The Importance Of Due Diligence In Op-ed “investing In Myanmar? Do Due Diligence”
Legal News & Analysis - Asia Pacific - Myanmar - Regulatory & Compliance
23 December, 2019
Risk, as well as opportunity, have always accompanied investors in Myanmar. The recent initiatives by both the United Nations (UN) and the U.S. to ensure that foreign direct investment (FDI) only enriches civilian enterprises and not Myanmar’s powerful military backed entities, makes it imperative for foreign investors keen on operating in Myanmar, to be very sure about the background and military links of their partners.
In August this year, the UN’s Independent International Fact Finding Mission on Myanmar released a 111 page report outlining how companies affiliated with the Tatmadaw (Myanmar’s armed forces) have supported “extensive and systematic human rights violations against civilians in Kachin, Shan and Rakhine states.”
The UN report urged companies to stop doing business with firms linked to the military, in particular the Myanmar Economic Corporation (MEC) and the Union of Myanmar Economic Holdings Ltd (UMEHL). Primarily owned by the Ministry of Defence, MEC and UMEHL between them control businesses that range widely, from golf resorts and sugar mills to telecommunications, breweries and gemstones. The UN report calls for reducing the economic power of both groups for driving greater corporate transparency in the country.
The UN report has identified close to 60 foreign companies with commercial ties with such Tatmadaw-backed businesses, all of whom, “at a minimum, [are] contributing to supporting the military’s financial capacity.” It calls for immediate, targeted sanctions against MEC, UMEHL and their subsidiaries, and for companies to step-up their due diligence processes to ensure their supply chains are free of involvement with military-owned businesses.
To read the full article, please click here (first published on The Business Times on Nov 28).