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Benefit Sharing

RESOURCE REVENUE SHARING IS CRITICAL TO PEACE AND SECURITY, INVESTOR CONFIDENCE AND RISK

“Getting resource revenue sharing right in Myanmar is not just important for peace and security; it is also a key component of economic reform and growth. At the moment, investors view Myanmar, particularly its resource sector, as a high risk proposition due to ongoing conflicts and administrative uncertainty.

“The unique characteristics of oil, gas and minerals pose a number of challenges for governments establishing a resource-specific intergovernmental transfer system. Non-renewable resources are finite and revenues generated from them are notoriously volatile, responding sharply to fluctuations in commodity prices. These characteristics imply that any large transfer linked to these revenues could exacerbate the boom-bust cycle in a producing region.

“8 STEPS TO DESIGNING A RESOURCE REVENUE SHARING SYSTEM” 1. “Agreeing on revenue sharing objectives”

2. “Deciding on vertical distribution” | This refers to the split in revenue shares between the national and all subnational entities

3. “Deciding on which revenue streams to share”

4. “Deciding on horizontal distribution” | Usually according to two principles: a. where a higher proportion accrues to the producing area; or b. an indicator-based principle, whereby revenues are allocated

according to needs (e.g., poverty rates; education outcomes) or revenue generating capacity (e.g., population; regional GDP

5. “Deciding on recipients”

6. “Improving incentives for efficient spending” | this might refer to smoothing of variable flows, timing of issues or earmarking – whether it has to be spent on a particular area

7. “Transparency and oversight mechanisms”

8. “Negotiation process and venue for implementation” | Experiences elsewhere shows that a fair, stable and efficient system requires stakeholder consensus on any revenue sharing formula, as well as it being law.

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