Geographies in Depth

Rules of the game for Myanmar’s natural riches

Clare Lockhart
Director and co-Founder, Institute for State Effectiveness (ISE)
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Natural resource management and the successful development of extractive industries require sound institutions and organizations, with a clear understanding of their functions, boundaries and interdependencies, as well as the nature of their relevant stakeholders.

Institutions are one element of responsible natural resources management explored by the World Economic Forum’s recent Global Agenda Council publication – Natural Riches? Perspectives on Responsible Natural Resources Management in Conflict-Affected Countries

The role and responsibility of governments in the management of natural resources on behalf of their citizens is to exercise stewardship so that resources can be a foundation for durable peace, stability and prosperity. This is challenging. Institutions must prevent predatory behaviours, establish accountability mechanisms and decision rights, invest in human capacity and moderate the interests of relevant stakeholders. All these tasks are immeasurably more difficult in countries afflicted by conflict and fragility or undergoing transitions.

Myanmar possesses a wealth of assets and the potential for true growth and development within the economy overall. Endowments of tin, antimony, zinc, copper, tungsten and lead, as well as petroleum, timber, coal, marble, limestone, gemstones, natural gas and hydro power, are potentially extremely lucrative and transformative. Ultimately, the ability for Myanmar to translate natural resource wealth into prosperity will be dependent upon its ability to set the rules of the game for all stakeholders, nurture domestic capacities where they might be competitive, including human capital, and create infrastructure and services that allow for a successful industrial presence and beneficial supply chains.

Governments can be most successful when they understand their comparative advantage (vis-à-vis firms, civil society, foreign capacity) set against the larger economic, social and environmental goals of the country. They can then act with confidence and authority to nurture a thriving sector rooted in rule of law, partnership, transparency, clarity and consistency.

Non-government institutions are also key players within the natural resource sector. Industry associations can represent collective interests, increase transparency and lower transaction costs of cooperation. Civil society organizations can promote stewardship for social and environmental issues and increase process transparency for the benefit of citizens, government and firms alike.

International bodies set standards, monitor obligations, facilitate the exchange of information that increases efficiency, and create a community of interest around issues related to natural resource management. There are no standard prescriptions for countries that have very different needs to be met by varied national assets and resources.

A variety of institutions within Myanmar require strengthening for a robust sector that can generate economic development. The Ministry of Mines will need to set out a sector strategy and corresponding policy to support development objectives. The Ministry of Finance and Revenue requires consultation with financial experts on the various options for revenue management and investment in this highly specialized field of finance. The Investment Commission should examine global regimes for this strategic sector and identify the appropriate restrictions and conditions for global capital and firm operation and the necessary legal structures and assurances that would support mutually beneficial investment.

Multiple ministries should cooperate to form a comprehensive strategy for environmental conservation and set standards for industry that will ensure best practices.

Author: Clare Lockhart is Director of the Institute for State Effectiveness (ISE) and the Market Building Initiative at the Aspen Institute. She is a Member of the World Economic Forum’s Global Agenda Council on Fragile States

Image: Trucks at a copper mine in Sarlingyi township, Myanmar. REUTERS/Soe Zeya Tun.

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