Interview: Vicky Bowman
How would you assess Myanmar’s move towards a more transparent economy so far?
VICKY BOWMAN: Over the last few years we have seen a combination of factors improve transparency here. The government’s reform agenda has led it to look at international standards, and they have been encouraged by other governments and by companies. For example, they applied to join the Extractive Industries Transparency Initiative (EITI) a couple of years ago, and we are just waiting to see whether they can submit their first report in January 2016.
EITI is a very systematic process around oil and gas and mining revenue transparency. It measures what the government collects against what companies say they pay and checks for a discrepancy between them. At the moment there is a lot of data collection within the ministries and companies.
There has also been international assistance from institutions such as the World Bank, which has helped with the telecoms sector. It introduced a new, more transparent type of tendering process. We often use the telecoms licences as an example to encourage other departments if they are privatising or are considering tendering. Improvements have also been made to the real estate tendering process.
Can mining and petroleum legislation balance the need for public revenues and environmental sustainability with remaining attractive to investors?
BOWMAN: EITI will be interesting, because for the first time the people of Myanmar will get a sense of how much revenue is coming in from extractive industries. There have been reports about the jade sector, and how much is being earned and how much potential revenue is being lost through illegal mining. So that will generate a lot more public interest.
Experienced oil and gas companies feel that taxes are very high in comparison with other high-risk countries, so the overall consensus is that it is a good deal for the government. It is difficult to say with the mining industry because it is so fragmented, and many people are unable to pay taxes because they are not making a profit on production-sharing contracts. It has generated a debate around legislation, which should allow for a good mix of risk and reward for the extractive industries. Distribution of revenues will be a challenging debate for this country, especially when deciding how much will be returned to states like Rakhine, Kayin and Kachin, for example.
Have you noticed a shift in how private firms are investing in Myanmar’s extractive industries? What impact will this have on local communities?
BOWMAN: Since US sanctions were lifted the policies of Western governments have changed, the government has tendered out oil and gas blocks, and there has been a big shift in the type of oil and gas companies coming in. The entry of European, American, Canadian and Australian operators has been positive, as most of those companies have strong global commitments to responsible business, and environmental and social protection. They are members of the International Petroleum Industry Environmental Conservation Association, and follow International Finance Corporation standards, which are probably the most realistic standards to be implementing here. They are designed to suit an emerging country like Myanmar that wants to protect its environment. These standards will improve safety, which has been one of this country’s greatest weaknesses.
Mining is different. International mining companies are concerned about legal certainty and conjunctive tenure, so we are not seeing standards improve in the mining sector. This is needed because risks in mining have a greater impact on people. International operators are keen to work with stakeholders, and have been conducting impact assessments while thinking of innovative ways to benefit the local economy.
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