State Companies Holding About $9 Billion in Cash
By Htet Naing Zaw 20 February 2018
NAYPYITAW — According to the 2018 budget proposed by the government to the Union Parliament last week, there are 25 state-owned economic enterprises (SEEs) in Myanmar authorized to keep other accounts (OAs), which hold around $9 billion.
The government retains exclusive rights to conduct business in certain sectors, including the extractive industry. These are outlined in the State-Owned Economic Enterprises Law enacted in 1989 under the military regime. The law allows local and foreign investors to conduct business in these sectors through contracts or joint venture agreements with the government.
The Lower House on Nov. 23 approved a proposal to ensure transparency in the country’s extractive industries and transfer revenue of enterprises under the Ministry of Natural Resources and Environmental Conservation into the Union budget.
During the debate, lawmakers pointed out that the ministry has more than 10 trillion kyats (US$7.3 billion) in its accounts — far more than the combined budgets for health and education in fiscal 2017-18.
They said that only about half of the ministry’s revenue goes to the Union budget, while the rest is kept by the ministry in a manner that lacks transparency.
“Enterprises that have other accounts will no longer be allowed to use that money as they like. They will need to seek the approval of the cabinet,” said Lower House MP U Lwin Ko Latt.
According to lawmakers, this is the first time the issue of OAs has been discussed during debate on the budget bill, allowing them to be informed about how many accounts there are and how much money is kept in them.
“But we have yet to try to return all that money into the Union budget,” Pobbathiri Township MP U Yi Mon told The Irrawaddy.
“The government will explain to the parliament how that money was used in a few days,” he said.
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.
Other government enterprises that have OAs while also spend 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, No. 3 Heavy Industry, and Myanmar Pharmaceuticals Enterprise.
Despite having OAs, Inland Water Transport reported a loss of over 4 billion kyats last fiscal year, Myanma Railways over 38 billion kyats, Road Transport Services over 1 billion kyats, Myanmar Post over 2 billion kyats, Electricity Supply Enterprise over 300 billion kyats, No. 1 Heavy Industry over 21 billion kyats, No. 2 Heavy Industry over 7 billion kyats, and No. 3 Heavy Industry over 14 billion kyats, totaling over 400 billion kyats.
“If those SEEs can be transformed into PPPs [Public Private Partnerships], it would benefit the country,” said lawmaker U Yi Mon.
The Lower House Economic and Investment Committee has also recommended to the government that loss-making state-owned enterprises be privatized.
“If you ask me in which sectors the money should spent, we have requirements in every sector. And we have a lot of international debts. We need to thoroughly discuss in which sectors we can make the best use of the money,” lawmaker U Yi Mon said.
Dagon Township lawmaker Daw Thet Thet Khaing, who submitted the proposal in November, said: “It is the government’s responsibility [to recover the money from the OAs of state-owned extractive industries], as my proposal has been approved by the parliament. Now, the government has made public the amount of money in the OAs. This is an improvement.”