A controversy has erupted over the appointment of a company to run a One Stop Service Centre for the gold and jewellery industry without a tender.
By KYAW LIN HTOON | FRONTIER
PROMINENT GOLD and jewellery traders have criticized the Union government for appointing a company without a tender to run a One Stop Service Centre for the industry that opened in Yangon’s People’s Park in September.
The opening of the centre, aimed at streamlining import-export paperwork for gold and jewellery, at the Culture Valley on September 24 follows plans announced by the Ministry of Commerce early this year to liberalise the gold trade.
The OSSC, which involves the Ministry of Commerce as well as the Ministry of Natural Resources and Environmental Conservation, Internal Revenue Department and local firms, will serve as the middleman between traders and buyers.
However, criticism has emerged over the appointment of the Myanmar Gold Development Public Company to run the centre.
Daw Kalayar Pyi Wai Shan, vice president of the Myanmar Gold Entrepreneurs Association, said that despite her role with the MGEA she was unaware that a company had been chosen to run the centre.
She said there was no record of any MGEA meeting at which a decision was made to choose Myanmar Gold Development to run the OSSC and said it could only have been the decision of the association chair, U Kyaw Win.
She said this was problematic because Kyaw Win is a director of and shareholder in Myanmar Gold Development. Corporate records indicate that Kyaw Win holds the position of managing director at the company, which was established in 2012, and also owns 5 percent of shares. Kyaw Win could not be reached for comment.
“Me and other executives in the association had understood that the government would run the centre itself, but soon after we arrived for the opening ceremony we learned that it will be run by a company and that it will charge service fees,” Kalayar Pyi Wai Shan told Frontier. “So, I mean, that’s a total lack of transparency.”
Kalayar Pyi Wai Shan acknowledged that there may be many members in the association who do not share her opinion about the issue. But several other MGEA members and members of the Yangon Gold Entrepreneurs Association also expressed concern to Frontier about what they said was a lack of transparency in the appointment.
“Will we need to pay a service fee for every transaction? For how many years will the company have its administrative role? There are many questions,” said one gold merchant and member of the Yangon Gold Entrepreneurs Association, who asked not to be named.
However, Myanmar Gold Development director Dr Ye Aung Thu said there was nothing to explain and the criticism was based on a misunderstanding.
“We don’t have to explain anything; OSSC is just OSSC and our company has the role of administering it,” he told Frontier.
He said the company would charge customers for services such as submitting applications for permits to export gold. While the fees have not yet been set, he said they would be kept to a minimum and were just intended to cover the company’s costs.
“If we make any profit, we have already promised that we will donate it all to the MGEA and Myanmar Gems and Jewellery Association,” he said.
Asked why no tender was conducted, he said the company was just a facilitator to make it smoother for the government and businesses working in the sector.
“We are providing the space and the technical support to the government … the gold business is also very dangerous so it’s necessary to have a company like us that can ensure security for everything,” he said. “Our company is just generously offering its help to the government. If it doesn’t need us then it can do everything itself.”
But Kalayar Pyi Wai Shan, who is also secretary of the Myanmar Gems and Jewellery Association, said it was unacceptable that the government had made the appointment without conducting a transparent auction or tender.
“Each time gold merchants trade, they will have to pay the service fee. Paying the fee is not a problem, but the company chosen to accept payments will have a big responsibility to provide other services in future,” she said, adding that they would include arranging insurance and helping to set industry standards. “For such a very important role, tenders should have been called.”
Speaking at the opening of the OSSC, Yangon Region Chief Minister U Phyo Min Thein said it was aimed at contributing to the development of the gold trade by easing red tape and handling import and export business in one location.
A senior commerce ministry official defended the government’s decision to appoint Myanmar Gold Development without calling a tender.
“We discussed this with the gold, gems and mining associations and the company was appointed because it was the choice of the MGEA; we did not select it,” said Daw Cho Thet Mu, a deputy director at the Department of Trade.
“We just told the association [to help establish the centre] and the association then assigned this company,” Cho Thet Mu told Frontier.
The government’s next move towards liberalising trade in the precious metal will be to launch the Myanmar Gold Exchange, expected next year. It will be based at Times City in Kamaryut Township, which will also house the OSSC after it moves from its temporary location in People’s Park.