CHINA IN MYANMAR(BURMA) FOR ARMS-LOGGING-DAM-COPPER-JADE etcs-PART ONE

Chinese Investments

in Myanmar

A Scoping Study

A “China Going Global” series publication

Global Environmental Institute

Investment Trade and the Environment Program Team

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Chinese Investments in Myanmar - A Scoping Study

AUTHORS: Christopher Dunn, Lin Ji and Kui Peng

Copyright © 2016

Global Environmental Institute

ADDRESS: Tayuan Diplomatic Office Building,

# 14 Liangmahe South Road; Building 1, Suite 32

Chaoyang District

Beijing 100600, China

TELEPHONE: +86-10-8532-5910

FAX: +86-10-8532-5038

E-MAIL: [email protected]

ACKNOWLEDGMENTS

This report was commissioned by the Wildlife Conservation Society (WCS) with funding support from

Norway’s International Climate and Forest Initiative (Grant No. RAS-2793 QZA-13/0563).

DISCLAIMER

The contents of this publication are the sole responsibility of the authors and can in no way be taken

to reflect the views of the Wildlife Conservation Society or the Norway’s International Climate and

Forest Initiative.

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TABLE OF CONTENTS

FOREWORDS 5

CHINESE INVESTMENT IN MYANMAR 5

SECTORS AND FORMS OF INVESTMENT 7

Mining 9

Hydropower 20

Agriculture 28

Infrastructure 32

Tourism 42

SUMMARY OF FINDINGS, RECOMMENDATIONS & NEXT STEPS 43

SUGGESTIONS ON FUTURE ENGAGEMENT WITH CHINESE COMPANIES 44

5

FOREWORDS

The purpose of this scoping study conducted by the Global Environmental Institute (GEI) is

to provide a better understanding of the presence and operations of Chinese companies

involved in overseas foreign direct investment activities (ODFI) in Myanmar, along with

direct and indirect environmental and social impacts associated with investments in target

jurisdictions.

This report summarizes the findings of stage one of the scoping study, which focussed on

identifying Chinese companies with investment interests in Myanmar and documenting

information relating to these investments in mining, hydropower, agriculture, infrastructure

and tourism sectors.

CHINESE INVESTMENT IN MYANMAR

The Myanmar government liberalized its trade policy to induce foreign investments in 1988.

Since then, China-Myanmar bilateral trade has been growing steadily until the beginning of

the 21st century.

In 2001, Chinese government launched the “Go Global” policy, which encourages outward

investment of domestic enterprises. Then from 2005-2010, the Chinese Foreign Direct

Investment (FDI) in Myanmar increased dramatically. It is illustrated by the amount of FDI

change as shown in Table 1 and Table 2. The drastic growth, however, makes Myanmar an

outstanding case compared to any other members of the Association of South East Asian

Nations (ASEAN). The reason behind the unusual surge of investment is multi-folds. One

primary issue is that, China has rapidly become the world’s largest consumer of imported

resources. Myanmar, rich in its natural resources, thus suddenly becomes more attractive to

China. The lack of competitors due to international sanctions over Myanmar also provides

China an ease of access. Besides the above, Myanmar’s strategic location for China is also

noted as an important reason. By 2011, China had become Myanmar’s biggest trading

partner, while it only held the third place after Thailand and Singapore three years before

then.

The enthusiasm from Chinese investors, however, chilled not after long and the investments

plummeted. In March 2011, the reformist government took office in Myanmar. Political

tensions between the two countries grew as the elite in Myanmar concerns that Myanmar

had become too dependent on China. Human rights groups also expressed concerns over

Chinese investment projects. Following that, two major investment projects from China

encountered serious difficulties – the Myitsone Dam and the Letpadaung Copper Mine.

Investments from Chinese companies dropped drastically to $217.8 million in the fiscal year

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in 2011, while the number was $875.6 million in the previous year. Although the investment

amount has grown back steadily and China is still the largest investor of Myanmar, some

Chinese companies might still wait and observe the new political development until the

election in the end of 2015.

