Myanmar’s multibillion-dollar jade market is collapsing under pressure from China’s crackdown on illicit border trade, according to sources. Jade sales in Mandalay at the country’s biggest gems market have slowed to a near halt since late February as Beijing clamps down on border telecom scams and tax fraud, traders said.
“Chinese authorities are investigating companies and merchants and making arrests. This is hitting the jade market in Myanmar,” a jade trader in Mandalay said.
Tighter controls on money transfers imposed by China and the junta were adding to the impact, the trader said.
Myanmar’s jade trade was estimated to be worth about US $31 billion in 2014 by transparency campaigner Global Witness. China is the biggest customer for Myanmar’s jade.
The gemstones used to be sold on-site in local markets, but Chinese buyers have now switched to making purchases online via Chinese payment platform WeChat. The government receives no tax from these online transactions. Chinese police recently began raiding the gems market in the border trade town of Ruili, targeting transactions made on WeChat, according to gems merchants in Mandalay.
“With demand now limited to less-precious stones, the business is only surviving because of trade on WeChat,” said a merchant from Mandalay’s Maha Aung Myay Township.
Chinese buyers are also using the payment app to drive down prices, the merchant added.
“If they pay 100,000 kyats for a stone on WeChat, they will only pay half that amount when we hand it over.”
Another merchant said brokers currently outnumber traders at Maha Aung Myay, the biggest gems market in Myanmar.
“There is hardly any business. The gems market has almost crashed. If things go on like this, most gem brokers will not survive more than five months,” he said.
Trade has halted at Sagaing’s jade market in Swe Min Wun, forcing merchants to move to Mandalay markets, according to a local dealer.
“The market [at Swe Min Wun] deals in low-priced beads and bracelets, but business dried up, so traders have to work in Mandalay. The jade and gems market relies entirely on China and has been hit hard by Beijing’s tight controls. Demand from buyers in [China’s] Guangzhou, Yinjiang and Tengchong has dropped to zero,” he said.
In contrast, the trade in raw gems is near normal as merchants seek to exchange kyats, whose value continues to decline, for a more stable asset, said a gems merchant from Mandalay.
“People are still making bids at gems and jade emporiums in Naypyitaw, but demand has dropped. With the value of the kyat falling constantly, they are buying raw gems to speculate. But the finished-gems market is in decline and many merchants are struggling,” he said.
Fighting along the road between Mandalay and Kachin State has also damaged the business, said another gems merchant. In the country’s jade hub of Hpakant in Kachin State, the Kachin Independence Army (KIA) has imposed taxes on jade mining and trading that have slowed trade, said local gems merchants.
“The KIA imposes a tax of 20,000 kyats on every barrel of fuel imported and another 20,000 when the mine operator buys the fuel from the supplier. It also imposes commercial tax on the gems trade and personal tax on jade mine operators. Brokers also have to pay taxes. So, the KIA’s taxation is partly responsible for the collapse of the gems market,” said a local gems merchant.
Top brass in the ethnic armed organization also profit from the mining, according to a Hpakant resident.
“The KIA sells land for mining. KIA senior officers hold shares in those mines. All people in Hpakant know that, but no one dares to talk about it. What’s worse, the junta is targeting jade mining companies with random arrests,” the resident said.
The Irrawaddy questioned KIA spokesman Colonel Naw Bu about its taxation of jade mines, but he declined to answer.
