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Using consultation to build local leadership and work politically – the case of the Myanmar Investment Law

31 March 2020

Can actors from other countries – outsiders – support and facilitate progressive reforms or change? And if so, how? These are questions that continue to frustrate as well as motivate. We know that if a reform is to succeed, it needs to be locally-led and has to be negotiated with those whom it will affect to be seen as legitimate.

Yet, despite a widespread commitment from donors and other external actors to try and build local stakeholders’ views and expertise into reform processes; what starts off as serious commitment to consult often ends up being simply too complicated, protracted and difficult to achieve.

That’s why the case of the Myanmar Investment Law provides such an interesting and instructive example. It demonstrates neatly the absolute centrality of politics to reform processes, even when they are perceived to be “technical”.

What is so revealing about this case is the role of the consultation in providing a vehicle for much-needed contestation. It rapidly became clear that the Investment Law meant different things to different people. In a context of a long-standing military regime, where space to question and understand policy reforms had been so restricted, the consultation served not just to build local involvement and improve the content of the law, but to test the actual premise upon which it was being made. In retrospect, it was clear that the law needed to go through an – inherently political – process of contestation, where ideas and worldviews were shared, challenged, clarified, and compromised.

Let’s look at what happened. In 2015, the International Finance Corporation (IFC), backed with resources from bilateral donors, began working with the Government of Myanmar to merge the existing two investment Laws (one for domestic investment, one for foreign), with a view to ironing out problems within and inequities between the two Laws and more generally (following Myanmar’s 2010 opening up after a long-running military regime), to support part of what was termed Myanmar’s ‘triple transition’ of democratization, marketisation, and shift away from conflict. This was viewed as a largely technical exercise.

Sound simple? Hardly. An early problem in the process was the lack of contextual understanding on the part of those supporting the reform: Myanmar was and continues to be a tricky place to do investment. The law was being drafted against a backdrop of a decade’s long regime, during which time many investments locked in control of resources by elites linked to the military. But legacy issues for these contracts were not considered. In fact, the process suffered a collective myopia on many fronts such as the complex realities of land rights and the presence of conflict in areas in the country likely to receive investment.

To add to this, the drafting was anchored in an ideological commitment to a market approach (the law retained a strong institutional view by drawing heavily on a generic IFC handbook on investment regulation). The IFC’s belief that the law’s development was largely technical and tangled up with a desire to keep the law away from divisionary interests that would complicate its drafting and passage – e.g. difficult and unpredictable consultations. It seems that the actors involved did not anticipate that the law might be of significant interest to the public and civil society.

In retrospect, this turned out to have been wishful thinking. While the reform process began by following a pattern of little (to no) plans for local consultation, it was not long before it was eased open by a diverse set of local and international actors whom – once they found out about the draft law and what it contained – signalled their deep concern about its possible impact if it went ahead without amendments. Without going into details on the exact nature of the criticisms from experts and civil society alike, it is possible to say that the very process of contestation brought about by the unplanned for and expanded consultations, resulted in the Government’s recognition of problems in the law, a slowing down of the drafting process to allow for time for comments, inputs and amendments to be made and ultimately, in improvements to the law.

The lesson of Myanmar Investment Law is that the consultation process ended up being the completely necessary conduit for this contestation, and one without which, the law would have been weaker, if not detrimental in its impact. In addition it…

  • … shows that unexpected criticisms – easily confused with the failure of the process – can, in fact, be learning opportunities that secure the ultimate success of the reform.
  • … provides a good account of what happens when there is a failure to think and work politically, showing how important it is to carry out political analysis before and during a reform process.
  • … reveals how important listening, learning, feedback, adaptation and inclusion are to working politically. Working politically is not only about Machiavellian back room deals, but protecting and using the public sphere to contest ideas.

It’s worth remembering, consultation might be complicated, but to quote Sean Connery’s Sir August de Wynter from the Avengers circa 1998: “Nothing is impossible, only mathematically improbable”. This sentiment could help to get policymakers over the rough times when consultation might seem more like an unnecessary headache and less like an essential component for ensuring a reform is on the right track.

For lessons learned from this reform process, read the full paper here.

The Australian Department of Foreign Affairs and Trade works in partnership with IFC to implement and deliver private sector development programs in Myanmar. These programs, and the IFC, are a valued part of Australia’s aid to Myanmar

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