Greater disclosure urged
The Myanmar Centre for Responsible Business says local companies need to lift their game and promote greater transparency to give the public a greater understanding of their dealings.
A SELECT few Myanmar firms display a higher level of transparency than most of their ASEAN peers, but many large companies continue to show little interest in disclosure – even when legally required - according to a recent report from the Myanmar Centre for Responsible Business (MCRB).
There is huge variation in the approach Myanmar’s largest companies take to transparency. Some boast levels of disclosure rare across the region and others lack even a basic company website and provide no public details of their operations, according the MCRB.
The centre published its third annual Transparency in Myanmar Enterprises (TiME) report on September 17, putting First Myanmar Investments (FMI) and Serge Pun & Associates in first and second place respectively. Famous tycoon Serge Pun owns both.
The report scores firms based on factors including organisational transparency, anti-corruption policy and human rights reporting.
In third place is the Max Myanmar Group – owned by the blacklisted U Zaw Zaw – followed by Smart Technical Services and oil exploration firm MRPL E&P Group. The top rated banks are KBZ and AYA, in sixth and seventh place.
In terms of transparency the top companies are “impressive by regional standards”, said MCRB director Vicky Bowman, although she added they do not provide as full and detailed reports as international firms.
The companies the MCRB chooses for review are those that pay significant commercial or income tax, and a few others – like Myanmar Thilawa SEZ Holdings (MTSH) – that play a prominent role in the economy.
The top-ranked 10 to 15 firms are virtually unchanged from the previous year, but several companies have still made improvements on areas such as financial data, grievance mechanisms, and environmental and social impact assessments, the MCRB said.
Firms like AYA Bank and MRPL E&P Group extended anti-corruption training to directors and suppliers. The latter also has perhaps “the best human rights and grievance policy” of all Myanmar firms, said Ms Bowman. She was particularly impressed that villages in areas in which the firm is operating have a channel through which to report complaints directly to the company.
Other companies have taken steps to protect whistle-blowers and a few have clarified their position on “facilitation payments” and accepting gifts, the MCRB said.
One difficulty is how to verify which companies are telling the truth about policies they say they have put in place. The MCRB is “not a professional due diligence service” but has altered its scoring system to award more points to firms that can demonstrate implementation, said Ms Bowman.
“We changed the scoring so that it makes it harder to get 10/10,” she said. The only firm to score above nine was FMI.
Another issue is how to take into account accusations of wrongdoing. An article in The Irrawaddy in May quoted farmers that said they were pressured into accepting compensation for land that was sold to a Max Myanmar rubber plantation. Religious officials told
The Myanmar Times in April that Zaykabar Company – another of the 100 surveyed firms – had destroyed a religious building as part of a long-running dispute over industrial land in Mingalardon township.
The MCRB encouraged surveyed companies – including Max Myanmar and Zaykabar Company – to provide information and clarification about such issues on their websites. Max Myanmar is the only one to have done so – stating that the farmers were fairly compensated and that the firm abides by the principles of Myanmar’s Land Acquisition Policy when solving disputes. Zaykabar chair U Khin Shwe told
The Myanmar Times that the matter of the religious building, which the company previously said had been built on land it owns, had now been resolved with help from the Yangon Region government. He added that he was unaware of any attempts by the MCRB to request information from Zaykabar.
His firm was one of the 34 of the 100 companies surveyed that the MCRB found had no website. The MCRB said that the absence of a website hampers its ability to contact some companies, and that even firms with websites and contact addresses sometimes lacked a facility for passing the MCRB’s written letters to senior managers.
“It’s not a public company, it’s a family company, so we don’t need a website,” U Khin Shwe told The Myanmar Times. He felt that because his firm was only concerned with one sector – construction – this also meant a website was unnecessary.
Another firm the MCRB listed as not having a website is Farmer Phoyazar, which is involved in construction, petrol trading and automobiles. Director U Myo Htwe said he thought the company had a website, but it had been left untouched for a long time.
He was also unaware of the MCRB’s attempt to contact the company, but told The Myanmar Times he was eager to improve transparency and would contact the IT team to help address the issue.
The lack of a website restricts Myanmar firms’ ability to comply with existing law, the MCRB said. New Environmental Impact Assessment (EIA) requirements published in December state that any company that submits an EIA to the environment ministry should disclosure it on their website within 15 days.
“The leading companies have generally [disclosed EIA reports],” said Ms Bowman. “But there are those lower down [the rankings] that have not.”
The ministry confirmed to the MCRB that they expect companies to follow this rule, she added.
Ms Bowman also hopes to see existing entities like the Yangon Stock Exchange (YSX) and incoming regulation like the new Myanmar Companies Act help promote transparency.
The new companies act contains a requirement for company directors to make a report, which the MCRB wants to explicitly include information on non-financial risks like labour and human rights.
The YSX, meanwhile, has reporting requirements. But the MCRB deems these “limited” – with no explicit requirement to provide details on stakeholder risk.
In the case of MTSH and its involvement in the Thilawa SEZ, the stakeholder risk is significant given the number of people who have to be resettled as part of the project, she added. In its early years the project was dogged by complaints over the resettlement and compensation process. The YSX listing department told
The Myanmar Times that although the bourse has “no detailed explicit disclosure criteria on stakeholder risks”, it does instruct firms to mention stakeholder issues that might affect investors’ decisions.
Officials shake hands at the launch of the Yangon Stock Exchange. The Myanmar Centre for Responsible Business says the YSX reporting requirements are limited.