Analysis: Trading Armed Struggle for Battle in the Market Place

By Moe Myint 25 July 2018

YANGON – For decades, ethnic armed groups (EAOs) in Myanmar have raised money by extorting “protection” payments from smugglers, engaging in illicit logging and jade mining projects, and trafficking drugs in order to buy tactical weapons and pay their troops.

Hope are high that this will soon change, especially among those groups that have signed the Nationwide Ceasefire Agreement (NCA), now that the government’s Peace Commission has begun implementing its “Business for Peace” (B4P) platform.

The B4P paradigm was officially adopted late in 2013 in line with the United Nations Global Compact (UNGC) framework, the brainchild of former UN Secretary-General Kofi Annan introduced in 2005. The global compact promotes responsible businesses in high-risk, conflict-affected and post-conflict regions around the world.

To engage with the UNGC, Prof. Aung Tun Thet established a local network, the UNGC Network Myanmar, in 2012. He is also the vice chairman of the National Economic and Social Advisory Council of Myanmar and a member of the Peace Commission (NRPC) established by the government of State Counselor Daw Aung San Suu Kyi.

The Myanmar B4P project aims to earn a “peace dividend” for NCA signatories by helping them to establishing public companies through official channels. The companies would serve as business arms of the EAOs. In 2017, UNGC Network Myanmar was applauded by Daw Aung San Suu Kyi, the country’s de facto leader, as Prof. Aung Tun Thet’s team signed a Memorandum of Understanding with the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI).

At the recommendation of Prof. Aung Tun Thet, the Myanmar Ethnic Entrepreneurs Association (MEEA) was established in March 2018. It comprises 27 members of eight major ethnic groups and has the ambitious goal of boosting socio-economic development in ethnic regions.

B4P targets infrastructure development in post-conflict regions, while also assisting the Peace Commission in its work and alleviating poverty. The MEEA was officially launched at the UMFCCI building in Yangon last Friday. The event was joined by representatives of NCA signatories and ethnic affairs ministers from across the country.

A meeting participant told The Irrawaddy that Prof. Aung Tun Thet gathered seven signatories — the Pa-O National Liberation Army (PNLO), Chin National Front (CNF), Arakan Liberation Party (ALP), All Burma Students’ Democratic Front (ABSDF), Democratic Karen Buddhist Army (DKBA), Karen National Union/ KNLA (PC), and the New Mon State Party (MNSP) — at the NRPC’s office and explained its new business model to the representatives.

EAOs give nod to B4P

PNLO spokesman Khun Myint Tun said during his keynote speech that his group attended the conference to learn how ethnic businessmen could jointly operate businesses in post-conflict regions. He said that multiple stakeholders in the country currently share the cause of establishing a democratic federal union. To reach that ultimate goal, three key conditions — peace, political transition and economic reform — are needed, he said.

Lieutenant-Colonel Khun Aung Mann of the PNLO, who joined both the MEEA launch ceremony and a meeting with Prof. Aung Tun Thet on Friday, said the discussions centered around the establishment by EAOs of public companies through the Directorate, Investment and Company Administration (DICA) as a source of steady income. The professor urged newly established MEEA members and the UMFCCI to offer technical support to EAOs. The PNLO officer acknowledged that six signatories agreed in principle with the public company strategy.

“It was like a workshop; we did not make a commitment to proceed with [forming] a company,” said Lt-Col. Khun Aung Mann.

He said that while the six NCA signatories have not all attended face-to-face meetings on the public company approach, his organization had held internal consultations on its potential risks and advantages. Some EAO representatives sought clarification on whether they need to be members of the MEEA in order to participate. Some said they had only learned of the formation of the MEEA last week.

While the PNLO officer pointed to a lack of information or a clear strategic plan, Union Ethnic Affairs Minister Nai Thet Lwin said his ministry will present relevant ministries with possible projects in post-conflict ethnic regions, referring to the areas the NCA signatories control.

During a B4P workshop in Chiang Mai, Thailand on May 19, Prof. Aung Tun Thet said, “Foreign investors are worried about safety in the ceasefire areas. I have talked with many companies from Thailand and Singapore. There are opportunities in those regions if we can persuade them to invest.”

Will B4P work out?

Since peace negotiations began under then-president U Thein Sein’s administration in 2011, fighting between the Myanmar military (or Tatmadaw) and EAOs in northern Shan State has displaced more than 150,000 people. The Karen National Union (KNU), Restoration Council of Shan State (RCSS) and six other groups inked the NCA with the previous government.

