State-owned timber company Myanma Timber Enterprise (MTE) is working to open a secret bank account at the state-owned Myanmar Economic Bank (MEB), following United States sanctions against two other junta-run banks.
Washington imposed sanctions on Myanma Foreign Trade Bank (MFTB) and Myanma Investment and Commercial Bank (MICB) last month, explaining that they facilitated international trade by revenue-generating state enterprises such as MTE and Myanma Oil and Gas Enterprise (MOGE).
MOGE provides the regime with its biggest single source of revenue by selling oil and gas abroad. MTE also generates large sums in US dollars for the junta by selling timber abroad.
The regime is reportedly planning to open secret accounts for state-owned enterprises at the MEB and other banks.
Timber giant MTE, which has been sanctioned by the US, European Union and Britain, has been working since the second week of July to use MEB to bypass international financial sanctions, a source close to the MTE told The Irrawaddy.
“As they can no longer use the MFTB and MICB, MTE is planning to make transactions through the MEB. It will be able to make transactions by linking through 15 foreign banks,” said the source.
The secret bank account at MEB will be linked with banks in Singapore, Thailand, Japan, India and China for international transactions, and with local banks such as AYA Bank, Co-operatives Bank (CB), and A Bank for domestic transactions, according to the source. The Irrawaddy could not independently verify this information.
“No other bank in Myanmar can match the MFTB in terms of international acceptance for transactions,” said a local economist and banking expert. “All the other [domestic] banks still operate as subsidiaries of MFTB, so the sanction against MFTB will also restrict the operations of other banks.”
The regime can shift accounts of state-owned enterprises to other banks to bypass financial sanctions, but it will inevitably incur higher transaction costs, the economist added.
Despite the sanctions imposed on MTE by Western countries, Myanmar timber is still being exported to these countries following the coup, US-based environmental group Forest Trends reported last year.
Myanmar exported US$ 190 million worth of timber to the US, EU and other Western countries in the year following the February 2021 coup. The country also exported US$ 154 million worth of timber to China, India, Thailand and other countries, said the report.
According to the junta-controlled Commerce Ministry, Myanmar exported US$ 235.6 million worth of timber from October 2021 to May 2023.
The source close to MTE said: “I heard transactions regarding tenders can be made soon [through the new account]. If the account set up by MTE succeeds, other government departments are likely to follow suit.”
In early July, Myanmar Now reported that more than US$ 500 million has been frozen in overseas banks since the EU imposed sanctions on MOGE last year. Following the asset freeze, the regime’s Ministry of Energy asked the Central Bank of Myanmar to set up a secret bank account for MOGE at the MEB to handle international transactions, Myanmar Now reported.
Following the Myanmar Now report, junta troops raided the MOGE head office in Naypyitaw’s Zabuthiri Township and detained senior officials for interrogation.
The US Treasury Department on June 21 leveled sanctions against Myanmar’s Ministry of Defense and MFTB and MICB, which the junta uses to purchase arms and other items with foreign currencies.
