State-owned enterprises need urgent reforms: NRGI

ASEAN+ February 01, 2016 01:00

By Khine Kyaw
Myanmar Eleven
Y

Large firms monopolise revenues; land grabs target poorer citizens



Myanmar’s new government should urgently reform state-owned enterprises in the oil and gas and mining industries due to the sizeable revenue against little oversight, says a non-profit organisation.
Launching a report on Thursday, the Natural Resource Governance Institute (NRGI) noted that in fiscal 2015-16, the enterprises’ combined revenue is projected to reach 20 per cent of the government’s revenue and 15 per cent of expenditures. 
However, the nation is unlikely to benefit hugely from their operations since profitable enterprises are allowed to retain almost 55 per cent of revenue in company-controlled “other accounts” that are not subject to the annual budget process.
“The enterprises play a crucial role here, as they exert significant influence over public revenues. In recent years, they accounted for a major portion of all government revenues and expenditures. 
“But these enterprises are carrying out their activities with very little formal internal oversight and less public transparency,” said Patrick Heller, director of legal and economic programmes and co-author of the report.
Myanmar’s first EITI report, covering fiscal 2013-14, showed that the government received US$3.1 billion (Bt111.5 billion) from the extractive sector. 
Myanma Oil and Gas Enterprise (MOGE), a state-owned company, retained $1.3 billion of this revenue for its own operating expenses and raw materials. The four state-owned mining companies collectively retained about $230 million.
Heller warned against the increasing financial autonomy of the enterprises and poor transparency of the “other accounts”.
“Though we have not seen any published figures on the exact size to which these accounts have grown, some of them appear to have reached billions of dollars,” he said. 
He noted that MOGE’s retained revenue in the year was nearly twice the government’s health budget of $750 million and higher than the education budget of $1.1 billion. 
The report also highlighted that military-affiliated companies like Myanmar Economic Corporation and Union of Myanmar Economic Holdings Ltd (UMEHL) are playing a key role in the mining industry. 
Though they are private companies, many stakeholders in Myanmar indicated that these companies play important quasi-official roles in determining who gets access to mining projects and in distributing the benefits of extraction, overlapping the authority of SOEs in confusing ways and impeding public accountability.
It suggested the setting of revenue retention policies matched to commercial strategies, enhancing public disclosure of key data, reducing any unnecessary overlaps between the state-owned enterprises and other public entities and ensuring strong mechanisms for internal accountability are in place. 
Land grabs will be another headache for the government. In its report submitted to parliament in July, the land confiscation investigation commission said that up to January 21, it had submitted 19,836 land dispute case files to the government. Of them, 6,423 cases remain unresolved.
In Yangon region, authorities returned 359,902 acres of confiscated land and paid 523,099 kyat (B14,400) in compensation.
 
New cases keep springing up
Last week, around 600 huts in Mingaladon housing 2,500 people were bulldozed. Next to their land is a beer factory of UMEHL. Evicted resident Hla Hla Kyi, 58, said he had lived there for 15 years and earned his living through farming. 
“We don’t know where we will go,” he said. 
The demolition came only a few days after residents received the eviction notice from UMEHL, he said. 
As of Friday, it was reported that they 
were forced to live in bamboo huts next to main roads, along with squatters evicted from other parts of Yangon. The Yangon City Development Committee estimates that Yangon houses about 300,000 squatters in 33 townships. 
Khin Hlaing, a member of the committee, said their houses would be demolished but little by little to minimise the impacts on the squatters. He said the next government might be able to offer the squatters permanent accommodation.