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New in-depth reports highlight risks to operations supply chains and investments in Saudi Arabia, Chile, Côte d’Ivoire, Dominican Republic, Honduras and Myanmar

24/03/2011

Saudi Arabia

Maplecroft’s in-depth Country Risk Report on Saudi Arabia offers high-level analysis and maps of regime stability, political violence, the regulatory and business environment, human rights and labour rights in addition to the environment.

The effects of the 2011 wave of protests across the MENA region have so far been limited in Saudi Arabia. Calls for large-scale protests to demand democracy and greater protection of rights have failed to materialise in the kingdom. Although dissent and protests remain official banned, demonstrations and public expressions of discontent have recently taken place, particularly in eastern Saudi Arabia. The potential exists for a rise in domestic political instability. Increased government spending does not effectively answer calls for reform. Foreign companies and investors operating in Saudi Arabia may be associated with government restrictions on fundamental democratic freedoms.

Saudi Arabian state security forces periodically commit abuses with impunity. Individuals in detention, particularly human rights defenders, political prisoners and those accused of terrorism, are highly vulnerable to torture. Additionally, Saudi Arabia remains a primary target for Yemen-based al-Qaeda in the Arabian Peninsula (AQAP) and other militant Islamist groups. The threat of terrorist attacks taking place in Saudi Arabia has increased with the 2011 wave of unrest and Western businesses remain an attractive target for terrorist groups.

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Chile

The Labour Standards Report on Chile offers in-depth analysis for all major labour issues, country scores, maps, key recent events and stakeholder viewpoints.

Chile suffers from a poor occupational health and safety record, with a total of 191,685 workplace accidents, including 443 fatalities, in 2009. In the first quarter of 2010 alone, there were 155 work-related deaths. Health and safety violations are most common among enterprises in the agricultural, fishing, forestry and mining sectors that employ temporary and contract workers. The substandard working conditions among small and medium-sized copper mining firms have been exposed all too clearly in recent months. In response, the Piñera government has formed an expert advisory commission tasked with reviewing and reforming the country’s health and safety laws and enforcement procedures.

Child labour remains a serious problem in the informal economy, particularly in such sectors as agriculture, lumber processing, charcoal production, meat and shellfish processing, fishing, ranching, shepherding, bagging groceries in supermarkets and domestic service. Chile’s mining and agricultural sectors are also reported to be host to foreign labour trafficking victims, principally from Bolivia, Peru, Colombia, Ecuador and China. Companies with operations, suppliers or subcontractors in Chile face risks of complicity in such practices, which could serve to damage brand reputation and relationships with key business partners and local communities.

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Côte d'Ivoire

Maplecroft’s in-depth Country Risk Report on Côte d’Ivoire offers high-level analysis and maps of the governance framework; the regulatory and business environment; political violence; human rights; and the environment.

Côte d’Ivoire increasingly appears to be entering a state of civil war, with rising inter-communal violence and political polarisation. The north and south of Côte d’Ivoire have largely returned to the political segregation which they experienced during the last civil war. Neither Laurent Gbagbo (who is internationally regarded as having lost the November 2010 elections) nor Alassane Ouattara (the widely accepted winner of the polls) appears likely to concede to their opponent. There is therefore a serious risk of severe and sustained violence.

For investors and businesses operating in Côte d’Ivoire there are a myriad of risks associated with severe Ivoirian instability and potential civil war. There is a high security risk to employees in the country. Foreign-owned property could also become a particular focus of anger during violent protests, in part due to international sanctions imposed on Côte d’Ivoire, and potentially as a result of incitement or payment by the incumbent regime. Moreover, it is likely that a return to widespread violence would see notable damage to existing Ivoirian infrastructure, thus further hindering the business environment. Companies are also at high risk of potential allegations of complicity in actions by any of the parties that contribute to the continuation of the conflict and associated human rights violations.

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Dominican Republic

Maplecroft’s in-depth Country Risk Report on the Dominican Republic offers high-level analysis and maps of the governance framework; the regulatory and business environment; political violence; human rights; and the environment.

Corruption remains pervasive in the Dominican Republic, with irregularities, bribery and other corrupt practices a particular risk when dealing with public administration agencies and officials. The current administration is perceived to be permissive of (if not complicit in) this environment. Companies are exposed to high levels of corruption, both through their local supply chains and as they engage in governmental contracts. As a result, foreign investors face legal, reputational and financial risks if allegations of corruption emerge in relation to their dealings with officials or local partners and suppliers.

Rule of law is not effectively enforced and poses serious risks to foreign companies and investors operating in the country. The main hindrances emerge from the ample power of the executive branch, widespread corruption in the public sector, and the politicisation of justice. Foreign companies face significant uncertainty when dealing with the judiciary. They could potentially be at risk of unfair proceedings in the judicial process, as irregularities and undue influence from other branches of government take place, often with impunity. In addition, weak rule of law prevents companies from relying on the enforcement of contracts and on the enforcement of dispute settlement.

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Honduras

The Labour Standards Report on Honduras offers in-depth analysis for all major labour issues, country scores, maps, key recent events and stakeholder viewpoints.

Poor working conditions in Honduran export processing zones (EPZ) and maquila factories have been widely reported. Many of these zones and factories manufacture clothing and textiles for name-brand western companies. Employees face pressures from employers who promise high productivity to the companies they supply. Long working hours, low wages and mandatory overtime in these zones have all been reported by unions as well as local and international NGOs. Employers often hire workers on temporary work contracts offering little job security, avoiding payment of benefits and decreasing the likelihood that employees will raise issues of poor working conditions with their employers.

The post-coup Honduran government intends to expand temporary work, subcontracted work and hourly work in an effort to make the labour market more “flexible” to create jobs and reduce unemployment, which is expected to be only 4.3% in 2011, according to IMF estimates. The Confederation of Honduran Workers (CUTH) union states that the bill is an attempt to further create privilege by denying working people job security and union organization which will decrease their bargaining power with employers.

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Myanmar

Maplecroft’s in-depth Country Risk Report on Myanmar offers high-level analysis and maps of regime complicity; human security; human rights; labour rights; and the environment.

According to Maplecroft’s Regime Complicity Index, the risk of business complicity in the actions of the Myanmar regime is very high. Companies operating or investing in Myanmar face two broad types of challenges associated with a high regime complicity risk. First, they face the reputational implications of being seen as supporting a repressive regime.  Second, companies also face potential legal liability issues linked to domestic (host country) laws, home country laws, especially when sanctions are in place, and international human rights conventions.

Myanmar has experienced internal ethnic conflicts in its eastern border states since independence, despite negotiated and non-negotiated attempts at ending them. These conflicts are likely to continue to be a risk to business, and can escalate quickly. Companies reliant on the army for protection are at serious risk of potential allegations of complicity in violations of human rights committed by the state security forces. This risk of complicity extends to the actions of any paramilitary or non-regular units, as well as private security forces potentially used to protect, for example, pipelines and other infrastructure.

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In-depth reports contain detailed analysis, country scores, maps, key recent events and stakeholder viewpoints. They are available for all countries, sectors and issues. Please contact info@maplecroft.com for more information.