U.S. Companies Investing in Myanmar Must Show Steps to Respect Human Rights

For the first time, effective on Monday, American companies investing in Myanmar must detail in public reports the steps they have taken to respect human and labor rights, to protect the environment and to avoid corruption in an economy warped by international isolation and military dictatorship.

The reporting requirement represents a novel and, to some, controversial effort by the administration to shape business practices in an emerging economy that has embarked on a remarkable though hesitant opening under Myanmar’s reform-minded president, U Thein Sein.

Officials said the effort could become a model for other countries that might someday emerge from sanctions, like Cuba and Iran. It could also be used, they said, for countries with shoddy records of corruption or other abuses that have come under heightened scrutiny after disasters like the one in a Bangladesh factory in April that killed 1,129 workers.

“While these have been tailored to Burma,” said Daniel B. Baer, a deputy assistant secretary of state, referring to Myanmar by its other common name as a matter of American policy, “a similar set of issues would apply in other places — not only other countries emerging from sanctions but really any place where businesses are operating and investing.”

The requirements have generated considerable criticism. Business and industry groups have complained that they are onerous and make American companies less competitive than their European counterparts, which are also surging into Myanmar.

Human-rights advocates argue that they are not strong enough — and lack explicit penalties for companies that do not comply — to manage a headlong rush to invest in an impoverished country afflicted with ethnic conflicts and still dominated by the military and state-owned enterprises that operate with little transparency.

The U. S. Chamber of Commerce lobbied against the rules as the administration drafted them after President Obama’s decision to lift sanctions last July. American investment in Myanmar “should be encouraged, not hindered,” said John Goyer, the chamber’s senior director for the region. The organization has called on the administration to extend trade privileges to Myanmar.

“Other countries are not putting similar obligations on their own companies, so it is an additional requirement that our competitors do not have,” Mr. Goyer said. “Larger companies can put forth the resources necessary to adhere to the reporting requirements, but for smaller companies, it is much more difficult to do so.”

The administration imposed the requirements using the legal authority it has from a raft of economic sanctions that were imposed after Myanmar harshly repressed the opposition movement led by Daw Aung San Suu Kyi, refusing to recognize her party’s victory in elections in 1990. Her party has since been legalized, and last year she won a seat in the country’s Parliament.

Mr. Obama has welcomed the initial steps to loosen the military dictatorship and met Mr. Thein Sein in the White House in May, but the sanction laws remain on the books and can be reinstated if the reforms are reversed. The president used his authority to waive the sanctions and grant companies licenses to operate there. The State Department then spent months drafting the requirements after holding public hearings and inviting comments from companies and advocates.

The requirements apply to any company investing more than $500,000, and to all investments with the country’s state energy monopoly, Myanma Oil and Gas Enterprise.

In addition to ensuring the rights of workers and providing protections for the environment, the companies must report any payment exceeding $10,000 to government agencies or officials, any contact with Myanmar’s military, arrangements with private security companies and the details of any purchase of land or real property.

Companies are required to submit their reports within 180 days of reaching the threshold and by July each year thereafter. The reports will be made public on the Web site of the newly reopened American Embassy in Yangon, also known by its colonial-era name, Rangoon. Companies can separately submit to the State Department a report with any privileged competitive information that will not be made public.

American companies are already subject to laws governing foreign investments, including the Foreign Corrupt Practices Act, and the Securities and Exchange Commission now requires companies to report on investments in oil, gas and mineral industries overseas under the Dodd-Frank legislation that Congress adopted in 2010. But the requirements for Myanmar are the first to apply to investments across the entire economic spectrum.

Article source: http://www.nytimes.com/2013/07/01/world/asia/us-companies-investing-in-myanmar-must-show-steps-to-respect-human-rights.html?partner=rss&emc=rss