Myanmar’s Oil, Gas, Mining Sectors Need More Reform, Says Transparency Watchdog

By Nan Lwin 18 October 2019

YANGON—The Extractive Industries Transparency Initiative (EITI) board stated Wednesday that Myanmar is making progress on transparency but urged the government to improve public disclosure about gemstone production and state-owned enterprises (SOEs). The transparency watchdog also asked the government to clarify the status of military-affiliated extractive companies and their activities in the country.

After meeting this week in Addis Ababa, Ethiopia, the EITI board announced that Myanmar has achieved meaningful progress towards implementing impactful EITI standards by introducing policy reforms, improving transparency in extractives data, stimulating robust public debate and creating a platform for dialogue among stakeholders. 

However, the statement emphasized the need for Myanmar to further improve public disclosure around license allocation, gemstone production data and SOEs, as well as the comprehensiveness of its EITI reporting.

SOEs play a dominant role in Myanmar’s economy and account for nearly half of the government’s revenue. Among the natural resource SOEs covered by EITI standards, Myanmar Oil and Gas Enterprise (MOGE), Myanmar Gems Enterprise (MGE) and Myanmar Timber Enterprise (MTE) are the largest and most powerful. 

EITI is a global standard for transparency and accountability in the oil, gas and mining industries. In July 2014, Myanmar officially became an EITI candidate country, joining the 48 countries that have already signed on to the initiative.

The fourth Myanmar EITI report was published in March and placed the value of gems and jade sold through the country’s official emporium in 2016-2017 at nearly 676 million euros (1.15 trillion kyats). However, a study by Myanmar’s EITI body in 2016 said that 60-80 percent of gemstones produced in the country are not declared and bypass the formal system for sales.

The EITI board also urged Myanmar to clear up confusion around the status of military-affiliated extractive companies and ensure that their activities are comprehensively addressed in accordance with the EITI Standard.

A UN Fact-Finding Mission report in August said two of Myanmar’s military-owned entities, Myanmar Economic Holdings Limited (MEHL) and Myanmar Economic Corporation (MEC) own at least 120 businesses involved in a range of sectors across the country, from construction to pharmaceuticals, manufacturing, insurance, tourism and banking.

The report said that both companies, along with at least 26 of their subsidiaries, hold licenses for jade and ruby mining in Kachin and Shan states, where the Myanmar military has been accused of committing international human rights and humanitarian law violations including forced labor and sexual violence.

The board also pushed Myanmar to work to create an environment that allows civil society to meaningfully engage in all aspects of the EITI process, particularly in subnational regions such as ethnic states.

Myanmar is rich in natural resources, especially oil, gas, minerals and gems. The extractive sector accounted for 4.4 percent of GDP, 14 percent of state revenue and 20.4 percent of total exports in 2016-2017, according to EITI Myanmar data. 

EITI chair Helen Clark highlighted Myanmar’s improvements in transparency for the extractive sector.

“Myanmar is a unique example of a formerly opaque regime opening its doors and committing to greater transparency,” she said. “The government’s intention to ensure sound governance of its natural resource sector is signaled in [its EITI] policy framework and in a reform agenda that puts emphasis on transparency.”

The ruling National League for Democracy government’s 12-point economic policy also emphasizes the strategic role of EITI in the reform process, specifically in natural resource governance, Clark added. 

In 2016, the Myanmar government officially appointed the Myanmar EITI Leading Committee, with Union Minister of Planning and Finance (MOPF) as chair, Union Minister of Natural Resources and Conservation and Union Minister of Energy and Electricity as members, and the Deputy Minister of MOPF as secretary.

In June 2018, the government created a Beneficial Ownership (BO) Task Force to support companies to disclose the individuals and groups who ultimately own, control and benefit from their operation. The BO Task Force includes representatives from related government departments.

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