Deputy Defense Minister: Perks Over for Military Businesses

By Htet Naing Zaw 3 May 2017

NAYPYIDAW — The military’s two major conglomerates, bolstered by past monopolies over industries ranging from cigarettes to cement, are no longer being treated preferentially, said Deputy Defense Minister Maj-Gen Myint Nwe.

The Union of Myanmar Economic Holdings Ltd (MEHL), established in 1990, and its sister company, Myanmar Economic Corporation (MEC), founded seven years later, have a sprawling business empire encompassing trade, services, and military supplies.

These vast trade interests are sustained through lawfully competing with other private companies, and the conglomerates pay taxes, the major general told a press conference in Naypyidaw on Tuesday.

From the fiscal years of 1990-91 to 2015-16, he said the firms paid 8.9 billion kyats (US$70.191 million) in tax and an advance tax of $1,000 plus 3.082 million euros (4.559 billion kyats) for the 2016-17 fiscal year.

Established under the 1950 Special Company Act with a capital of 56.098 million kyats, MEHL had shares worth 161 billion kyats ($119.4 billion) altogether on March 24, 2017, according to Maj-Gen Myint Nwe. The shares are owned by serving and former soldiers, and war veterans’ organizations.

“MEHL was formed officially in line with the rules and regulations, and it pays taxes,” said the deputy defense minister.

The Ministry of National Planning and Economic Development under the former President U Thein Sein administration allowed MEHL to turn itself into a public company in March 2016—just before the National League for Democracy (NLD) assumed office.

“We have transferred the shares to war veterans’ organizations to transform MEHL into a public company,” said Maj-Gen Myint Nwe, adding that the shares will not be sold to the public.

Chairman U Khin Aye of the Lower House Economic and Financial Development Committee said MEHL’s businesses were “barely transparent” and did not pay taxes in the past.

Accepting that MEHL now paid taxes, he emphasized the need for greater transparency in the conglomerate, including the disclosure of its share ownerships and business activities.

“MEHL used to evade tax. It is not a bad thing that it is paying it now, but I don’t like that the establishment runs businesses. I’m concerned that other government institutions will also want to follow suit,” said U Khin Aye, who is also the lawmaker representing Nattalin Township in Pegu Division.

“Our committee is also interested to find out how those businesses are doing.”

MEHL was founded with the aim of helping soldiers, war veterans and their families, as well as the people, and the economic development of the country, said the deputy defense minister.

It is made up of 48 companies that mainly produce automobiles, corrugated iron sheets, cement, electricity, LED bulbs, textiles, rubber, plastic household goods, consumer goods, cigarettes, beer, sugar, and processes fish and prawns, he added.

MEC produces basic supplies for the Burma Army, he said, adding that it was established with a view to reducing military costs, and helping the families of military personnel.

“MEC competes with other private businesses in line with the law,” said the major general. “It also pays taxes. It doesn’t [enjoy] advantages over other businesses.”

The Irrawaddy asked the deputy defense minister if the Burma Army was investigating allegations of human rights violations in northern Arakan State.

“Regarding the Arakan issue, an investigation led by Lt-Gen Aye Win has been formed. If there are human rights violations, our commander-in-chief of defense services will take harsh actions. The Tatmadaw [Burma Army] does not accept human rights violations,” he said.

He dismissed rumors that the army suffered more than 400 casualties in clashes with the Kokang rebels and said the Tatmadaw True News Information Team was releasing the news “people should know” through the army-run Myawaddy newspaper, the defense ministry and the Facebook page of Burma Army chief Snr-Gen Min Aung Hlaing.

Translated from Burmese by Thet Ko Ko