Representatives call for review of SOE law

Representatives of Parliament have urged lawmakers to review an existing law under which the government must bail out loss-making State-owned enterprises (SOEs) with public funds.

A total of 17 out of the 26 Myanmar SOEs under the Union budget are expected to turn a profit in 2018-19, commencing October 1, according to the Ministry of Planning and Finance (MOPF).

These include Myanma Posts and Telecommunications, Myanmar Timber Enterprise, Myanmar Gems Enterprise, Myanmar Pearl Enterprise, Myanma Oil and Gas Enterprise, , Myanma Economic Bank, Myanma Investment and Commercial Bank, Myanma Foreign Trade Bank, Myanma Agriculture Development Bank and Myanma Insurance.

Meanwhile, the News and Periodical Enterprise, Inland Water Transport, Myanmar Railways, , Myanmar Post and the Electricity Power Generation Enterprise are among those expected to rack up losses.

External funds

In contrast, five out of the six SOEs which do not rely on government funds are expected to turn a profit in 2018-19. According to MOPF forecasts, the Myanma Port Authority, Myanma Shipyard Enterprise, Yangon Electricity Supply Corporation, Mandalay Electricity Supply Corporation and Central Bank of Myanmar will make money, leaving Myanmar National Airline in the red.

According to a recent report by the Renaissance Institute and Natural Resource Governance Institute, SOEs have accumulated a total of K11.5 trillion, or US$ 8.6 billion in their so-called Other Accounts as of January 2017.

Since 2012-13, the MOPF has allowed SOEs to keep their revenues in so-called Other Accounts after paying 45pc of net profits to the government and accounting for raw materials and other operating costs.

Last week, Daw Thet Thet Khine, representative of the Pyithu Hluttaw, suggested that profitable SOEs contribute 20pc of their earnings to the Union Finance Fund.

She added that the amount of funds in the Other Accounts exceed the country’s budget deficit. For example, SOEs held around K12 trillion in these Other Accounts in 2016-17, which is three times more than the budget deficit of around K4 trillion for that year.

Despite this, the government continues to fund loss-making SOEs out of state coffers.

As such, Daw Thet Thet Khine urged the Pyidaungsu Hluttaw to review the 1989 SOEs Law to reform the current system.

SOURCE: MYANMAR TIMES

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