Myanmar is rich in natural resources and one of the first oil exporting countries in the world and the biggest exporter of jade. 90% of the world-class jade reserve lies in Hpa-Kant. Kachin state possesses the third largest reserve of Rare Earth which is essential in space, electric car and smart phone technologies following China and United State and it’s now becoming the world’s highest extraction site. Besides, Myanmar stands the tenth biggest exporter of natural gas. It is now found that Myanmar’s natural gas and oil reserves can produce 10 billion cubic feet of gas and 50 million barrels of oil respectively. According to the 2017 indices, Myanmar ranked 83rd in the mining and 77th in natural gas and oil among the natural resource rich countries in the world. In 2016, the revenue from natural resources was 6% of the total GDP and 23% of the total national revenues of Myanmar. According to the 2019 World Development Indices, Myanmar’s national revenue from natural resources was 5.6% of GDP with 0.2% from oil, 2.9% from natural gas, 0.2% from mining and 1.8% from forest products. Even in 2013-2014, the government revenues included 442 billion from mining and 2.6 trillion from oil and gas. In 2020, the revenue from natural resources was 4.41% and ranked 55th in the world. In the 2016-2017 fiscal year, the revenue from oil and gas occupied 79% of the total revenue from the extractive sector.
Indices show that most of the world largest exporters of natural resources are the countries which could utilize less man-power for the country’s development and are wrestling with conflicts. It’s noticeable here that the world’s top countries in the human development indices are those which rely mainly on human resources. Myanmar ranked 148th in the UN human development index in 2014, became 145th in 2016 and jumped to the middle in 2017 (meaning ranking between 120 and 156 among the total of 189 countries). Myanmar dropped down to 147th in 2019-2020. These were the rankings in the indices under the civilian government. Before 2010, Myanmar ranked 150th and 154th in 2008. Although there was a partial democracy after political changes in 2011, due to an extent of good governance practices which is a feature of a democratic country, Myanmar has risen up in the human development index after 2015. According to the governance index based on the analysis conducted by the National Resources Governance Institute on 58 countries which are rich in natural resources, it’s found that Myanmar ranked 58th. There are extractive industries in natural resources, valuable minerals, oil and gas in all the States and Regions except Yangon Region. Although ethnic areas are rich in natural resources and home to many extractive industries, poverty rate is 75.1% in Rakhine, 89% in Kayin, 75% in Shan, 84.7% in Kayah, 87.2% in Kachin and 87.4% in Chin States. The total electricity production of Myanmar comprises 70% from hydro-power, 28% from natural gas and 3% from coal. 80% of natural gas produced has been exported to Thailand and China. However, the 2015 data showed that Chin, Rakhine, Kayah and Kachin are the states with the least electricity utilization. Despite the wealth in natural resources, Myanmar has become a least developed country with a highest rate of poverty. Due to lack of a proper resource governance, there have been more serious environmental and social impacts as well as armed conflicts. In an ethnically and religiously diverse country, unfair and centralized practices of revenue sharing make the dream of building a federal union shattered. States with rich natural resources have been in catastrophe, and armed resistance has deeply rooted. How do we resolve such crises? Wealth sharing and resources federalism should be considered one of the solutions to the problems.
In federal countries, territorial demarcation is usually based on religions, languages, cultures and own identities as well as natural resources. Resource sharing plays an important role in building a federal nation. 40% of internal conflicts in many countries around the world during over six decades was somewhat related to natural resources. Natural Resource Federalism is a process of devolution of power on some of natural resource governance to subnational institutions. (Please see the detailed description on consideration about natural resource federalism for Myanmar in the author’s article “Digging Federal Fragments out from the Root Cause of the Problem”). The centralized control of the natural resources dissatisfies more the ethnic nationalities from the areas where natural resources are extracted and eventually leads to conflict. Moreover, mismanagement and poor management on natural resources causes depletion of resources and loss of benefits for a country and its people.