TABLE 1 CHINA'S OFDI FLOWS TO ASIA AND MYANMAR ALONE (2005-2013)

(Million USD)

Country/Region 2005 2006 2007 2008 2009 2010 2011 2012 2013

TOTAL 12,261 17,634 26,506 55,907 56,529 68,811 74,654 87,800 107,840

Asia 4,484 7,663 16,593 43,548 40,408 44,891 45,495 64,785 75,600

Myanmar 11.5 12.6 92.3 232.5 376.7 875.6 217.8 749.0 475.3

FIGURE 1 CHINA'S OFDI FLOWS TO MYANMAR (2005-2013)

TABLE 2 CHINA'S OFDI STOCK FOR ASIA AND MYANMAR ALONE (2005-2013)

(Million USD)

Country/Region 2005 2006 2007 2008 2009 2010 2011 2012 2013

TOTAL 57,206 75,026 117,911 183,971 245,755 317,211 424,781 531,940 660,480

Asia 40,954 47,978 79,218 131,317 185,547 228,146 303,435 364,410 440,010 Myanmar 23.6 163.1 261.8 499.7 929.9 1,946.8 2,181.5 3,093.7 3,569.7

0

100

200

300

400

500

600

700

800

900

1000

2005 2006 2007 2008 2009 2010 2011 2012 2013

Investment Amount(Million USD)

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SECTORS AND FORMS OF INVESTMENT

Chinese investments in Myanmar are mainly focused on the sectors of hydropower, oil and

gas, and mining. According to statistics from the Myanmar Embassy, by 2011, 63% of China’s

investments in Myanmar were in power sector, while investment in oil and gas and mining

sectors occupied 36%. The total of the three makes up 99% of all Chinese investments in

Myanmar. Besides these sectors, recent years have witnessed more investments in other

sectors, such as infrastructure construction, which includes economic zones and

transportation facilities like roads, railways and port facilities. Because of the nature of

these abovementioned sectors, one typical feature of the Chinese companies invested in

these major projects is that most of them are state-owned companies (SOEs).

FIGURE 2 CHINESE INVESTMENTS IN MYANMAR, BY SECTOR (2011)

Chinese investors in the agriculture sector are very much in small portion and diversified.

Those projects under the opium substitution plan along the China-Myanmar border areas

such as Shan State (including Kokang and Wa Special Region) and Kachin State, mainly focus

on sugar cane, rubber and fruit plantation, and are mostly made by private companies from

Yunnan Province, with a couple of Yunnan provincial SOEs involved. Agricultural plantation

demonstration projects, on the contrary, are made largely by both national and provincial

SOEs. No Chinese investment projects in tourism in Myanmar were identified during the

preliminary research.

According to Myanmar’s new Foreign Investment Law, an investment may be carried out in

either of the following two ways: a) as a 100% foreign-owned entity; b) by way of a joint

venture with a Myanmar citizen or the Myanmar Government. Both forms exist for Chinese

investments, with most SOEs establishing joint venture projects with large Myanmar

63%

25%

11%

1%

Power Sector

Oil and Gas

Mining

Manufacturing

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companies, while private companies usually tend to invest alone or collaborate with

Myanmar local companies, often related to Chinese decedents.

FIGURE 2 NUMBER AND TYPOLOGY OF CHINESE INVESTMENTS IN MYANMAR

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MINING

Following analysis of the data summarized in Table 3, a total of 7 mining projects with 13

Chinese parent and subsidiary companies are identified with interests in Myanmar’s mining

sector. These companies can be classified into three distinct groups, as follows:

1) SOEs with investments in large-scale mining projects;

2) Specialized SOE subsidiaries providing engineering and other contracting services;

3) Private companies with investments in small-scale projects and conducting

exploration.

Most identified mining projects are medium to large in scale1 and have Chinese SOEs

involved, therefore their information is comparatively easier to acquire; while upon

conversations with the Chinese Chamber of Commerce (CoC) in Myanmar, there are much

more small enterprises or even individual investors from China, mostly Yunnan and Sichuan

provinces, investing in small-scale mining projects in central, north and north-eastern parts

of Myanmar, whose detailed information are hard to collect.

1 Defined by investment amount – projects between US$30 million and US$200 million are considered as

medium scale projects, while those over US$200 million are large scale projects.

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TABLE 3 CHINESE COMPANIES IDENTIFIED WITH INTERESTS IN MYANMAR'S MINING SECTOR

Company Name Company Type

Company Role Local Partner Project Name Project Location Project Status

China Nonferrous Metal Mining (Group) Co., Ltd. (CNMC)

Central SOE (CSOE)

Investor Myanmar No. 3 Mining Enterprise (50% share in the project)

Tagaung Taung Nickel Mine

Thabeikkyin Township, Mandalay Region

Operational

Taiyuan Iron and Steel (Group) Co. Ltd. (TISCO)

SOE Investor

China Metallurgical Group Corporation

SOE N/A

China ENFI (China ENFI Engineering Co., Ltd. and China ENFI Engineering Corporation)

Subsidiary company

Contractor (design, equipment supply, construction support and commissioning)

China North Industries Corporation (NORINCO)

