Upcoming B2B Gems & Jewellery Exhibition- 19th - 20th - 21st January 2019. Bangalore.

Myanmar improves Transparency

2016-06-14


According to Paul Shortell, the MT, Myanmar has made significant progress toward addressing these questions since joining the Extractive Industries Transparency Initiative (EITI), a global effort to make information from the natural resource sector publicly available. Myanmar’s Gems and precious stones contributed approximately K7500 per person while other minerals only generated K1000 per person in revenues.

The production value of gemstones and minerals is not as insignificant as these numbers suggest. The low value is partly the result of the EITI report’s limited scope, which only covers 53pc of gemstone companies selling at the annual emporium. It also reflects widespread illegal activity in the mining sector, which prevents the government from collecting taxes.

There is evidence to suggest that mining revenues, especially from gemstones, could be even greater than those from oil and gas if taxes were effectively levied. China reported importing $11.8 billion worth of precious stones from Myanmar in 2014. This trade alone should have generated more than K67,500 per person in additional revenues if it were subjected to Myanmar’s 30pc commercial tax on gemstone exports.

Even without taking into account other important forms of taxation such as the corporate income tax, that sum is greater than reported oil, gas and mining revenues combined. For the first time, Myanmar’s EITI report allows stakeholders to know which companies hold many oil, gas and mining licences. Data available via the EITI website includes the licensed company’s name, its legal owners, the type of license, the commodity being extracted, the licensed area, and the date of award and expiration.

One example is Myanmar Imperial Jade. The company is listed as the holder of 428 out of 1258 gemstone licences covered by the EITI report. Myanmar Imperial Jade is legally owned by United Myanmar Economic Holdings Limited (UMEHL), a military enterprise. However, the identities of Myanmar Imperial Jade’s “beneficial owners” – the individuals who ultimately benefit from the company and its gemstone activities – have not been made public. In other cases, the person listed as the legal owner of a company may serve as an intermediary (proxy) for a spouse, friend or relative who ultimately exercises control and benefits from the entity.

Although areas for improvement remain, Myanmar’s first EITI report allows stakeholders unprecedented insight into the natural resource sector. EITI data can support advocacy for reformed and responsible governance of oil, gas and mining – such as improved accountability for state-owned economic enterprise revenues, greater oversight of the gemstone sector, or stronger rules regarding disclosure of contracts and beneficial owners. While working to address remaining knowledge gaps in its next EITI report, Myanmar’s new government should also focus on putting this powerful information into the hands of stakeholders and citizens.