UK Minister of State: serious issues remain in Myanmar’s reform process

Following Hugo Swire’s recent visit to Myanmar as part of a broader tour of South East Asia to promote ties with the United Kingdom, the Minister of State at the Foreign and Commonwealth Office and East Devon MP speaks to Asia House Web Editor Naomi Canton about his trip and the upcoming general election in Myanmar.

What are the key outcomes of your trip to Myanmar?

This was my third visit to Burma*.  As well as discussing preparations for their elections in November, I wanted to see again for myself the political and humanitarian situation in Rakhine State. This visit reinforced my belief that, while a great deal has been achieved since 2011, a significant amount of reform is still needed for Burma to fulfil its vast potential.

The elections obviously have the potential to be a landmark moment in the transition from dictatorship to democracy. I wanted to emphasise the strong international support and interest that there is in these – and to reiterate that seen from outside, it is vital for Burma’s future that they are credible, inclusive and conducted with respect for human rights and freedoms.

In Rakhine State I visited Buddhist and Muslim camps for the internally displaced. I saw first-hand the appalling conditions that many Rohingya still live in, and heard accounts of the difficulties people continue to face on basic rights such as access to education, healthcare and livelihoods. I raised our serious concerns about these issues with local and national government.

I was also especially pleased to launch the International Protocol on the Investigation and Documentation of Sexual Violence in Conflict in Burma. Preventing sexual violence in conflict and supporting the rights of women and girls remains a major priority for the UK, following the excellent leadership of the former Foreign Secretary William Hague and Angelina Jolie – who was also in Burma over the summer, although sadly the week after me…

What are your reflections on the progress of political and democratic reform in Myanmar, how far it has got and how much more needs to be done? What challenges can you envisage and how will the UK support the process?

If you take a step back and remind yourself where Burma has come from, the reform process since 2011 has been remarkable. Bear in mind that in 2010 Burma was still an opaque and isolated dictatorship. You can see for yourself today that towns and cities across the country are being transformed – with a much stronger media and civil society, new economic dynamism and investment in key bits of infrastructure which were previously hugely outdated.

But there remain serious issues. Large parts of rural Burma and the ethnic regions are yet to feel the positive impact of reform, and I still have concerns about civil liberties.  There is much to do – from addressing the situation of the Rohingya, to recalibrating the role of the military in a democracy, to turning ceasefires into a proper political settlement that can bring lasting peace to the country, to the proper conduct of the critical elections in November.

Our view is that it is incumbent on Burma’s friends not just to criticise from the sidelines or even to turn their backs to the country, but instead to redouble our efforts in supporting the reform process. The UK is providing expertise and knowledge in a number of areas – from the peace process and electoral reform, to parliamentary reform and exposing the military to international human rights law and accountability. The secondment of a House of Commons parliamentary specialist to the Burmese parliament is a great example of where we are using our own experiences to help.

Do you have confidence in Myanmar’s ambitious plans for structural reform and strengthening of public institutions? How has the UK influenced these endeavours? 

This is a really important area and I don’t think it receives enough attention in the public debate on Burma in the UK. One of the most damaging legacies of a dictatorship is of course the hollowing out of public institutions. Without an effective parliament, civil service and judiciary it is extremely hard for any administration to govern effectively. And a transparent and rules-based economy is essential for growth and poverty reduction.

We are funding projects in a number of these areas – supporting better public financial management, supporting Burma in its Extractive Industries Transparency Initiative (EITI) application, raising awareness of responsible business practices across government, helping the development of an independent and functioning accountancy sector. There is an enormous amount that needs to be done and I hope there will be another big international push, assuming we have credible elections.

Is reform momentum slowing down as the election approaches?

Clearly there have been serious setbacks over the past year or so in particular.  The plight of the Rohingya attracted international attention earlier this summer, with the terrible suffering of the many people trying to escape by boat to other parts of South East Asia. But the shrinking of the democratic space has also given cause for concern, with increasing numbers of political prisoners, potentially discriminatory new laws on race and religion, and restrictions on free speech, the media and peaceful protest.

The elections are quite obviously a critical moment going forward. If they respect and further embed democracy, then I hope Burma will be better placed to address some of these issues.

How confident are you that the forthcoming November 8 general election in Myanmar will be conducted on a free and fair basis? Are you concerned they may lead to uncertainty and unpredictable horse-trading?

The international community is of course watching the conduct of these elections very closely. We and others are supporting the process as best we can – with technical assistance to the Union Election Commission, by training local observers and by contributing to the European Union (EU) election monitoring mission.

I obviously can’t speculate on what will happen after the vote – the important thing is that everything is done properly and that the voice of the Burmese people is heard and respected. That is, after all, what democratic elections are all about.

