Yangon Government Borrowed Money Without Parliamentary Approval

By Nan Lwin 2 October 2018

YANGON—The Yangon government violated the Constitution by borrowing money from two private banks to provide bus services and by using public funds for its own companies without seeking the Union parliament’s approval, lawmakers said on Tuesday.

In the Yangon Parliament, 11 regional lawmakers discussed the findings of the Yangon Region Auditor General’s Office regarding the 2016-17 fiscal year. Lawmaker Daw Sandar Min said the city government borrowed 8 billion kyats from Ayeyarwady Bank to buy public buses and 5.5 billion kyats from Kanbawza Bank to buy 200 school buses. The government did not seek parliamentary approval, however.

Daw Sandar Min said, “If they want to take loans from others, they need Parliament’s approval according to the Constitution.”

According to the military-drafted 2008 Constitution, project budgets, including loans, to be spent by regional or state governments must be approved by the Union parliament.

She stressed that the Yangon bus companies are not responsible for repaying the loans, adding that the state and Union parliaments cannot guarantee loans borrowed on a personal basis.

However, she didn’t say who had taken the loans from the banks.

In 2017, the Yangon government invested 70 billion kyats ($45 million) in two public-private partnership bus companies—Yangon Bus Public Co. Ltd. (YBPC) and Yangon Urban Public Transport Co. Ltd. (YUPT)—which are majority owned by the Yangon Region government. The government bought 1,000 new buses to upgrade the city’s public transportation system.

In September, the Yangon Region Auditor General’s Office revealed in the parliament that bus companies lost 3.5 billion kyats ($2.3 million) during fiscal 2017-18.

Lawmaker U Yan Shin pointed out that even though the government borrowed 5.5 billion kyats to buy 200 school buses, few of the city’s schools could afford to buy one of the expensive vehicles.

The Yangon government should have taken the socioeconomic conditions into account, U Yan Shin said.

According to lawmakers, the Yangon Parliament approved a budget allocation of 64 billion kyats to Yangon Metropolitan Development Public Co. Ltd., which is 51-percent-owned by the state government.

The government then transferred 10 billion kyats of the 64 billion kyats to New Yangon Development Company—which is fully owned by the Yangon government—but did not seek the government’s approval.

An audit found that New Yangon Development Company misused the budget for basic expenses – 53 million kyats for ceremonies and other costs, 195 million kyats for social events, 33 million kyats for an audit team — before major investment had even begun.

Daw Sandar Min requested the audit office investigate the details of the government’s alleged misuse of public funds.

U Yan Shin said the Yangon Auditor General’s Office also revealed that the government violated the Constitution by transferring two projects—one each from the Ministry of Construction and the Ministry of Hotels and Tourism.

“According to the Constitution, only Parliament has the authority to transfer or sell government-owned properties. The government must follow the Constitution,” U Yan Shin said.

The lawmaker also pointed out that the government used 192.36 million kyats from Yangon Metropolitan Development Public Co. Ltd to renovate a historic building downtown.

“The government didn’t follow the Constitution or the government budget’s rules and regulations that they use the money from their company. It might lead to confusion over ownership in the future. I’d like to suggest the government follow the Constitution,” U Yan Shin said.

“The Parliament isn’t responsible for what they did because they didn’t seek our approval,” U Yan Shin said.

Lawmakers asked the government to take responsibility for mismanagement and spending public funds in a way that doesn’t benefit the public.

Lawmaker U Nay Phone Latt said the lawmakers will check whether the government followed the audit’s finding.

According to the audit, the government also lost billions of kyats due to mismanagement of land leases. A company leasing the old courthouse in downtown Yangon was supposed to pay the regional government 400 million kyats ($250,000) a year but has not paid since October.

The audit also revealed that the company that successfully bid for the Yangon Traffic Control Center failed to pay a penalty for not finishing the project. In Dagon Seikkan Township, a residential development company failed to pay its annual lease of more than 3 billion kyats ($1.87 million).

The Auditor General’s Office revealed its findings in September. According to lawmakers, it included a total of 363 pages, two chapters, 28 cases and 52 tables.