The civil war in Myanmar has entered its third year without any sign that the situation will improve soon -- especially after a five-month ceasefire brokered by the Chinese government fell apart late last month.
As such, it would hardly be surprising if the global community resorted to sanctions to incapacitate the country's military government.
Either way, the latest report by the United Nations, titled "Banking on the Death Trade: How Banks and Governments Enable the Military Junta in Myanmar", should serve as a red flag for any Thai companies that are pouring money into the war-torn nation and a warning that they need to show credible due diligence to guarantee that their investment aligns with human rights and sustainability practices.
Released last week, the report by the UN Special Rapporteur for Human Rights found that 16 banks in seven countries have processed transactions linked to military procurements for the Myanmar junta in the past year alone.
The report stated that Thai banks have now become the main source through which the Myanmar military is buying weapons and military supplies -- including parts for helicopter gunships.
Needless to say, the Thai Bankers' Association quickly refuted the report, while Siam Commercial Bank (SCB) -- one of the named banks -- publicly denied any connection to the arms trade and reaffirmed its commitment to adhering to anti-money laundering and other regulations, as well as good governance and transparency.
The case reflects the investment risk for companies putting money in Myanmar. Since the Tatmadaw overthrew the elected civilian government in February 2021, conglomerates like TotalEnergies of France and US-based Chevron have withdrawn their respective investments after being pressured to do so by human rights groups. Major global funds have also cut ties.
Listed Thai companies are already feeling the heat from this pro-democracy-driven embargo. In December 2022, Norway's Sovereign Wealth Fund dropped two Thai firms -- state energy giant PTT and OR -- from its equity portfolio after it was found they held major shares in Myanmar's Brighter Energy Co Ltd.
Listed Thai companies often follow anti-graft and anti-money-laundering laws while adhering to good governance and transparency both locally and in the countries where they invest.
The question is whether these firms have auditing and due diligence systems that can monitor their investments to make sure the money and supply chain are not dragged into human rights violations or polluting activities.
That raises the question of what our government and related investment agencies have been doing in this regard. Indeed, Thailand is the first country in Asia to have created a National Action Plan (NAP) on Business and Human Rights.
In 2017, the former government of Prayut Chan-o-cha enacted the country's first NAP. Based on the UN Guiding Principles on Business and Human Rights (UNGPs), the country's NAP provides guidelines for states and companies to address human rights abuses in various business domains.
As wars make trade more uncertain, non-tariff barriers and even trade embargoes are likely to play an even bigger role in the future.
The Thai government must prepare our businesses to be ready for such challenges.