After a 25 year-long absence, International Financial Institutions (IFIs) returned to Burma in 2012 in support of the country’s political and economic transitions.
Following the election of the civilian government in November 2010, the leadership of President Thein Sein indicated, in the eyes of the international community, signs of reform.
The civil society organizations of Burma, both those that are based inside and on the border of the country, were very clear in reminding the IFIs to avoid rushing into a country where the military still exerts a huge influence over the government (25% of the seats in Parliament are reserved for military personnel) and military cronies dominate the formal economic sector. However, donors continue to exhibit an overwhelmingly positive view about the prospects of Burma’s political and economic reforms and have already moved ahead with multi-million dollar projects.
Burma (also known as Myanmar) has been a member of the World Bank Group since 1952 and a member of the Asian Development Bank since 1973. However, both institutions froze regular operations in the country in 1987 after the government failed to pay back its loans. While the IFIs could not provide investment lending during this period, the World Bank was allowed to support a multi-donor response to the onslaught of Avian flu and a joint assessment of the aftermath of Cyclone Nargis.
In 2010, the country held its first general election in 20 years, and the Thein Sein presidency reached out to the donor community to support his reform agenda. In 2012, the World Bank and ADB put into action their respective interim assistance strategy to enable them to perform limited technical assistance and so-called “quick win, peace dividend” projects. Burma owed around $420 million to the WB and $512 million to the ADB in arrears.
The US economic sanctions that restricted the flow of US aid to Burma were lifted on September 26, 2012, and the country’s outstanding debts were cleared in late January 2013 when Japan provided two bridge loans totaling approximately $900 million for Burma to clear its arrears with ADB and WBG. Both the World Bank Group and the Asian Development Bank in turn issued loans to the country on January 22, 2013 and January 14, 2013 respectively so that Burma could repay Japan and pave the way for both IFIs to recommence their lending.
International Monetary Fund
While BIC does not actively monitor the IMF, the institution has been critical in shaping Burma’s economic policy in recent years.
In contrast with the WBG and ADB, the IMF did not stop its engagement with Burma during military rule, though its engagement up until 2012 was limited to unpublished Article IV consultations. On December 28, 2012 the government of Burma sent a Letter of Intent to the IMF, which outlined the economic policies of the government for the year 2013 and requested assistance from the IMF to implement those policies. Its two main aims were to ensure macroeconomic stability (e.g. low inflation, build up of international currency reserves) and to strengthen the institutions that ensure this stability (e.g. exchange rate system) and set benchmarks for indicators of success. The IMF agreed to a Staff Monitored Program in January 2013 and have invited the community to attend public sessions since then to hear the results of the annual Article IV consultations.
The World Bank Board of Directors approved the short-term Interim Strategy Note (ISN) on November 1, 2012, whose three pillars concentrated on institutional reform to better economic and private sector performance, short term benefits, especially to conflict-affected communities, and preparing for the longer term strategy. Local and international CSOs noted several concerns with the ISN development process, as articulated in a letter sent to the Board of Directors in August 2012. Among the concerns was the lack of a transparent and accountable consultation process and the short turnaround time between disclosure of the final ISN and Board Approval.
The ISN was replaced with a Country Partnership Framework (CPF), which was finalized in April 2015 and outlines the Bank’s engagement in the country from 2015 to 2017. The CPF is larger than the ISN as it involves a greater lending volume to a greater area in a larger number of sectors. Burma was one of the two pilot countries in Asia for the Bank’s new CPF development process, which now includes priorities from IDA, IFC, and MIGA. Part of this new process included the development of the Strategic Country Diagnostic (SCD), which is intended to be a thorough evaluation of the country’s needs prior to articulating the Bank’s strategy for poverty reduction.
Many of the concerns raised during the ISN consultations were raised again during the CPF consultation process, in particular around the short timeline for developing both the SCD and the CPF. The Asian Development Bank, which began to re-engage at around the same time as the World Bank, did not start its long-term country partnership strategy consultation process until after the November 2015 elections in Burma , which led many to question the World Bank’s rush to get this CPF out the door.
A formal written submission regarding the content of the CPF, especially its focus on agriculture and energy, was submitted to the World Bank Burma Country Staff on September 12, 2014 by 30+ Burma civil society groups. Given the fragile peace-process and lack of reliable data in Burma, upstream risk assessment and a robust consultation process are critical in ensuring that the CPF is effective in meeting its development goals.
