Beginning July 1, 2013, the US Department of State will require US persons making new investments in Burma to submit two types of reports describing these investments under the recently-issued Burma Responsible Investment Reporting Requirements1 (Reporting Requirements). First, US persons who have invested in Burma an aggregate amount in excess of $500,000 must annually report to the US Government certain details of their investments in Burma, including a description of the business activity; the reporting party’s policies and procedures that address human rights, workers’ rights, corruption, and environmental protection concerns; any communications the reporting party may have had with the Burmese military and armed groups; and any payments made to the Burmese government. Second, US persons must notify the Department of State of any new investments, regardless of their value, made under an agreement with the Myanma Oil and Gas Enterprise (MOGE) within 60 days of making the investment.
The US Government’s Burma policy has steadily shifted in response to the Burmese Government’s increasing liberalization and improving stance on human rights. Since July 2012, the US Department of the Treasury’s Office of Financial Assets Control (OFAC) has authorized US persons to export financial services to Burma,2 make new investments in Burma,3 and import into the US a greater variety of products from Burma4—all significant developments in light of the broad restrictions on financial transactions and trade enforced against Burma in past years.
Nevertheless, the US Government’s liberalization of financial transactions with Burma has been accompanied by lingering concerns about human rights, democracy-building, labor rights, environmental protection, and corruption. In addition to the State Department’s new reporting requirements, which are detailed below, the Treasury Department continues to prohibit financial transactions with certain Burmese military and government entities and persons and companies listed as Specially Designated Nationals (SDNs) under the Burmese Sanctions Regulations (BSR), 37 C.F.R. pt. 537.5 While the relaxation of sanctions presents new financial opportunities, US businesses seeking to invest in Burma must be certain to comply with the Reporting Requirements. US businesses must understand the Reporting Requirements and be aware of the remaining restrictions on financial transactions with Burma.
The New Reporting Requirements
The Reporting Requirements apply to investments made under General License No. 17, which authorizes most types of new investment (as defined in the BSR)6 in Burma as of July 2012. The State Department requires companies to be transparent about key aspects of their dealings in Burma, with the goal of helping US businesses develop robust policies in key areas of concern, promoting investments that enhance development and reform, and empowering civil society to play a role in monitoring investment in Burma.7
Parties required to file a Burma investment report under the Reporting Requirements must file two versions of the report with the State Department. The first is a version for use by the US Government. It must contain all of the information required under the Reporting Requirements. The State Department will not make this version of the report public. The second report is a version that will be released to the public. The public report is not required to contain contact information for the submitting party, a section regarding any communications with the Burmese military or other armed groups, or a section on identified risks and risk prevention mitigation plans. In preparing the public report, the submitting party may also omit any information that the reporting party believes in good faith is exempt from public disclosure under the Freedom of Information Act (FOIA). The submitter must indicate in the US Government report the information being withheld from the public report, and provide justification for withholding the information. US persons must submit information in two general categories:
- Annual Reporting Requirements, and
- MOGE Investment Notification.
The summary below describes the annual Reporting Requirements, including who must file an annual report; when they must file the annual report; and the information that a reporting party must include in an annual report. This summary also describes the Reporting Requirements for any investments US persons make in MOGE.
Annual Reporting Requirements
Who must report:
- Any US person or entity who has, under General License No. 17, invested over $500,000 in Burma;8
- Any US person or entity who has, under General License No. 17, acquired or leased property valued over $500,000 or consisting of over 30 acres.9
What must be reported in the US Government report:
- Any communications with the Burmese military or other armed groups;
- Possible investment-related risks and impacts on human rights, workers’ rights, corruption, and the environment;
- Organizational policies on these risks and impacts;
- Steps taken to mitigate these risks and impacts.
What must be reported in both the US Government report and the public report:
- The name of all companies operating in Burma covered by the report (including subsidiaries), and an overview of Burma operations, including the nature of the business, the identity and location of operations in Burma, and the size of the workforce;
- The reporting entity’s policies and procedures on human rights, workers’ rights, corruption, and environmental impact;
—— This category includes the reporting entity’s due diligence policies and procedures addressing human rights; anti-corruption policies and procedures; policies and procedures on community/stakeholder engagement, policies and procedures for hearing and remedying employee grievances, the reporting entity’s global corporate social responsibility policies; and the extent to which these policies and procedures apply to the entity’s subsidiaries and business partners in Burma.
- The reporting entity’s arrangements with security service providers—including their names, duties, whether they are signatories to the International Code of Conduct for Private Security Providers or otherwise certified as meeting international standards—and due diligence policies for using security providers, including policies on human rights and anti-corruption;
- The reporting entity’s property acquisition policies, the location of the acquired property, the identity of previous ownership, policies on dislocation or resettlement of previous residents, and compensation made to those residents;
- Payments to government entities or non-state authorities in Burma, if total payments exceed $10,000 during the reporting year.
When reports must be submitted:
- Reporting begins on July 1, 2013;
- Reports must be submitted within 180 days of reaching the $500,000 threshold, and thereafter annually on July 1.10
MOGE Investment Notification
Any US person that has undertaken a new investment pursuant to an agreement with MOGE must notify the State Department within 60 days of the new investment. The Reporting Requirements provide no minimum amount triggering a reporting obligation; a US person must report any investment in MOGE to the US Government.
The US Government’s liberalization of investment opportunities in Burma over the last year presents both opportunities and challenges for potential investors, in light of certain continuing restrictions. The Reporting Requirements describe for new investors in Burma the information they must report to the State Department and the public. Investors must comply with these Reporting Requirements in order to avail themselves of General License No. 17, which authorizes new investment in Burma.