NAYPIYDAW, KOMPAS.com – Military Myanmar which launched coup d’etat on February 1, financed by a large part of the national budget. However, they also secretly get a lot of income from business interests that are scattered all over the place.
At the Indoor Skydiving Center, a popular tourist spot in Yangon, visitors can experience the thrill of jumping from a plane with a vertical wind tunnel.
However, not many people who try this attraction realize that it is part of a giant business empire run by the military, a business inseparable from national life.
Observers argue that this business network is possible the Myanmar coup happened, and dropped military accountability, as quoted from BBC Indonesia on Tuesday (9/3/2021).
Civil businessmen spoke of an environment like “Sicily under Mafia rule”, while activists said democratic reform was only possible if “soldiers returned to barracks”.
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Two conglomerates that fund the military
Myanmar military, Tatmadaw, became involved in business after Ne Win’s socialist coup in 1962.
Over the years, military battalions were required to be self-sufficient and encouraged to develop capital in local businesses to finance their operations.
Although this practice has been gradually stopped, two military-run conglomerates were founded in the 1990s when the government began the privatization of state-owned industrial companies.
The two organizations, Myanmar Economic Corporation (MEC) and Myanmar Economic Holdings Limited (MEL), have since become important sources of revenue for the Tatmadaw, with stakes everywhere from banks and mining to tobacco and tourism.
MEHL also manages military pension funds.
Some military leaders and their families also own stakes in many companies, and have been sanctioned in the past.
Aung Pyae Sone, son of the general’s coup leader Min Aung Hlaing, owns several companies, including beach resorts, and holds a majority stake in the national telecom operator Mytel.
The extent of this business interest is difficult to ascertain. But experts say the influence of military business remains significant, despite recent democratic reforms, and the coup may be partly an attempt to protect these business interests.
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Protected from accountability
Little we know of the financial outreach of the military has only surfaced in recent years.
Report PBB in 2019, sparked by Myanmar’s crackdown on communities Rohingya, concluded that business revenues strengthen the military’s ability to commit human rights violations with impunity.
Through a network of businesses and affiliates belonging to the conglomerate, the UN says the Tatmadaw can “protect itself from accountability and surveillance”.
Details about MEHL’s structure and finances were also revealed in two internal reports, one of which was submitted by the conglomerate in January 2020, the other leaked by activist groups Justice for Burma and Amnesty International.
They pointed out that MEHL was run by high-ranking military officials, including some of the leaders of the ongoing coup.
About a third of the shareholders are military units, while the rest are owned by former Tatmadaw personnel and members.
The leaked report says that, between 1990 and 2011, MEHL paid its owners 108 billion kyats in dividends, worth US $ 16.6 billion (IDR 239 trillion), according to the official exchange rates at the time.
It is also suspected that the military used MEHL shares as rewards for loyalty and punishment for bad behavior.
One table lists 35 people who lost their dividends for various reasons such as desertion and imprisonment.
MEHL has not commented publicly on the leaked reports.
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Calls for sanctions
Following the coup, advocacy groups have called for sanctions against the military and its access to the global financial system.
Many activists also want military conglomerates to be dissolved.
In a statement to BBC, Justice for Myanmar accused the military of being in an “unlawful conflict of interest”.
“The assets stolen by the military and their businesses belong to the Myanmar people and must be returned to them,” he added.
The US has imposed new sanctions on the military and some government figures, along with three mining companies.
Canada, New Zealand and the UK have also enacted their own policies, however, as yet neither country is directly focused on conglomerates.
Activists argue that the weak sanctions in the past have allowed the Tatmadaw to stage a coup and pursue alleged human rights abuses.
But experts say BBC there is a strong desire to increase sanctions, at the right time.
“The world is still waiting to see what happens,” said George McLeod, managing director of Access Asia, a risk management company that specializes in the region.
“From what I hear from insiders, Norway is trying to make some sort of initial attempt to bring about a solution through negotiations.”
Meanwhile, there was growing resentment among local businessmen about the power of conglomerates.
“They describe it in much the same way a business owner in Sicily talks about the Mafia,” McLeod told BBC.
“You have to deal with them if you get on their radar. But you don’t want to,” added McLeod.
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They want to be international players
Tatmadaw has begun to feel pressure from investors abroad.
Japanese soft drink company Kirin ended two lucrative business deals with MEHL, which have helped it dominate the beer market in Myanmar. Singaporean businessman Lim Kaling also cut off his investment in a tobacco company linked to the conglomerate.
Meanwhile, protesters in Myanmar are boycotting companies linked to the new government, including jewelry shops and cigarette brands.
However, not all countries are calling for international sanctions. China and Russia have resisted attempts by other UN Security Council members to denounce the Tatmadaw.
Experts agree that while sanctions are an important part of the solution, they must be accompanied by legal and diplomatic pressure, as well as an arms embargo.
The deputy Tatmadaw commander, Soe Win, told the UN they were ready to face international pressure if necessary.
Without multilateral action, Myanmar could return to being an isolated country, said Peter Kucik, a former adviser at the US Treasury Department.
“The current group of generals is more or less the same group that was in power under the SPDC regime (the military junta that ruled Myanmar from 1997-2011), and they have shown that they are very comfortable living in an isolated country,” he told BBC.
While the country can rely on trading partners like China, local entrepreneurs are wary of this prospect, added Kucik.
“They want to deal with top Japanese companies, they want to deal with Western companies, and they want to be players on the international stage like Thailand,” said Kucik.
Whatever happens next, advocacy groups say that controlling military funding, and reforming their conglomerates, is essential for democratic reform.
“That’s what the Burmese people want,” said Anna Roberts, director of Burma Campaign UK.
“They want the military back in the barracks, and they want a civilian economy and a civilian federal government that respects their wishes,” added Roberts.
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