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State Economic Enterprises

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Title: Policy Options for Improving the Performance of the State Economic Enterprise Sector in Myanmar
Date of publication: 21 September 2015
Description/subject: EXECUTIVE SUMMARY: "The Myanmar economy became one big state economic enterprise (SEE) in the Ne Win era beginning in 1962 when an extreme socialist path to development was adopted. As the failure of this strategy became increasingly obvious, the scope for private enterprise was enlarged in the years preceding the popular uprising that ended the Ne Win era in 1988. The military junta (SLORC) that crushed the uprising and formed a new government declared its support for market-based economic growth and began privatizing state enterprises and state assets. This process of privatization proceeded in waves over the next 23 years. Nevertheless, the SEE sector remained significant at the end of the SLORC/SPDC era. Following the national election in November 2010, the government led by Thein Sein took office in March 2011. It surprised most observers by promptly launching an ambitious program of peace building, democratic institution building, and economic reform. It moved quickly to implement crucial macroeconomic policy measures, especially adopting a managed float exchange rate system. It opened up the foreign trade sector and enacted a new Foreign Investment Law. Privatization of the SEE sector has been one of the priorities of the Thein Sein government, but its implementation has been mixed. The rent-seeking nature of the deals carried out under the previous government has not changed much. Every part of the government is actively engaged in privatization activities, but each in its own way. No common policies or procedures exist. As a result, it is likely that substantial values that could be retained by or accrue to the government are being captured by narrow private interests. With one year remaining in its 5-year term, there may be little the Thein Sein government can do to reduce these losses and improve the performance of the SEE sector as a whole. However, among the six options examined in this study, it is possible to extract a set of actions that could make it easier for the next government to achieve better results. These actions are the following: * Sharply increase the transparency of the SEE sector. A starting point would be posting a list of all SEEs on a dedicated website. A separate page for each SEE could provide the following minimum information: responsible ministry, name of CEO (Chief Executive Officer)/Managing Director, scope of operations, actual budget revenue and expenditure for the last available fiscal year, projected revenue and expenditure for the current fiscal year, and contact information for the SEE home office. Lease agreements, joint ventures, and PPPs would be included. * Proceed with the corporatization of all enterprises that appear to have the potential of operating profitably or with a reasonable amount of budget support, starting with 100 percent ownership and then moving opportunistically to sell or enter a joint venture or proceed with an IPO (Initial Public Offering). This is probably best done not by a broad fiat from above but selectively where the stakes are high or where the managers seem inclined toward this move. In this process, it would also be advisable to develop a consistent approach to the articles of incorporation. Serious mistakes can be made at this stage so close attention will pay off in the long run. * Establish a special SEE policy unit—in the Finance Ministry, the Ministry of National Planning and Economic Development, or the President’s office—to provide consistency in managing the government’s SEEs. (Alternatively, a quasi-government entity like the Centre for Economic and Social Development could be mandated to perform this function.) * Develop preliminary guidelines for the SEE policy unit setting forth the scope of its work, procedures for coordinating with relevant ministries and agencies and the legislature, principles for privatization actions (corporatization, joint ventures, leasing, PPPs or public-private partnerships), near term priorities, etc. * Recruit two or three outstanding CEOs to turn around two or three visible, mid-sized SEEs, and give them the support they need to succeed. * Design a scheme for buying out redundant SEE employees. There will not be enough time to implement the scheme before the next government takes office, but it could conceivably be the single most important contribution this government can make to improve SEE sector performance. Multilateral and bilateral aid agencies could provide matching financing for the scheme..."
Author/creator: Lex Rieffel
Language: English
Source/publisher: ISEAS-Yusof Ishak Institute, Singapore
Format/size: pdf (1MB-reduced version; 2.2MB-original)
Alternate URLs: http://www.iseas.edu.sg/images/pdf/ISEAS_Working_Paper_2015_No.%201_Policy_Options_for_Improving_th...
Date of entry/update: 24 September 2015

Title: State-owned enterprises and the future of the Myanmar economy
Date of publication: 16 September 2015
Description/subject: "...The state-owned enterprise sector will remain a drag on Myanmar’s economic progress. Bold reforms that may be proposed by the next government will be watered down by the legislature. The military will not cede control to civilians of its most lucrative rent-seeking activities. The woefully neglected education system will not produce enough quality graduates who can become globally competitive enterprise managers. We can hope for a miracle: a genuinely civilian government next year that brings the civil war to an end and implements policies that raise household incomes in the rural sector where most of the population resides. But don’t hold your breath."
Author/creator: Lex Rieffel
Language: English
Source/publisher: "Brookings"
Format/size: pdf (46K)
Alternate URLs: http://www.burmalibrary.org/docs21/Rieffel-2015-09-16-State-owned_enterprises_and_the_future_of_the...
Date of entry/update: 22 September 2015