Army Capitalists: The Junta’s Wealth
By MIN LWIN
The Irrawaddy News
The Burmese military has monopolized the country’s economy, especially heavy industries, mining and the import-export sector, since the military seized state power in September, 1988.
According to Burmese defense scholar Maung Aung Myoe, the collapse of the socialist regime in 1988 opened the way for the Tatmadaw [armed forces] to resume its socio-economic role, independent of the country and its private, commercial interests, as it decided to play the leading role in national politics.
The scholar notes in his book, “Building the Tatmadaw,” that there were two reasons to establish commercial enterprises: to be self-reliant and to finance defense modernization as an off-budget measure.
The Burmese military founded two military-managed economic organizations, the Myanmar Economic Corporation (MEC) and the Union of Myanmar Economic Holding Limited (UMEHL), in 1989 and 1990 respectively.
Interestingly, UMEHL, also known as U Pai, funding is based on contributions from military personnel, military units, retired military personnel, army veteran organizations and the ministry of defense to support in-service and retired military personnel.
UMEHL was previously led by Lt-Gen Myo Nyunt, a former Rangoon regional commander. It is currently led by Lt-Gen Tin Aye of the Office of Defense Industries.
UMEHL was the first business venture established by the Burmese military for small and medium-sized commercial enterprises and industries. Its subsidiary and affiliated firms engage in macroeconomic trading with Singapore, Japan, Malaysia, China, South Korea, and India. Edible oil, fuel oil and automobiles from these countries are imported to Burma and exports include cigarettes, beans and pulses, gems and garment products.
Maung Aung Myoe’s book, published by Institute of Southeast Asia Studies in Singapore, said that between 1990 and early 2007, UMEHL formed 77 fully owned firms.
UMEHL’s commercial interests include gem production and marketing, garment factories, wood and wood-based industries, food and beverage, supermarkets, banking, hotels and tourism, transportation, telecommunications and electronic equipment, computer, construction and real estate, the steel industry, cement production, automobiles, cosmetics and stationery.
In the 2006-2007 fiscal year, UMEHL started 35 firms; it has liquidated six firms since 1999.
One of the liquidated firms, the Myanmar Ruby Enterprise, operated Mogoke mine, Mongshu mine, Nanyar mine, Mawchi mine and a gold mine in the Tahbeikkyin area.
Maung Aung Myoe noted that one of the main reasons for firms being liquidated was the investment sanctions imposed by Western governments. Another possible reason could be structural problems relating to poor macroeconomic policies and business environment in Burma.
Among the corporations heavily involved with UMEHL are Segye Corporation of Korea, Daewoo Corporation of Korea, Korea-based Pohon Iron and Steel Co. Ltd, Rothmans Myanmar Holding Pte Ltd. Of Singapore, Fraser & Neave of Singapore, Mitsugi Corporation of Japan and Nikko Shoji Co. Ltd of Japan.
The MEC is by nature secretive. It is under the ministry of defense and is designed to help the Tatmadaw to build its own industrial and technological base. MEC operates at least 21 heavy factories across the country, according to Maung Aung Myoe.
Among them, MEC operates with Thai companies on the construction of Tarsan Hydroelectric Power Plant on the Salween River.
Since 1989 when Burma introduced an open-market economy, the country has remained poor, but the generals who monopolize the natural resources and the economy have increased their personal fortunes while maintaining their military machine.