Amending the constitution has been the National League for Democracy’s (NLD) main preoccupation. What chances are there of the NLD amending the constitution? Do you believe this could happen after the elections? Will Aung San Suu Kyi ever make it as President in your view and who else might the NLD support as President if they win the elections?

As our Prime Minister has made clear, we do not believe a constitution that excludes Aung San Suu Kyi from becoming President is a democratic one. Nor do we think that the 25 per cent military bloc in parliament is compatible with Burma’s democratic aspirations. We have made no secret of this. Whilst this is regrettable, it is obviously now highly unlikely that any further amendments will be passed before the elections. We will continue to support efforts to make the relevant amendments after the elections, whatever the formation of the new government.

What are the prospects for further improving the investment climate?

There has been some clear progress in Burma’s efforts to improve the investment climate. The 2012 Foreign Investment Law offers a number of incentives to foreign investors, and the liberalisation of key sectors such as telecoms and banking has obviously attracted a lot of international interest.

As with any country in the world, the most important thing for investors is to build and maintain confidence in a stable and predictable rule of law. Burma has signed up to a number of international protocols which help increase confidence – for example, in 2013 Burma signed up to the New York convention on recognising and enforcing foreign arbitral awards.  However, the legislation to implement this is yet to be passed and I would encourage the Burmese government to look at this as a priority.

Which sectors are there opportunities for UK companies in Myanmar? 

Burma is emerging from over 50 years of under-investment and under-development. This makes it a place with tremendous business opportunities across a wide range of sectors, but also a place with significant challenges for foreign companies. The success of a British company in Burma depends less on the sector they are operating in and more on their approach. I think the most successful will be those with a long-term horizon, with a wish to invest their time and energy responsibly, and with realistic view on the risks and opportunities.

The Thilawa Special Economic Zone (SEZ) is the first SEZ in Myanmar that will be fully commercially operational in 2015 – backed by the Japanese Government and three Japanese companies. What incentives does it offer UK companies and are more SEZs in the pipeline?

SEZs offer a number of incentives for foreign investors under the Special Economic Zone Law, for example tax holidays and tax relief on revenue from exports. As well as the financial incentives, the SEZs will provide stable infrastructure and ‘one stop shops’ for acquiring the necessary Government permits and permissions.

This is clearly an important way of attracting the investment which will drive Burma’s economic growth, but it is important that they are developed in a sensitive and sustainable way. This is why the British Government has been funding the UK based NGO International Alert to work with Burma’s government, civil society and local communities in the affected areas. The work has been focused on ensuring local communities are engaged in the development of the SEZs and that they benefit from them.

Taking into account underlying fundamentals, such as growing consumer base, credit growth, natural resources and growth in exports, what is your assessment of the economic growth potential of Myanmar?

The potential is enormous. Burma has a wealth of natural resources, the largest landmass in mainland Southeast Asia and has the potential to be the bridge to two of the biggest markets on earth, China and India. Draw a 700-mile radius around Mandalay, Burma’s second-largest city, and you encompass a population of 700 million people – nearly one in 10 of all the people on the planet. Organisations such as the World Bank and Asian Development Bank (ADB) are predicting 8.5 per cent growth for the next few years. There are, of course, major challenges to ensuring that this is sustainable and, just as important, equitable, and we are working to try to help in this.

Are you optimistic about the ‘progression of national reconciliation’ which would underpin long-term stability and business confidence?

Clearly, after 50 years of conflict, it will take a significant amount of time, effort and compromise to achieve proper national reconciliation. The progress made towards a Nationwide Ceasefire Agreement (NCA) has been significant, and has been one of the main achievements of the last four years. My hope is that the NCA will be signed soon. But it’s important to remember that this isn’t the end of the road – there will then need to be serious and complex negotiations to convert ceasefires into a lasting political settlement.

Last October, Myanmar awarded banking licences to nine foreign banks. Do you see opportunities for UK banks in Myanmar in the future?

The liberalisation of Burma’s banking sector is a really important step in the broader economic reform process. We’ve seen in other countries that foreign institutions can play a big role in supporting the development of a sound financial infrastructure. No British banks submitted applications on this occasion, but we obviously have great expertise in this area and I’m sure we have lots to offer going forward.

naomi.canton@asiahouse.co.uk

The Rt Hon Hugo Swire MP was appointed Minister of State at the Foreign and Commonwealth Office on 4 September 2012. He has been the Member of Parliament for East Devon since 2001.

* The British Government refers to the country as Burma because the unelected military regime, which changed the name to Myanmar in 1989, was not legitimate and the people of Burma were not consulted. Burma’s democracy movement (including Aung San Suu Kyi) also do not accept the legitimacy of the military regime to change the official name of the country.