May in the Mon state hluttaw into how the MIC approval process has bypassed the regional legislature and executive. The probe seeks to unravel how the state government is forced to shoulder responsibility for companies approved by the MIC but which – according to the MP – are doing little work on the ground, contrary to what their proposals claim.

Policy failure

The Directorate of Investment and Company Administration (DICA) serves as a secretary to the MIC and supports the body’s operations. U Thaung Tun, who chairs the MIC, is also Minister for Investment and Foreign Economic Relations in charge of drumming up inbound investment approvals. Multiple phone calls to the MIC, DICA and the ministry by The Myanmar Times failed to elicit an official response to the investigation.

Section 45 of the Investment Rules stipulates that all investment proposal summaries must be published on the government website “within 10 working days after the date of receipt for public information before issuing the Permit.” The summary is supposed to be prepared in accordance with Rule 36 and 38. (See Figure A)

Figure A: The Myanmar Investment Rules.

Investigations show that the authorities have completely failed to release any materials on its website prior to approving investment proposals.

Even for documents published after approval, key information is found to be missing. The form does not include company website, contact point for enquiries, and exact location of the proposed scheme. In the 10 most recent proposal summaries published, The Myanmar Times found that the majority are scanned PDFs missing basic information. (See Figure B)

Figure B: This is the analysis of information disclosure of the 10 most recent proposal summaries published on DICA”s website.

Manuscript and scanned PDF forms are not searchable online and therefore difficult for the media and other stakeholders to find either at the time of the submission, or afterwards.

Some have more accurate information missing than others. One proposal submitted by Modern Era Handbags Co last year says the investment will be located in China, while another one, handwritten, fails to mention the company name or names of management/ owner. (see Figure C and D)

Figure D: The handwritten proposal fails to mention the company name or names of management/ owner.

“It’s very important that at the early stage of screening a project, any significant potential problems are flushed out through discussion and consultation, and alternatives identified. The earlier this is done, the less likely it is that there will be subsequent protests or investor disputes,” said Vicky Bowman, director of Myanmar Centre for Responsible Business.

The same Proposal Summary should be used for the purposes of screening by the Environmental Conservation Department (ECD) to determine whether or not an environmental impact assessment (EIA) is required, and by the MIC. This would ensure consistency and reduce paperwork for the investor.

“That proposal should be available publicly before the MIC decision is made so that stakeholders have access to it, including through media reporting. They should also have a channel to feed in any concerns and questions to the MIC,” Ms Bowman said.

The proposal form therefore needs to be redesigned, she added, to be in electronic and searchable open data format, and include environmental and social data, such as proximity to environmentally sensitive areas. This would also enable the environment ministry to undertake the screening process.

Lacking information, communities in Myanmar often become aware about a project coming in when the investor tries to do a scoping survey or to buy land from a villager, according to NGO Paung Ku. This approach leaves villagers with fear and uncertainty about what might be imposed upon them.

The NGO’s senior programme coordinator Doi Ra said the MIC’s policy failure amounts to an abdication of its responsibility to local communities. “The MIC needs to publish information about both the project and the investor well in advance for the communities to be informed and have a say on equal terms. Also, those ‘minimum summaries’ currently published on DICA’s website are wholly insufficient.”

“Especially when the approval is coming from the MIC at the Union level, it is even harder to access information either from the state government or parliament, as they themselves are often kept in the dark.”

The authorities do not seem to understand these provisions. When The Myanmar Times broke the news in June 2018 that Yangon-registered company Kyaw KS Development Trading Co was seeking township approval to extract 5 million cubic metres of sand in Tanintharyi Region DICA’s spokesperson declined to say whether the company had applied for an MIC permit. This contravenes Investment Rule 45 on the need to publish corporate applications and proposals.

Doi Ra said individual projects associated with the China Myanmar Economic Corridor, the Yangon New City and developer Gold Coast KTMG Myanmar, which reportedly proposed a US$38 billion “new city” scheme near Sittwe on 7000 acres of land, ought to go through the proper process when they reach the project proposal stage. The MIC is legally obliged to publish the proposals for public dissemination before considering the applications.

“Communities are the ones facing the impact of land speculation and risks of land grabs. How the MIC and some companies are currently engaging with the communities – or no engagement at all – is a violation of our constitutional rights by forcing the communities to live in constant insecurity and fear. Worst of all, in some cases, they create irreversible social division.”

But those are not the only areas where the authorities fail to enforce.

Legally-required company reports

Rule 196 requires companies to submit an annual performance report within three months of the end of the fiscal year. Companies should also, according to Rule 199, publish those reports within three days from the date of submission either on their own website or on the MIC’s.

While the MIC issued a notice last June reminding companies of the need to do so, it has yet to actively enforce this, The Myanmar Times reveals. To date no report or weblink has been uploaded on the MIC’s website.

MCRB’s latest Pwint Thit Sa report also confirms that these documents, in practice, are not being submitted or published. “While further guidance is required from DICA on these reports, companies should nonetheless be submitting them and disclosing them on their company websites, including to support their wider stakeholder communication.”

“Company disclosures plays a big part in an investor’s decision to invest as well as good corporate governance,” commented Ma Cherry Trivedi, head of the Myanmar Institute of Directors.

Despite progress made since 2011, she said the authorities and businesses need to take a stronger stance in their commitment to adhere to laws and regulations in order to attract more investments from abroad.

But there are improvements on other fronts. The new Companies Law established the first official electronic registry for companies. MyCo, DICA’s online searchable database, provides free and open access to company name, type, registration number, director names and address. Other information filed with the registrar is available to the public on payment of K10,000. These provided a degree of access to official corporate information to the public and journalists in Myanmar not available before.

The investment body is not alone in the lack of transparency. U Phyo Min Thein last October filed a lawsuit against three Eleven Media journalist for publishing “incorrect information” about the Yangon Metropolitan Development Public Company (YMDPC) under Penal Code 505(b). The matter was subsequently addressed through the Myanmar Press Council and remains unresolved.

“The media serves public interest by reporting on such dealings. If the government and companies want accurate reporting, they must provide full disclosure. The alternative is to complain about inaccuracy and file criminal complaints against the media, which, though currently the preferred option, feeds a toxic cycle that damages press freedom and trust between government and the public,” commented a Yangon-based journalist who declined to be named.

However, YMDPC still does not have a website or official social media presence.

“A major company without a clear channel for media communication or even a website inspires nothing but distrust. Similarly, a government that does not abide by its own rules and hides its dealings with companies is worrying,” the journalist added.

Source: Myanmar Times

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