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Decentralised Revenues

In theory, the benefits of decentralisation can be widespread: it brings public services closer to local people, encourages accountability, improves efficiency, and even increases income.

However, when decentralisation is pursued without proper attention to a given context, political motives, or institutional capacity, it's likely to be unsuccessful. If Myanmar is to effectively decentralise, it must be able to shake off a history of top-down, centralised and opaque operations, and accommodate the needs of its diverse regions.

Decentralisation started with the 2008 Constitution and has been further supported by Thein Sein government's "people-centred development" and the creation of local consultative bodies. Still, execution has been mixed and limited. There is now a state/region budget, but it's scope remains small (about 5% of overall public spending), and control over its composition highly centralised. Most state funding must still be sourced locally, but local tax policy and administration remains underdeveloped, something vital for future fiscal autonomy at a local level.

So far only minor and relatively non-controversial responsibilities have been distributed subnationally. Going forward it will be important to allocate more meaningful responsibilities, while ensuring local governments have the capacity to carry them out.

The most meaningful example of this so far is the Poverty Reduction Fund, a lump sum development grant that can ostensibly be used by states/regions as they see fit. So far implementation has varied, however, without proper methodology guiding allocation.

Myanmar's decentralisation process has just begun, and it has the potential to go either way. Transparent guidance at a national level, with the right motivations, will be vital. Such policy must understand and respond to local needs, but it also must be cooperated with at every level of government, as every level is affected by decentralisation.

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