What will new government’s information ministry do?
Sky Net contract that profits the state only 40 million kyat per month and Forever Group that is not in top payers list.
Donors make donations under various titles at pagodas. The caretakers of the pagodas use the donation money to arrange entertainments during ceremonies and festivals.
After the ceremonies are over and the costs audited, money is needed and the pagoda is in debt. Dr. Nandamalabhivamsa, Rector of the International Theravada Buddhist Missionary University (Yangon), used the example of ‘debt to be collected from the pagoda’ to teaching the audience to act with virtue and not to incur sins while arranging such ceremonies.
When you think about it, the pagoda is in debt—thanks to the caretakers—even though it is getting donations.
The situation of Myanmar is similar to that example. The state budget, money from the taxpayers, were invested in projects which profited a handful of people. When the budgets were audited at the end of the fiscal year, there were budget deficits every year. Due to the budget deficits, loans from international community were made, putting the country in debt. Therefore, the country is giving out public assets and still falling deeper into debt.
It is obvious to see how much of the state revenues are being exploited by looking at Sky Net contract and taxes paid by Forever Group (MRTV-4). The people’s government, which is supposed to serve the people, can investigate if they are really harming the country.
The Sky Net contract harming the country and budget
In 2010 July, Ministry of Information and Shwe Than Lwin Media (Sky Net) reached an agreement, giving a 33 years permit to the later.
In the contract, tax exemption was given for the first 3 years with no share of profit to be provided back to the state.
Only after the three years, Sky Net will have to share profit with the state under certain ratios.
According to the contract, the country will benefit only 4 percent of the profit margin for the next the first 5 years while the company enjoys 96 percent.
For another 5 years period, the country will get only 8 percent of the profit. The rate increased to 12 percent, 16 percent, 20 percent and 25 percent every 5 years, meaning the country will benefit 25 percent of the profit margin only when the contract is about to expire. Even then, Sky Net will be enjoying 75 percent of the profits.
For the first 3 years, the country get nothing from the contract. Moreover, when the country starts to enjoy profit margin from the contract, it is only 4 percent. Even when the contract is about to over, the country still get only 25 percent of the profit from the project. To make matters worse, the contract allows Sky Net to use public land plots and properties from the government. Therefore, the country is at a great loss even in the first contract.
Under Ye Htut, the then new information minister, the contract was revised. The revisions only made it worse.
In the previous contract, it is stated certain ratios of profit margin will be given back into the state budget. Criticisms were made only because the country can enjoy only a small margin of profit. Many recommended to change the ratio so that the country will get a better rate.
The revision made under Minister Ye Htut makes it so that none of the profit belongs to the state, allowing Sky Net to enjoy full percentage of the profit. Instead, the new contract only asked for rents from Sky Net for using government owned factories, machines, tools and land plots.
As a rental fee, Sky Net has to pay 40.4 million kyats to the government every month, further lessening the amount government profits from the project.
The contract harms the public budget in various ways. I cannot say exactly in how many ways since more losses were incurred by the new contract made by Minister Ye Htut.
Contract of donation
It can easily be seen if the country suffer a monetary loss just by looking at the estimated income of Sky Net and the amount the government get as rental fee.
During a press conference on November 5, 2014, permanent secretary for Ministry of Information Tint Swe and the then deputy minister Pike Htwe said Sky Net has more than 320,000 receivers installed throughout the country.
It is also said the amount included the receivers given free as a donation. Therefore, we will look at the monthly fee 300,000 receivers can make.
When asked to most of the Sky Net users we can reached, there are two most popular subscriptions: 13,500 Ks per month subscription with sport channels and 6,300 Ks per month subscription without sport channels. Therefore, we can say a receiver make about 10,000 Ks per month on average.
If you multiply the amount with 300,000 receivers, the income for Sky Net from the subscription alone will be 3 billion kyats every month, making it 36 billion kyats for a year.
The amount of receivers were that of 2014 and the estimated income was that of 2014. (The amount of receivers was stated by the Ministry of Information.)
In 2016, an advertising company asked for the amount of receivers while putting their ads. The response was almost 800,000 receivers. No documentations were released. It was an oral response.
If we do not count the number of receivers given for free as donation, the estimated amount remained will be 600,000 making the monthly income 72 billion kyats.
