US hikes investment ceiling for Myanmar reporting

The US intends to raise the minimum amount of investment that triggers reporting requirements for its firms in Myanmar, although there are doubts that the move would trigger much of an increase in investment.

by Steve Gilmore,  MyanmarTimes, Myanmar, May 20

Senior US administration officials said on May 17 that as part of actions to help trade, investment and the new government, the US would raise the reporting threshold for “aggregate new investment” from US$500,000 to $5 million.

The announcement came as part of a series of amendments to the US sanctions regime against Myanmar following the country’s transition to a democratically elected government.

The reporting system requires all US companies with investment over $500,000 in Myanmar to file annual reports, along with companies that have any investments with state-run Myanma Oil and Gas Enterprise (MOGE).

This system has attracted a range of opinion, from US firms that believe reporting requirements should be removed altogether to human rights organisations that say reporting should be made more rigorous and better defined, giving firms less discretion over what they disclose.

Officials at US firms have also encountered issues with the definition of “new investment”, and had to seek clarity from the US administration over what exactly qualifies.

US officials did not comment on any change to the structure of the reporting, but said that a higher threshold would help encourage investment.

“We’ve discovered, in part through [an] extended public comments process, that while there are mixed views on [the] reporting requirements, a consistent [concern] has been the threshold that requires reporting,” said one senior US official, asking not to be named.

Small and medium enterprises in particular have found the threshold a costly obstacle to investment. The change “should minimise the reporting burden, and encourage US companies that want to invest to do so”, he said.

The change in threshold was under “administrative review” and expected to be active “within weeks”, he added.

But people at US firms were doubtful the threshold shift would lead to substantial new investment.

Many of the US companies in Myanmar have invested over $5 million, and several others have chosen to report, despite not hitting the $500,000 threshold, said Eric Rose, lead director at Herzfeld Rubin Meyer and Rose law firm in Yangon.

General Electric is among the companies that report voluntarily while remaining beneath the $500,000 threshold and not engaging in agreements with MOGE.

Pressure from human rights and civil society groups, which often rate the quality of US firms’ disclosure documents for their Myanmar operations, acts as a strong incentive to meet the reporting requirement regardless.

An official at one US company operating in Myanmar, who asked to remain anonymous, said the move would help remove an administrative burden, “but I don’t think people decide to invest or not based on [the] reporting threshold”, he said.

Claudia Flores, director of the University of Chicago Law School’s International Human Rights Clinic (IHRC), said the change in threshold was a “step in the wrong direction”.

She and a team from the IHRC visited Myanmar earlier this year, and heard repeatedly that workers face barriers to securing basic workplace rights, Ms Flores said.

Given Myanmar’s history of human rights abuse, ensuring investment is done responsibility and meets human rights standards is critical, the IHRC has said.

For US firms “a duty to report is, at best, tenuously connected to any financial burden”, said Ms Flores. “A $5 million threshold would only encompass rather large investments leaving all other investments unaccountable in their adverse impact on human rights.”

The IHRC in January submitted comments to the US State Department, noting that some firms,

particularly international garment and footwear brands, operating in Myanmar maintain they are not required to report.

Reports from other companies provide little in the way of useful information that would allow civil society groups to monitor whether human rights are being protected, the IHRC said.

The IHRC wants better-defined reporting requirements, which include details of what kind of policies and procedures firms must design to address how their operations

affect things like human rights, that require US firms to disclose the identify of their local partners and that are available in Myanmar language.

“If the threshold is increased, it should follow that the requirements are more rigorous than those currently drafted,” Ms Flores said.

Although some US firms want the requirements dropped altogether, the official at the US firm operating in Myanmar said he thought any level of disclosure was helpful, as long as it was not commercially sensitive.

“Being shy sends alarm bells,” he said.

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