Myanmar to transform some state-owned factories into public companies

The Myanmar government has outlined a plan to transform some 11 state-owned factories into public companies and to pave way for the emergence of a stock and share market, the local weekly 7-Day News reported Wednesday.

The plan was introduced after the government announced a proposal last month to run the 11 factories under the Ministry of Industry-1 with the private sector on the basis of joint ventures as a form of privatization.

These factories include textile, beer, cigarette, soft drink and ice, cosmetic, glass, paint, sewing and bicycle factories scattered in Yangon, Mandalay and Kyaukse respectively.

Under the proposed government-private cooperation plan, the state will put in 51 percent of share, while the remaining 49 percent of share will be sold to the public, according to a recent clarification given at the new capital of Nay Pyi Taw to private entrepreneurs by the ministry.

The ministry set the period of such joint running as 10 years and assured that the public enterprise will not be nationalized.

The 11 state-owned factories are among the 899 to have been endorsed for such operation and the remaining ones will follow suit on the next occasion, the ministry said.

In its move to help develop the industrial sector, Myanmar has since 1995 been privatizing state-owned enterprises (SOE) systematically including industrial ones with the aim of transforming them into more effective and efficient ones.

The plan, which has been implemented by the government-formed Privatization Commission, is carried out by auctioning and leasing or establishing joint ventures with local and foreign investors. These enterprises include textile factories, saw mills, rice mills, oil mills, cinemas and hotels.

So far, a total of 194 SOEs from 10 ministries, including 26 from the Ministry of Industry, have been privatized in Myanmar as of March this year since the country began implementation of the plan of privatization.

Meanwhile, the manufacturing or industrial sector is dominating Myanmar's domestic private investment with 31.483 billion Kyats ( 28.62 million U.S. dollars) out of a total of 122.73 billion Kyats (111.57 million dollars) as of January this year since 1988, according to the National Investment Commission.

Myanmar's industrial sector increased with an average of 24.4 percent in the previous four fiscal years and the private industrial sector has increased to more than 23 percent in 2002-03, 30 percent in 2003-04 and 25 percent in 2004-05.

Although the industrial sector accounts for about 11 percent of the country's gross domestic products, economists said that it still has a long way to go for the sector to contribute more to the national economy and that efforts are needed on the development of medium and heavy industries in addition to small industries which are leading.

Source: Xinhua