Issue No. 43, March 2016
Myanmar – Another step in the transition
The November 2015 elections that have brought the National League for Democracy (NLD) to power were largely free and peaceful. Just as encouragingly, the transition period from November 2015 to March 2016 have been marked by political jostling and deal-making rather than violence. The new NLD-dominated parliament elected the president, U Htin Kyaw , on March 15th, another milestone on a long path towards restoring national stability. However, Myanmar’s continued political transition depends in large part on the NLD’s ability to establish a constructive working relationship with the military (Tatmadaw) who exercises administrative control over state, division and local governments and controls three key ministries – Defense, Home Affairs and Security and Border Affairs.
Second, a focus on the national peace process will bring the debate over federalism to the forefront in 2016. This will include debate on decentralization and revenue sharing between states/divisions and the central government on natural resource projects, primarily oil and gas and mining.
In terms of governance, Myanmar has been an Extractive Industry Transparency Initiative (EITI) candidate country since 2014, and the first Myanmar EITI report released in January 2016 (including 57 companies disclosing data). Such transparency would have been unthinkable in 2011 when the transition began. The process has seen significant civil society engagement and support from senior levels of government. As the Natural Resource Governance Institute has highlighted, there is still a long way to go, but an important foundation is being laid to help Myanmar convert its natural resource wealth into sustained benefits for the country’s citizens.
After the successful auction of on and offshore oil/gas blocks in recent years, the oil and gas sector was one of the sectors that benefited most from the outgoing government’s market liberalization policy. Local industry leader, Ken Tun has said of Myanmar “we can be the generator of Asia”. Though expectations are high in the resource-rich states and divisions, any revenue from future oil/gas development projects is still several years away (and assumes commercial discoveries). In the meantime, large special economic zones (SEZs) are planned for Kyauk Phyu, Rakhine State and Dawei, Tanintharyi Region, two possible hubs for future offshore gas development. If successful, the SEZs have the potential to transform the economies of these two regions through local job creation, improved infrastructure and vastly enhanced connectivity with international markets.
Beyond infrastructure needs, another challenge for future oil and gas operators will be local labor skills. Labor productivity is 70% below that of benchmark Asian countries and is one of the biggest inhibitors to economic growth. While exploration phase capacity building efforts are often limited in scope, oil and gas industry support for basic skills training alongside other international partners (e.g. the World Bank, Asian Development Bank) may help achieve Myanmar’s local content objectives in the years to come and the economy overall.
After stagnating for 60 years, Myanmar is entering the second phase of a decades-long project to reform and modernize, facing enormous challenges on all fronts. Once prospects for the commercialization of oil and gas reserves become clearer, the industry will have an important role to play in Myanmar’s longer term economic development through contributions to infrastructure development, employment, local procurement, training, and other forms of capacity building. Companies that begin laying the groundwork for social performance programs now will have the most lasting positive impact over the next decade.
This note is presented by Chris Nolan of Currahee - a Yangon-based advisory firm and a local partner of Acorn International in Myanmar. Acorn International LLC delivers social and environmental risk management consulting services to the extractive industries and investors worldwide. We work with local partners in over 80 countries worldwide. Use of these local specialists is paramount, particularly in developing countries, where information is often scarce, second-hand, and unreliable. We look forward to engaging in continuous improvement for the industry and building capacity with our partners.
Acorn International LLC delivers social and environmental risk management consulting services to the extractive industries and investors worldwide. We work with local partners in over 80 countries worldwide. Use of these local specialists is paramount, particularly in developing countries, where information is often scarce, second-hand, and unreliable. We look forward to engaging in continuous improvement for the industry and building capacity with our partners.
Issue 41 -FPIC Is Here To Stay
Issue 40 -A Multi-Stakeholder Partnership in Ghana: Marine and Fisheries Management
Issue 39 -The Colombian Social Responsibility Framework: An Evolving Model
Issue 38 -Social Network
Issue 37 -A Community Look-back on Ebola
Issue 36 -Ghana and the Voluntary Principles: Implementing the Human Rights Protection Framework
Issue 35 -Inundation
Issue 34 -Colombia: Local Hiring Requirement for O&G Industry
Issue 33 -Mature and Frontier Mining Geographies: Where does Greater Risk (and Reward) Reside?
Issue 32 -Local Content in Mining: Increasing Expectations and Potential Solutions
Issue 31 -Fast Money Beware: Non-Technical Risk Due Diligence
Issue 30 -Social and Environmental Performance - Considerations for Difficult Commodity Price Environments
Issue 29 -A Window into the Opposing View - Stakeholder Concerns about Oil and Gas in Mexico
Issue 28 -Why Non-Technical Risks Matter to the Mexican Apertura
Issue 27 -Equator Principles:Drivers of Sustainability in the Oil and Gas Industry?
Issue 26 -The Transparency Tightrope: Examining UNEP’s New Access to Information Policy
Issue 25 -July 2014: Bouston
Issue 24 - July 2014: Land Tenure and Property Rights - Where Legal Compliance May Not Be Enough
Issue 23 - May 2014: 3 Things I Learned in Mexico - Non-technical Risks in the Oil Industry
Issue 22 - April 2014: Capacity Building on Stakeholder Engagement
Issue 21 - March 2014: Above-ground Facilities and Stakeholder Engagement: Deploying the 'CAC'
Issue 20 - March 2014: A Starting Point for Shared Equity
Issue 19 - March 2014: What It Takes to Run a Great Consulting Firm
Issue 18 - February 2014: Considering Human Rights - Trends and Lessons in Oil and Gas Impact Assessments
Issue 17 - June 2013: Managing Environmental Health in International Development Projects
Issue 16 - January 2013: Integrating Environmental and Social Performance throughout the Project Lifecycle
Issue 15 - January 2013: The State of Shale Play in 2013
Issue 14 - August 2012: Building Environmental and Social Governance in Host Countries
Issue 13 - May 2012: Human Rights and Business: A New Era
Issue 12 - February 2012: Extractive Industries Confront Pressure for Greater Transparency
Issue 11 - January 2012: Key Updates to the IFC Sustainability Policy and Performance Standards
Issue 10 - June 2011: Oil & Gas and NGOs: New Rules of Engagement?
Issue 9 - February 2010: Annual Study of Sustainable Development Priorities
Issue 8 - January 2009: Annual Study of Sustainable Development Priorities
Issue 7 - May 2008: Top Ten Lessons Learned About Health Impact Assessment
Issue 6 - January 2008: Annual Study of Sustainable Development Priorities
Issue 5 - September 2007: Results of web forum with our International Partners
Issue 4 - January 2007: Annual Study of Sustainable Development Priorities
Issue 3 - May 2006: Suggestions and tips for safe international travel
Issue 2 - January 2006: Annual Study of Sustainable Development Priorities
Issue 1 - November 2005: The Top 10 “unspoken" criteria for determining the success of EIAs