The European Union has poured a pile of money into assisting Myanmar’s peace process since the country’s transition from military rule to a quasi-civilian government under U Thein Sein began. Its total aid is due to reach some 103 million euros by 2020. It remains unclear how much of this the previous government spent. When the National League for Democracy (NLD)-led government took office in 2016, its leader Daw Aung San Suu Kyi took control of the peace process. The New Mon State Party (MNSP) and Lahu Democratic Union signed the NCA earlier this year.

Although seven NCA signatories appeared at the MEEA opening ceremony last week, and six groups have basically accepted the idea of establishing public companies, some of the strongest ethnic armed signatories like the KNU and RCSS did not show up. However, Prof. Aung Tun Thet is confident that the remaining groups will join the plan later.

Speaking to The Irrawaddy on condition of anonymity, an inside source at the MEEA said the new business model was not much of an incentive for the stronger armed groups, as they have been operating proxy businesses in the remote areas under their control, and elsewhere. He pointed out that some regions like Karen and Shan states had seen recent skirmishes between EAOs and the Tatmadaw.

He said, “None of them has engaged in corporate business in the past, and sometimes [signatories] have even clashed with each other. And now, B4P seeks to mobilize signatory groups to establish public companies. There are a bunch of challenges to this; how can they be realistically solved?”

A source at MEEA said that many questions remain to be answered regarding such issues as the shareholder structure and profit-sharing arrangements for each group, as well as administrative roles within the public companies, and the sustainability of the entities. Moreover, the risk of asset forfeiture is a big concern for any public company, and they would certainly need legal or other official protection, the source said.

“What if one of the signatories stumbles into a clash with the Army? Will the government seize its public company’s assets and properties?” the source said.

The PNLO’s Lt-Col. Khun Aung Mann echoed these concerns, saying, “We assume that the implementation process will be very difficult in terms of each group’s profit-sharing and investment, and organizational structure.”

‘Do No Harm’ Policy

Prof. Aung Tun Thet agreed there would be challenges, but as an economic expert he said he wished to focus on the opportunities rather than the challenges.

“Well, I do think in a positive way on those issues. Let bygones be bygones, and if we do seek to have new institutions, we need to think how to start them.”

Prof. Aung Tun Thet explained that the Businesses for Peace philosophy has four fundamental components; protecting human rights, upholding labor standards, preserving the environment and fighting corruption. Especially, he is keen to promote a “do no harm” policy among companies in post-conflict regions. He said this could maintain stability and keep the situations on the ground from deteriorating.

He believes that setting up companies and creating opportunities for NCA signatories can address the EAOs’ financial hardships through official channels, as well as helping to halt logging in conflict zones. To oversee technical matters, UMFCCI-affiliated associations in each state and division could help EAOs set up public companies, he said.

“Six [armed] groups are interested in founding public companies… I have urged them to register as soon as possible,” he said.

After the EAOs’ public companies are registered by DICA, ethnic affairs ministers will seek business opportunities on the ground including infrastructure projects. Business organizations and the UN Global Compact Network Myanmar will also seek to drum up foreign investment in post-conflict region.

Start ‘Tomorrow’

Yangon-based ethnic armed affairs expert U Maung Maung Soe was skeptical of the plan, saying that having EAOs set up public companies would not be an effective long-term solution. He compared it to the previous government’s offer of car permits for peace signatories.

He suggested that instead of promoting such a complex business scheme, the government should distribute a “peace dividend” to EAOs in the form of a share of its annual revenue depending on the size of the region under each group’s control. He said this could be done by amending a few sections of 2008 Constitution.

The Constitution’s Section 37(a) stipulates that the ultimate owner of all lands and all natural resources both above and below ground and bodies of water is the Union, while Section 37(b) states that the government can enact the necessary laws to supervise the extraction and utilization of state-owned resources.

U Maung Maung Soe recommended that the ruling NLD government amend the law, as it has majorities in the Union and local parliaments, rather than waiting for the Union Accord to be completed as part of the 21st-Century Panglong Union Peace Conference.

“To my understanding, forming a public company to generate a steady income for EAOs is just a short-term solution. [It doesn’t address] the root cause of armed conflict in Myanmar,” U Maung Maung Soe said.

Prof. Aung Tun Thet defended his approach, saying it is based on economic, rather than constitutional, resource-sharing mechanisms. He said his business initiative effort is based on a macro-economic approach. He insisted that the B4P approach would build trust between armed groups and the military.

He expected the EAO-established companies to complete the registration process within the next three months.

Asked by The Irrawaddy when the scheme could be up and running, Prof. Aung Tun Thet said, “We have to start it without delay. If you ask me when, then I will say I want it to start tomorrow. We are keen to do so; it will surely happen, whatever the timeline.”