Article: Burma needs "responsible investment" of foreign capital

A new report -- "Drawing the line: the case against China's Shwe Gas project, for better extractive industries in Burma" -- was released on September 30, 2013 at a press conference held at the Meeting Hall of the Royal Rose Garden in Yangon. The report which was researched by Shwe Gas Movement calls for suspension of the Shwe Gas Project on the grounds that it sets a dangerous precedent for the extractive industries and leads to ongoing human rights abuses that include land confiscation, poor labor practices, environmental damage and exacerbation of tensions with ethnic nationalities.

According to the press release, this new report examines the Shwe Gas Project as a case study of the failures of the country's booming extractive sector. Based on testimony from locals in all affected areas and analysis of Myanmar/Burma's legal setting, the report concludes that weak governance, unfair distribution of revenue and continued human rights abuses are cause for suspension, and that addressing these fundamental problems now will pave the way for more responsible future investments in one of the nation's fastest-growing industries.

Myanmar needs "responsible investment" of foreign capital as it seeks to accelerate economic development, opposition leader Aung San Suu Kyi said. The country also needs to improve its rule of law and democratic reforms must take place soon, not by 2015 when general elections will be held, Suu Kyi said at a conference in Singapore on 20 September, according to Klaus Wille from Bloomberg News.

"If you are going to try to revive the economy, you need capital," Suu Kyi said, when asked whether investors should wait for more political stability before committing resources to the country. "I wouldn't advise you to draw out. I would like you to continue your investments. But make them as responsible as possible," Aung San Suu Kyi said.

As mentioned in the report, the Shwe Gas Project, estimated to earn US$54 billion for the government over the next thirty years, is a dual-pipeline project transferring gas and crude oil from Burma's western coast to southern China. The project cuts across some of the country's poorest communities where many still live without electricity and even traverses areas marred by armed conflict in northern Shan State.

China dominates the construction sector in Myanmar/Burma, including numerous hydropower projects and a deep-water sea port project in Kyauk-phru in Rakhine State. The most important Chinese project is a gas and oil pipeline across Myanmar from Kyaukphru to Ruili, on the China border. The 771-kilometer-long pipeline will provide a shortcut to carry crude oil from Africa and the Middle East into China instead of the sea route via Malacca Strait. The natural gas will come from fields off Burma's west coast.

Afterward, the 771-kilometer-long Chinese pipeline project has been criticized by local inhabitants with reference to unfair land grabbing, controversial compensation and environmental disaster. Chinese companies should abide by the international norms doing development projects with respect to the voice of the people who live in the province.

Rural population in Myanmar continues to be scared of the probable environmental brunt of these large projects, and the consequential beat on their livelihood. According to the current report, Land has been confiscated all along the pipeline route for years, and it is still happening.

The researchers of this report examine recent cases in Arakan and Shan States. Shwe Gas Movement's researchers have documented the confiscation of land from 26 households in Mala Kyun, Ramree Island, none of whom have received compensation despite a written promise from state authorities. In Pyine Se Kay village, also on Ramree Island, only 6 of 14 villagers whose lands were irreparably damaged have received compensation, which was sometimes as low as 50,000 kyat (US$52.00) for half an acre.

The researchers have documentation that 23 heads of households whose land was damaged by Punj Lloyd contractors (either by the passage of trucks or mudslides carrying waste into the farmlands) complained to Punj Lloyd to no avail. The villagers then made an appeal to state authorities in April 2013, at which point an investigation commission was established on 23 April 2013. While this commission was said to have investigated the claims, more than 100 villagers are still awaiting recourse.

Much of the land used for the project was bought by speculators at unfair prices years before construction commenced, who acquired the lands by coercing villagers to sign confusing and predatory contracts. Some of the villagers are illiterate and many of the contracts were written in non-native languages, sometimes only in Burmese or Chinese, which many ethnic villagers cannot read or understand. Due to the culture of fear at the time, many people signed them nonetheless. In Namkham, however villagers refused to sign the contract pictured below, key parts of which were printed only in Chinese, as said by the researchers of this report.

In many cases, even though a contract was signed, the money never materialized. In instances where compensation was received, it was not enough to purchase new lands or sustain a household for more than a few years. Furthermore, land prices are arbitrary and vary greatly by region. In Shan State, for example, villagers in Namkham received 13,000,000 kyat (US$13,500) per acre against 2,500,000 kyat (US$2,600) in Namtu and Hsipaw, according to Northern Shan Farmers Committee.

"This is a critical moment for Burma's extractive sector; we cannot let this project set a bad example for future investors. Only when we have ensured equal benefits and humane conditions can development proceed without conflict," said Wong Aung, Coordinator of the Shwe Gas Movement.

The release of the report follows the recent opening of the Shwe Gas pipeline and the announcement of 30 additional gas and oil blocks open for foreign bidding, while the government and civil society scramble to hit an arbitrary December deadline to sign the Extractive Industries Transparency Initiative, a protocol that could green-light a flood of investments in the extractive industry. It also follows the May 2013 announcement by Revenue Watch Institute that Myanmar/Burma's resource governance is the world's weakest.

In consideration of this analysis along with the imminent rush of extractive investments in Myanmar, the Shwe Gas Movement Report concludes that the only way to avoid involvement in abuse and a future of discrimination and displacement is to put off the Shwe Gas pipeline and similar projects until the fundamental problems of poor governance and the disenfranchisement of ethnic nationalities are solved.