The Australia-Myanmar Chamber of Commerce Responsible Investment Working Group has launched a Position Paper: Incentivising Shared Value at the Asian Forum on Corporate Social Responsibility in Naypyidaw on 19 September.
In response to questions from Mizzima Weekly, the AMCC discussed responsible investment principles in Myanmar.
In light of the official publication by the Australia-Myanmar Chamber of Commerce of the Position Paper: Incentivising Shared Value, what would you say are the key factors concerning responsible investment in Myanmar?
Responsible investment in Myanmar means business activities that work for the long-term interests of Myanmar and all its people bygenerating sustainable financial and social gains.
We believe that the concept of Creating Shared Value is a refinement of basic responsible investment practice. It generates value for both the company and society. It’s a management strategy, where companies identify and address societal problems that intersect with their business, and look for solutions that create measurable business value and goodwill with customers as well as governments, organisations, and wider society.
Myanmar has opened up more to foreign investment over the last five years. What is the AMCC message to foreign investors?
Myanmar’s recent political and economic reforms are leading the nation towards more transparent governance and sustainable economic development. The IMF recently reported Myanmar as the fastest-growing economy in the world in 2016 at 8.4 percent, albeit from a low base. The new government embarking on further legislative reform, including a merger and reform of the Foreign Investment Law and Citizens Investment Law, in response to advice from the OECD, and also a reform of the centenarian Companies Act. These changes will, we hope, improve the investment climate for FDI.
However, if business is to earn a sustainable commercial return on their investments, they also must gain and retain a ‘social license to operate’, and that is as true in Myanmar as elsewhere – perhaps more so. A social license to operate is recognition that the business provides social returns in the form of decent jobs, useful and safe products, and business practices which respect the environment and the culture in which they work. With this, it is important that businesses work with their stakeholders to develop this ‘social license to operate’ because each sector brings different knowledge, skills and perspectives which ultimately increases the business’ ability to have a positive impact.
This is why the Australia-Myanmar Chamber of Commercecreated the Responsible Investment Working Group, which is co-chaired by and the Myanmar Centre for Responsible Business (MCRB) and has membership drawn from prominent Australian and Myanmar business leaders, non-governmental organisations and the Australian Government. The purpose of the Working Group is to discuss what responsible business means in Myanmar and how companies can work with stakeholders, including the Myanmar Government, to promote it. However it reflects more than just a business view - it's a genuine partnership between business and NGOs, which reflects the wider value of collaborating to create shared value.
What is the AMCC message to the Myanmar government in terms of foreign investment in light of India's mandatory CSR spending?
We understand that some members of the previous Myanmar Investment Commission (MIC) focussed on encouraging foreign companies looking to invest in Myanmar to set spending targets of 1 to 5 percent of pre-tax profits on Corporate Social Responsibility (CSR). This spending-driven approach is similar to India’s CSRlegislation, which makes it mandatory for certain companies to spend 2 percent of their average net profit on ‘CSR activities’ (also defined by legislation). While this approach may mobilise funds for social causes, India’s example demonstrates that mandatory spending legislation also leads to problems in practice. One problem is that linking CSR spending to profits may discourage companies from thinking about community development at an early stage before profits arise. Some activities, such as in the extractives industry, may never lead to the development of profitable projects until well into the future. There are a number of reasons why this approach is not seen as supporting good governance or responsible investment, which we outline in ourPosition Paper.
That’s why we have recommended that the Myanmar Government use the opportunity of the reconstitution of the MIC to review how best to encourage companies to invest responsibly. Such a review could include:
- Re-evaluating the previous approach
- Launching a national debate and consultation within government and with companies, State Owned Enterprises, Parliament and civil society, on how to achieve and promote responsible investment and creation of ‘shared value’
- Considering the pros and cons of incentives such as public recognition; awards and rankings; tax measures; grants; disclosure/reporting requirements; and inclusion of social and environmental criteria in government procurement and contracting.
How would you describe and class Australian best practice when it comes to responsible investment?
The Position Paper highlights a number of Australian examples of how government can incentivise responsible investment and shared value. These examples demonstrate that Australia regulates business with laws covering environmental protection, minimum rates of pay, anti-discrimination, equal opportunity, anti-competition, and misleading and deceptive conduct as well as legislation requiring companies to recognise the interests of stakeholders as well as shareholders. This is the state’s duty to protect.
But when it comes to incentivising companies to ‘go beyond’ the legal requirement, legislation is supplemented by ‘soft law’ initiatives (i.e. rules that are not legally enforceable) such as the Australian Stock Exchange (ASX) Principles on Corporate Governance and Best Practice Recommendations, released by the ASX in 2003 and last updated in 2014.
Companies also have their own policies that go beyond the law. Although voluntary, where a company makes a public commitment it becomes morally binding, and sticking to the commitment is crucial to gaining and maintaining a social license to operate.
Myanmar faces a lot of opportunities in terms of development as the country opens up. What part does foreign investment play in this development process?
