Municipal Governance in Myanmar An overview of Development Affairs Organizations Matthew Arnold, Ye Thu Aung, Susanne Kempel, and Kyi Pyar Chit Saw July 2015 Matthew Arnold is Program Director and Ye Thu Aung is a Senior Program Officer for The Asia Foundation’s Myanmar office. Susanne Kempel is an independent consultant specializing in local governance in Myanmar. Kyi Pyar Chit Saw is a Research Associate at the Myanmar Development Resource Institute's Centre for Economic and Social Development (MDRI-CESD). The authors would like to pay special thanks to the chief ministers, ministers of development affairs, and Development Affairs Organization staff and committee members in Shan State, Mon State, Ayeyarwaddy Region, and Tanintharyi Region for their support in facilitating the data collection for this research. The authors would also like to thank Jared Bissinger, Tin Maung Than, Giles Dickenson-Jones, Kanay De, and Kim Ninh for their thoughtful reviews and constructive feedback on this paper. Lastly, the authors would like to express special appreciation to Thi Dar Nwe of The Asia Foundation for her extensive efforts formatting the paper and to Ann Bishop for her help with editing. The Subnational Governance in Myanmar Discussion Paper Series is a collaborative research initiative between MDRI-CESD and The Asia Foundation. The paper series aims to provide Myanmar policy- makers at national and local levels, civil society organizations, the business community, development partners, and other interested stakeholders with timely research on subnational governance issues that directly inform policy and reform processes. The research behind the series incorporates the perspectives of a range of government, political, non-governmental, civil society, and community stakeholders in subnational governance, while also bringing to bear the most relevant policy analysis and international experience. MDRI-CESD and The Asia Foundation welcome input and suggestions on published, ongoing, or future research. The Myanmar Development Resource Institute's Centre for Economic and Social Development is an independent think-tank dedicated to the economic and social transformation of Myanmar. The Centre undertakes participatory policy research studies related to economic reform, poverty reduction, sustainable development, and good governance in Myanmar. It also provides training and education services for key institutions and organizations contributing to the ongoing process of reform. The Asia Foundation is a nonprofit international development organization committed to improving lives across a dynamic and developing Asia. Informed by six decades of experience and deep local expertise, the Foundation works through a network of 18 country offices in Asia on programs that address critical issues affecting the region in the 21st century—governance and law, economic development, women's empowerment, environment, and regional cooperation. ii Preface The Myanmar Development Resource Institute's Centre for Economic and Social Development (MDRI- CESD) and The Asia Foundation are pleased to present this 7th volume in the Subnational Governance in Myanmar Discussion Paper Series. The pace of change in Myanmar is rapid and constantly evolving, and decentralization and local governance are issues of critical importance to the country’s long-term development, as well as priorities in the government’s reform agenda. As such, there is a real need for timely research and analysis on key reform areas related to decentralization and local governance. As an extended collaboration between The Asia Foundation and MDRI-CESD, this series of discussion papers aims to provide Myanmar’s policymakers at national and local levels, civil society organizations, the business community, development partners, and other interested stakeholders with research findings on subnational governance issues that directly inform policy and reform processes. While Myanmar has historically been a rural agrarian society, urbanization is increasingly significant for the country’s development. Yangon and Mandalay, as the country’s largest cities, receive much attention with their booming economies and many new construction projects, yet other towns and cities across the country are also seeing rapid change as Myanmar’s transition unfolds. Development Affairs Organizations (DAOs), often referred to as municipal offices, are found in each township and provide water and sewage services, trash collection, and road maintenance, as well as manage the provision of business operating licenses and construction permits, and the collection of building taxes. While DAOs are the primary municipal governance agencies for Myanmar outside of Yangon City, Mandalay City, and Nay Pyi Taw, there is limited understanding of how they are structured and what they actually do. To address this significant information gap regarding municipal governance, this research report provides an extensive overview of DAOs. The paper methodically defines their history, structures, functions, and key business processes at the state/region and township levels, and the extent to which they have been redefined in recent years as the country has embarked on political and administrative reforms. This report was generously funded by the United Kingdom’s Department for International Development (DFID). The opinions expressed in this report are solely those of the authors and do not necessarily reflect those of DFID, MDRI-CESD, or The Asia Foundation. Dr. Zaw Oo Dr. Kim Ninh Executive Director Country Representative MDRI-CESD The Asia Foundation iii Table of Contents Acronyms ................................................................................................................................................ v Executive Summary ................................................................................................................................ vi ONE: Introduction ................................................................................................................................... 1 TWO: Historical Origins and the Modern Evolution of Development Affairs Organizations .................. 5 THREE: Legal Mandate and Positioning within Subnational Governance ............................................ 10 3.1 Legal mandate for DAOs ............................................................................................................. 10 3.2 Positioning of DAOs within Myanmar’s subnational governance system .................................. 12 FOUR: Functions of DAO Offices in the States/Regions and Townships............................................... 16 4.1 State/Region DAO Offices ........................................................................................................... 16 4.2 Township DAO Offices ................................................................................................................ 18 FIVE: Township Development Affairs Committees and Key Relationships ........................................... 34 5.1 Township Development Affairs Committees .............................................................................. 34 5.2 Key Relationships ........................................................................................................................ 39 SIX: Policy Considerations ..................................................................................................................... 45 6.1 Operational challenges and policy priority areas ....................................................................... 45 6.2 Political significance of DAOs for Myanmar’s transition ............................................................. 51 References ............................................................................................................................................ 54 Annexes ................................................................................................................................................. 56 Annex 1: 2014 Census Results for Urban and Rural Populations ..................................................... 56 Annex 2: State and Region Government Structures ......................................................................... 57 Annex 3: 31 Core Tasks of Municipal Governance in Myanmar ....................................................... 58 Annex 4: SLORC Law 5/93 ................................................................................................................. 59 Annex 5: Schedule II of the 2008 Constitution ................................................................................. 60 Annex 6: Evolution of Municipal Laws in Myanmar ......................................................................... 62 Annex 7: Organigram for State and Region DAO Offices .................................................................. 63 Annex 8: Functions of Department of Rural Development .............................................................. 64 Annex 9: Organigram of Township DAO Offices ............................................................................... 65 Annex 10: Example of Variance in DAO Fines and Penalties ............................................................ 66 Annex 11: Schedule V of the 2008 Constitution ............................................................................... 67 Annex 12: Terms of Reference for Township Development Affairs Committees ............................. 68 Annex 13: Self-identified Organizational