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One on One with U Maw Than

Name: U Maw Than

Age: 75

Positions held: Director (Central Bank of Myanmar), Member (Tax Board), Member (Myanmar Accountancy Council)

Profession: Academic – Accounting, Finance and Management.

The Myanmar Insider: You have held various positions in both public and private sectors over many years. Could you summarise the various portfolios that you have held until now?

U Maw Than: After my graduation in March, 1960, I joined my family company, owned by my father and a few associates. I worked there for three years. It was called Mone Man Corporation Ltd; “Mone Man” referring to Mon Ywar and Mandalay, two of the biggest cities in Upper Burma. It was located in Pabedan, Yangon, and after the military coup in 1962, they began to nationalise the private companies and we liquidated the company. Soon after, I joined U Hla Tun (at that time known as Allen Charlesworth & Co, Chartered and Registered Accountants) in 1963 as a trainee. I completed the articleship programme in 1966. In 1967, I joined the People’s Pearl and Fisheries Board, under the Ministry of Agriculture and Forestry. I was with the board until December, 1972 – for five years. I was selected in the state scholar programme and transferred to the Ministry of Education. I was sent to study at Aston Business School in England. I did my research there, first completing my MBA and then Master of Philosophy. I came back to Burma in 1977. From 1977 until December 2000, I was with the Yangon Institute of Economics – for nearly 23 years. From 1977 to 1985, I was an assistant lecturer at the Department of Commerce. I became a lecturer in 1985, associate professor in 1992, professor in 1994 and rector in 1996. I have been on the board of the Myanmar Accountancy Council (MAC) as professor and rector of the Institute of Economics. I was asked to join the Board of Directors of the Central Bank of Myanmar (CBM) in 2013. After I retired, in addition to participating actively on these boards, I also lecture during my spare time. I currently lecture at one of the private schools, specialising in ACCA subjects at professional level. I also give some of the continuing professional education (CPE) seminars at the Myanmar Institute of Certified Public Accountants (MICPA). Actually, I have to thank these teaching assignments, as they have kept me updated on current issues in the accounting world.

MI: One of your key positions is Tax Advisor to the present government, through the Tax Board. Could you elaborate on key challenges that the country is facing now, in terms of taxation concerns?

MT: The main issue here is the tax to GDP ratio. In Myanmar, our ratio is around four percent. This is extremely low compared with 25 to 30 percent for the United States and around 16 percent for ASEAN countries. Our tax revenues are extremely low. Behind the issue is the enforcement action. Tax officers have to enforce the tax laws to ensure the efficiency of collection. Just like in every civilised society, everyone has to contribute their own fair share of taxes.

MI: Can you summarise the tax system and the types of taxes in Myanmar?

MT: In Myanmar, most taxes are handled by Inland Revenue; taxes, such as income tax, commercial tax, custom duties and lottery taxes. Others are levied by respective ministries in the form of indirect taxes, for example, road tax, etc. Income tax is, in turn, grouped into seven categories: salary; professional earnings; business; properties; capital gains; other sources; and undisclosed income. Income tax system wise, taxable income here is assessed on a prior year basis. The income tax is naturally progressive, whereas commercial tax is proportional. As recently reported in the news, there are about 10,000 companies that do not pay tax. What structural and policy changes would you recommend in order to restore the country’s tax system deficiency? It is a question of enforcement of the tax law. I would advise Inland Revenue to focus on these 10,000 companies and carry out detailed investigations and take action. Enforcement officers must understand tax laws thoroughly, and rules and regulations for enforcement.

MI: How does the new system go hand in hand with the investment law as far as foreign investors are concerned?

MT: Foreign investment law provides lots of tax exemptions and tax holidays for companies. I am a bit concerned that companies will transfer their operations into another new company or set up – even liquidate – once the tax benefits expire.

MI: What are the main policies that the government has changed or adapted to accommodate Myanmar’s new trends and its opening up to international markets?

MT: Our government has started economic zones and a lot of infrastructure works, especially roads, bridges and telecommunications infrastructure upgrades. Now, more sectors are open to foreign participation. They are also emphasising the increase in power supply to businesses. The government realised that, once the businesses prosper, tax revenues will go up.

MI: As far as personal income tax is concerned, will there be significant changes going forward?

MT: The current income tax threshold is pretty low. Salary earners have to start paying tax once they earn 120,000 kyats (around US$120) per month. The rate ranges from one percent to a maximum of 20 percent.

