Despite Some Promise, Myanmar’s Oversight of Gemstone, Oil and Gas Extraction Remains Sorely Lacking, Study Finds

YANGON, 28 June 2017— The 2017 Resource Governance Index (RGI), a global index assessing countries’ oversight of natural resources, has given failing or poor marks to governance of Myanmar’s gemstone and oil and gas sectors.

Myanmar’s gemstone sector was ranked 83rd among 89 worldwide assessments, scoring 27 of 100 points. Myanmar’s oil and gas sector fared slightly better, ranking 77th among 89 assessments, with a score of 31 of 100 points. The index is produced by the Natural Resource Governance Institute (NRGI).

NRGI staff were encouraged by some of the ongoing improvements in Myanmar’s extractive industry, despite structural shortcomings and the urgent need for better regulatory oversight, transparency provisions, revised legislative and fiscal frameworks.

Myanmar’s long-running internal conflicts have been partly financed by the gemstone sector in general, and jade in particular. Central to the issues facing Myanmar’s gemstone sector is transparency, the data show, with the government disclosing almost no information related to the licensing process, contracts or the identities of those with ultimate financial interests in trading companies or the sector generally. Gemstone licensing in Myanmar is the second-least transparent of all countries’ licensing systems, with an index score of four of 100 points; only Turkmenistan’s oil and gas sector ranks lower. Due to its opaque set-up, Myanmar Gems Enterprise (MGE) received a score of 16 of 100 points for governance, making it one of the most poorly governed state-owned economic enterprises (SEEs) covered in the study.

The gemstone sector now has the potential to play an important role in the country’s future. Improved transparency throughout the sector, particularly in licensing, ownership, production and revenue data, and improved valuation, taxation and collection of revenues, would be a huge step towards better governance.

“The findings of the Resource Governance Index re-emphasize the need for Myanmar to get right the new Gemstone Law currently being discussed in Parliament,” said Maw Htun Aung, NRGI’s Myanmar manager.

As the results show, serious challenges also remain in the oil and gas sector. The Myanmar Oil and Gas Enterprise (MOGE) scored 35 of 100 points in governance. Since MOGE is one of the most important revenue contributors to the state budget, NRGI calls for further improvements. For example the oil and gas sector licensing process scores only 24 of 100 points. In terms of revenue contributions, MOGE does not report annually on its finances or operations, representing a serious failing in oversight. The government has already announced that SEE reform is a priority in its twelve-point economic plan for the country. This plan includes a greater transparency and reporting of finances and taxes to the public, and the restructuring of SEEs to be more competitive and economically viable. NRGI’s research supports these planned reforms; they are key for ensuring that Myanmar’s oil and gas wealth benefits the economic development of the country, and can contribute to the peace process.

Maw Htun Aung said: “In the context of Myanmar’s peace process, resource-rich, conflict-affected regions of the country have called for greater sharing of natural resource revenues and management responsibilities. Governance challenges evidenced by the index results point to a need to improve transparency as the first step toward designing a system that distributes benefits equitably and allows oversight of compliance with the rules.”

Full results from the Resource Governance Index globally are available on www.resourcegovernanceindex.org.

Notes for editors

The Resource Governance Index is the sum total of 89 sector-specific assessments in 81 countries (in eight countries NRGI assessed both oil and gas and mining sectors), formulated using a framework of 133 critical questions answered by 150 researchers, drawing upon almost 10,000 supporting documents.

For each assessment, NRGI has calculated a composite score using the scores of three index components. Two of the components comprise new research based on expert answers to the questionnaire, and directly measure governance of countries’ extractive resources.

The first component—value realization—covers the governance of allocating extraction rights, exploration, production, environmental protection, revenue collection and state-owned enterprises. The second—revenue management—covers national budgeting, subnational resource revenue sharing and sovereign wealth funds. The index’s third component assesses a country’s enabling environment. This component draws on pre-existing research to measure the broader governance context.

Media enquiries:

Ko Myat Thu Tun
Mangosteen PR
myatthu.tun@mangomyanmargroup.com
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Hosana Chay
Myanmar Associate
Natural Resource Governance Institute
hchay@resourcegovernance.org
M: +95 9 456382233

Lee Bailey
Communications Director
Natural Resource Governance Institute (London)
lbailey@resourcegovernance.org
T +44 (0)20 7332 6114
M +44 (0)7823 442 954