The Ministry of Finance is researching the potential for a Myanmar natural resource fund, in collaboration with Norway.
Norwegian experts suggested the idea several months ago and have since been collecting data, deputy finance minister U Maung Maung Thein told The Myanmar Times. Meanwhile, the finance ministry has formed a committee, he said.
A natural resource fund is a type of sovereign wealth fund – a special-purpose investment vehicle owned by a government, and financed by revenues from oil, gas or mineral sales.
The money can be used in a number of ways including covering unexpected budget deficits, ring-fencing resource revenues or saving for future generations, according to non-profit Natural Resource Governance Institute (NRGI).
For economic development and to preserve the country’s natural wealth, “necessary information is being collected to draft a law to govern such a fund”, said U Maung Maung Thein.
Despite living in a country with vast natural resources including oil and gas, gold, jade, gems and forests, the people of Myanmar are among the poorest in Asia, he said.
Myanmar’s extractive industries are notoriously opaque, though the government has recently voluntarily signed up to the Extractive Industries Transparency Initiative (EITI), with its first report due next year.
None of the ministries governing natural resources, such as the Ministry of Mines or the Ministry of Energy are involved in researching the natural resource fund, said U Maung Maung Thein. “Once we have done the initial research, we will consider which other ministries should be involved,” he said.
Finance minister U Win Shein will chair the project’s executive committee and U Maung Maung Thein will chair an implementation committee, with Norwegian experts acting as consultants.
Over the past few weeks Norwegian researchers have come up with five main research topics, the deputy finance minister said. These are the source of capital, whether the fund should be held onshore or offshore, who would manage the fund, how it would be spent, and ways to ensure transparency in spending.
“Once [the Norwegian researchers] submit their findings in December, the implementation committee will examine them and draft new laws accordingly,” he said, stressing the importance of getting the laws right and educating people, to prevent mistakes.
Myanmar does not yet have a sovereign wealth fund. In July, the Norwegian government held a conference in Yangon to create awareness about the potential for such a project.
During the event, ambassador Ann Ollestad said that the country’s natural resources belong to the people, and that the focus of such a fund “should be to ensure that the people of Myanmar benefits from the country’s vast resources”, according to a speech later posted on the embassy website.
However, Ms Ollestad also noted that a natural resource fund should be established only when a government has a budget surplus.
In Myanmar – where the budget deficit is widening fast and may reach 5 percent of GDP this fiscal year – such a fund may not yet be suitable, she said.
Questions about how Myanmar’s government is spending the proceeds of its natural wealth are left largely unanswered and data on the value of some of its most profitable industries varies enormously.
While Ministry of Mines statistics published in state newspapers on October 24 show sales of minerals, gems, jade and pearls at K3.76 trillion (US$2.9 billion) between financial year 2011-12 and September 2016, a recent report by non-government Global Witness claimed that the jade industry was worth up to $31 billion last year alone.
Chinese import figures for last year value Myanmar jade at $12.3 billion, while Myanmar’s official data puts exports for the same year at little more than $1 billion.
Natural gas revenue figures are less disputed. U Win Myint, director general for the Department of Trade Promotion under the Ministry of Commerce, told The Myanmar Times that gas exports to China and Thailand had earned the government $1.7 billion this financial year to August.
Translation by Kyawt Darly Lin