SOE Parent company N/A N/A N/A N/A

Wanbao Mining Co., Ltd. Subsidiary company

Investor N/A N/A N/A N/A

Myanmar Wanbao Mining Copper Limited

Overseas subsidiary

Local operating company Myanmar No. 1 Mining Enterprise (51% share in the project)

Monywa Letpadaung Copper Deposits

Sagaing Region Under construction

Myanmar Yang Tse Copper Limited

Unknown Local operating company Unknown Monywa Sabetaung and Kyisintaung Copper Deposits

Sagaing Region Operational


SOE Parent company Myanmar government (20% share in the project)

Mwetaung Nickel Mine

Tiddin Township, Chin State

Advanced stages of exploration (feasibility study completed)


SOE Parent company N/A N/A N/A N/A

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Investor N/A N/A N/A N/A

Myanmar Wanbao Mining Copper Limited

Overseas subsidiary

Local operating company Myanmar No. 1 Mining Enterprise (51% share in the project)

Monywa Letpadaung Copper Deposits

Sagaing Region Under construction

Myanmar Yang Tse Copper Limited

Unknown Local operating company Unknown Monywa Sabetaung and Kyisintaung Copper Deposits

Sagaing Region Operational


SOE Parent company Myanmar government (20% share in the project)


Tiddin Township, Chin State

Advanced stages of exploration (feasibility study completed)


Investor

Zijin Mining Group SOE Parent company Jinshan (Hong Kong) International Mining Company

Subsidiary company

Investor

China Metallurgical Group Corporation

SOE Investor Unknown

China ENFI Engineering Co., Ltd.

Subsidiary company

Conducted feasibility study

China National Heavy Machinery Corporation

SOE Contractor (design, equipment supply, technical instruction for erection, commissioning, technical training)

Project owned by Shan Yoma Nagar Co. Ltd

Tigyit coal mine Pinlaung township, Southern Shan State

Operational

China Minghua Group LTD Private Investor Unknown Kalonta tin mine 24km NNE of Dawei, Tanintharyi region

Operational

North Mining Investment Company

SOE Investor Unknown Mway Taung Phar Ttaung copper mining project

Chin State Feasibility study proposal submitted

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SOES WITH INVESTMENTS IN LARGE-SCALE MINING PROJECTS

The SOEs that can be classified in this group are some of China’s, and indeed the world’s,

largest companies. Often through their network of subsidiary companies, many of which are

big players in their own right, they make investments in resource development projects in

China and overseas. Often these investments are to secure access to resources - such as

minerals and metals - which the company and wider industry sector within which it operates

in China will need to sustain its operations over the course of the coming decades. As such,

the resource development projects invested are typically large-scale and underpinned by

support at the highest levels from the Chinese and host country governments.

Four Chinese SOEs were identified with interests in a total of four of Myanmar’s largest and

most high-profile mining projects. China Nonferrous Metal Mining (Group) Co., Ltd. (CNMC)

and Taiyuan Iron and Steel (Group) Co. Ltd. (TISCO) are both investors in the Tagaung Taung

Nickel Mine. Through its subsidiary Wanbao Mining Co., Ltd, China North Industries

Corporation (NORINCO) has invested in developing the Monywa Copper Mine (Letpadaung

and Sabetaung/Kyisintaung Deposits) and the Mwetaung Nickel Mine. Zijin Mining

Group Co., Ltd is also an investor in the Mwetaung Nickel Mine, through its subsidiary

Jinshan (Hong Kong) International Mining Company.

CHINA NONFERROUS METAL MINING (GROUP) CO., LTD. (CNMC)


Founded in 1983, China Nonferrous Metal Mining (Group) Co., Ltd. (CNMC) is a large scale,

central government SOE under the management of SASAC. According to the company’s

website, CNMC’s major businesses include the development of nonferrous metal mineral

resources, construction engineering, and relevant trade and technological services2. It has

built and put into production several nonferrous metal mining projects overseas.

In 2004, a joint venture was formed between CNMC and Myanmar’s state-owned Number 3

Mining Enterprise, with a 75-25 distribution in favour of CNMC. In 2008, both parties signed

a production sharing agreement to develop the Taguang Taung nickel mine, whereby CNMC

committed to provide all the capital and the Number 3 Mining Enterprise the mining rights.

In the same year, it became clear that the project’s distribution had been altered to a 50-50

split, with delays attributed to negotiations over the Myanmar government’s stake in the

project3. In 2010, it was reported that CNMC had signed an agreement with Taiyuan Iron &

Steel Group (TISCO) to jointly develop the mine (see further information on TISCO below).

2 (China Nonferrous Metal Mining (Group) Co., Ltd. (CNMC))

3 (Moran, 2010)

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The mine is located 200km North of Mandalay in Thabeikkyin Township, Mandalay Region.

