It is scheduled to move to Yangon and be restructured so it eventually operates as an independent organisation similar to the Central Bank of Myanmar.
Observers inside and outside the country will be watching closely to see whether its new status will mean greater resources and greater authority – and, if so, how MIC will use such resources. Will it prioritise the rights of the people of Myanmar or the interests of foreign investors?
The MIC changes reflect Myanmar’s strategic efforts to attract foreign direct investment to spur economic development. Government figures show contracted FDI topped US$4 billion in the 2013-14 fiscal year ending March 31. The Directorate of Investment and Companies Administration says this is nearly triple the previous year’s investment, creating 90,000 new jobs.
The government hopes FDI will double again in 2014-15. With that goal in mind, it refuses very few projects.
There is still tremendous pressure to attract more FDI, and many potential foreign investors – both states and corporations – are demanding bilateral investment treaties, or BITs, to protect their interests in Myanmar.
There is growing concern, however, that desire for rapid economic growth will put corporate interests ahead of human rights and the environment.
BITs essentially give investors the standing of states in international arbitration to resolve disputes over regulations that reduce their profits or the imposition of performance standards, such as technology transfer or sourcing local products and labour. Investors have used BITs to challenge environmental, health and affirmative action regulations in other jurisdictions, impacting human rights and the environment.
Arbitral awards over disputes can run into the hundreds of millions of dollars and are enforceable around the world. The result can be a “regulatory chill”, where states regulate cautiously to avoid litigation by affected investors.
Myanmar has joined the investment law regime. It has signed the 2009 ASEAN Comprehensive Investment Agreement, has BITs with regional neighbours and has signed the New York Convention on the enforcement of arbitral awards.
Yet many states are concerned about losing their right to regulate investment and have moved to renegotiate terms.
Developing nations, including fellow ASEAN members Indonesia and the Philippines, have begun to rethink the logic of BITs because of these concerns.
To ensure investment benefits the people of Myanmar, and to avoid costly arbitration, Myanmar must put in place a legal framework that clearly demonstrates its commitment to national development in a manner that enhances respect for human rights and protects the environment.
To do so it must develop and implement national laws in compliance with international standards in order to bolster the national legal system, which lacks key rules and procedures related to the protection of human rights and the environment. In the absence of a robust national regulatory framework, investments may fail to help improve the lives of the people in Myanmar, and may even aggravate existing problems.
This is where the restructured MIC comes into play.
States have the authority to control the entry of foreign investment and regulate corporate activities. Under the foreign investment law of 2012, the MIC is the gatekeeper that licenses would-be investors in Myanmar. It is the primary task of this investment administrative agency to ensure that foreign investment benefits the people of Myanmar.
Investment commissions are set up by governments both to promote and regulate investment. The MIC can restrict entry on the basis of environmental and social impact assessments so it is the first line of defence protecting human rights and the environment from the negative impact of corporate operations. The MIC must ensure that investors will be subject to rules protecting human rights and the environment.
Positive steps have been taken. Myanmar’s foreign investment law lays out Myanmar’s intention to ensure that foreign investment benefits its people. It sets out basic principles that characterise suitable investment, making it clear that investors’ interests will be protected as long as they comply with their duties and relevant national laws.
The law allows the MIC to determine which types of investment will be permitted in Myanmar. It restricts or bars businesses that harm local cultures and communities or the environment. This is an important declaration of the government’s right to regulate in line with its responsibility to protect human rights. The MIC must maintain this regulatory space as an independent body.
The government of Myanmar acknowledges the need for sweeping legal reform and the difficulty of the task ahead. A wide range of laws, rules and procedures are currently under review.
This momentous task is being undertaken with limited resources and capacity. The uncertain state of affairs leaves open a regulatory gap even as new investments flow in. Much will depend on the work of the MIC as an independent regulatory body. It must balance the pressure to promote investment with a commitment to regulation.
The new MIC must overcome limited capacity and resources to protect not only Myanmar’s independence and integrity but also its environment and, most importantly, the human rights of the people.
Daniel Aguirre is the International Commission of Jurists’ legal adviser for Myanmar.
source: The Myanmar Times