Myanmar’s military: Its power over business and human rights and the UN’s Guiding Principles

The report stated that two powerful military conglomerates, Myanmar Economic Holdings Limited (MEHL) and Myanmar Economic Corporation (MEC)—which own businesses across diverse sectors of the economy from construction and gem extraction to manufacturing, insurance, tourism and banking—were directly involved in gross violations of international human rights law and serious violations of international humanitarian law.

by requiring human rights due diligence. The Principles also require States to provide guidance to business enterprises on how to respect human rights throughout their operations.
The evidence presented by the Fact-Finding Mission is an extreme example of how Myanmar is failing on both these counts.
At present there is little prospect of containing 'military capitalism'. The military (known as the Tatmadaw) has a central political role under Myanmar's constitution and is fiscally and administratively autonomous. The Constitution provides that 25% of members of state and federal parliaments must be serving army officers appointed by the commander-in-chief, and that the Constitution cannot be amended without the approval of more than 75% of Parliament.

Other economic actors pursuing a business and human rights agenda
Myanmar emerged from almost 20 years of direct military rule in 2011, at the same time as the UN Human Rights Council unanimously adopted the Guiding Principles on Business and Human Rights and its economic potential is significant. It is rich in natural resources (gas, teak and jade) and is located between China and India, on one of the world's major trading routes. It also has a young population.
Following elections in 2010 and Aung San Suu Kyi's entry into parliament in 2012, most Western sanctions were removed. In 2016, Myanmar recorded the fastest GDP growth of any country in Asia and was hailed as the 'next Vietnam', capable of realising 10% growth. A key priority for the new regime was obtaining foreign investment to promote long-term growth and development; and diversifying sources of foreign direct investment to reduce over-reliance on China. The Guiding Principles aligned with the economic strategy of Myanmar's major democratic political party the National League for Democracy, which took power in elections in 2015 on a platform of 'macroeconomic stabilisation, long-term growth and development, economics for democracy and national economic sovereignty'.
For some international investors and domestic entrepreneurs, democratic transition represented an opportunity to employ best practice business standards to achieve sustainable, inclusive and peaceful development. Organisations such as the Myanmar Centre for Responsible Business were established, committed to the process of engaging government and private companies in changing the culture of business through capacity building, advice and support on disclosure and good practice.
There have been some notable successes. Myanmar Petroleum Resources Limited (MPRL) introduced a Guiding Principles compatible 'operational grievance mechanism' which has been a model for inspiring other businesses. For some private companies, in the aftermath of decades of military rule and cronyism, the business and human rights agenda promised a remedy for 'corruption fatigue'. Some studies report 'extraordinarily high levels' of awareness of Corporate Social Responsibility and Sustainable Development Goals among Myanmar's domestic businesses. For Western investors, the Unocal litigation in the 1990's provided a cautionary tale about the problems of investing without paying due attention to human rights. In 1996, Burmese villagers sued Unocal in the federal court of the United States, accusing the company of forced labour, murder, rape and torture in the construction of a gas pipeline in Myanmar. The case settled after almost a decade of litigation. The most significant point, perhaps, is that even if such a program were to be pursued, the rule of law is still weak in Myanmar and ensuring compliance would be difficult.

Political transition and progress
The issues arising from the nature of Myanmar's transition from military to civilian government, in terms of business and human rights, concern both state responsibility to protect and corporate responsibility to respect. Attempts to reform the jade industry provide an insight into some of the challenges. The jade industry, thought to account for half of Myanmar's gross domestic product, has long been the The most considered and influential civil society actors in the business and human rights space are not calling for the creation of National Action Plans that align with the UNGPs. Instead, they are calling for basic effective regulation of industry and the rule of law. Yet it would be a mistake to take the view that the process of democratisation in Myanmar has failed to bring about significant change to business practices. A degree of change has been wrought by top-down action-through government reform-and from the bottom up, as civil society actors find new (though contested) spaces to challenge the actions of corporations.
One example of top-down reform is the government of Myanmar's commitment to implement the Extractive Industry Transparency Initiative (EITA). Myanmar was accepted as an EITI candidate in 2014. Myanmar's first EITI report disclosed that more than 50% of revenues from State Owned Enterprises, primarily in the extractive sector, were kept in separate "Other Accounts" instead of being transferred to the State Budget.
The 2019 EITI report shows that in the fiscal year 2017-2018, Myanmar's largest operating SOE, Myanmar Oil and Gas Enterprise, had an "Other Account" with a closing balance of $USD4.6 billion, more than six times the total revenue collected from oil and gas companies in the same period. Rules for retention and spending around "Other Accounts" are oblique. In 2019, the government issued a directive that "Other Accounts" were to be abolished and that from July 2019, all revenues from SOEs were to be transferred to the State Budget. The directive was framed as an essential part of Myanmar meeting the Sustainable Development Goals. In Despite these advances, Myanmar still tests the logic that underpins the United Nations Guiding Principles on Business and Human Rights. The 'protect, respect and remedy' framework assumes productive interaction between: a state that legislates and enforces rules that respect human rights; empowered stakeholders able to employ social and legal compliance mechanisms, advocacy and strategic litigation; a corporate governance system which internalises pressure and expectations of the other two systems.
In Myanmar, in relation to many sectors of the economy, the logic fails at the first hurdle. The state does not fulfil its obligation to protect. Myanmar stands as an example of the difficulties of employing the UNGPs in contexts where democratic transition is not consolidated and the states capacity to control corporate actors is weak.