New rules planned for government tenders

The new rules will govern tender practices for this financial year, said U Saw Hla Tun, a member of the committee.

Existing rules relating to contracts awarded by ministries have not been widely followed, he said, resulting in a lack of transparency in government-led projects.

In 2013 the President’s Office issued a directive with rules for government departments when issuing tenders, though the rules have since been frequently broken.

Applicable to tenders for oil and gas and mining permits, government land, infrastructure, and services, the directive highlighted “the need for transparency, accountability [and] responsibility”.

Government departments were required to organise committees to set out rules before issuing a tender, set a floor price, advertise through newspapers at least one month in advance and open bids in public. Specific rules were also issued for tenders related to purchasing, construction, services and lease-and-sale.

“We will amend and update those laws with the assistance of the World Bank. The laws will apply for this year’s projects and will be inclusive of all ministries and government bodies,” said U Saw Hla Tun.

“The new laws must ensure that national budget spending becomes transparent for everyone, and should help with standardisation.”

A more transparent tendering system would be welcomed by foreign investors who have often complained of a lack of clear information, particularly about the decision-making process. Each ministry has its own idiosyncratic rules for tendering, which can cause confusion.

The Myanmar Construction Entrepreneurs Association held a special meeting last December to discuss the urgent need for reform. The existing system favours well-connected companies and leaves little space for smaller local businesses to compete, they said. U Saw Hla Tun declined to comment on whether the government would reconsider tenders that have already been awarded, such as contentious contracts for flyovers in Yangon.

Last week Bill Committee members told a press conference that the new laws would support the new government’s efforts to establish a corruption-free society.

For Edwin Vanderbruggen, a Yangon-based lawyer who has worked with the government on a wide range of privatisations and tenders, “the existing rules are just not up to international standards in many respects”.

He noted that the rules for a 30-year public-private partnership in the power sector are the same for a one-off purchase of some goods by the government. “That just does not work,” he said.

Government tenders tend to fail in Myanmar, he said, because the department often does not understand the business case for the asset they are tendering, and has no budget for technical, commercial or legal advisers.

“This problem could be mitigated by soft-testing the bidders, but there is no time for that on most projects,” he said.

Additional headaches for investors include unrealistic tender timelines and a tendency among some ministries to change the tender variables part-way through the process.

The government’s inexperience with international-standard project documentation can also result in unsuitable sponsors signing up for the deal – such as speculators or developers willing to take very high risks.

“You lose credibility very fast that way, and bidders don’t make the expense and effort any more to bid on your projects in the future,” Mr Vanderbruggen said.

Source: Myanmar Times

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