MI: As one of the Board of Directors at the CBM, what are your main duties?

MT: At the CBM, our objective is the control of inflation and exchange rate stabilisation. Since we’ve had the free float of the kyat, we have been trying to keep the inflation and exchange rates stable through monetary policy tools.

MI: What is your view on the CBM maintaining a high interest rate regime?

MT: The Myanmar interest rate is spread eight to 13 percent. The main purpose of maintaining the high rates is to control inflation. If the interest rates are lower than inflation, there will not be incentives for capital accumulation and lesser demand for the kyat. We cannot have out of control inflation for the sake of stability of the country and the financial system. I must let you know that the informal rates are even higher.

MI: You are a significant figure in the Myanmar accounting world. What are the present changes in Myanmar accounting standards that will close the gap of local standards versus IFRS?

MT: The MAC has already adopted IAS/IFRS (International Accounting Standards/International Financial Reporting Standards) since 2010. The MICPA has also been providing CPE training seminars for existing CPAs. The MAC also requires companies to adopt IAS/IFRS. We are in the midst of structuring Myanmar tax and Myanmar company law exams for Myanmar nationals who’ve graduated from overseas to become CPAs here.

MI: With the influx of foreign investors, the demand for well qualified accountants will increase. Could our present education syllabus on both taxation and accounting standards fulfill the international standard requirements?

MT: Our immediate response is the MAC inviting applications to join our CPA programme on a wider basis. Initially, it is targeted at previous Yangon Institute of Economics (YIE) fresh commerce graduates. Holders of Accounting Diplomas from the MAC are admitted to the programme since two to three years ago. For the current year, we already have close to 780 applicants. We will exercise quality control through exams. For the medium term, we would like to update the syllabus of the YIE. One of the MAC members is a professor from the YIE, so we expect to get good cooperation on that. The MAC would keep abreast of developments of the IASB (International Accounting Standards Board).

MI: The Myanmar Stock Exchange is launching in early 2015. In order to qualify for the IPO application, what are the criteria that companies must possess, in your opinion?

MT: First, we need the authorities to change the Companies Act to include corporate governance or adopt a code of corporate governance in Myanmar. We need a strong corporate governance regime here. Companies have to abide by that. We can adopt a rule based on SOX or principles based on the Combined Code; I personally prefer the latter. Every company these days is turning themselves into public companies, trying to issue shares to an unsuspecting public. They seem to just make up 50 percent of the shareholder requirements with their own friends and relatives to become a public company

MI: Public awareness of risk and reward when investing in public companies is minimal. What is being done to address this issue?

MT: Listing criteria will be needed to go public soon. They will then know these requirements and trust can be developed. The public need to be aware of requirements, such as the minimum percentage to be held by the public, the percentage of independent directors within the board, etc. For the time being, the public need to be aware of listed public companies versus just public companies.

MI: How do you feel that foreign companies now entering into business here will affect the local workforce?

MT: If the foreign entity is an MIC (Myanmar Investment Commission) approved entity, then FDI law specifies the local employee must have a certain percentage of local staff; yes, they will be a boost to the local employment scene. In essence, our local staff will become better and more efficient, through practical experiences, transfer of management skills and knowhow.

MI: From a country development standpoint, in your area of expertise, what do you see as being the biggest challenges facing the current government in the next one to three years?

MT: At the policy level, I believe the government has taken and is currently taking all good and appropriate measures. The main challenge would be the changing of the mindset of the people, especially civil servants, from being used to just carrying out orders or what is being asked to do, to taking the initiative. Currently there is little or no initiative at the corporate staff or civil service level. For example, putting up for approval or needing to inform management where it is within one’s authority to decide. Maybe we are facing a crisis of confidence. As a result of this, we ended up forming committee after committee in parliament, with the prospect of no one being held responsible or accountable.

MI: How do you see Myanmar comparing with its Asian neighbours in the short and long term future?

MT: I am an optimist. Myanmar people are generally smart and resourceful. They also learn fast. With proper use of our natural resources, even if we are behind in the short run, we will catch up with our neighbours fast, assuming our government continues the current open door pathway.

MI: What would your advice to the generation of young people in Myanmar on their future, and what can they do to help to build and develop the country?

M T: We need them to correct the weaknesses and mistakes of older generations. People of our generation were neither bold nor daring enough. “Generation Y” people, because of their exposure, generally have more confidence. They need to keep abreast of digital technology and language. Expose yourself to foreigners and do not be afraid to venture out and take risks.