Government plans to privatize unprofitable state-run factories since most state owned factories are operating at a loss

Most state-owned factories are not making profit and are operating at loss, while eating up state budget. The government is planning to privatize the unprofitable state-run factories, U Kyaw Win, Union Minister of the Ministry of Planning and Finance (MOPF), said at a meeting of UMFCCI.

In lieu of selling the factories, the Ministry of Planning and Finance will hold discussions with the Ministry of Industry to privatize unprofitable state-run factories as soon as possible, said U Kyaw Win at the regular meet­ing of Vice President No-1 and the business leaders held at UMFCCI on Octo­ber 27.

“To accelerate minis­terial activities, we are planing for short, me­dium, and long-term sce­narios on how to handle this situation. Currently, we are working on the short-term plan,” the Per­manent Secretary of Min­istry of Industry, U Ko Ko Lwin, said.

U Ko Ko Lwin did not disclose detailed plans for the activities. Structural reform will be submitted incrementally, starting from the end of this year, he added.

‘‘State-run factories have been losing billions of kyats yearly. If one fac­tory loses that much, then you’ll know how much for 40 factories. The country is allocating state budget to operate the factories. So we are planning to hand them over to private as soon as possible,’’ Un­ion Minister for Planning and Finance, U Kyaw Win, said.

If government employ­ees, who are currently working for the factories, want to keep their posi­tions after it has been transitioned to private management, the minis­try will arrange for them retain their job at the fac­tory, U Kyaw Win said.

The Ministry of Com­merce will set strategic direction for the factory while the private com­panies will take direct control of management and investments. Profit sharing will be negotiated between the ministry and the companies, U Khin Maung Cho, Union Min­ister for the Ministry of Industry, said.

“These factories have been losing for years. There was no profit at all because of weakness in management. We need to fix this. We will adopt pol­icies when we hand over the factories, the private owner will have to imple­ment the management policies. The profit will be allocated between the ministry and the private company,’’ he said.

Tenders (bids) for joint investment in these fac­tories will be called for by the end of the year. Leas­ing permits for a mini­mum of 10 years to a max­imum of 50 years for local and foreign companies will be considered. How­ever, interest in some of these dilapidated facto­ries have been lukewarm in the past.

In terms of foreign in­volvement, currently only companies from South Korea and China are in­volved in state-owned factories, according to Ministry of Industry.

There are 115 factories under the management of Ministry of Industry. Former president U Thein Sein’s administration per­mitted nearly half of total state-run factories to be use by private business. 54 factories remain under state management.

(Myanmar Business Today: https://www.mmbiztoday.com/articles/state-owned-factories-looking-new-management )

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