Parliament Approves Proposal to Ensure Transparency in Extractive Industries

By Htet Naing Zaw 27 November 2017

NAYPYITAW —Myanmar Lower House of Parliament on Thursday approved a proposal to ensure transparency in the country’s extractive industries and transfer back the gross revenues of the enterprises under the Ministry of Natural Resources and Environmental Conservation into the Union budget.

Seven lawmakers discussed in favor of the motion proposed by Daw Thet Thet Khaing of Dagon Township and the Lower House approved the proposal despite the objection by the Ministry of Natural Resources and Environmental Conservation and the Ministry of National Planning and Finance.

Lawmakers have questioned the transparency of revenues from the country’s extractive industries, pointing out that the natural resources ministry has more than 10 trillion kyats (US$7.3 billion) in its accounts—an amount far more than combined budgets for health and education in the 2017-18 fiscal year.

According to lawmakers, only about half of the ministry’s revenues go to the Union budget while the other half is kept by the ministry without transparency.

Enterprises of the resources ministry such as Myanma Oil and Gas Enterprise (MOGE), Myanma Petrochemical Enterprise, and Myanma Petroleum Products Enterprise currently have more than 10 trillion kyats held in their other accounts, according to the Ministry of National Planning and Finance.

MOGE alone has more than 4.6 trillion kyats in its account, far exceeding the budgets of education and health, which only received a combined 13 percent of the total 20.59 trillion kyats budget for the 2017-2018 fiscal year.

“If we use that amount for building roads in rural areas, we will be able to build over 30,000 miles. If we use it for building schools, we will be able to build over 100,000 school buildings, and if we use it for rural electrification, we will be able to electrify over 75,000 villages,” said lawmaker U Naing Htoo Aung of Natogyi Township.

Ministry officials defended that the money held by the ministry currently belongs to the Union budget, but U Naing Htoo Aung claimed that lawmakers are unable to monitor those accounts.

While operation costs, overhead, staff salaries and debts of those enterprises are paid from the Union budget, they have accumulated money in their accounts over time, U Lwin Ko Latt of Thanlyin Township pointed out.

According to a report after Myanmar was accepted as a candidate country to the Extractive Industries Transparency Initiative (EITI) in Mexico in January 2014, the Ministry of Energy non-publicly awarded licenses for 16 natural gas fields in October 2013 and 14 gas fields in March 2014, said U Lwin Ko Latt.

“The most important thing is transparency. Without it, people will think the old practices are still alive no matter what changes we introduce,” he added.

Lawmaker Dr. Khin Sithu of Loikaw Township, citing the 2017 Resource Governance Index, said that Myanmar is among 13 countries that receive the least benefits from natural resource mining.

“Those state-owned enterprises are running a large surplus and I can’t understand why those surpluses go to their other accounts [and not into the Union budget] while they have no specific economic responsibilities. Those accounts should be audited with external audits,” said the lawmaker, who also called for equal distribution of benefits from resources to ethnic states.

Ministry officials told Parliament that the ministry has been taking steps to transfer the money back into Union budget, and that a national level committee has also been formed to ensure transparency in extractive industries.

According to the Ministry of National Planning and Finance, there are 19 state-owned enterprises that are allowed to open other accounts for their operation. These include the News and Periodicals Enterprise under the Information Ministry, Myanma Railways and Road Transport Administration under the Ministry of Transport and Communications, Myanma Timber Enterprise, mining enterprises under the Ministry of Natural Resources and Environmental Conservation, heavy industries under the Ministry of Industry, the Electricity Supply Enterprise of the Ministry of Electricity and Energy and more.