More information about the World Bank’s new Country Partnership Framework Process:Country Partnership Framework, Bank Information Center website
CSO Recommendations on the World Bank’s Draft Interim Strategy Note for Burma (Myanmar), September 2012
Joint Submission on the Proposed World Bank Group’s Country Partnership Framework
(CPF) in Myanmar, September 2014
National Community Driven Development Project
The Myanmar National Community Driven Development (CDD) Project was approved by the Board of Directors on November 1, 2012. The total project cost is $86.3 million, of which the World Bank is contributing $80.0 million through an emergency recovery loan. This emergency lending allowed the Bank to quickly disburse the loan to the Government of Burma prior to the clearance of the country’s arrears, which did not occur until January 2013. The project aims to provide grants to poor rural communities for small-scale development projects which are selected by communities themselves, though the Bank has stipulated that the projects identified at village tract level should be infrastructure-based such as road extensions, bridges, classroom building, etc.
The CDD project is a six year project, and is intended to reach 3 townships in the first year, 5 more in the second year, and 7 more in the third year. By the end of the sixth year, CDD projects will have been implemented in a township in all 14 of Burma’s states and regions as well as the union territory, covering a total of 640 village tracts. The first three townships chosen for this project in May 2013 were Kyunsu in Tanintharyi Division, Kanpetlet in Chin State, and Namhsan in Shan State. Each village tract will receive an average of $27,000 per year for three years, which is sent to the village tract directly once the project is approved. The project has been assigned the environmental assessment category B, which means that it is anticipated to have limited social and environmental impacts.
For the World Bank, the rationale for this project is to shift the paradigm from a top-down development approach to a bottom-up one. The idea is that if the communities themselves choose the projects while the Department for Rural Development (DRD) implements them, the projects will serve as a confidence-building measure between the communities and the government. However, the fact that the DRD is part of the Ministry of Border Affairs (a military-run ministry) still raises many concerns for CSOs, and the lack of experienced facilitators has compounded the problem. In addition, the focus on infrastructure-only projects is particularly limiting for many of the targeted communities. In Namhsan, Shan State, for example, the need was not for infrastructure, as they already had a hospital and a new school, but for community livelihood support and capacity building for the hospital and school staff, which is not what the CDD provides. Namhsan was also the site of ongoing conflict between the local armed groups and the Burma military during the first year of the project, which led many CSOs to question the township selection process given that the Bank required that all of the selected sites be located in non-conflict zones.
The issue of consultation and transparency has also been a problem so far with the CDD project. Many groups felt that despite the rhetoric, the CDD was being rushed through, implemented in a top-down fashion as opposed to bottom-up, and did not have space for communities to provide input. For instance, many remote village tracts were visited only once by the facilitators, where Steps 1-6 of a ten step process were conducted. These steps include information dissemination, volunteer election (some villagers who were absent from the meetings were “volunteered” by others), forming committee members, and choosing a project from a pre-defined priority list. According to the project information, this cycle requires at least three visits by the facilitator, but in this case the whole process was squeezed into 3 hours. To make matters worse, in many cases the facilitators’ visits were only announced two days in advance, which prohibited many villagers who needed to work from attending the meeting. This rush to cut corners undermines the entire purpose of the project and deepens the mistrust between communities, the government, the international NGOs hired as facilitators, and international institutions such as the World Bank.
- DRD response to IFI Watch Myanmar’s Namh Sam report, 10 February 2015
- Verifying World Bank Claims About CDD: A Report on the Namh Sam Township Project, IFI Watch Myanmar, October 2014
- Burma Country Manager response to IFI Watch Myanmar, 29 May 2014
- Notes and Recommendations on the CDD Project, IFI Watch Myanmar, April 2014
- CSOs Lambast World Bank for ‘Hasty’ Grant to Burma, The Irrawaddy, 7 November 2012
- Community Driven Development, World Bank website
Telecommunications Sector Reform Project
The Telecommunications Sector Reform Project is a $31.5 million public sector project funded by IDA that was approved by the Board of Directors on February 6, 2014. The project is intended to provide an enabling environment to support a liberalized telecom sector and to help provide access to extremely rural areas. Component 1 includes the improvement of the regulatory environment. The Myanmar Post and Telecommunications (MPT) will take over the regulatory role for the time being, and they will receive on-the-job training from Bank staff and regional regulators. Component 2 includes the development of a universal access fund and strategy, especially to provide coverage to extremely rural areas. The second phase pilot projects will be funded by a one-time subsidy to the four main operators to build infrastructure in areas which are not commercially viable. Component 3 includes the improvement of e-Government in Burma, including the launch of the Myanmar National Portal. The Portal will be mobile-friendly and should help improve access to information regarding licensing and other relevant data (subscriptions, quality of service, etc). The project has been assigned the environmental assessment category B, which means that it is anticipated to have limited social and environmental impacts.
