CHIANG MAI - With widely anticipated democratic elections completed and the
military's preferred candidates now firmly in power in Myanmar, the prospects
couldn't be brighter for the generals' business cronies. Atop that exclusive
list is U Zaw Zaw, the owner and managing director of the Max Myanmar Group of
Companies, and one of a clutch of Myanmar companies to be targeted by United
States financial sanctions.
The 44-year-old Zaw Zaw's business activities were closely examined in a June
2009 US Embassy in Yangon cable recently released by WikiLeaks. In the
confidential document, he was mentioned as "one of several mid-level cronies
attempting to curry favor with the regime and to use his government ties to
expand his commercial enterprises".
By any assessment, Zaw Zaw has impeccable connections to the
ruling junta, including ties to former Lieutenant General Tin Aung Myint Oo,
ranked number four in the junta and recently elected to parliament. He is also
known to maintain personal relations with Senior General Than Shwe, the
country's authoritarian military ruler.
In September, Zaw Zaw was included in a select group of individuals chosen to
accompany Than Shwe on a state visit to China. The entourage included the
general's family and senior junta officials. He also accompanied Than Shwe on a
tour led by Chinese officials of the Shenzen Special Economic Zone (SEZ).
This month, Zaw Zaw was granted a major state construction contract to develop
the new deep-sea port and future SEZ at the southern port of Dawei. The
project, which is being led by Italian-Thai, Thailand's largest construction
firm, is worth around US$8 billion.
Around the same time, Zaw Zaw attended a birthday party in Yangon for Than
Shwe's four-year-old granddaughter, also attended by many leading high-society
and military figures.
Until recently, Zaw Zaw owned the local Delta United professional football
club, where Than Shwe's grandson played. The businessman gave up ownership of
the company later in 2009 saying it conflicted with his presidency of the
Myanmar Football Federation. Zaw Zaw became the organization's first head in
2008, along with that of the Myanmar Tennis Federation.
Zaw Zaw's connections to the military leadership were also apparent in the
concessions he received during the mass privatization of state-owned
enterprises and property that occurred in the early part of this year in the
run-up to the elections. The fire sale has been touted as the largest sell-off
of state assets in Myanmar's history.
In the process, Max Myanmar gained the right to operate eight fuel stations,
all of which opened on June 10, in Ayerawaddy, Bago and Yangon divisions. The
government has continued to set price limits, but observers expect fuel prices
to eventually rise under the private ownership of some of Myanmar's most
wealthy businessmen.
Zaw Zaw was also allowed to enter the financial sector through the
establishment of a new private bank. Permission was given in late May by
central bank chief Major General Tun Thein for the opening of private banks by
Zaw Zaw and other junta-connected tycoons, including Tay Za, Nay Aung and Chit
Khine. Max Myanmar's bank is known as the Ayerwaddy Bank and opened in August.
Myanmar's banking system is in urgent need of reform, with a high level of
mistrust due to high inflation and negative interest rates, and the involvement
of more private capital is seen by some as a positive development. That said,
previous attempts at opening private banks were unsuccessful - the Asia Wealth
Bank and Myanmar May Flower were closed by the junta due to widespread
suspicions they were involved in money laundering.
Along with other prominent businessmen, Zaw Zaw was given a prominent role in
the aftermath of Cyclone Nargis in 2008. Along with Tay Za and Tun Myint Naing,
he accompanied senior generals on tours of disaster areas and his donations to
relief efforts were prominently featured in the local media, which estimated he
made US$1.6 million in contributions.
Zaw Zaw was also given government contracts for reconstruction of the worst-hit
areas, work which is ongoing. Max Myanmar's website says philanthropy is part
and parcel of the group's standard operating procedures, including regular
donations to educational, health, sports and religious activities.
Rapid expansion
Zaw Zaw originally founded his conglomerate as the Max Myanmar Co in 1993 to
import buses from Japan. The company quickly expanded and, according to its
website, later became known as the Max Myanmar Groups of companies comprised of
six independent enterprises. These include the Trading Co Ltd, Construction Co
Ltd, Hotel and Tourism Co Ltd, Manufacturing Co Ltd, Services Co Ltd, and the
Gems and Jewelry Co Ltd. Zaw Zaw also owns the Singapore-based Max Singapore
International Pte Ltd.
