Greater dis­clo­sure urged

The Myanmar Times - - Front Page - STEVE GIL­MORE newsroom@mm­ ZAY YAR LINN za­yarlinn@mm­

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.

Photo: Naing Wynn Htoon

Of­fi­cials shake hands at the launch of the Yan­gon Stock Ex­change. The Myan­mar Cen­tre for Re­spon­si­ble Busi­ness says the YSX re­port­ing re­quire­ments are lim­ited.

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