State-participation: Myanmar

Myanmar’s 2013-14 EITI Report documented that state-owned companies retain considerable amounts of revenue from the extractive sector.

State-owned enterprises (SOEs) in Myanmar play a significant role in collecting revenues from the extractive sector. In the financial year April 2013 to March 2014, SOEs collected 85% of all extractive industry revenue through “other accounts”. According to the report, these “other accounts” are essentially accounts held by state-owned companies for the management of their own resources. SOEs use this revenue to pay corporate income tax (25% of profit) and the state contribution (20% of profit) to government budget accounts, after which the SOE is entitled to spend the remaining 55% of net revenue on raw materials and operating costs.

For example, in 2013-14, state-owned Myanma Oil and Gas Enterprise (MOGE) retained USD 1.3 billion of the total USD 2.9 billion that the company collected on behalf of the state. The four state-owned mining companies collectively retained about USD 230 million. The report noted that “functioning modalities and use of these accounts were not provided. As a result we cannot provide explanation on rules and practices governing transfers of funds between the SOE(s) and the State, retained earnings, reinvestment and third-party financing as requested by Requirement 3.6 of the EITI Standard”.

The 2013-14 EITI Report recommended that, in order to improve the transparency and comprehensiveness of the budgeting process, the Ministry of Finance should consider whether revenues collected by SOEs from the extractive sector could be redefined as normal budgetary revenue and whether more information need to be disclosed with regards to “other accounts” in the budget.

The report was released in January 2016. The government and Myanmar´s multi-stakeholder group has not yet had the opportunity to consider how to act on this recommendation.