Historically, Myanmar used to exercise self-determination in specific ethnic areas, but during the colonial time, the British started to monopolize natural resources from the ethnic territories and so the local ethnic communities began to lose their rights to natural resource governance and related benefits. Some of Myanmar’s well-known mining industries were Baw Dwin, Heindar, Maw Chi, Kan Bauk, Yadanarbon, Taung Thone Lone, Har Myin Gyi, Kalay Wa, as well as ruby mines in Mogoke and jade mines in Kachin state, and these industries were a joint venture of a British mining company and the government of Burma around 1950s. In the 1947 Constitution which came into force after Burma’s independence, the governance of or authority over natural resources should be exercised by the Union Government in accord with the Article 92, List I of the Third Schedule known as “the Union Legislative List.” After the military orchestrated a coup in 1962, they vitalized the Burma Socialist Programmed Party (BSPP), and waged a nationalization of private businesses including the mining industries which were joint-ventured with the British mining company. Since then, the military that pulled the strings behind the BSPP monopolized the control of natural resources. In accord with the State-owned Economic Enterprises Law 1989, the government retains exclusive rights to (A). Exploration, extraction and sale of petroleum and natural gas; (B). Exploration and extraction of pearl, jade and precious stones and export of the same; and (C). Exploration and extraction of minerals and export of the same.
After the military coup of 2021 in Myanmar which is rich in natural resources, illegal extraction of the resources has become more uncontrollable, and the military and the Ethnic Resistance Organizations (EROs) are key actors behind all this. Export of rare earth extracted from Kachin state to China within the month of December 2021 alone was worth US$ 200 million which was five times more than it was in the past. Illegal logging has been much increased. During each coup, the military usually takes a total control over natural resources and extracts and exports without any limits. The report published by Global Witness entitled “Jade: Myanmar’s Big State Secret” revealed the jade sector was secretly controlled by networks of military elites and jade export to China was worth US$ 12 billion and the industry was worth up to US$31 billion in 2014 alone. That was equivalent to 48% of the GDP for the entire Myanmar. However, only about one-tenth of it flowed into the Union budget as national revenue and so the amount of money reaching ordinary people from the areas of extraction or state coffers is just a drop of water in the sea. In the 21st Century Panglong Conference, Dr. Aye Maung, the then chairman of ANP, made a statement that rights to ownership, to control and to governance of natural resources should be devolved to the States where the reserves lie, and he also said that benefits from natural resources should be shared among the States. The same year, the Committee of Kachin Political Parties started to develop policies for rights and autonomy over natural resources. Besides, there was a wide range of discussions over natural resources in the States such as Rakhine, Shan and Kayin. The key point of ethnic-based political parties’ discussions was to gain political and financial autonomy over the natural resources. The political autonomy over the natural resources means rights to make laws, to governance and to control of them whilst the financial autonomy means rights to collect revenues from natural resources and transfer them over to the federal government in order to share wealth among different levels of the government. In other words, it means a maximum degree of decentralization which is devolution, and not just de-concentration.
- “Decentralization, Federalism and Democracy in Myanmar”- Hanns-Seidel Foundation
- Public Finance for a Genuine Federal Democratic Union: Stefan Collignon
- Fiscal Federalism: The Ethnic Nationalities Affairs Center (ENAC)
- Natural Resources of Myanmar (Burma): Ownership, Management, Revenue Sharing and Impacts: The Ethnic Nationalities Affairs Center (ENAC)
- “Natural Resources and Subnational Governments in Myanmar: Key Considerations for Wealth Sharing”- Thet Aung Lynn and Mari Oye
- Natural Resource Governance Reform and the Peace Process in Myanmar: Kelvin M. Woods
- NGRI 2016: “Natural Resource Revenue Sharing”
- “The Economic Interest of the Myanmar Military and Illegal Jade Mining during the Coup”- CAfT
- “Jade and Conflict: Myanmar’s Vicious Circle”- Global Witness
- World Economic Forum, “Natural Riches? Perspective on Responsible Natural Resource Management in Conflict-affected Countries”
- “Fiscal Federalism and Natural Resources” – The Asia Foundation
- Statistics on Myanmar Government Budget Published by the Ministry of Planning and Finance
- David Dapice 2013: “Creating a Future: Using Natural Resources for New Federalism or Unity”
- David A. Super: “Rethinking Fiscal Federalism”
- Fiscal Arrangements in Selected Federal Countries: Forum of Federations, Myanmar
- Fiscal Federalism: A Comparative Introduction: Forum of Federations, Myanmar