On February 1, 2021, the Burmese military seized power in a coup d’état that reversed much of the economic progress of recent years. The military’s brutal crackdown on peaceful protests destabilized the country, prompted widespread opposition, and created a sharp deterioration in the investment climate. Burma’s economy shrank by 18 percent in 2021, with a forecast for one percent growth in 2022, according to the World Bank. The regime’s ongoing violence, repression, and economic mismanagement have significantly reduced Burma’s commercial activity, compounded by the pro-democracy Civil Disobedience Movement that emerged in response to the coup. Many routine business services like customs, ports, and banks are not fully operational as of April 2022. Immediately after the coup, the military detained the civilian leadership of economic and other ministries as well as the Central Bank of Myanmar (CBM) and replaced them with appointees who are beholden to the regime. The CBM has imposed severe foreign exchange restrictions that limit commercial activity, and the regime severely limits access to U.S. dollars. Frequent power outages and reliance on generators have dramatically raised costs for business. The regime’s suspensions of internet and other telecommunications have restricted access to information and seriously hindered business operations. Due to COVID-19 concerns, commercial international flights resumed only on April 17, 2022. Many foreign companies have suspended operations, invoked force majeure to exit investments, and evacuated foreign national staff. The rule of law is absent, regime security forces engage in random violence, there are attacks in response by pro-democracy People’s Defense Forces, and arbitrary detentions of perceived regime opponents including labor organizers and journalists. Companies invested in the market face a heightened reputational risk. There is also the potential for the regime to expropriate property or nationalize private companies. In response to the coup, the U.S. government has imposed targeted sanctions, including on members of the regime’s so-called State Administration Council (SAC), ministers, and other authorities. The U.S. has also suspended our Trade and Investment Framework Agreement and instituted more stringent export controls. In the 2022 Business Advisory for Burma, the United States reaffirmed that it does not seek to curtail legitimate business and responsible investment in Burma. Nevertheless, investors should exercise extreme caution, avoid joint ventures with regime-affiliated businesses, and conduct heightened due diligence when considering new investments in this market.
|TI Corruption Perceptions Index||2021||140 of 180||https://www.transparency.org/en/cpi/2021/index/mmr|
|Global Innovation Index||2021||127 of 132||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, historical stock positions)||2020||-6.0||https://apps.bea.gov/international/factsheet/|
|World Bank GNI per capita||2020||$1,350||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|
8. Responsible Business Conduct
The military regime has not demonstrated any awareness or commitment to responsible business. On the contrary, the regime had enacted policies and practices that undermine economic governance and the rule of law. Moreover, security forces are engaged in an escalating pattern of human rights abuses including mass detentions, extrajudicial killings, and violence deliberately targeting civilians. These human rights abuses have seriously also impacted the business community. Two foreign national business advisors were detained and put under house arrest without charge and one economic advisor was charged for violation of the official secrets acts, with no credible evidence provided to support the charge. Local businesspeople have been interrogated and subject to detention without charges by security forces. Several employees of local businesses have been killed by security forces.
Although there are labor unions, independent NGOs, and business associations in Burma, their ability to operate has been several constrained and in some cases these organizations have been openly targeted by the military regime’s security forces. Child and forced labor are present in Burma. For more information on the human rights and labor situation, please refer to the additional resources.
The Extractive Industries Transparency Initiative (EITI) Secretariat suspended Burma’s participation in the EITI initiative following the military coup. Burmese government officials do not regularly participate in meetings of the Voluntary Principles on Security and Human Rights, although several businesses, civil society organization, and diplomats participate in Burma country discussions.
The regime has not demonstrated an interest in protecting the environment. On the contrary, the regime has pursued environmentally destructive projects like hydro-electric dams. Illegal timber harvesting and mining have increased under the regime with little regard to existing environmental regulations.
The government of Burma is not a signatory of The Montreux Document on Private Military and Security Companies, a supporter of the International Code of Conduct or Private Security Service Providers, or a participant in the International Code of Conduct for Private Security Service Providers’ Association. The Myanmar Centre for Responsible Business is a civil society member of the International Code of Conduct Association.
Department of State
Country Reports on Human Rights Practices ( https://www.state.gov/reports-bureau-of-democracy-human-rights-and-labor/country-reports-on-human-rights-practices/);
Trafficking in Persons Report ( https://www.state.gov/trafficking-in-persons-report/);
Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities ( https://www.state.gov/key-topics-bureau-of-democracy-human-rights-and-labor/due-diligence-guidance/) and;
North Korea Sanctions & Enforcement Actions Advisory ( https://home.treasury.gov/system/files/126/dprk_supplychain_advisory_07232018.pdf ).
Department of Labor
Findings on the Worst forms of Child Labor Report ( https://www.dol.gov/agencies/ilab/resources/reports/child-labor/findings );
List of Goods Produced by Child Labor or Forced Labor ( https://www.dol.gov/agencies/ilab/reports/child-labor/list-of-goods );
Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World ( https://www.dol.gov/general/apps/ilab ) and;
Comply Chain ( https://www.dol.gov/ilab/complychain/ ).
10. Political and Security Environment
Burma has a long history of civil wars and military coups marked by violence. In the aftermath of the February coup, Burmese security forces launched a brutal crackdown against the people of Burma, who peacefully protested the coup and the military’s upending of their democratic transition. In the face of brutal force by the regime, the people of Burma have disrupted the military’s ability to govern by launching a nationwide Civil Disobedience Movement, including general strikes and protests. Burma is also home to multiple long-running insurgencies in border regions, where the military competes for control with various ethnic armed organizations (EAOs). Shortly after the February 2021 coup, the military launched brutal and unprovoked attacks against EAOs, perceived opponents, and peaceful demonstrators across the country seeking to terrorize the public into submission. On September 7, 2021, the National United Government (NUG) announced a “People’s Defensive War against the military regime.” Violence is widespread and could continue to escalate.
There have been several reported fires and explosion targeting foreign businesses since the coup, including at Chinese-owned factories, an agricultural storage facility, and military related companies. Attacks resulting in destruction of property and injuries have also been reported at banks and ATMs as well. Foreign businesses are concerned about the potential for violence and destruction of property to escalate, although principally the targets have been companies or infrastructure associated with the military or companies that are perceived to be supportive of the military. The Chinese government has reportedly sought increased regime protection for an oil and gas pipeline that runs through Burma to China because of the deteriorating security situation.
The military regime has also declared martial law in several industrial townships in Yangon, suspending even the veneer of civil liberties and allowing security forces to be more aggressive in response to protests.
Protestors and military opponents have organized boycotts of businesses that have ties to the military regime with great success.