Civil society organizations have noted a number of gaps in the project documents and have sought to bring them to the attention of the project team, country staff, and Executive Directors. In particular, civil society would like the Bank to commit to risk assessments and support for safeguards prior to implementation in all three components of the project, especially given the history of abuse perpetuated by the Ministry of Communications and Information Technology (MCIT), the project implementer. Currently, Burmese law and practice does not protect users from unwarranted security agency surveillance or collection of personal data, and the government may seek to enlist state-owned MPT or new private operators in such abuses without appropriate safeguards for rights.
The World Bank must have a primary interest in ensuring that security agencies are not able to conduct surveillance, procure user data, or disrupt communications without an accountability process that involves independent oversight to protect rights (i.e. obtaining a warrant from an independent and competent judicial authority). Such a process does not now exist. Rather, the MPT has been responsible for regulating internet filtering and monitoring surveillance in conjunction with government security agencies.
While the commitments made by the Burma Country Manager to review the suite of telecommunications policies focused on issues of privacy, data collection, cyber-crime, access to and freedom of information (which was not described in the project documents) was welcome, it is insufficient unless those laws are revised and removes the government’s ability to wield bias and abusive powers as it aids the Burmese government in modernizing Burma’s IT infrastructure and launching eGovernment services.
It is also critical that the project team develops a consultation framework for use by the government during Component 2, which involves the construction of the telecommunications infrastructure in rural ethnic areas and which may have a number of indirect but serious land and environmental impacts caused by the influx of labor, movement of construction equipment, biased land laws, and lack of a domestic safeguard policy framework. According to the available project documents, it is unclear whether the Bank will provide oversight of the Environmental and Social Management Framework, undertake safeguards assessments, lead mitigation efforts, or build the institutional capacity of MCIT. Past consultations with CSOs were disappointing, so the lack of clarity on implementation of the project, especially the physical components, is particularly worrisome.
For instance, the documents for the first consultation with NGOs regarding the project were disclosed only a few days beforehand and indicated that the Bank had already consulted ethnic groups widely. When CSOs demanded that the list of ethnic groups consulted be published, the project team admitted that they had not done any other consultations besides the one in Yangon but had included the statement in the draft project documents in anticipation of future consultations. The document was immediately taken down from the Bank’s website, but CSOs still feel as if they cannot trust what is recorded in the Bank’s documents because of this instance.
- Response to World Bank Country Manager, 10 February 2014
- Burma Country Manager Response to CSO letter, 25 January 2014
- CSO letter to the World Bank Board of Directors on the Burma Telecom Project, 21 January 2014
- CSO letter to the World Bank Southeast Asia Country Director on the Burma Telecom Project, 21 January 2014
- Telecom investments threaten privacy rights in Burma, DVB, 4 February 2014
- World Bank Pledges $2 Billion in Aid to Myanmar, Radio Free Asia, 27 January 2014
- Reforming Telecommunications in Burma: Human Rights and Responsible Investment in Mobile and the Internet, Human Rights Watch, May 2013
Agriculture Development Support Project
The Agricultural Development Support Project (ADSP) is a $100 million public sector project funded by IDA that is expected to go to the Board of Directors for approval on February 5, 2015. The project is focused on the productivity improvement of small-holder farmers through Water User Groups in Burma’s dry zone, namely in the Naypyitaw, Sagaing, Bago East, and Mandalay regions. The three major components are: (i) irrigation management, which will focus on reforming the way irrigation schemes are managed as well as fund some strategic studies; (ii) farm advisory services, including classic training on basic problems such as inadequate seed production, technology, fertilizer, and agrochemicals; inexistence of public extension services; and increasing labor costs (which will be addressed through the farm mechanization subcomponent); and (iii) project management. There is also space for an emergency fund to allow the project team to quickly re-allocate resources in the case of an emergency. The project has been assigned the environmental assessment category B, which means that it is anticipated to have limited social and environmental impacts.
