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Maplecroft releases new high-level analysis of operational and reputational risks in Indonesia, Peru, Togo and Viet Nam

08/06/2011

Indonesia

Maplecroft’s report on the state of human rights in Indonesia offers in-depth analysis, maps, key recent events and stakeholder viewpoints on civil and political rights, human security, access to remedy and labour rights.

Indonesia’s human rights record is poor. Maplecroft’s 2011 Human Rights Risk Atlas places Indonesia in the “extreme risk” category for civil and political rights, access to remedy and labour rights and protection for the fourth consecutive year. Reports of arbitrary arrest and detention, harassment and intimidation of human rights defenders and journalists covering business-relevant issues deemed “sensitive” (such as elections, logging, environmental and workers’ rights issues) put companies operating in Indonesia at potential risk of alleged complicity in the actions of state or non-state actors. In addition, women face widespread discrimination, including in the form of sexual and domestic violence, as well as inequitable treatment in the workplace.

The independence of Indonesia’s judiciary is severely compromised by high levels of corruption. The outcomes of courts proceedings are often influenced by outside parties, such as businesses, politicians and security forces. Bribery and forced confessions are common practices within the judiciary. Many businesses operating in Indonesia refrain from resorting to the courts as they do not provide effective means for resolving commercial disputes. High levels of corruption and incompetence, considerable unofficial costs, delays in court proceedings, poor enforcement of court rulings, as well as an ambiguous legal and regulatory environment also deter businesses from pursuing this avenue of redress.

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Peru

Maplecroft's in-depth Country Risk Report on Peru offers high-level analysis and illustrative subnational maps of the governance framework, the regulatory and business environment, political violence, human rights, the environment and climate change, plus an economic overview.

The election of Ollanta Humala as President on 5 June 2011 may destabilise the foreign investment climate due to Humala’s commitment to increase state control over the economy and seek greater redistribution of mineral revenues, with higher mining taxes expected on foreign investors in the extractive industry. However, Humala will also want to maintain the strong economic growth that the country has witnessed over recent years, which has benefitted from foreign investment, and so the President-elect has pledged to avoid breaking existing contracts. Attempts at significant legislative changes will be hampered as Humala’s Gana Peru party does not have a majority in Congress.

Social unrest has increasingly led to protests and violent clashes with security forces.  A revived culture of protest is likely to result in more widespread violence destabilising the foreign investment environment. Most protests are a response to outgoing President Alan Garcia's push to bring foreign investment to the country's mining sector, which has increasingly put mining operations in contact with local communities. Whilst social movements in some provinces are demanding complete cessation of extractive projects, it seems unlikely that President-elect Humala will be able to deliver whilst at the same time maintaining economic growth.  As a consequence, maintaining support from indigenous communities will prove challenging and Peru is likely to continue to face social unrest.

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Togo

Maplecroft's in-depth Country Risk Report on Togo offers illustrative subnational maps and high-level analysis of the governance framework, the regulatory and business environment, political violence, human rights, the environment, plus an economic overview.

The regulatory framework of Togo lacks legal provisions essential to business operations and strategy (such as valid investment or public procurement codes). Where legal texts exist, they lack comprehensiveness and specificity. Additionally, the regulatory and judicial processes lack transparency. As a result, investors are likely to face terms and conditions outside of a framework of reference and are thus highly vulnerable to changes in regulation and government policy. Private investors in Togo should expect to operate in a highly uncertain business environment. Investors are likely to have to negotiate the specifics of each investment contract with another party, including the State, outside of a domestic framework of reference.

While the threat of terrorism and ethnic violence in Togo is currently low, conflict and criminal activity in neighbouring countries has spill-over effects through the region’s porous land and maritime borders, posing growing risks to businesses operating in the country. Furthermore, piracy has over the years become an increasingly significant risk for the whole Gulf of Guinea. Although the phenomenon remains most prevalent off the coast of Nigeria, there have been recent (2008-2011) incidents of attempted pirate attacks off the coast of Togo.

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Viet Nam

Maplecroft’s Country Report on the state of human rights in Viet Nam offers in-depth analysis of the situation of labour rights, civil and political rights, human security, and the rule of law in the country.

The Vietnamese government currently struggles with the effects of one of the world’s highest inflation rates has on the country, trying to retain Viet Nam’s position as one of the most attractive places for foreign investment in Asia. High inflation and rising prices for commodities are putting additional stress on workers’ wages. Although the government has repeatedly increased the national minimum wage, it fails to match the rising costs of living. This tense situation is expressed in an increasing number of labour disputes, particularly in the manufacturing sector.

The past year has seen an increase in government pressure on civil activists, bloggers, land rights activists, and human rights defenders. Since October 2009, concerted government efforts to clamp down on freedom of expression have resulted in numerous political critics and activists receiving long prison terms. Religious groups encounter the greatest restrictions when they engage in activities that the government perceive as “political activism” or a “challenge” to its rule.

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