Junta Crony

Myanmar Junta Rewards Crony Arms Dealer With Palm Oil Plum

By Hein Htoo Zan 6 February 2023

Myanmar’s military regime has permitted the US-sanctioned Htoo Group, owned by a notorious arms dealer, to import over US$5.4 million worth of palm oil per month, according to operators in the edible oil business.

The Htoo Group of companies is owned by junta crony U Tay Za, who was sanctioned by the US last year for providing arms to Myanmar’s military. The group is currently led by his sons, who have also been targeted by US sanctions.

Businesspeople confirmed that group subsidiary Htoo Trading began importing palm oil last month.

A palm oil trader in Yangon said the junta has permitted the company to import at least 15,000 tons of palm oil monthly while setting restrictions for other importers.

Restrictions for other importers include limits on the quantity of palm oil they can import and on sales of oil in stock.

Importers are also facing problems over their reserves of foreign exchange, which are limited by the Central Bank of Myanmar (CBM).

The commodity is managed by the regime’s supervisory committee on edible oil import and distribution under the Ministry of Commerce.

Myanmar people have been suffering high prices for palm oil since the middle of last year as stocks dwindle. According to figures from the Myanmar Edible Oil Dealers’ Association (MEODA), the private sector has little more than 180,000 tons of palm oil in storage.

The junta has also started controlling the amount of palm oil it releases onto the market, adding to dealers’ difficulties in importing and distributing the commodity.

“The economy has already reverted to a monopoly system. Now, there is no transparency or fair competition. Those with close ties to the junta can manipulate the market,” said the palm oil trader.

A couple of months after the coup, the junta placed controls on imports of palm oil and other goods to reduce the foreign exchange deficit.

“After seizing power, the military regime imposed a policy to reduce palm oil imports. We were able to import freely before, but now the limit has been set at only 5,000 tons. So, all importers are now competing for a smaller slice of the market,” said an edible oil businessman.

The regime has granted Htoo Trading the privilege to import 15,000 tons per month, leaving hundreds of other importers struggling with a smaller market share, he explained.

The junta’s controls on imports and distribution saw the palm oil price surge to over 7,000 kyats per viss (1.6 kg) in July last year.

Before the coup, Myanmar imported at least 6,000 tonnes of palm oil per month to meet demand, according to the Ministry of Commerce.

The US Treasury Department’s Office of Foreign Assets Control imposed sanctions on junta crony U Tayza and two of his sons, Ko Pyae Phyo Tay Za and Ko Htoo Htet Tay Za, on Jan. 31, 2022, one year after the coup. On Jan 31 this year, it also imposed sanctions on U Tay Za’s daughter Ma Htoo Htwe Tay Za.

An undated photo of U Tay Za and his children. From left, Pyae Phyo Tay Za, Htoo Htet Tay Za, Htoo Htwe Tay Za a.k.a Rachel Tayza, and U Tay Za.

In May 202,1U Tayza joined regime air force chief General Maung Maung Kyaw and other high ranking military officials on a trip to Russia to procure military hardware.

Under the previous military regime, U Tayza’s Htoo Trading Company was involved in timber, transport, tourism, construction, property development, palm oil production and military arms deals.

The junta crony made his fortune from the timber business before expanded his dealings with the State Peace and Development Council (SPDC), as the previous regime was known, by supplying the military with aircraft parts through his company Myanmar Avia Export. The company is Myanmar’s sole representative of Russia’s Export Military Industrial Group, known as MAPO, and of the Russian helicopter company Rostvertol.

The US Treasury placed U Tay Za on its list of sanctioned Specially Designated Nationals  in 2008 for providing support to the junta, including the purchase of military equipment and aircraft, according to a statement at the time. Washington’s objections were spelled out in more detail in a leaked 2007 US diplomatic cable that accused U Tay Za of earning “hefty commissions from sales to the military of arms, ammunition, supplies, MI-17 helicopters and MiG-29 [fighter jets].”

U Tay Za has admitted selling Russian-made Mi-17 helicopters and continues to hold the service contracts and provide spare parts to Myanmar’s military.