State-owned enterprises play a dominant role in Myanmar’s economy. Collectively, they generate about half the government’s revenue, spend half the government’s budget, and regulate much of the formal economy. The natural resource state-owned enterprises—namely the Myanmar Oil and Gas Enterprise (MOGE), Myanmar Gems Enterprise (MGE) and Myanmar Timber Enterprise (MTE)—are some of the largest and most powerful of these entities. Yet they remain black boxes.
This report by the Natural Resource Governance Institute and the Renaissance Institute sheds light on the finances, operations and governance of Myanmar’s natural resource state-owned enterprises. It identifies four sets of issues: (1) The legal framework governing state-owned enterprises treats regulatory bodies, tax collectors, commercial entities and public service entities in the same manner; (2) Ministry of Planning and Finance rules allow for enterprises to retain too much cash; (3) Cash savings represent a large misallocation of resources and are managed opaquely; and (4) Enterprise balance sheets are artificially inflated due to their tax collecting roles. The report finds that the commercial activities of natural resource enterprises have remained inefficient and unprofitable, despite 25 years of attempted reforms.
The report benchmarks MOGE and MGE performance against global standards and peer companies. It then suggests a comprehensive state-owned enterprise reform agenda, including new legislation, enhanced oversight systems, better planning and more transparency by the enterprises, and new cash management rules.