On the march to do business in Myanmar

August 26, 2009
Singapore Democrats

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Brian McCartan
Asia Times

The debate over United States and European Union-led sanctions against doing business in Myanmar is set to intensify in the wake of US Senator Jim Webb’s recent high-profile meeting with Senior General Than Shwe and detained pro-democracy leader Aung San Suu Kyi.

Webb spoke out against the sanctions and Myanmar’s junta echoed that call through state media. As US policymakers weigh the pros and cons of economically re-engaging the ruling junta, the process will necessarily take into account that a handful of military linked businessmen, many allegedly involved in illegal activities, including drug trafficking, dominate Myanmar’s underdeveloped economy.

For US investors eyeing business opportunities that the cessation of sanctions would present, dealing with Myanmar’s top military and business leaders would be key to gaining market access. Myanmar is one of the world’s most corrupt countries, according to Transparency International, an independent corruption watchdog, and US businesses would enter Myanmar at great risk to their corporate reputations.

In Myanmar business circles, the most talked about businessman is Tay Za, who owns the Htoo Trading Company Ltd, also known as the Htoo Group of Companies. Htoo maintains large logging, construction, property development, import-export, aviation, transportation, shipping and mining operations. Tay Za has also made recent forays into telecommunications and banking, and established Myanmar’s first privately invested airline, Air Bagan.

The US Treasury Department placed five of those companies, along with Tay Za, his wife, and eldest son, Pye Phyo Za, on a sanctions list in October 2007 because of their financial connections to the regime and Tay Za’s alleged role as an arms broker. In February 2008, the US stepped up those sanctions by putting several more companies and Tay Za’s business associates in both Myanmar and Singapore on a black list, including Tay Za’s brother and business partner Thiha. Htoo Trading Company Ltd, which includes Ayer Shwe Wah Company Ltd, Myanmar Avia Export Company Ltd and Pavo Aircraft Leasing Company Ltd, are all currently under US sanctions.

US sanctions, first imposed broadly in 1995, have since 2007 targeted specific generals and their associated business interests by freezing their assets in American financial institutions. The restrictions also prohibit any commercial or financial transactions between American individuals and Myanmar firms named in the sanctions order and ban named individuals from travel to the US.

Tay Za and Htoo Trading have also been targeted by the European Union, which imposed sanctions against them in December 2007. Similar to the US sanctions, the EU also targeted Tay Za’s wife, eldest son and brother. Canada also put Tay Za and his family on their Canadian Special Economic Measures Regulations list in December 2007. (Tay Za could not be reached for comment for this article.)

Sprawling empire

Despite those impediments, Tay Za’s businesses continue to thrive, including through contracts with China. In 2008, he negotiated a concession from Alcatel Shanghai Bell to cooperate on projects in the new Yadanabon cyber-city currently under construction in central Myanmar. He also built the old capital Yangon’s top shopping complex, the Myanmar Shopping Center, which is stocked with international brands. Htoo Trading was also one of two main companies granted contracts to construct the new capital city at Naypyidaw.

Tay Za’s rise is directly connected to his close relations with Myanmar’s generals, especially Senior General Than Shwe, the country’s authoritarian ruler. He is also well-connected to General Thura Shwe Mann, currently the junta’s third-ranking officer and often tipped to be Than Shwe’s eventual successor. Shwe Mann currently holds a position on Htoo Trading’s board, while his son, Aung Thet Mann, is director of Htoo Trading subsidiary Ayer Shwe Wah Company Ltd, which is involved in construction, palm oil products and import-export activities.

Those relationships, analysts and opposition groups say, have helped him win many lucrative government contracts and trade concessions. In the months following the destruction wrought by Cyclone Nargis in May 2008, Htoo Trading claimed it spent some US$3 million on rescue and rehabilitation. Myanmar watchers say Tay Za was granted lucrative reconstruction contracts from the generals for his donations to the relief effort.

He has come under criticism, including from the United Nations Educational, Scientific and Cultural Organization, for a project to build a 150-room hotel and 60-meter-high tower in the historical town of Bagan which some say damages the religious site’s aesthetics. His timber businesses stand widely accused of unsustainably cutting large swathes of Myanmar’s remaining forests. But of special concern to the US is Tay Za’s alleged role in brokering past arms purchases. Tay Za has consistently denied he is an arms broker for the military regime.

