Myanmar to revamp governance of industrial zones under new law
11 JUN 2020 - Source: Myanmar Times - Legislators in Myanmar have approved a long-awaited law governing industrial parks that grant regulatory bodies new powers to punish polluters and land speculators.
Lawyers and experts, however, warn that effective governance will depend on enforcement and accompanying regulations, which have yet to be announced.
Enacted by the Hluttaw on May 26, the Industrial Zone Law seeks to address the prevalent problem of land speculation and improve environmental governance of more than 60 industrial zones across the country.
It creates a Union-level central committee to regulate the zones on top of the existing regional and management committees. The law defines the responsibilities of different levels of committees and bans investors from occupying plots for speculation purposes.
It also sets out responsibilities on creating and implementing pollution control management and proper waste disposal. In particular, investors are now legally liable for "failing to make [their] own arrangements for waste disposal" if the zone does not already have a collective system in place, among other environmental offences.
Other important developments include section 34(b) of the law, which says developers are required to submit to the authorities a project plan and completion date within six months. Failing to comply will result in a penalty of 10 percent of the land value, permits revoked or even imprisonment.
Colliers Myanmar assistant research manager Ko Hpone Myint Thu expects the law to help restore land use for industrial purposes by cracking down on speculators. In Myanmar, the wealthy often pour money into purchasing lands in designated industrial zone areas without actually conducting businesses, hoping to sell the land with a higher price.
Between 1991 and 2016, there were around 2 million hectares of land transactions in the country. Ko Hpone Myint Thu said that the industrial use of land has been "relatively minimal" compared to what was allocated throughout the period, partly because of rampant land speculation.
"By ensuring the broader access to land, we can create more competitive environment when it comes to allocating the industrial lands for investors, and it will perhaps reduce the rental cost in the future," said Ko Hpone Myint Thu.
Myanmar currently has 63 industrial zones and parks in operation, occupying 25,425 acres of land in all the states and regions, with the exception of Chin State. Of all the industrial estates, 65pc is located in the Yangon Region.
Better governance and management
Also introduced in the law is a "clearer hierarchy" into the management of industrial zones, according to Zico Law in Yangon. Previously, they were largely left to be governed on a sub-national level.
The legislation helps create zone governance, with well-defined procedures and guidelines as to the functions of management committees, said its resident partner Geraldine Oh.
"All in all, it is a positive step in ensuring that management committees are properly funded and staffed for the overall good and development of the industrial zone it manages," Ms Oh said. "At the same time, there is accountability for the funds it receives with the requirement to be audited."
But the composition of the committees could also lead to potential conflicts of interest as they are made up of officials and company representatives. The committees are empowered by the law to issue warnings and fines, and supervise environmental and waste disposal compliance. This would give investors, who are commercial players, some authority to regulate themselves.
"It's a terrible idea to have companies which cause pollution fining themselves for the pollution," said an environmental lawyer who declined to be named as he wasn't allowed to speak to the media. He emphasised that the committees should have independent oversight and accountability.
Better for the environment
Section 28 of the new law specifies that investors have to comply with zone-level Environment Impact Assessments based on the Environmental Conservation Law of 2012. These assessments determine the carrying capacity of the zone on water usage, carbon emissions and other issues, and ensure that the cumulative impact of the factories is managed.
"The rules accompanying the Industrial Zone Law need to articulate how zones will be planned and managed to ensure that they do not have negative environmental impacts," said Vicky Bowman, director of the Myanmar Centre for Responsible Business. "It's important that these rules are subject to a systematic and transparent consultation process."
Bangkok-based environmental lawyer Matthew Baird pointed out though that the law does not require industrial zones to comply with the incumbent government's Myanmar Sustainable Development Plan.
Section 13 of the law, regarding choosing locations for the zones, does not include environmental issues. Mr Baird argued that zone locations should be based on a strategic environmental assessment that also considers the availability of water, energy, labour and transport.
"Controlling air pollution, waste, promoting clean energy, and good occupational health and safety is fundamental for Myanmar's stated goal to meet the Sustainable Development Goals by 2030," he said.