Investing in Myanmar? Do due diligence

RISK and opportunity have always accompanied investors in Myanmar. The recent initiatives by both the United Nations (UN) and the US to ensure that foreign direct investment (FDI) only enriches civilian enterprises and not Myanmar’s powerful military-backed entities make it imperative for foreign investors keen on operating in Myanmar to be very sure about the background and military links of their partners.

In August this year, the UN’s Independent International Fact Finding Mission on Myanmar released an 111-page report outlining how companies affiliated with the Tatmadaw (Myanmar’s armed forces) have supported “extensive and systematic human-rights violations against civilians in the Kachin, Shan and Rakhine states.”

The UN report urged companies to stop doing business with firms linked to the military, in particular the Myanmar Economic Corporation (MEC) and the Union of Myanmar Economic Holdings Ltd (UMEHL).

Primarily owned by the Ministry of Defence, MEC and UMEHL between them control businesses that range from golf resorts and sugar mills to telecommunications, breweries and gemstones.

The UN report calls for reducing the economic power of both groups in order to drive greater corporate transparency in the country. It has identified close to 60 foreign companies with commercial ties with such Tatmadaw-backed businesses, all of which, “at a minimum, contribute to supporting the military’s financial capacity”. It calls for immediate, targeted sanctions against MEC, UMEHL and their subsidiaries, and for companies to step up their due-diligence processes to ensure that their supply chains are free of involvement with military-owned businesses.

Source : The Business Times

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