Thu 30 Aug 2012
Filed under: Business / Trade,Interviews
BANGKOK – In July, Myanmar’s reformist president Thein Sein vowed to join the Extractive Industries Transparency Initiative (EITI), a global standard for governments and companies to report how much is paid for extracting natural resources, to ensure maximum transparency in these sectors.
The sale of natural resources has brought in billions of dollars to the resource-rich country’s former rulers but a huge majority of its 60 million population remain mired in poverty, with little access to basic services such as electricity, water and roads.
TrustLaw spoke to Ajay Chhibber, United Nations Assistant Secretary-General and Regional Director for U.N. Development agency UNDP in Asia Pacific, on how Myanmar can improve governance and accountability.
Q: What do you think of Myanmar’s plan to join EITI?
A: The news is very, very welcome because in (EITI) process Myanmar would take a very big leap forward in signalling its intention to ensure that its extractive industry development is done in a very transparent manner.
Of course the implementation of all of this is quite important and that also goes with a lot of the legislation that Myanmar is hastily passing. But even a perfect law would not mean much unless there’s capacity in the Ministry of Environment and other enforcement bodies especially at the local level that can actually monitor and enforce some of this legislation.
The basics of (EITI) are not complicated, but getting them implemented is quite a difficult task because you have a lot of vested interests, both inside the country and outside the country, that would be interested in coming together to make a quick buck.
Q: How important are extractive industries to Myanmar?
A: They’re very important. Overall, extractive industries form a large part of resource and revenue base of Myanmar. But extracting these in the right way is one step. How to use that natural wealth for better human development is the key.
In most resource-based developing countries, you’ll find that due to their commodity and natural resource exports Gross Domestic Product (GDP) is going up, but inequality is rising and basic human development and poverty reduction is left almost untouched. There are very few countries in the world that have managed to use their resources effectively for human development.
As a late comer to development, Myanmar has the advantage of learning from those who did it right but also from those who got it completely wrong. It will require very, very deliberate and careful management. This is an area where speed is not of the essence. The more hastily you start to try and attract foreign investment, the more mistakes you’ll end up making because you’ll lock in contracts at this point which will be hard to unravel later.
Q: How important is it for extractive projects to be transparent for solving ethnic conflicts in Myanmar?
A: People call these ethnic conflicts. They’re certainly ethnic in nature but behind all these conflicts lies, of course, the issue of resources and resource management and resource exploitation. The root cause of conflict is often not so much ethnic differences but more the lack of trust that has developed because of the way resources are being exploited in those areas.
So the EITI initiative can be a very important vehicle for the transparency that’s needed in order to build the trust that is fundamental to resolving some of these conflicts.
More than anywhere else in the country it is in the ethnic border areas that the resource issue becomes very central to both development and the resolution of conflict.
Q: Would you say EITI is the first step in Myanmar’s drive towards anti-corruption efforts?
A: EITI is a very important part of it but I wouldn’t say it is the only game in town. I think the whole issue of land management, which is partly connected to extractive industries, but it’s also for other purposes and how it’s being allocated I think becomes very important in the anti-corruption initiatives that are needed.
But more than corruption there is a broader set of governance issues that are very fundamental. You’ve had a very top down system of government. Now that you have a constitution that gives a much greater power to the local authorities and at least on paper to communities then the question is how that will get implemented.
Fundamentally there is an issue of capacity at so many levels. Also the separation of powers between the three parts of state is still work in progress. The parliament has been quite active. The role of the judiciary versus the parliament is also very important. So there are a whole host of governance issues that are not just related to corruption.
It’s the effective transformation of a state from a system which was very much command and control, top-down, to a new constitution which is giving much greater freedom and rights to people.
How to make that happen in a way that will be smooth and will continue to provide reasonable justice and governance and administration to people will be the key.
For example, how to deliver some benefits to people quickly while at the same time ensuring that you’re not doing everything too hastily that you could be leaving problems for the future.
If people could get better public services immediately – transport or electricity – these are visible things that people can see as a benefit of a new system that is coming to them. At the same time you take more time improving the overall governance in a much more systematic manner.
I think some combination of that is needed because if people just say we’re gonna wait for capacity to be built up then we’d have to wait for 10, 15 years. No one’s going to be happy with that either.
Q: What are some of the things Myanmar need to do to avoid ‘sweetheart deals’?
A: Environmental assessment for projects in Myanmar would be the first, most obvious step so people are made aware of the environmental implications of whatever investment is being carried out.
It is very possible to have ‘sweetheart deals’ if you’re not even required to have basic environmental assessment done for your project. My sense is that the government’s intent is right at the level of the president and many of his advisors. They’re well aware of where they need to go, the question is how quickly to get there and what other steps needed to get there. A good legislation is only the first step towards that.
Q: How difficult would it be for Myanmar to do a 180-degree turnaround from one of the most corrupt to one of the most transparent?
A: I think the record of Myanmar government in the recent months show they are quite capable of 180 degree turnaround. They have done it in other areas. Also, having a goal of EITI accession is a very good thing. It sets a timeframe to get certain things done in a certain way.
I think it is incumbent on all of us, the UNDP and other international organisations, to help them achieve that goal and we certainly would be very willing to put all our efforts and our best experts at their disposal to achieve this objective.
Short-term, quick, focused capacity building (for policy making) is badly needed. UNDP is about to sign an agreement with Singapore to establish a global public service centre to train people and give advice to countries on capacity building. We’re certainly willing to help Myanmar.