Wednesday 11th December 2019 Font size:

Who owns mining and drilling firms?

Friday, November 15th, 2019

On October 2, the Office of the President issued a notification providing a strong legal framework that requires the disclosure of the actual owners of companies involved in the extraction of Myanmar’s natural resources.

Notification No. 104/2019 confirms the mandate of the Beneficial Ownership Task Force to make decisions regarding ownership disclosures, and empowers the Directorate of Investment and Company Administration (DICA) to implement them. It also requires the 158 companies and five state-owned enterprises in Myanmar’s oil and gas, mineral, pearl, jade and coloured gemstone industries to disclose their beneficial owners by January 1, 2020, setting an important precedent in the country’s efforts to increase transparency in its natural resources sector.

 Thanks to the Extractive Industries Transparency Initiative (EITI) – a global standard to foster transparency and accountability in the oil, gas and mining sectors – Myanmar stakeholders are discussing the issue of beneficial ownership. Myanmar became an EITI candidate country in 2014, and formed a multi-stakeholder group (MSG) of representatives from government, business and civil society to oversee implementation of the standard.In 2016, the EITI included a requirement that member countries disclose the beneficial owners of all companies operating in the extractive industries by January 2020. It also requires those countries to identify owners who hold or have held public roles that expose them to opportunities for bribery and other forms of corruption, as well as their relatives and close associates.
The Myanmar government convened the task force in June 2018 to implement the requirements. Representatives of companies and civil society sit on the task force along with officials of the Anti-Corruption Commission, Financial Intelligence Unit, the Central Bank of Myanmar and other government agencies. The task force and the MSG have decided on the definition of beneficial owners and those with public roles as well as on arrangements for information collection and disclosures.

With the deadline only months away, the presidential notification could not be timelier. It strengthens Myanmar efforts to collect ownership information through an online platform and to prepare the publication of its beneficial ownership report on all businesses and enterprises in the sector.

These steps confirm the Myanmar government’s commitment to progress and put it in the vanguard of countries seeking greater transparency of company ownership. However, the first disclosures will be just one step in a long process of building integrity. To capitalise on this progress, further steps are needed after the January 2020 deadline.

First, government agencies will need to verify and use the information disclosed. There are ongoing discussions on integrating the information into existing DICA reporting systems. Disclosure requirements can also gradually be added to the procedures of other monitoring or licensing agencies. For example, extractive state-owned enterprises could make beneficial ownership information a mandatory part of license applications, using it to screen for potential conflicts of interest during their decision-making on new oil and gas blocks or mineral, jade and coloured gemstone concessions.

Second, the task force and MSG should make the information publicly available to all citizens free of charge. This would allow journalists and civil society groups to scrutinise the data and complement the government’s reform efforts. This is especially important given that verification requires more resources, time and knowledge than any single stakeholder possesses.

Third, to be able to meet the EITI requirements, the task force should expand its current scope to cover all companies with interests in Myanmar’s extractive industries. A review of existing legislation and ministerial regulations would identify gaps, synchronise rules and streamline the beneficial ownership requirements of relevant government agencies.

The concept of beneficial ownership disclosure is still new in Myanmar, and there are concerns about the security of the information. However, most stakeholders (including companies) seem to realise the feasibility and benefits of ownership transparency. This is largely due to the leadership of DICA, enabled by strong support from the Myanmar EITI National Coordination Secretariat and the task force.

Implementing the president’s notification should strengthen the fight against corruption, illicit financial flows and tax evasion in the extractive industries, and help restore public trust. By shedding more light on who actually owns and benefits from these companies, the disclosures will support anti-corruption efforts and tax compliance. More transparency in this area can also contribute to the government’s efforts to build a more robust business environment, improve Myanmar’s ability to attract investment and contribute to the country’s ranking in international indices. A level playing field, less corruption and more tax revenue will ultimately benefit the people of Myanmar.

https://www.mmtimes.com/news/who-owns-mining-and-drilling-firms.html
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