Beef Up Investment Rules: NGOs

Five nongovernmental organizations called on the United States Friday to establish a strong regulatory framework to monitor American companies investing in Burma following the lifting of economic sanctions on the once-pariah nation. “We continue to be deeply concerned by the U.S. government’s decision to lift all remaining sanctions, and allow corporations unrestricted investment access to Burma despite widespread corruption, ongoing human rights violations and a total lack of rule of law,” the rights groups said in a statement. EarthRights International, Freedom House, Physicians for Human Rights, U.S. Campaign for Burma and United to End Genocide said the current set of reporting requirements proposed for U.S. companies investing in Burma were not effective. They made the statement after submitting a joint comment together with 12 NGOs to the U.S State Department regarding the “Reporting Requirements on Responsible Investment in Burma” that will be applied to American companies. The United States in May announced an easing of investment and financial restrictions to reciprocate reforms in Burma, allowing American companies, which had been banned from the country for the past 15 years, to obtain licenses to invest there. The policy shift suspended sanctions across all sectors of Burma’s economy and the export of financial services. But the NGOs said that current requirements are not comprehensive enough to hold foreign firms accountable for their investments in Burma. “Although U.S. companies will be required to report on their investments, the current requirements lack specificity about enforcement and consequences for non-compliance,” the groups said. Loopholes also exist which enable companies to designate information as “confidential” in order to avoid public scrutiny, they warned. “The U.S. government should take immediate steps to ensure that there is a strong regulatory framework that can effectively promote accountability and transparency.” ‘Direct correlation’ Reduced sanctions, along with reforms to the financial system—which included the eradication of a dual exchange rate system—have made Burma’s business environment attractive to potential foreign investors. The Burmese government is also in the process of reforming its business sector through a foreign direct investment law which is expected to liberalize foreign stakes in joint ventures and lift restrictions to foreign investment in certain sectors. The NGOs cautioned that there is “a direct correlation between foreign investment and human rights abuse in Burma,” particularly in the country’s resource-rich ethnic minority areas. “As investment floods unfettered into the country, there are real risks that American companies will find themselves complicit in rights violations unless the U.S. government enforces regulations that mitigate some of the negative impacts of investment,” they said. Rights groups have already expressed concerns over an increase in the number of land grabs authorized by the Burmese government for the purpose of creating industrial zones to attract foreign investors, which have displaced farmers and local communities. The NGOs said that U.S. firms have claimed their investment in Burma will raise the standard of human rights in the country, but that “history demonstrates that American companies are not models of corporate responsibility, especially when it comes to extractive industries.” Many of the companies poised to be the first to enter Burma are targeting the country’s extractive resource sector, which the NGOs said lacks transparency and suffers from “pervasive corruption.” Profits generated by the sector are known to have gone towards military operations in ethnic areas and worsened the conflicts there, they said, adding that individuals who control access to the sector routinely engage in forced labor practices, land confiscation and evictions of indigenous communities. Reporting recommendations In the comment submitted to the State Department, the 17 NGOs called for tighter reporting requirements for U.S. investment in Burma. The recommendations included reassessing the designation of some reporting information as confidential and the designation of “threshold amounts” for reporting. They also pointed to insufficient attention to the inclusion of subsidiaries, contractors and business partners and the inclusion of language that might permit companies to bypass reporting on issues. They also emphasized the need for the timely release of the final reporting requirements so that the information collected can be used to advance human rights and political reform in Burma. “We strongly urge the U.S. government to implement the recommendations outlined in the comment submitted by our organizations and others, which are designed to strengthen accountability and transparency of U.S. corporations investing in Burma.”
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