© 2012 Foley Hoag LLP. All Rights Reserved.Presentation Title | 1 Business in Burma: Opportunities and Pitfalls.

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Presentation transcript:

© 2012 Foley Hoag LLP. All Rights Reserved.Presentation Title | 1 Business in Burma: Opportunities and Pitfalls

Presentation Title | 2© 2012 Foley Hoag LLP. All Rights Reserved. Outline  Introduction to Foley Hoag’s CSR Practice  Overview of Political Developments  Opportunities for Business  Sanctions Risk  Labor/Human Rights Risk  Rule of Law  Opportunities to Engage

Presentation Title | 3© 2012 Foley Hoag LLP. All Rights Reserved. Foley Hoag’s CSR Practice  Advise companies on legal, reputational, and operational risk  Carry out desk-based due diligence and human rights assessments at the project level  Follow international developments as well domestic laws relevant to CSR  Focus on issues such as human rights, indigenous peoples, revenue transparency, conflict minerals, and the nexus of security and human rights

Presentation Title | 4© 2012 Foley Hoag LLP. All Rights Reserved. Overview of Political Developments  Closed-off, economically mismanaged state holds reasonably free and fair 2012 elections: NLD sweeps them  Many political prisoners released  Less draconian laws passed  New FDI law/openness to investment  But: –Ongoing conflict – Kachin and Rakhine States (and other ethnic areas) –Anti-Muslim witch hunts –Years of economic and social neglect

Presentation Title | 5© 2012 Foley Hoag LLP. All Rights Reserved. Opportunities for Business  Extensive natural resources –Oil offshore and some onshore –Minerals in ethnic minority areas and central Burma  Large labor force  Investment desperately needed if democratic reform is to lead to concrete changes

Presentation Title | 6© 2012 Foley Hoag LLP. All Rights Reserved. Sanctions Risk  Investment, financial services, and import sanctions in place since late 1990s in response to human rights abuses and drug trafficking  E.U. suspended sanctions in April 2012  U.S. eased sanctions on investment and financial services in July 2012, and imports in November 2012  “Wait and see” approach  Civil society opposed due to ongoing conflict

Presentation Title | 7© 2012 Foley Hoag LLP. All Rights Reserved. Import Sanctions  President eased them before his November trip to Myanmar  Some items still banned: gems

Presentation Title | 8© 2012 Foley Hoag LLP. All Rights Reserved. Export Controls  Still limits on what can be exported to Burma  Exercised through export controls which prohibit export of dual use items  Cannot export arms to Burma

Presentation Title | 9© 2012 Foley Hoag LLP. All Rights Reserved. Easing of Financial Sanctions  General License 16 eased them in 2012  Apply to U.S. Persons (including businesses)  Now allowed to transfer funds and provide banking services, money remittances, etc.

Presentation Title | 10© 2012 Foley Hoag LLP. All Rights Reserved. Easing of Financial Sanctions  But cannot export financial services to: –Entities/people on Specially Designated Nationals list or entities they control –The Ministry of Defense, the armed forces, non-state armed groups, etc. if payment is in connection with the provision of security services A problem for oil, gas, and mining companies Unocal case

Presentation Title | 11© 2012 Foley Hoag LLP. All Rights Reserved. Easing of Investment Sanctions  General License 17 eased them  Apply to U.S. Persons (including businesses)  Definition of “investment” –Probably does not include supplier factories in Burma if not owned –Probably would include setting up of business operations, offices –Certainly would involve infrastructure, oil, gas, or mining projects

Presentation Title | 12© 2012 Foley Hoag LLP. All Rights Reserved. Easing of Investment Sanctions  Exceptions: –No investments based on agreement with Myanmar Ministry of Defense, state or non-state armed group, etc.

Presentation Title | 13© 2012 Foley Hoag LLP. All Rights Reserved. Easing of Investment Sanctions  Exception: –No transactions -- direct or indirect -- with persons on the SDN list –So don’t source from an SDN or entity that it controls or use them as middlemen

Presentation Title | 14© 2012 Foley Hoag LLP. All Rights Reserved. Reporting Requirements  Two main elements: 1.Report to State Department if agreement with Myanmar Oil and Gas Enterprise 2.Annual reporting requirements if aggregate investment over $500,000

Presentation Title | 15© 2012 Foley Hoag LLP. All Rights Reserved. Annual Reporting Requirements  Public report: –Summary of policies and procedures/due diligence on human rights, workers rights, anticorruption, and the environment –Arrangements with security providers –Property acquisition –Payments to Government of Burma and sub-national or administrative entities

Presentation Title | 16© 2012 Foley Hoag LLP. All Rights Reserved. Annual Reporting Requirements  Private/for State Department only: –Meetings or communications with the military –Efforts to mitigate risk related to human rights, worker rights, or the environment

Presentation Title | 17© 2012 Foley Hoag LLP. All Rights Reserved. Labor/Human Rights Risk  Labor Rights –Forced labor mostly at hands of military, not factories –Extremely limited enforcement capacity –Right to organize has improved, but permits still denied and activists arrested –Substantial capacity-building needed for workers – for productivity and to meet EHS and labor standards

Presentation Title | 18© 2012 Foley Hoag LLP. All Rights Reserved. Labor/Human Rights Risk  Human Rights –Ethnic minority regions in conflict or militarized – risk of complicity –Land confiscation - urban and rural - over past 20 years an enormous problem –Repression of protests –Corruption

Presentation Title | 19© 2012 Foley Hoag LLP. All Rights Reserved. Rule of Law  Not a single attorney on Supreme Court  Courts reknowned for political bias  New FDI law, new land laws, new labor laws – all improvements, but enforceability?

Presentation Title | 20© 2012 Foley Hoag LLP. All Rights Reserved. Take-aways  Many activities allowed, but some sanctions remain: evaluate business partners  Much more scrutiny of company human rights, labor, and environmental practices than typical  Investment desperately needed, but the state has limited capacity to regulate or support business

Presentation Title | 21© 2012 Foley Hoag LLP. All Rights Reserved. Opportunities to Engage  Burma is redrafting its laws at a frenetic pace and needs help –But it is overloaded with short-term consultants and other experts –Longer-term projects would be preferable  Generally, countries in the region such as Laos and Cambodia also could use legal support. Growing network of international human rights lawyers, and expansion of Western law firms into the area