12
MAR
2015

Myanmar Investment Law vs. Human Rights

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Courtesy of PWC

Courtesy of PWC

In an attempt to promote business and reconcile its investment rules with comparable laws in neighboring ASEAN countries, the government of Myanmar has recently released its draft Investment Law. Myanmar’s Directorate of Investment and Company Administration (DICA), with the assistance of the International Finance Corporation, has produced a draft law designed to consolidate the Foreign Investment Law (2012) and the Myanmar Citizen Investment Law (2013) and thereby create a level playing field for both local and foreign investors. However, the proposed law has raised concerns among legal experts that as currently framed it may usurp international human rights standards.

The purpose of the new investment law is to clarify a range of issues facing companies seeking to operate in that country. However, the draft law is not without its problems. The draft investment law would give investors the right to challenge new policies or laws in domestic courts and possibly in international arbitration and it would entitle them to full compensation if Myanmar government regulations impact their profits.[1]

The International Commission of Jurists (ICJ) has expressed concern that the Draft Investment Law establishes significant rights for investors without protecting the rights of those affected by business activity. It would require investors to follow national laws without acknowledging that the existing national legal framework does not adequately protect human rights or provide remedies for those whose rights have been violated.[2]

The Draft Investment Law does not establish or protect Myanmar’s ‘right to regulate’ to protect human rights or other social or environmental needs.  “The Draft Investment Law’s proposed legal framework would provide all investors the right to be consulted and challenge any new national law or regulation that may impact their profits,” said Daniel Aguirre, ICJ International Legal Advisor in Myanmar. “This framework would allow businesses to challenge government policies aimed at addressing legitimate needs within the country, and it could create a regulatory chilling effect in which Myanmar’s government would find itself in the troubling position of evaluating whether the passage of new social policies would lead to costly lawsuits from investors.”

Combined with the recently developed National Land Use Policy (see: Human rights in Complex Environments, Nov. 11, 2014), the Investment Law would set the stage for businesses to operate without regard for the human rights implications arising from their business operations. However, for western businesses operating in Myanmar, the increased human rights and reputational risks could prove to be a significant problem. As the global community pays greater attention to Myanmar as it becomes a greater economic force, the consequences of such growth without restraints on the rights of Myanmar’s people will likely become problematic. For western businesses entering into this frontier market, human rights due diligence with regard to business operations will be of even greater importance. As international human rights law plays a greater role in international business operations, domestic business laws that ignore human rights considerations will expose unwary businesses to greater risk.

 

[1] Myanmar Times, http://www.mmtimes.com/index.php/opinion/12356-protecting-profits-over-people.html

[2] ICJ, Press Release, https://businesshumanrightsburma.wordpress.com/2015/02/09/myanmar-investment-law-at-critical-drafting-stage/

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