The amount is estimated income from monthly subscriptions alone. The income from advertisements and selling the receivers are not added.
Let’s we calculate the price of the receivers sold from 2010 to 2016. The price of a receiver is 5,500 Ks. Let’s suppose only 600,000 receivers were ever sold out during the period. The income they get will be 33 billion Ks.
Do not calculate the price of the receivers just yet. Let’s only look at the monthly subscription fees. Even for subscription fees, do not take the amount of receivers the advertising department stated orally. Let’s only look at the amount of receivers officially stated by the ministry of information. Still, the income will be 36 billion Ks at least.
However, what Sky Net, Shwe Than Lwin media, got from the government were government-owned machines, broadcast stations, signal towers and certain set of bandwidths to air the channels while the government get only 40.4 million Ks a month (0.48 billion Ks per year).
It can be seen if the contract more or less looks like a donation to Sky Net by comparing the money Sky Net get monthly from subscriptions alone (38 billion Ks) and what the government get as a monthly rental fee (0.48 billion Ks).
Under the terms of the previous contract, from the amount of receivers stated in 2014, the government can enjoy 1.5 billion Ks (4 percent of 36 billion Ks). If we count the number of receivers the advertising department stated in 2016, it will be 3 billion Ks (4 percent of 72 billion Ks). The amount is calculated on the unfair amount of terms set by the previous contract that gave only 4 percent of the profit to the state.
Moreover, for the channels namely MITV, NMTV, Channel 9 and Buddha Channel, only 20 million Ks has to be given to the government as bandwidth fee. It was not officially tendered nor was no information released if monthly fees are needed to be given. Moreover, it was not even officially announced that 20 million Ks was given as bandwidth fee for a channel.
Even if that 20 million Ks is monthly subscription, for 4 channels it will be 80 million Ks every month, making it 0.96 billion Ks a year.
The company is using public assets, from broadcast stations to channel bandwidths, in cooperation with the government. It generates minimal 36 billion yearly income while the government get barely more than 1 billion a year. It is that kind of contract.
The main point is it is said to be a cooperation with the government; however, the government only enjoys rental fees.
Therefore, current Union Minister of Information Pe Myint can decide if this really harms the country.
Since there are lots of such donation contracts throughout the country, it is not wonder a media company from
Naypyitaw that built Thingyan (water festival) stage gave 5 million Ks to personal secretary of a high ranking official as a gift.
Why is Forever Group not included in top taxpayers list
Under President Thein Sein’s administration, top taxpayers list were announced from 2011-2012 fiscal year to 2014- 2015 fiscal year.
For the first two fiscal years, Forever Group was not included in top taxpayers list.
Only in 2013-2014 fiscal year was it included in top 1,000 taxpayers list.
However, company disappeared from the list again in the last year, 2014-2015 fiscal year.
To conclude, Forever Group appeared in the top taxpayers list only for a year out of 4 years.
A company can be included in the top taxpayers list if it paid about 50 million Ks in tax. Why is Forever Group not included? The reason why the question is asked is the advertisements running on MRTV-4 channel from Forever Group alone can put it on the top taxpayers list.
I have calculated the average advertisements on MRTV-4 from 6 pm to 10-11 pm. The ads run time is more than one hour.
Do not calculate the advertisements from the whole day yet. Let’s only calculate with one hour of advertisement per day. For the advertisement fee, in 2014 it was 500,000 to 1.1 million Ks per minute. (In 2015, the advertisement fee during 6pm to 10-11 pm is 1 million to 1.2 million per minute.)
This is the rate of advertisements for local products. It is increased for foreign products or joint ventures.
If we calculate with the minimal fee (500,000 Ks per minute), for one hour of ads runtime in a day, it will be 30 million Ks. That makes a monthly income of 900 million Ks or a yearly income of more than 10 billion Ks.
By taking advertising charges for one minute to be between a minimum of 5 lakhs and a maximum of 11 lakhs, the average rate of advertising fees per minute is at 8 lakhs.
So based on those numbers, we can calculate that the money earned from one full hour of advertising per day alone will exceed 17 billion Ks.
This is based only on one hour of advertising per day for MRTV-4 channel with advertising fees from 2014.
Forever Group owns many broadcasting channels, including Channel 7. It is not difficult to imagine the amount of income their channels generate from advertising alone.
