$31b Jade Trade Enriches Elite, Fuels Ethnic Conflict: Report

By Seamus Martov 23 October 2015

A lengthy and detailed 120-page report released on Friday in Rangoon by the London-based NGO Global Witness, reveals that vast revenues generated by Burma’s lucrative multi-billion dollar jade trade continue to flow into the pockets of senior military officials, key figures in the ruling Union Solidarity Development Party (USDP) and well connected crony firms including Asia World and Ever Winner.

Based on 12 months of research, the report titled “Jade: Myanmar’s ‘Big State Secret,’” estimates that Burma’s jade production was valued as high as US$31 billion in 2014, a figure that vastly overshadows the country’s other major resource earners, including natural gas exports.

Although a series of reforms have been enacted in Burma since the army officially ceded control of the country in 2011, a group of shadowy firms controlled by individuals closely connected to Burma’s previous military regime, including the families of Sen-Gen Than Shwe, former northern commander Ohn Myint and other key figures from the military era, continue to dominate the jade trade—an industry that is, according to Global Witnesses research, marked by government secrecy and widespread corruption.

“Myanmar’s jade industry may well be the biggest natural resource heist in modern history. The sums of money involved are almost incomprehensibly high and the level of accountability is at rock bottom,” the report concludes.

According to Global Witness, this plundering has been made possible by the central government’s hold on Hpakant in western Kachin State, where the jade is mined. Hpakant came under government control after 1994 when the then-ruling military regime reached a ceasefire with the Kachin Independence Organization (KIO) and its armed wing the Kachin Independence Army (KIA).

Although there has been fighting in Hpakant since the June 2011, when the Kachin ceasefire with the central government collapsed, the army has continued to hold most of Hpakant, including its most lucrative jade deposits. Government authorities in Naypyidaw “have full control of the major jade mines in the Hpakant area. They decide who has access to valuable concessions and on what basis” says Global Witness. A position that means that decision makers can extort huge payments from jade firms, according to jade businessmen interviewed by Global Witness.

The Burmese armed forces, or Tatmadaw, remain the most powerful institution in post-junta Burma. Those forces, the report suggests, bear much of the responsibility for the looting of Burma’s jade.

“The Tatmadaw’s main priority in Hpakant is milking money from the jade business and this imperative frequently trumps its designated function of fighting the KIA.”

Citing government documents and well connected sources in the jade industry, the report also uncovers in unprecedented detail the jade operations of army controlled firms, a finding that calls into question claims by some analysts that the army had begun to withdrawal its dominant position in the economy under a nominally civilian government.

The military controlled Union of Myanmar Economic Holdings Ltd (UMEHL) also known as Myanma Economic Holding Limited, Myanmar Economic Corporation (MEC) and Northern Star Gems sold $283 million dollars of jade at the 2013 and 2014 annual jade fairs in Naypyidaw, according to previously unpublished figures obtained by Global Witness.

But most of the jade is not sold at the annual emporium. The British NGO estimates that 50 to 80 percent of the jade mined annually is smuggled across to China, where the precious stone is highly sought after.

The High Cost of Jade for Kachin State

The report notes that jade mining in Kachin State’s Hpakant Township has created a “dystopian wasteland in which the local population grapples with environmental and social collapse on a daily basis.” Kachin State’s lucrative jade deposits are more of a curse for the local population than anything else. In addition to destroying local rivers with dams and obliterating Hpakant’s local geography, rampant drug use among the poorly paid mine workers has transformed what was once a sparsely populated area with only small-scale mining ventures into a desolate moonscape.

“We feel that we have no security for our lives here… Hpakant will soon disappear without any benefit to the local people”, says a pastor from Hpakant quoted in the report.

Few—if any—of the huge revenues generated by mining in Kachin State are spent on health care or schools in the remote state, a situation that has only reinforced longstanding distrust of the central government by the local population.

The KIO has, as the report points out, resumed levying their own taxes on jade mining firms once the ceasefire ended, a position supported by many Kachin who see the organization as a more legitimate government structure than the central government.

Civil society groups, such as the Kachin Development Network Group (KDNG), have recommended a full stop to mining in the area until a new system can be put in place that would respect land rights. Such proposals are rapidly rounding up support among local populations throughout the state, but are hardly gaining traction in Naypyidaw, where, according to Global Witness, Burma’s ex-military rulers have strong incentives to maintain the status quo.

“Every cabinet minister is involved in jade—it’s their best source of income, even though they have never been to Hpakant,” one business insider told Global Witness.

Than Shwe’s Family Earning Millions From Jade

The report identified two firms, Myanmar Naing Group and Kyaing International, as entities controlled by Than Shwe’s sons Kyaing San Shwe and Htun Naing Shwe. Documents obtained by GW indicate that these firms hold licenses for six jade mines in Hpakant.

The latter firm appears to be named after the retired military supremo’s wife, Daw Kyaing Kyaing. A massive flooded mine crater located in Hpakant’s Maw Sizar jade tract, where Kyaing International has its lucrative mining concession, has been named after her, a testament to the low opinion local people still hold of the former first lady, who is reportedly still very much involved in her family’s business activities.

A third firm, Kywe Wa Sone—registered in English as “Richest Gems”—is headed by an individual who serves as a director of both Kyaing International and Myanmar Naing Group. According to businessmen in the jade trade interviewed by Global Witness, Kywe Wa Sone is also controlled by Than Shwe’s family.

“The Than Shwe’s family’s [sic] stake in a corrupt and militarised jade business poses a serious challenge to reformers’ efforts to bring real change to Myanmar’s extractive industries, and to peacemakers’ attempts to forge a lasting settlement in Kachin State,” the report states. Moreover, firms controlled by the families of Than Shwe, retired Gen. Maung Maung Thein and current Union Minister Ohn Myint accounted for some $220 million in sales at the 2014 government-run jade emporium in Naypyidaw.

Minsiter Ohn Myint’s Jade Connection

Union Minister for Livestock, Fisheries and Rural Development Ohn Myint, who previously served as the army’s Northern Regional Commander during the final years of the State Peace and Development Council (SDPC), was the highest serving general in Kachin State. According to Global Witness research, this afforded him a great deal of power to decide who mined what in Hpakant.

Global Witness has concluded from their research that Ohn Myint still has connections to the jade trade by way of firm a called Myanmar Win Gate Gems and Jewellery Mining Co. Ltd. Two of the firms directors are Kyaw Thiha, a name shared by Ohn Myint’s son, and Daw Nway Ei Ei Zin, Kyaw Thiha’s wife’s name.

At the 2014 jade emporium the firm posted pre-tax sales of US$80 million of jade half of which came from one piece of jade that weighed 24 KG.