Submission to the Asian Infrastructure Investment Bank on the Duqm Port Commercial Terminal and Operational Zone Development Project

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1 1 May 2017 Dr. Shakeel Khan Project Team Leader/Principal Investment Operations Specialist Asian Infrastructure Investment Bank B9 Financial Street, Xicheng District Beijing P.R. China Dear Dr. Khan: We are writing to share our concerns about the application of the AIIB s Environmental and Social Framework in the Duqm Port Commercial Terminal and Operational Zone Development Project. Our concerns relate to the employment of foreign migrant workers as labor on the Duqm Port Project as well as the treatment of social issues in the Preliminary Environmental Impact Assessment (PEIA) for the Project. 1. Foreign Workers and the Duqm Port Project The AIIB s Environmental and Social Framework (ESF) stipulates that, as part of its due diligence, the Bank is required to determine whether all key potential environmental and social risks and impacts of the Project have been identified and whether effective measures to avoid, minimize, mitigate, offset or compensate for the adverse impacts are incorporated into the Project s design and ESMP. 1 As we explain in more detail below, in our view, the Preliminary Environmental Impact Assessment should be revised to identify and address the social risks attached to the employment of migrant construction labor on the Project. Environmental and Social Standard 1 (ESS 1) requires the Client to assess labor and working conditions of project workers and ensure that, in connection with the Project, there is no work or service not voluntarily performed that is exacted from an individual under threat of force or penalty (including any kind of forced or compulsory labor, such as indentured labor, bonded labor or similar labor-contracting arrangements, or labor by trafficked persons). 2 Foreign citizens constitute approximately 45% of the Omani population, 3 and the majority of foreign workers in Oman are employed in low-skill construction and manufacturing jobs. 4 As in other countries in the Gulf, foreign migrant workers in Oman are employed under a sponsorshipbased immigration system known as kafala which can be conducive to the exaction of forced labour as it binds workers employment and residency rights to their employer, restricting them 1 Asian Infrastructure Investment Bank, Environmental and Social Framework (2016), para Id. at ESS 1, para. 4, Section D. 3 U.S. & Foreign Commercial Service, Doing Business in Oman: 2016 Country Commercial Guide for U.S. Companies (2016), p Id. 1

2 from changing employers or leaving the country without their employer s consent. 5 Foreign workers in Oman have been subjected to ill-treatment that has amounted to forced labor, beginning with unscrupulous labor recruitment agencies [that] deceive some workers into accepting work that constitutes forced labor. Such unscrupulous agencies provide false contracts with fictitious employers or wages and charge workers high recruitment fees with exorbitant interest rates, leaving workers vulnerable to trafficking. 6 If workers arrive in debt, it increases their susceptibility to other forms of ill treatment including excessive working hours, passport confiscation, and physical and mental abuse. 7 In a recent case, two dozen migrant construction workers were left stranded by their employer and not paid for up to nine months. 8 According to the Duqm Port Project PEIA, 90% of the workers at the Port are foreign workers. 9 The PEIA estimates that the construction of port-related infrastructure under the Project will involve approximately 900 workers. The majority of these workers will consist of laborers, 10 which is the category of workers most vulnerable to forced labor. However, the PEIA makes no mention of the risk of the use of forced labor in the Project, nor does it identify any actions needed to address this risk. In order to comply with ESS 1, we recommend that the AIIB request the Client to revise the PEIA to address the risk of use of forced labor in a manner that is consistent with international guidelines for construction projects in the Gulf region. 11 We recommend that AIIB require the Client to commit to address these risks and identify measures to ensure that: Project workers do not pay recruitment or other fees in the course of the recruitment process and on arrival. If Project workers have paid fees, they should be fully reimbursed, including fees paid to recruitment agencies or for visas, medical exams, and travel costs. All Project workers receive an employment contract in a language that the worker understands and that identifies the terms of employment including payment, location, working hours, dates, and length of employment, job duties, housing conditions, leave entitlement, and end-of-service benefits. 5 International Labour Organization, Labour Migration in the Arab States, available at Times of Oman, Dozens of Indian workers stranded in Oman, not paid for months, available at 9 PEIA, p The PEIA estimates that the required manpower for the construction phase will be 900 workers. 805 workers are classified as laborers, with the remaining 95 workers are classified as technical and administration staff. PEIA, p Building and Wood Workers International, Decent Work for Migrant Workers in Qatar: Role of Construction Companies, available at Human Rights Watch, Guidelines for a Better Construction Industry in the GCC (2015), available at 2

