A/HRC/42/CRP.3 Tatmadaw’s role and interests in State-owned enterprises C. 71. The Tatmadaw also benefits from relationships that MEHL and MEC have with Myanmar’s State-owned enterprises (SOEs) both in and outside of the extractive sector. State-owned enterprises play a dominant role in Myanmar’s economy, generating about half the government’s revenue, spending half the government’s budget and regulating much of the formal economy. The natural resource SOEs — namely the Myanmar Oil and Gas Enterprise (MOGE), the three Myanmar Mining Enterprises (ME1, ME2, and ME3), Myanmar Gems Enterprise (MGE) and Myanmar Timber Enterprise (MTE) — are some of the largest and most powerful of these entities. 155 Their finances, however, remain largely opaque. 72. Myanmar’s SOEs have direct business relationships with MEHL and MEC. One instructive example is in the coal mining industry. According to Myanmar EITI, a coal mine in Kyauk Ohn Chaung, Kalaywa, Sagaing State is operated by Htoo Han Thit Co. Ltd. with proceeds from the mine divided with 31.5 per cent going to the SOE Mining Enterprise 1 (ME1), 67.5 per cent to Htoo Han Thit Co. Ltd. and one per cent to MEHL. 156 73. SOEs also have relationships with MEHL and MEC subsidiaries in other extractive industries. According to MEHL records, in Kayah State, MEHL’s wholly owned subsidiary Kayah State Mineral Production Co. Ltd. has a strong business relationship with Ye Htut Kyaw Mining Extracting Co. Ltd., with the MEHL subsidiary Kayah State Mineral Production Co. Ltd. receiving a 13 per cent share of production of minerals, including tin, tungsten and scheelite, Ye Htut Kyaw Mining Extracting Co., Ltd. receiving a 54 per cent share and the SOE ME2 receiving the remaining 33 per cent. 157 74. Apart from the revenue they generate through their partnerships with MEHL, MEC and their subsidiaries, SOEs may also benefit the Tatmadaw more directly. As a result of reforms implemented in the 1990s and in 2012 through which the government granted SOEs greater financial autonomy, SOEs have adopted a practice of amassing large reserves in independent accounts that carry over from one year to the next. As a result, a significant portion of revenues from extractive industries in the oil and gas, gems and timber sectors are retained by SOEs under a budget line known as “Other Accounts”. “Other Accounts” are considered to be a SOE’s own funds and are held for the purpose of its exclusive operations and capital investment.158 The Mission reviewed credible reports that the “Other Accounts” of SOEs are used to spread benefits to a network of private political patrons that support the government.159 A clear example of this dynamic is the SOE Myanmar Gems Enterprise, whose leadership is dominated by former military officials, which the media has reported as being responsible for protecting the interests of Tatmadaw and Tatmadaw-linked businesses 155 156 157 158 159 Andrew Bauer, Arkar Hein, Khin Saw Htay, Matthew Hamilton and Paul Shortell, “State-Owned Economic Enterprise Reform in Myanmar: The Case of Natural Resource Enterprises,” Natural Resource Governance Institute, pg. 8. Myanmar’s natural resource State-owned enterprises are powerful in large part due to the 1989 State-owned Economic Enterprises Law, which grants them a monopoly in various industries. Myanmar Extractive Industries Transparency Initiative (MEITI): The Fourth Myanmar EITI Report For the Period 1 April 2016 to 31 March 2017 (FY 2016-2017), Oil and Gas, Gems and Jade, Other Minerals and Pearl, 30 March 2019 (https://myanmareiti.org/sites/myanmareiti.org/files/publication_docs/4th_meiti_report_30_march_20 19_1.pdf), pg. 72. Reference No. 5/3/Ah Kha Ya/Pai (2124/2018), “Submitting MEHL’s information and data for EITI process,” 25 June 2018 (https://myanmareiti.org/files/uploads/mehl_information_data_for_eiti.pdf). Natural Resource Governance Initiative, “Who gets Myanmar’s oil and gas revenues? Understanding MOGE’s “other accounts,” March 2016 (https://resourcegovernance.org/sites/default/files/documents/infobooklet-moge-other-accountsenglish.pdf). Patrick R.P. Heller and Lorenzo Delesgues, “Gilded Gatekeepers: Myanmar’s State-Owned Oil, Gas and Mining Enterprises,” Natural Resource Governance Initiative, pg. 2. (https://resourcegovernance.org/sites/default/files/documents/nrgi_myanmar-state-ownedenterprises_full-report.pdf). 27