On the march to do business in Myanmar
By Brian McCartan
BANGKOK - 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
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.)
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
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
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
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.
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
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
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
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
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
 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.
Brian McCartan is a Bangkok-based freelance journalist. He may be reached at