By Tin Shein
There has been much talk about good governance (GG) in the media. GG encompasses two levels: corporate level and Government level. GG at the corporate level means that corporate bodies need to practice GG.
It is all the more necessary for public companies in which the public has invested their money by buying their shares. So public interests are involved in the public companies. Now that the stock exchange has come into existence, public-listed companies have now started selling their shares on the stock exchange. Thus the fate of their shareholders hinges on the financial performance of those companies.
If their performance is good, i.e. if they rack up profits, the value of shares in their hands will rise. But if their performance is poor, i.e. if they run into losses, the value of their shares will fall on the stock exchange, and holders of their shares shall suffer economically thereby. Thus the rise and fall of shares on the stoc exchange will depend on the twists and turns of the fortunes of such companies.
Now the role of GG comes in here. We may need to explore what is meant by GG, what elements or factors constitute GG and how to implement GP.
GG means absence of corrupted practices, use of accounting gimmicks to doctor their financial statements either to evade income tax by deflating profit or to project a good image of their financial health by inflating their profits beyond what they actually are. To start with the corporate bodies, they must carry out their business operations and manage their financial affairs with complete transparency and accountability. That is, they must manage their financial affairs economically, efficiently and effectively, putting the company’s interests above theirs. Management of those companies must observe their respective professional ethics. They must follow Myanmar Accounting Standards (MAS) and Myanmar Financial Reporting Standards (MFRS) that are prescribed by the Myanmar Accountancy Council since 2009 in preparing their financial statements, so that they will show a true and view of their financial results and the financial position at the fiscal year-end. Their financial statements must be free from misstatement of facts, accounting or financial errors, manipulation of accounts to mislead the shareholders and stakeholders. It is the responsibility of management of corporate bodies to do whatever they can to safeguard their assets, properties and financial interests on behalf of shareholders and stakeholders.
Toward that end, there must be put in place an effective control system, including internal audit and internal check, whose job it is to ensure that all day-to-day transactions involving both cash, stocks and assets are carried out in accordance with the procedures, rules and regulations, directives, etc. prescribed by management. Only then will misuse of financial powers, accounting errors, frauds, misappropriations of money and stocks, etc. could be minimized, if not eliminated altogether. Thus, GG will prevail in the corporate bodies much to the advantage of shareholders, stakeholders and the country, too.
Moreover, they must also recognize their legal obligations to pay taxes—income tax, commercial tax, withholding tax, etc.—due on their profits, sales, services, etc. to the Internal Revenue Department (IRD). Here it will not be wrong to say that tax is to the Government nwhat rice is to our people. Unless the Government receives the taxes due from the public, corporate entities, joint ventures, state-owned enterprises, etc., it will surely find it difficult to carry out its functions and responsibilities as mandated by the Constitution for the welfare of the people and development of the national economy. In the same way, without rice which is the staple food of our country, our people will not be able to have adequate supplies of rice for their comfortable day-to-day living.
Therefore, it is a ‘must’ for the authorities to take strong measures to enforce effective collection of all kinds of taxes from top to lowest levels of sources where taxable incomes can be located. There are many Small and Medium-sized Enterprises (SMEs) and family-run convenience stores in big cities and small towns around the country whose incomes might have reached taxable levels. If only we could tap those sources for tax collection through the different levels of IRD tax offices across the country, it wouldn’t be too much to say that we would have no deficit budget and no need to resort to borrowings from anybody. Even surplus budget may result thereby. However, most important of all, the mind-set of IRD personnel should change in line with the spirits of the times. They can’t be allowed to do their job in the old way they collect taxes by making secret deals with the taxpayers at the cost of the country. Strict enforcement of anti-corruption law is indispensible; severe punishment, including imprisonment and fines, should be meted out to both the bribers and the bribe-takers as well as those who misuse power for own benefits as a determent to future corrupted persons.
But the good news is that with the financial and technical assistance of IMF, a tax reforms program has been launched. Under that program the tax payers have to fill up the tax forms prescribed by IRD with the accounting and financial data, the correctness of which has to be certified by the tax payers themselves. As far as is known, those data are keyed into the computer that checks them against its built-in criteria on the correctness of the financial statements submitted to IRD by taxpayers in line with the self-assessment system. That program aims at ensuring that no direct contact between the tax officer and the taxpayer can take place to make secret deals regarding the tax assessment. However, human ingenuity and greed are so great that it is difficult to take it for granted that such a system itself will be fool-proof enough to prevent cheating the accounts to evade tax. If I may be allowed to venture the opinion, almost every businessman knows full well that corruption and bribery exist to a lesser degree at some levels of administration of departments like, for example, Customs, Immigration, Port(s), Trade, etc. where the maxim “no machinery operates smoothly and efficiently without grease” is likely to be applicable. The implication is that no prompt transactions involving clearance certificates from Customs and Port(s), import or export permits from Trade, etc. can be done within a reasonable period of time unless some forms of payoffs and kitbags are given to those who handle the processing of the required documents On the Government side, too, in my humble opinion, it is most important that GG should be put on the top of the agenda of the Government, as it involves vital wellbeing of the whole nation. So every effort needs to be made to launch a program to implement GG in the Government administration, so that there will emerge an inclusive clean Government over time. If ever it comes about, we will have created a Government where there will be no corruption, bribes, misuse of power, much-talked-about cronyism, favoritism, impartiality, injustice, etc. that have been the rule rather than the exception even now at the lower levels. All Government personnel or, shall I say, servants as they were called when we were in public service shall bear in mind all the time they are in service that their salaries and costs of facilities provided for them are paid out of the state budget which is nothing but the funds contributed by the public in terms of taxes and other dues. They must realize that they from top to down to the lowest clerk have been appointed to their respective posts of trust, power and responsibility to serve the interests of both the public and the country, complying with the rules and regulations prescribed by the Government. In spite of the reforms being undertaken by the new Government within the 100-day work plan, GG can’t be accomplished completely overnight, as malpractices have been deep-rooted. It may take time to remedy this situation. It need not be overemphasized that corruption is the bane of human society as a whole, because it can disrupt or impede the flow of trade and commerce that contribute much to the economic growth of the country and the well being of the people. After all, we may say that these malpractices—corruption, cronyism, etc.—are are stumbling blocks that stand in the way of achieving good clean governance that we all hope for.
By Tin Shein