U Soe Win, Minister of Planning and Finance : Interview

Interview : U Soe Win

How does the Ministry of Planning and Finance (MPF) intend to address inefficiencies in state-owned enterprises (SOEs)?

U SOE WIN: The MPF is collaborating with the World Bank, the US Treasury and the Myanmar Development Institute to enhance the oversight of SOEs. Their underlying profitability and financial sustainability is the main focus, as well as their socio-economic impact. The end result of these efforts will be to create the right policies and procedures for reforming and strengthening SOEs, as well as corporatising or privatising them where appropriate. Reducing the burden of SOEs on the government budget is a clear objective in the coming years, coupled with our determination to generate greater social and economic returns to the Myanmar people.

What are the government’s planned fiscal policy actions up to 2020 to ensure the budget deficit is financed and inflation targets are met?

SOE WIN: The government, throughout its tenure, has been highly prudent on the fiscal front. We inherited a large and accelerating budget deficit. However, we have stabilised the country’s fiscal position and we are committed to financing it in ways that are non-inflationary. Moreover, we do not want to borrow from the Central Bank of Myanmar and so we are determined to move away from the so-called money financing approach, which for decades was almost the default option for funding government spending in Myanmar. Money financing is highly inflationary, as has been demonstrated time and again – not just in Myanmar, but on a global level. We have reduced this practice more than any previous government and have in place a programme to ensure its complete elimination over the next few years. Of course, in order to do this, the government needs to reform its payment collection system, as well as to keep a careful eye on its spending.

Since this administration took office in 2016, policy measures to make the tax system more efficient and fair have been central to our national development strategy. Taxation reforms are already well under way, and will be accelerated through 2019 and beyond.

To what extent can Myanmar rely on foreign loans and official development assistance funds to realise its top infrastructure development priorities?

SOE WIN: The government firmly believes that the use of both concessional and non-concessional borrowing for major infrastructure projects should be based upon expected social and economic returns.

The government appreciates the foreign assistance it receives in funding its infrastructure priorities, but we are careful not to rely on any particular form of financing. Overseas loans and official development assistance funds are important, but the lion’s share of funding for any development or infrastructure project must come from domestic capital. Through the accelerated tax reforms, strategic allocation of budget and institutional reforms in the capital market, we plan to maximise our capacity to mobilise domestic capital for infrastructure development.

Equally, the government is keen to create an enabling environment that will encourage the participation of our domestic private sector through public-private partnerships (PPPs) and other similar financing mechanisms. The Project Bank and the soon-to-be created PPP Centre will be of great assistance in this regard.

How can the implementation of the Myanmar Credit Bureau (MCB) improve borrowers’ access to credit?

SOE WIN: The MCB was granted a licence to operate in May 2018. It is a joint venture between the Myanmar Banks Association and Singapore’s Asia Credit Bureau Holdings. The MCB will collect information on borrowers, such as loan repayment histories, allowing lenders to better evaluate creditworthiness of potential borrowers and improve risk assessment procedures, while reducing the need for strict collateral requirements.