3 Workers are permitted to change jobs when they choose to do so, and no objection certificates and/or exit visas are provided on demand and without delay. Employers do not hold Project workers passports, and workers are able to keep possession of their passports and other identity documents in locked storage in safe locations within their accommodation. Workers are paid on time and in full, including for overtime, and with no unauthorized deductions. Food, transportation, and lodging are provided to migrant workers for free or at a reasonable cost that is disclosed prior to hiring. Workers have access to regular and reliable transport on their day(s) off. Freedom of movement and freedom of association are fully respected inside the work camps, for workers staying at the camps, and as appropriate and safe on the job site (e.g., at non-work areas of the site). The Client and Contractors should commit to not interfere with the right of project workers to hold their own meetings or to meet with community or representative organizations of their choosing. In addition, the AIIB should ensure that the Client conducts due diligence assessments of the private entities executing the construction contract, with particular attention to the companies records on labor and their operations in the Gulf region. MSF Enghenaria operates in the UAE and is involved in three infrastructure projects in Qatar, 12 a country that is infamous for the worst forms of the kafala system and abuses of migrant construction workers. 13 Serka Taahhüt /Adali Holdings has been involved in construction and service projects throughout the MENA region. Similar due diligence also is necessary with regard to any labor brokers used in the course of the project, since many abuses of migrant workers in the Gulf involve third-party brokers. Further, the AIIB s ESF recognizes that living wages, safe and healthy working conditions and putting measures in place to prevent accidents, injuries and disease; having good human resources management; and having a sound labor management relationship based on equal opportunity, fair treatment, non-discrimination, freedom of association, right to collective bargaining and access to grievance mechanisms, consistent with the national law (including international agreements adopted by the member) governing the Project contribute to the overall quality of the Project. 14 However, the Duqm Project PEIA does not address the risk of other forms of ill-treatment of foreign workers that have been documented in Oman, including excessive hours and physical and mental abuse, 15 which would be inconsistent with the AIIB s commitment to financing high-quality projects. The PEIA also does not address the risk of forms of ill-treatment common in the Gulf construction industry, including unequal and delayed payment of wages for foreign workers, denial of freedom of movement, denial of freedom of association and assembly, minimal enforcement of the labor law, and limited or no access to legal and judicial remedies. 12 See, e.g., 13 International Trade Union Confederation, Frontlines Report 2015, Qatar: Profit and Loss, available at 14 AIIB ESF, para

4 In order to address these risks, we recommend that the AIIB require the Client to commit to: Take steps to prevent wage discrimination by operating on the principle of nondiscrimination and equal pay for equal work. The Client should ensure the existence of wage guidelines and scales based on the type of work, skills, and education of workers and ensure that there are no discrepancies in wage based on nationality, race, religion, country of origin, or gender. Contracts given to local and migrant workers should provide equal protection, compensation, and benefits. Ensure respect for workers right to freedom of association and collective bargaining under international standards and Omani law. Inform workers of their rights and entitlements under their employment contract and relevant Omani laws in a language that they understand, as well as legal redress and contact information for embassies, employers, trade unions, recruitment agents, help centres, and whistleblowing hotlines. Workers should have access to an internal complaint procedure to which they can submit grievances anonymously and without fear of retaliation. Inform workers about the AIIB s environmental and social standards, the project-level grievance mechanism, and the AIIB s Oversight Mechanism/Compliance, Effectiveness, and Integrity Unit. Ensure that there is no interference in workers attempts to express their views or raise concerns through other means. Ensure that all tendering and bidding documents and contracts including those with subcontractors and labor brokers contain legally binding provisions on worker welfare, including sanctions for violations of workers rights. Moreover, due to the high risk of abuse of migrant construction workers in the Gulf, we urge the AIIB to take an active role in verifying and monitoring Project contractors compliance with the requirements described in the PEIA for labor camps and worker health management requirements. 16 Lastly, it is important that the Project foster inclusive growth for Oman and local economic empowerment through the participation of the community in the planning process and a focus on local hiring. Specific steps should be taken to ensure that local people are not excluded from the project workforce and their rights are respected. We recommend that the Client: Create a detailed action plan to consult the community and jointly formulate a plan to maximize local and Omani hiring. A comprehensive sustainable development plan is mentioned in the PEIA, but no detail is provided. 17 Establish clear targets for the hiring of locals and Omani nationals, and procedures to ensure that the targets are achieved. Carry out training programs as necessary to create opportunities for local workers to access job created as a result of the Project. This should be done in consultation with community and social partners. 16 PEIA, p , PEIA, p

5 Provide local workers with adequate transportation to and from the job site, and design transportation systems to maximize the ability of locals and Omani nationals to work on the project. Create a plan to transition locals hired during the construction phase into long-term jobs in the Port. 2. Treatment of Other Social Issues in the PEIA We also have concerns about compliance with the provisions of AIIB s ESF on information disclosure, consultation, and a project-level grievance mechanism. Information Disclosure and Consultation: According to ESS 1, meaningful consultation ensures that all parties have a voice in consultation, including national and sub-national government, the private sector, nongovernmental organizations and people affected by the Project, including, as applicable, Indigenous Peoples. The Duqm Project PEIA states that rapid consultation has been undertaken through a series of meetings and written correspondence, 18 and then states that the only entities consulted are two government bodies and four companies. There is no record of consultation with local civil society and affected people. In addition, the PEIA does not include a record of the consultation, which also is required by the AIIB s ESF. 19 Project-Level Grievance Mechanism: The ESF requires the Client to establish a suitable grievance mechanism to receive and facilitate resolution of the concerns or complaints of people who believe they have been adversely affected by the Project s environmental or social impacts, and to inform Project-affected people of its availability. 20 However, the PEIA does not include any information about such a grievance mechanism. In closing, we urge the AIIB to address these issues before project construction operations commence. We would be happy to speak further about our recommendations, and please do not hesitate to contact us if you have any additional questions. Regards, Elizabeth Summers, Infrastructure Policy Manager, Bank Information Center Mariam Bhacker, Project Manager Migrant Workers & Gulf Business, Business and Human Rights Resource Centre 18 PEIA, p. 123 and ESF, para ESF, para