‘Other Accounts’ of Union Govt Ministries, Agencies to Be Scrapped

By Htun Htun 20 June 2019

YANGON—The Union government will systematically audit and abolish the so-called “other accounts” (OAs) held by government ministries and agencies, Vice President U Myint Swe said at a meeting of the Finance Commission in Naypyitaw on Monday.

Starting in fiscal 2019-20, state-owned enterprises (SOEs) will have to transfer all of their net income to the Union government, and not their own accounts, he said.

“This will be carried out according to the financial policy of the government. However, state-owned enterprises were never allowed to use funds from their other accounts as they wished; they were only allowed to spend it according to the budget. So, the abolition will not have any impact,” said U Win Htike, the deputy permanent secretary of the Ministry of Finance and Planning.

There are 25 state-owned economic enterprises in Myanmar authorized to keep OAs, which hold around US$9 billion (nearly 14 trillion kyats), according to figures submitted to the Union Parliament in February 2018. The accounts were created in 2013 under U Thein Sein’s administration.

The government retains exclusive rights to conduct business in certain sectors, including the extractive industry, according to the State-Owned Economic Enterprises Law enacted under the military regime in 1989. Under the law, local and foreign investors may conduct business in these sectors through contracts or joint venture agreements with the government.

According to Parliament’s Joint Public Accounts Committee, the News and Periodicals Enterprise of the Information Ministry, Myanmar Posts and Telecommunications, Myanma Timber Enterprise, No. 1 Mining Industry, No. 2 Mining Industry, Myanma Gems Enterprise, Myanma Pearl Enterprise, and Myanma Oil and Gas Enterprise have other accounts and operate with their own funds.

They pay 25 percent of their profits as income tax, and another 20 percent as a dividend to the government. The rest goes into the other accounts, with which they operate.

Since 2017, lawmakers have called for the abolition of other accounts and greater transparency in the country’s lucrative extractive industries.

U Maw Tun Aung, Yangon office manager of the US-based National Resource Governance Institute, said: “SOEs book the money from share dealings, signing fees, and so on, which they collect on behalf of the government, as their own income. This must be ended. These funds should go directly into the state coffers. Only then will we be able to know the real capacity of SOEs.”

The Finance Commission’s decision to abolish other accounts will not affect SOEs engaged in the energy sector, said U Than Htay Aung, a government representative to the Myanmar Extractive Industries Transparency Initiative (MEITI), a tripartite multi-stakeholder group.

“In the energy sector, we were never allowed to spend as we wished from other accounts. We could only spend with the approval of Parliament, and the Auditor-General’s Office made regular audits,” U Than Htay Aung said.

“While the profit-making SOEs transfer their profits into their own accounts, loss-making SOEs are operating under the state budget, so there are imbalances,” said Lower House lawmaker Dr. Thet Thet Khaing.

“The abolition of OAs means money from profit-making SOEs can compensate for loss-making ones, reducing the state budget deficit. But I think it would be better to adopt a law on financial procedures for SOEs so there will not be frequent policy changes, and the Parliament can take the matter into its own hands,” she added.

Other government enterprises that have OAs while also spending Union funds include Inland Water Transport, Road Transport Services, Myanma Railways, Myanmar Post, Electricity Supply Enterprise, Myanma Petrochemicals Enterprise, No. 3 Heavy Industry, No. 2 Heavy Industry and Myanmar Pharmaceuticals Enterprise.

The commission meeting on Monday approved the budget for fiscal 2019-20 and will submit a budget bill to the Union Parliament.

The meeting was attended by State Counselor Daw Aung San Suu Kyi, President U Win Myint, the two vice presidents and other high-ranking officials.

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