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    Southeast Asia
     Dec 22, 2010

A crony rises in Myanmar
By Brian McCartan

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.

(Copyright 2010 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)

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