Everybody have to pay five percent in trade taxes for advertising income. So looking at the MRTV-4 channel alone, the taxes should amount up to at least Ks 50 million to Ks 85 million per year which makes it very questionable that they do not appear yearly on the list of those who pay the highest amount of taxes.
And this is only the amount for trade tax from advertising income that comes in occurs between 6pm to 12am.
Instead, it leads to even more questions.
Forever Group, similar to Shwe Than Lwin, has permission to operate on state owned land such as their machineries and towers. For example, they are currently renting 2 acres of land within the Yayku Broadcasting station compound for as low as 50 Lakhs per month as well as MEP, the venue for the recent Academy Awards, for the same amount.
The other comparable point is that, Sky Net which is owned by Shwe Than Lwin, started appearing on the list of high amount of taxes paid while Forever Group is still missing.
Radio station owners such as Golden Wave (Shwe FM) and Myanmar Album Media (Cheery FM) also started appearing on the tax lists but Mandalay FM and Pyinsawadi FM, owned by Forever Group is nowhere to be found.
It is very questionable as to why Mandalay FM, which is essentially the same as Shwe and Cherry FMs, does not appear on the high tax list.
The answer why should be investigated; is it because of they were late in paying taxes? Or is it an issue of paying too little taxes?
According to tax laws, no matter which tax from whichever year must be investigated and there are plenty of examples when tax from the past were looked into and made to be paid.
It is only fair that the reader will question on how much the Eleven Media Group pays in taxes. During ex-President Thein Sein’s term, EMG and Eleven Trading paid over 5 billion in taxes, which is proved the our name appearing on the official list of highest amount of tax paid.
What will the new government’s information ministry do?
Ye Htut is involved in many broadcasting media contracts ever since he was a deputy minister as well as while he was a union minister and apparently, a total of 14 meetings were held between 11 November 2013 to 2 August 2014 so that the contracts are “better suited for the modern age”.
Only after those editions, the state only earns income from rental and service charges. The Ministry of Information needs to address this issue so that the state is not hemorrhaging money every single month from possible income.
Information Minister Pe Myint is responsible and must be bold in his duties to cut losses for the country.
As to why he must be bold and is empowered to do so now, I refer to a news conference regarding the edited broadcasting contracts where I asked a question on the bearing of responsibility if the contracts prove to be not beneficial to the country. I received official answers from ex Deputy Minister Pike Htwe and current Permanent Secretary Tint Swe that guarantees responsibility.
Now that the losses are clear as day, authorities must bear responsibility and act swiftly as the promises were already made, which gives the right to the authorities to execute strong moves.
Money owed from the Pagoda
By taking a look at the amount of tax paid between Forever Group and Sky Net, it is vividly clear that the country is incurring heavy losses.
There are also so many cases that the government is losing money such as extremely cheap rental rates in land rental of big parks such as Mya Kyun Tha, Kandawgyi, Yangon Zoo and many more.
Myanmar’s treasury is suffering from a constant cycle of budget deficit and international loans.
Now that a government that is willing to serve the people is in power, the leaking wounds of the national treasury must be patched up.
Also, now that we are talking about this, I would like to highlight a housing project that Capital Development and two other companies won the tender to without meeting the tender requirements. The project’s tender was called when ex Yangon Region Minister Myint Swe, now one of the vice president, was in charge.
It is a project where the country lost 5 billion Ks. As of now, Vice-President Myint Swe have yet to come forward to bear responsibility but no matter who, it is now in the hands of Yangon Region Chief Minister Phyo Min Thein to take charge, investigate into this matter and show that he really is a minister for the people.
In Democratic nations, mistakes will land you into getting sued. Even if no mistake were made, the government must take into account the losses and other discrepancies with the law, investigate and then report the findings to the people.
Both Chief Minister Phyo Min Thein and Information Minister Dr Pe Myint must look into these matters because no matter which government is ruling, any discord with the law and regulations must be taken action against by those in power.
The many errors under military governance were only slightly rectified under Thein Sein’s administration and adding that to the mistakes during Thein Sein’s time made people criticize that the previous government’s rule was no different from the oppressive military government.
The current government must take charge and dig up the past sins so that the country will no longer be losing large amounts of money and doing that will also differentiate themselves from previous governments as a true, democratic government.