The US Treasury claims that Tay Za’s Myanmar Avia Export Company Ltd has been used to buy aircraft and helicopters for the Myanmar Air Force, including the 2001 purchase from Russia of 10 MiG 29 fighters and several Mi-8 helicopters. Established in 1993 to supply spare aircraft parts to the military, the company is now the representative for MAPO, Russia’s major state-owned military aircraft manufacturer and a subsidiary of MiG. It also represents Russian helicopter company Rostverol, which in 2006 merged with Mil and Kamov to become Oboronprom Corporation.

More worrying to US and regional security interests is his alleged role in brokering Russian and North Korean aid for Myanmar’s suspected nuclear program. Tay Za was part of the delegation led by Vice Senior General Maung Aye, the junta’s second-ranking official, to Russia in 2006, reportedly to discuss weapons purchases as well as the construction of a nuclear reactor.

Testimony from a defector claiming to be a former bookkeeper for Tay Za was recently made public by Desmond Ball, a professor at Australian National University. The self-professed accountant claimed that Htoo Trading was directly involved in discussions with officials from North Korea and Russia “concerning contracts and memoranda of understanding for the provision of nuclear assistance, as well as the logistic arrangements for the export of uranium and the importation of equipment and materials for various elements of [Myanmar’s] nuclear program”.

Htoo Trading is also allegedly involved in contracting for construction at the sites of the two reactors. According to the defector’s testimony, Tay Za is also responsible for shipping equipment to the sites, often under cover of night. According to Ball’s notes, the defector was with Tay Za when he played golf with Kyaw Thein, the deputy director of the Directorate of Defense Services Intelligence, and an Iranian intelligence officer and nuclear expert.

Controversial enterprise

Two other top businessmen with top connections to the regime are Lo Hsing Han and his son Steven Law, also known as Tun Myint Naing. Together they run Asia World Ltd, Myanmar’s biggest and most diversified conglomerate with interests in industrial development, construction, transportation, import-export and a chain of local supermarkets. Ten more companies are owned under the group in Singapore by Law’s wife, Cecilia Ng.

Both Lo Hsing Han and Steven Law have been on a US visa blacklist since 1996 for suspected drug trafficking activities. In February 2008, they were also put on the Treasury Department’s sanctions list, along with Asia World Company and subsidiaries Asia World Co Ltd, Asia World Port Management, Asia World Industries Ltd and Asia World Light Ltd for their financial connections to the regime.

Asia World currently holds the contract to run Yangon’s main port, which handles 40% of Myanmar’s container traffic and operates a cargo and shipping business from the same facility. The company was the second main contractor for the construction of the new capital now located at Naypyidaw and earned government reconstruction contracts in the Irrawaddy Delta in the wake of the cyclone disaster.

Asia World currently has contracts to build several hydropower projects, including the Myit Sone dam on a tributary of the Irrawaddy River north of Mytikyina. It is known to have strong links to China. For instance, the company was contracted by the Myanmar government to develop a port at Kyaukpyu on Ramree Island off Myanmar’s western Arakan coast, which is intended to facilitate shipping goods between the coast and China’s southwestern Yunnan province.

There is strong speculation that Lo Hsing Han’s business empire was originally built on narco-profits – though he has consistently denied the widespread drug trafficking allegations. Starting as a local militia leader in the northern Kokang region in 1960, Lo Hsing Han was dubbed the “King of Opium” by US drug enforcement authorities in the 1970s because of large amount of heroin his alleged networks were sending through Thailand. Arrested by Thai police in 1973 and deported to Myanmar, he was sentenced to death for rebellion but granted an amnesty in 1980. He promptly moved back to northern Myanmar in a known drug cultivation area.

Lo Hsing Han’s usefulness to the regime became evident in 1989 when then-chief of intelligence, Lieutenant General Khin Nyunt, used him as a go-between for ceasefire agreements with several ethnic insurgent groups, including the Kokang and the United Wa State Army, recognized as the world’s largest narco-producing militia. According to a 1993 Thai Office of Narcotics Control Board report, in exchange he was granted the right to smuggle heroin from northern Myanmar to the Thai border.

By 1994, his organization was widely considered among the most heavily armed drug trafficking organizations in Southeast Asia. Law enforcement officials say he might have stepped back from the trade in the mid-1990s, soon after he established Asia World. He also made strong efforts to cultivate relations with Myanmar’s senior generals, especially Than Shwe; in 2006, Lo Hsing Han was known to have catered the extravagant wedding of Than Shwe’s daughter.