Foreign investment is going to be significant in some sectors, such as oil and gas, but probably not in others such as agriculture. In the end, the origin of the investment is unimportant. What matters is that the government encouragesresponsibleand inclusive investment since this drives sustainable economic growth and reduces poverty. Australian Minister for Foreign Affairs Julie Bishop made this clear in her “Ministerial Statement on Engaging the Private Sector in Aid and Development”. As the Position Paper notes, the Australian Government’s development policies now for the first time clearly identify the private sector as an essential partner to achieving sustainable development outcomes. The concept of Creating Shared Value underpins this approach.
In Myanmar, the Australian Government is currently collaborating and partnering with the private sector and NGOs to implement sustainable aid solutions that tackle development challenges while delivering commercial returns. One such programme is the Business Partnership Platform (BPP), which enables businesses to partner with the Australian Government and NGOs on investments that deliver a combined social and financial return on investment according to “Shared Value” principles. AVI, a Responsible Investment Working Group member, and Intrepid Travel were successful in the first BPP round. Applications are now open for the BPP Round 2: http://dfat.gov.au/aid/who-we-work-with/private-sector-partnerships/bpp/Pages/business-partnerships-platform.aspx
What role should foreign companies play in human resources development?
Again, human resources development isn’t an issue specific to foreign companies; it should be a priority for all companies. Myanmar companies are concerned about staff retention and poaching by better paying foreign companies, but one of the reasons for that is that staff sees more development opportunities offered by FDI.
One of the most important things foreign companies can do to develop Myanmar’s human resource capacity is provide a compliant workplace, in which labour law, anti-corruption and safety are taken seriously and measured and monitored. These are weaknesses in some Myanmar companies because of the business climate in which they worked in so many years. If foreign investors can spread those practices to Myanmar companies through supplier training and audits, those suppliers will be well-positioned to win further business.
Foreign companies also often cite skills and capacity building as one of the key challenges of operating in Myanmar. As such, there is an opportunity for foreign companies to act as enablers and facilitators in human resource development. Foreign companies should be encouraged to proactively invest in training and development, by localising and implementing best practice procedures from operations in more developed economies.
Myanmar has a large, young working population that can be fostered with learning, networking and mentoring opportunities. This highlights another opportunity to enrol high potential Myanmar staff – including women - on the company’s leadership training and mentoring programmes, so that they have the opportunity to meet their peers from other countries. A particularly imaginative use of company leadership training is to offer places in the training course to high potential people with disabilities from local organisations. This brings company employees together with a disabled person and breakdown down barriers and stereotypes. It also builds the human resources of wider civil society and in particular a significant group of people who are usually excluded from the workplace. It’s initiatives like these, and programmes to support women in the workforce that AMCC seeks to encourage adoption of in Myanmar.
The AMCC has supported a number of initiatives since 2013. Could you outline some examples of human resource development and skills training that the AMCC has been involved in?
Some examples of human resource development and skills training that AMCC have been involved in are:
- In 2015, the Chamber was the successful recipient of Austrade’s Asian Business Engagement Plan funding under which the Chamber implemented its Networks Through Skills Development Program (NTSD). The NTSD has facilitated the secondment of Myanmar professionals to Australian companies to deepen business linkages between the two countries and promotes business opportunities. It has also supported technical Industry Skills Seminars by our members and Australian companies to over 1200 Myanmar officials and private sector representatives. Over 40 people attended the most recent seminar, Good Governance in Mining: Australian Environmental & Social Impact Solutions, which was held in July 2016 in Myanmar.
- In 2016, the Chamber in partnership with Myanmar Women’s Entrepreneurs Association (MWEA) launched an inaugural event, the “Women in Business and Leadership Gala Dinner and Conference”. The event brought together more than 30 expert business people and leaders working in Myanmar to share their knowledge, expertise and personal stories with nearly 600 participants. It served as a platform to discuss the important role that women play in business in Myanmar, showcased opportunities for women across a wide range of industries and organisations, and equipped participants with skills and practical advice to succeed as entrepreneurs, innovators, mentors, and managers. There was an overwhelming interest in the event and tickets were sold out; demonstrating there is clearly an appetite for discussing the role of women in business and leadership in Myanmar, their challenges and the enormous opportunities that lie before them.
- The Chamber has also run a number of capacity building seminars that have been delivered to the Myanmar business community and government include Good Governance in Mining Seminar, Best Practice Myanmar Labour Law, Banking and Finance Law update, Integrated Water Resource Management in Myanmar and Port Development in Myanmar.
Is there anything else you would like to add?
While the Working Group considers that Shared Value has the potential to make good economic and development sense, we do not suggest that it is solution to all business and social problems. Rather, we hope that the launch of the Position Paper is the beginning of a conversation not only with government but with other Chambers’ of Commerce and industry leaders, with civil society and other stakeholders who are currently or have potential to contribute to Myanmar's development through responsible investment. Our engagement with stakeholders thus far has indicated significant interest and goodwill on the part of business to maximise the positive impact investment can have in Myanmar. The Position Paper acts as a platform for the Australia-Myanmar Chamber of Commerce to widen the dialogue over the coming months to ensure the diverse but important views across the spectrum are captured and understood.