Agriculture is core to the development of Burma, as 70% of the country’s population relies on this sector for their livelihoods, most of whom are small-holder farmers. The most burning issue regarding agriculture in Burma today is that of land – land grabbing by cronies and the miltary is a major problem and one that will not go away unless the lands of small-holder farmers are protected. There is a fear that World Bank investments in agriculture will promote agribusiness in Burma, which has already prompted mass land grabbing by cronies, leaving local farmers landless without compensation.
Of particular concern is the intersection between agriculture, energy and extractives, and land as conflict drivers in Myanmar. The ethnic groups of Burma, which represent about 40% of the total population, occupy 70% of the country’s land that is rich in natural resources. However, the government has already granted several land concessions to national and international business interests for agribusiness, energy, and minerals,though no one in the local communities has seen these contracts. For instance, large amounts of land has been granted to Chinese businesses for energy production, especially in Kachin State where conflict is ongoing. In fact, the conflict in Kachin State was reignited in 2011 over an argument between the KIO and the military over access to electricity generated by a hydropower dam owned by a Chinese company.
This project could seek to exacerbate some of these issues if it does not take into account the complexities of land conflict and governance risks. The team is hiring consultants to conduct some of these surveys, but it is important that they learn from the negative examples of the Thilawa Special Economic Zone and the Cambodian Land Management and Administration Project how to adequately address legacy land conflict issues. There are a lot of questions and concerns about the Ministry of Agriculture and Irrigation’s capacity to ensure that the rights of farmers are promoted in the program, how much of the benefits will flow down to the smallholder farmers, and also how the program can protect against land loss by smallholders. In addition, CSOs in Burma are concerned that all of the consultations for the project thus far have only been conducted in Yangon with senior staff from international NGOs, while stakeholders such as ethnic groups and small land holders in rural areas that will be directly impacted by the project have never been consulted.
- Myanmar ADSP Meeting Notes, 3 September 2014
- VIDEO: Progress and Perspectives on the Interim Strategies of the World Bank and ADB in Myanmar, World Bank Spring Meetings, 9 April 2014
- Myanmar Agricultural Development Bank: Initial Assessment and Restructuring Options, World Bank: Livelihoods and Food Security Trust Fund, April 2014
- Myanmar: Capitalizing on Rice Export Opportunities, World Bank: Livelihoods and Food Security Trust Fund, February 2014
Yoma Bank Equity Project
The Yoma Equity Project is a $10 million International Finance Corporation investment approved by the World Bank Group Board of Directors on July 1, 2014. The investment will consist of (i) quasi-equity; (ii) senior loan; and (iii) trade finance through IFC Global Trade Finance Program (“GTFP”). The investment is intended to help expand the small and medium-size enterprise (SME) portfolio of the client, Yoma Bank, thereby increasing SME access to lending in Burma generally. The project has been assigned the environmental assessment category FI-2, which means that while the project may have some negative social and environmental impacts, the client is responsible for managing the environmental and social risks of its sub-projects.
The IFC’s Performance Standards do not apply directly to FI projects, meaning that the responsibility for assessing the social and environmental impacts of the particular FI portfolio is delegated to the client. The client is not required to disclose sub-clients or sub-projects, perform consultations, or conduct environmental or social impact assessments. This tool is supposed to allow the IFC to finance smaller projects than is typically feasible, but in practice it often leads to less supervision and poor verification on the documents submitted by the client. This of course creates serious accountability issues, especially if the FI lending happens to go to a client that has a checkered history and without even the minimum standards of Corporate Social Responsibility. As a result, FI projects have come under scrutiny in recent years, especially in India and Honduras, as illustrated by the CAO’s audit of IFC FI projects in February 2013.
While the IFC claims that part of this project will include advisory services for Yoma Bank staff to develop and implement an Environment and Social Management Framework, Yoma will be operating in an environment where there are no country system safeguards in place and therefore little accountability if they fail to implement the ESMF. The role of the IFC in overseeing the implementation and monitoring of the project is going to be very important in this case, especially because of Yoma Bank’s checkered past. These concerns include Yoma’s membership in the business ecosystem that has been developed for many years by its main sponsor, Serge Pun and associates, through the creation of different companies, business holdings, and other investment deals or joint ventures with some major multinational companies and overseas banks, some of which go to agribusiness, golf courses, real estate development, and industrial infrastructure including the Thilawa SEZ. These investments have been linked with human rights violations including forced evictions, clearance of forests, industrial wastes and labor issues.