The Construction Co received contracts for some of the construction of the new
capital at Naypyidaw in the early 2000s. This included an eight-lane highway
and other parts of the remote capital's modern road network. Other projects
handled by the company included the repair of sections of the Yangon-Mandalay
road in 2009. Max Myanmar was later granted the concession to collect tolls on
the road. It also notched the contract to construct a 30,000 seat stadium in
Naypyidaw as part of Myanmar's bid to host the 2013 Southeast Asia Games.
The company's construction operations in Naypyidaw were enhanced in August 2009
with a contract given by the Ministry of Mines to produce limestone which
supplies a new Max Myanmar-owned cement factory. According to the leaked US
Embassy cable, the cement is expected to be used for the capital's newly
expanded airport, now under construction by Steven Law's Asia World Company.
Law is another of the regime's favored businessmen.
Zaw Zaw's Hotel and Tourism Co operates the three-star Hotel Max, also known as
the Hotel Chaung Tha Beach Resort in the town of Chaung Tha in Ayerawaddy
division. The resort is a known favorite of the ruling generals and their
associated business elite. The posh Royal Kumudra Hotel in the capital
Naypyidaw is also operated by the company.
Max Gems and Jewelry is largely involved in jade mining with a concession in
the Hpakant jade mining area of Kachin State. It operates the Lone Khine jade
mine in conjunction with the Ministry of Mines. In 2009, the company unearthed
a 115 ton jade stone, the second-largest mined in the past decade.
The company's Pinya Manufacturing Co Ltd, meanwhile, produces the popular Max
Cola as well as several other beverages for the domestic market. The company
began operating in 1998 with an initial investment of $41,000. This followed
the 1997 pullout of Pepsi Cola under strong international activist pressure
over the junta's human-rights record. The Pepsi distributorship was held by U
Thein Htut, Zaw Zaw's father-in-law.
On January 4, Myanmar's Independence Day, Zaw Zaw was honored along with Tay Za
and 16 senior military officials in a ceremony in Naypyidaw. Although not
mentioned in the domestic media, the exile-run Irrawaddy reported he received
the Thiri Pyanchi medal, one of the country's highest honors for his
"outstanding work" in developing Myanmar's economy and contributions to the
development of the country's professional football league.
The honor, which was suspended under the rule of former strongman Ne Win but
restored recently by Than Shwe as part of his "roadmap to democracy", was
traditionally given to civil servants and individuals who had made an important
contribution to the country.
The US has also recognized his importance to the regime. In January 2009, Zaw
Zaw and the Max Myanmar Group were specifically targeted by the US Treasury
Department and placed on a list of sanctioned individuals and companies in
Myanmar. The Office of Foreign Assets Control targeted eight of Max Myanmar's
companies, including its Singapore-based Max Singapore International.
The financial sanctions froze any assets Zaw Zaw may have held in American
banks and included a travel ban to the US. They also put pressure on non-US
banks, especially those situated in Singapore, for holding assets of sanctioned
individuals and companies. Zaw Zaw was added to the US sanctions list because
"Max Myanmar has provided important services in support of the [Myanmar] junta,
particularly in the form of construction projects".
Until now, Zaw Zaw has escaped much of the scrutiny and criticism leveled at
fellow junta crony and his rival for richest businessman in Myanmar, Tay Za,
the owner of the Htoo Trading Company. This is likely due to Tay Za's more
public involvement in the procurement of weapons systems for the military and
more recent revelations of his involvement in the regime's alleged nuclear
plans. Tay Za's close public relationship to the top general has made him a
favorite target of exile activist and media groups.
However, Zaw Zaw's companies have been criticized for at least one of its
projects. Karen Human Rights Group, a grassroots organization which monitors
human-rights abuses in eastern Myanmar, alleges the Myanmar army confiscated
large tracts of land in northern Mon State in 2008 which it then sold to Max
Myanmar for use in its rubber plantation operations. The project is listed on
the company's website as beginning in 2005 and expected to begin production of
rubber for export in 2012.
With 25% of parliament's seats reserved for military men and the junta's Union
Solidarity and Development Party (USDP) overwhelming the rest of the seats,
junta-connected businessmen are expected to win the lion's share of new
government contracts doled out by the nominally civilian-led administration. As
such, Zaw Zaw is expected to be one of the bigger business winners of the
democratic transition.
Brian McCartan is a Bangkok-based freelance journalist. He may be reached
at brianpm@comcast.net.
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