Tue 19 Mar 2013
Filed under: Business / Trade,News,Parliament
The Public Account Committee of the Upper House is urging Parliament to take action against tax evasion and delinquent payments by companies that won auctions for state assets in Myanamar’s controversial privatisation scheme that saw about two-thirds of the state’s assets sold or leased to businesses, often those with close links to the previous military junta.
The committee submitted a statement to Parliament last week calling on it to investigate issues that were previously raised by members of the business community who have described the privatisation scheme as corrupt.
Business people with close relationships to the junta, often referred to as cronies, won auctions for state assets with bids that were often far below the value of the assets, the statement from the Public Account Committee said. As an example, it pointed to fuel stations in Bahan, Sangyoung and Seikan townships of Yangon that were sold for 250 million kyats (about US$288,000) apiece even though their value was at least 400 million kyats apiece.
The statement also points out that Inlay Khoungdine Hotel, the most strategically placed and attractive hotel in Inlay, went for less than US$9 per square foot. Another so-called crony won the bid for the 5.507 acre Kandawgyi Hotel, near central Yangon, for 28.4 billion kyats, while another snapped up 10 acres in Tharkayta Township, an industrial centre, for 5,626 kyats per square foot, the statement says.
The Public Account Committee said 66 percent of state-owned property and enterprises has been privatised. The Privatisation Commission and the Management Committee for state-owned property have sold or leased 2,257 state-owned properties and enterprises, the statement says. The state has 1,175 left, it says.
In some cases bidders who lacked funds to operate privatised enterprises still won auctions to buy or lease them. In some of these cases the government is still waiting for payment. In total, it is waiting to receive 177 billion kyats of the 1,268 billion kyats it was supposed to collect from the auctions.
Some auction winners used the assets for collateral so that they could take out loans to make initial payments on the assets. In some cases they did not make subsequent payments and also requested that taxes be waived. The statement from the Public Account Committee urges the government to be aware of this practice.
The statement says that taxes are being paid on only about 15 percent of the assets privatised. Businesses holding 331 of the 2,257 assets privatised have paid taxes, but the rest have not, the statement says. The government has received about 14.97 billion kyats in tax from the 331 assets over the last four years, the statement says.
The committee met with officials from the Privatisation Commission, the Management Committee for Housing Development and the Internal Revenue Department on February 22, but did not disclose the results of the meeting.
The committee is urging Parliament to investigate allegations of tax evasion and collect taxes from those who found to have dodged taxes. It also said that businesses that are delinquent in paying for state assets or evading taxes should be publicly named.
Analysts described the statement as factual and reasonable. Democratic governments usually rely on taxation, they said. Funds raised from taxes are necessary to develop infrastructure that will in turn fuel economic development, they said.