- Foreign Aid Funding Luxury Hotels in Myanmar, Inter Press Service, 1 June 2014
- Press Release: International Finance Corporation (IFC) Should Postpone Burma Investment, US Campaign for Burma, 27 May 2014
- DVB talks to Vikram Kumar, IFC, DVB, 3 August 2014
Civil Society AnalysisUnderstanding and Influencing IMF Policy Advice in Myanmar, New Rules and Bank Information Center, April 2016
Concerns and Recommendations Regarding Peace Funds, Burma Partnership and KESAN, October 2012
Accessible Alternatives: Ethnic Communities’ Contribution to Social Development and Environmental Conservation in Burma, Burma Environmental Working Group, November 2009
Opportunities and Pitfalls: Preparing for Burma’s Economic Transition, Yuki Akimoto (OSI/BIC), 2006
Multilateral Development Banks and Burma: A Resource Book from the Bank Information Center, October 2004
Project BriefsIFC: Maha MicroFinance Project brief, April 2016
WB: Myanmar EITI Implementation Project brief, December 2015
ADB: Power Transmission Improvement Project brief, October 2015
ADB: Enhancing Rural Livelihoods and Incomes Project Brief, September 2015
WB: Myanmar National CDD Project Additional Financing Brief, June 2015
IFC: Ooredoo Myanmar Project Brief, June 2015
WB: National Electrification Project Brief, May 2015
WB: Ayeyarwady (Irrawaddy) Integrated River Basin Management Project Brief, November 2014
WB: Agriculture Development Support Project Brief, September 2014
IFC: Yoma Equity Project Brief, June 2014
MediaBurma: Will International Financial Institutions Get It Right this Time?, April 14 2016 (Huffington Post)
DVB talks to Vikram Kumar, IFC, DVB, 3 August 2014
DVB talks to Kanthan Shankar, World Bank, DVB, 27 June 2014
Foreign Aid Funding Luxury Hotels in Myanmar, Inter Press Service, 1 June 2014
World Bank Pledges $2 Billion in Aid to Myanmar, Radio Free Asia, 27 January 2014
Multilaterals Warned Not to Go Too Far, Too Fast in Myanmar, Inter Press Service, 18 April 2012
World Bank Country StrategiesBurma CPF page, Bank Information Center website
Joint Submission on the Proposed World Bank Group’s Country Partnership Framework (CPF) in Myanmar, September 2014
CSO Recommendations on the World Bank’s Draft Interim Strategy Note for Burma (Myanmar), September 2012
Other ResourcesQuick Facts on IFI Re-engagement in Burma, 2014
Burma Country Page, World Bank Website
World Bank Myanmar Facebook page
Burma Country Page, Asian Development Bank Website
Myanmar in Transition: Opportunities and Challenges, Asian Development Bank, August 2012
Burma Project, Transnational Institute
Country Director, Cambodia, Lao PDR, Malaysia, Myanmar, and Thailand
Tel: +66 2 686 8300
30th Floor, Siam Tower
989 Rama 1 Road
Pathumwan, Bangkok 10330
Country Manager, Burma
Tel: +95 1 654 824
No.57 Pyay Road
6 1/2 Mile, Hlaing Township
Kyaw Soe Lynn
Communications Officer, Burma
Tel: +95 1 966 2866 ext 240
Resident Representative, Burma
Tel: +95 1 654 824
No.57 Pyay Road
6 1/2 Mile, Hlaing Township
Chu Thi Van Anh
Communications Officer, Burma, Lao PDR,Thailand, and Vietnam
Tel: +84 4 3824 7892 ext. 608 (Vietnam)
Country Director, Burma (Myanmar) Resident Mission
Yan Naing Hein
Civil Social/External Relations Officer, Burma (Myanmar)
Burma (Myanmar) Resident Mission Contact Information, ADB website
Acting Director, Asia Program
Tel: +91 98711-53775 (Delhi)
Myanmar Program Coordinator, Asia Program
Tel: +95 94480 16197 (Yangon)
For other regional contacts, please see BIC’s Asia Program page.