Lo Hsing Han is now one of the most prominent persons foreign investors seek out to establish joint venture arrangements. Golden Aaron, an Asia World subsidiary, has been linked to China’s National Offshore Oil Corporation (CNOOC) since 2004 in a production-sharing contract for oil and gas deposits in Arakan State’s controversial Shwe gas project, which has been linked with land confiscation and human rights abuses by monitoring groups.

While Tay Za, Lo Hsing Han and Steven Law are the more well-known businessmen connected to the regime, a handful of other lesser-known and controversial entrepreneurs have also parlayed their relationships with senior generals into lucrative business empires.

Brothers Nay Aung and Pyi Aung are the sons of powerful Ministry of Industry [1] head Aung Thaung, who is known to be close to both Than Shwe and Maung Aye. Pyi Aung is married to Nandar Aye, Maung Aye’s daughter. The brothers founded Aung Yee Phyo Company Ltd and IGE Company Ltd in 1994, which in 2001 was registered in Singapore. IGE has since evolved into one of Myanmar’s leading oil and gas companies, while also providing spare parts for electrical generation projects, the agriculture industry and timber trade.

In March 2007, IGE signed a contract with Rimbunan Petrogas Ltd, making it a partner in a joint venture with the state-owned Myanmar Oil and Gas Enterprise in offshore oil and gas exploration in the Shwe gas field. Both men are banned from travel to Australia and the EU, but are not on the US’s sanctions list.

Khin Shwe, owner of the Zaykabar Company, is the country’s leading property developer and has played a leading role in the tourism industry through his chairmanship of the Myanmar Hotelier Association. He was placed on the US sanctions list in 2007 for his close ties to the generals, including his daughter’s marriage to Shwe Mann’s youngest son.

He has also served as chairman of the Myanmar-Japan Friendship Association, Myanmar-Korean Friendship Association and the Myanmar Thai Development Company. He maintains strong connections to the regime and hired US public relations firm Bain and Associated in 1997 in a failed attempt to improve the junta’s image on Capitol Hill.

Also on the US sanctions list is Htay Myint, founder of the Yuzana Company which has interests spanning real estate, transportation, construction, hotels and tourism, fisheries, palm oil production and rubber plantations. He also owns the Yuzan Supermarket and Yuzana Hotel in Yangon and an oil refinery in Thaketa township near Yangon.

These are some of the businessmen who will be rehabilitated and free for joint ventures with Western partners if the US and EU drop or relax their sanctions against Myanmar’s rights-abusing regime. They are also the business groups foreign investors will likely need to seek out to gain access to Myanmar’s various underinvested industries and markets.

While dropping sanctions would no doubt ease the suffering of the general population, the policy shift would simultaneously further enrich and entrench some of the region’s most controversial business groups.


Myanmar, Singaporean experts to conduct research on orchid
Xinhua News

Myanmar and Singaporean experts will conduct joint research on orchid at the Hukaung Valley reserve forest in Myanmar’s northernmost Kachin State in April next year, forestry officials said on Thursday.

The research will be the third of its kind after that at Naungmon in 2007 and at Phonkanyarzi Mountain in March 2009 conducted by experts from the Myanmar Horticulture Association and Horticulture Research Committee and Singapore.

Meanwhile, experts of Myanmar and Austria have carried out research on orchid at the Phonkanyarzi Mountain lying at a height of 8,000 feet (2,424 meters) above sea level.

Statistics show that there is a total of over 800 species of orchids in Myanmar.

There is an orchid garden in Pyin Oo Lwin township, northern part of the country, which was inaugurated in December last year.

Claimed as the largest in Myanmar and an international-level one, the 4.95-acre (2 hectare-) orchid garden is located in the famous National Kandawkyi Garden (NKG) in the township in Mandalay division.

The garden showcases 304 kinds of domestic orchids as well as foreign ones imported from Australia, Vietnam, China and Thailand.

Aimed at promoting tourism, a huge floriculture show took place at the NKG also in December last year.

NKG was established in 1915 as a botanical garden and was later expanded in different areas reaching 177 hectares in 2000 which comprises lake, natural forest, observation tower and rose, orchid and bamboo gardens.

Pain Oo Lwin, lying 69 kilometers east of the second largest city of Mandalay and at over 1,000 meters above sea-level, enjoys cool and pleasant weather all year round. The flower city is well known for its pine trees, eucalyptus and silver-oak abounding in town.