Executive Summary: "Myanmar presents opportunities to build an inclusive economic system, but continues to be plagued by serious human rights challenges. The government is emerging from five decades of military rule and isolation, undertaking halting and partial reforms towards democracy, peace and a modern economy. With the beginning of reforms in 2011, Western governments lifted most of the economic sanctions and many foreign companies have taken advantage of the new business environment, the low-cost labour, abundant natural resources, geographic position, and over 50 million potential domestic consumers. During the 2014-2015 fiscal year, foreign direct investment reached a record US$8 billion. Last year saw a rapid increase in oil and gas projects with the award of 16 onshore and 20 offshore blocks in the space of 12 months. The prospect of cheap labour is also leading the garment industry grow rapidly. Total garment exports were valued at about US$1.6 billion in 2014. Already, a number of European and American companies have established a supply-chain in Myanmar, and many others are considering doing so. Myanmar has also seen an unprecedented growth in international tourist arrivals and the tourism industry is becoming one of the fastest growing areas of the economy. This report focuses on the foreign investment in these three sectors (oil and gas, garments, and tourism) ? the most significant ones today. It then assesses the human rights risks of multinational companies operating in Myanmar, particularly in the area of labour rights, land rights and conflict and security. Reforms remain fragile. Widespread corruption and the absence of rule of law, arbitrary arrests, and the lack of an independent judiciary continue. Armed conflicts persist in areas of Kachin and Shan States. The situation of the Rohingya minority has deteriorated further. The evolving domestic legal framework still lags behind international standards, and the government lacks the capacity to implement new legislation. The investment surge is intensifying land confiscation and violence. There are widespread reports of land grabbing linked to the development of infrastructure projects, the establishment of industrial zones, agriculture concessions, and resource extraction projects. In 2012, the government started a process to formulate a new Land Law, but the current framework leaves workers vulnerable to forced evictions, expropriation without proper compensation. Hydropower projects such as the Myitsone and the Salween River dams, extractive projects such as the Shwe Gas project and the Monywa copper mine (comprising the Letpadaung mine) and the establishment of Special Economic Zones, including the Dawei, the Kyaukphyu and Thilawa, have all been associated with tensions between local communities and investors over land confiscations and displacement, with little or no compensation. Protests are growing in number across the country and are often met with intimidation, the excessive use force, and arbitrary arrests and detentions. With the passage of new labour laws in 2012, the formation of trade unions and the exercise of the right to strike were legally allowed for the first time in 50 years. In 2012, the Confederation of Trade Unions Myanmar (CTUM) was allowed to return to the country after decades in exile. It has established an office in Yangon and was registered as the first nationwide confederation in July 2015. Workers and employers are, however, still learning about their rights under the new legal framework. Collective bargaining is growing, but still relatively rare. Poor implementation of the law means that, in practice, employers can and do discriminate against workers who seek to exercise their newfound rights without consequence. Striking workers and labour activists are dismissed by employers. The procedures established by the law on the Settlement of Labour Disputes has not provided adequate protection for workers and is considered to be dysfunctional. Workers are paid extremely low wages. To meet basic living needs, they are often forced to work excessive overtime. In June, the government announced a new minimum wage of 3,600 kyats per day for enterprises employing 15 or more workers? a compromise between the 4,000 kyats advocated by the unions and the 2,500 kyats urged by business. The wage is still among the lowest in the region ? on par with Bangladesh. Even then, the garment manufacturers association threatened to close around 100 factories if the minimum wage was introduced at that rate (and a few have in fact closed). The new wage rate is an improvement, though still below a wage on which a worker can meet his or her basic needs. It remains to be seen whether the new rate will be paid, and whether the government will effectively enforce it. The large influx of foreign money and consequent pressure to keep wages low and increase productivity levels combined with a weak regulatory framework risk exacerbating labour and union rights abuses. There are serious risks that Myanmar?s natural resources and labour will only benefit privileged domestic interests and foreign companies, while disadvantaged communities will suffer the negative impacts of poorly regulated business Executive summary Foreign direct investment in Myanmar: What impact on human rights? 8|76 activities. The investment challenges in a context where the economy is still dominated by the interests of the military and their connected ?crony” businessmen are obvious. Myanmar is still a high-risk country, requiring a rigorous responsible investment strategy. The government is not protecting human rights or enforcing labour and environmental standards. In this context multinational enterprises will find their responsibilities more difficult to fulfil. The corporate responsibility to respect requires companies to exercise due diligence in order to mitigate human rights risks so that their operations do not contribute to or exacerbate human rights violations. In Myanmar, a weak governance country, investors are exposed to a complex business environment and responsible businesses must understand the direct and indirect impacts that their activities have on human rights. In particular, companies will have to undertake due diligence with respect to the human rights of workers whether they are performing work directly on their behalf or indirectly through other business enterprise. Land use and acquisition should recognise customary land rights, ensure consent, with direct consultation with villagers and local authorities, and provide proper compensations. Companies should establish grievance mechanisms to provide early remedy for rights-holders who are adversely impacted by their operations. Given the lack to effective state-based remedies, operational level grievance mechanisms, established according to criteria in the [UN] Guiding Principles, are even more important in Myanmar. A collective bargaining agreement is the most appropriate grievance mechanism in the workplace. Due diligence is required when doing business in Myanmar?s conflict-affected areas or when dealings with the military and their companies. Many local companies have some relationship with the military or may be ?cronies”. Businessmen with close ties to the military, associated with human rights abuses, are the best placed to benefit from new foreign investment in Myanmar. Multinational companies operating in Myanmar are expected to act as industry leaders on human rights and labour practices. This includes engaging with the government to encourage it to apply international standards, as well as engaging with local partners and subcontractors to have them comply with these standards. This report provides guidance for multinational companies operating in Myanmar on their huma