Myanmar's business elite brace for changing times

Elsewhere in Asia, Zaw Zaw would be a prime candidate for foreign companies seeking to enter Myanmar, a country rich in natural resources and untapped opportunities that has been off the West’s investment map for two decades due to economic sanctions.

But Zaw Zaw, who has gone from a humble seaman in 1988 to become one of Myanmar’s richest tycoons, is an untouchable, at least for US companies. Like scores of other executives and their companies, he is on the US Treasury Department’s Office of Foreign Assets Control list of “blocked persons”. The European Union cancelled a similar list on Myanmar citizens when it eased sanctions on the former pariah state earlier this year.

“Since last year I have had a lot of foreign businessmen coming to see me, but, of course, I am still under sanctions,” Zaw Zaw said. “I want to get listed in Singapore, where the criteria for listing is strict so you can’t hide anything. I have to rebrand myself.” 

Although the US government has eased sanctions this year to allow US companies to invest, it has maintained an import ban. It also expanded the blacklist to include individuals “who undermine or obstruct the political reform process or the peace process with ethnic minorities. “They will do a comprehensive due diligence on your company, how you conduct your business, your background, everything – because US companies are very concerned that they will get into trouble here,” said Moe Myint, chief executive of MPRL E&P petroleum exploration and services firm.

Moe Myint, a former employee of Myanmar Airways who was the personal pilot of former strongman Ne Win, is not on the US list.

He left the airline to set up a food catering service for foreign oil rigs in the early 1990s that has made him a rare success story. “I had friends within the system but I never used my friends, or their authority, because I didn't need them,” Moe Myint said.

Most of Myanmar’s successful tycoons cannot make the same claim.

Zaw Zaw started his career as a merchant marine working in Thailand, Malaysia, Singapore before ending up in Japan, where he began exporting second-hand cars to Myanmar.

He moved into exporting second-hand heavy machinery, eventually setting up a construction firm specialising in building roads and dams for the junta that ruled during 1988-2010.

“I don’t deny I had connections with the previous government, because our business is making roads and dams, but after that I created jobs and paid taxes, so what is wrong?” he said. What was wrong, for the US and EU governments, was that he and other politically connected businessmen were helping to sustain a regime accused of human rights abuses and blocking democracy.

Cut off from international aid and finance, the junta depended on crony businessmen, some of them with alleged links to trade in drugs and illegal arms. The firms built infrastructure projects and were rewarded with lucrative timber and mineral concessions or exclusive business licences.

President Thein Sein, who took office in March 2011, has been pushing reforms to open the country up to more foreign investment and international aid. 

“Now we are trying to unwind that system, and get back to a legitimate way of doing business, but it is going to take time,” said Moe Myint.

“This was something built up over a period of 22 years, so you can’t just turn to one of those cronies and say stop doing business.” The parliament approved a new foreign investment law on Friday that awaits the president’s signature.

“With joint venture partners desperate to team up with local knowledge, I think the cronies will have their time in the sun in the immediate and medium term, but in the longer term the reforms will undermine their position.” said Sean Turnell, economics professor atAustralia’s Macquarie University. “I can see a situation where their influence gradually erodes and some will rise and some will fall.”