Construction was completed by 2012 and the mine is currently in operation, following

investment of over $850m USD. This represents the largest cooperation project in mining

between China and Myanmar, as reported by CNMC in 20144. According to China ENFI

Engineering Corp. (ENFI) – the Chinese company responsible for design of the mine - it has

an annual output capacity of 25,000 tons of nickel metal5, and CNMC’s agreement to

operate the mine is understood to be for 20 years.

TAIYUAN IRON & STEEL GROUP (TISCO)


Established in 1934 in Shanxi Province, Taiyuan Iron & Steel Group (TISCO) is a local

government SOE and one of the world's largest stainless steel producers.

In 2010, TISCO signed an agreement with CNMC to jointly develop the Tagaung Taung nickel

mining project, whereby TISCO would inject capital into CNMC Nickel to acquire an

increased share in the increased capital stock. At the time, a spokesman from the company

was reported as saying that resources from the mine would greatly alleviate China’s nickel

shortage and reduce domestic stainless steel producer’s risks from fluctuations in nickel

prices, and that the company was actively carrying out mining projects in several countries

outside of China6. In 2014, a spokesman for TISCO reiterated China’s urgent need for nickel

supplies and confirmed that the Tagaung Taung nickel mine would provide 20% of the

company’s annual demand7.

CHINA NORTH INDUSTRIES CORPORATION (NORINCO)/ WANBAO MINING CO., LTD.

Monywa Copper Mine (Letpadaung and Sabetaung/Kyisintaung Deposits), Mwetaung Nickel

Mine

China North Industries Corporation (NORINCO) is a central government SOE founded in 1980,

with its headquarters in Beijing. Through its various subsidiaries, NORINCO is involved in the

research and development of weapons and defense products and heavy-duty equipment

and vehicles, along with engineering contracting and the development of petroleum and

mineral resources.

Wanbao Mining Co., Ltd., incorporated in 2004 and also based in Beijing, runs the mineral

business of NORINCO. It focuses on investment in overseas nonferrous metal resource

4 (China Nonferrous Metal Mining (Group) Co., Ltd. (CNMC), 2014)

5 (China ENFI Engineering Corp. (ENFI), 2013)

6 (China Mining Association, 2010)

7 (China Daily Asia, 2014)

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development and conducting mineral and non-ferrous metal trade. Wanbao controls

various subsidiary entities overseas, including two in Myanmar.

The first of these entities is Myanmar Wanbao Mining Copper Limited (MWMCL), founded in

2011 and responsible for operating the Monywa Letpadaung copper mine project in Sagaing

Region. The original contract between China and Myanmar to develop the Letpadaung

copper deposits was signed by then Chinese Premier Wen Jiabao during a visit to the

country in 2010. An amendment to the product sharing contract was subsequently agreed

and signed in 2013, following strong local resistance to the project and political intervention

by Aung San Suu Kyi. Under the terms of this, MWMCL and its business partner Myanmar

Economic Holdings Limited (MEHL, a conglomerate controlled by Myanmar’s military8)

retains 49% of the benefits (understood to be a 30%:19% split), while the Myanmar Ministry

of Mines represented by No. 1 Mining Enterprise holds 51%. MWMCL carries all the

investment and operational risks of the project 9.

The Letpadaung mine remains under construction at the time of writing, with Wanbao

hopeful that construction will be completed in 2015 and the mine ready to begin production

in 2016. However, development of the mine has faced local opposition since its inception. In

2012 police were reported to have forcefully dispersed protestors, injuring 100 Buddhist

monks, while as recently as December 2014 police again clashed with protestors with 20

injured and one killed10.

Once operational the mine is expected to have an annual output of 100,000 tons of copper

cathode, while MWMCL’s investment is expected to be in the region of $1.1 billion USD,

which would surpass other Chinese mining investments in Myanmar.

The other subsidiary entity controlled by Wanbao Mining in Myanmar is Myanmar Yang Tse

Copper Limited (MYTCL). MYTCL owns and operates the Sabetaung and Kyisintaung (S&K)

mine, an open-cut copper ore mine consisting of two primary deposits located in the

Monywa District of Sagaing Region. Wanbao is the latest of a series of international

companies to be involved in development of the S&K mine under several eras of ownership,

having acquired the projects in 2011 with estimated total investment of $487 million USD.

The mine is currently operational and has an annual output of 39,000 tons of copper

cathode11 12.

Wanbao also has another mining interest in Myanmar, in the form of a 10% stake in a joint

venture with Jinshan (Hong Kong) International Mining Company – a 100% subsidiary of

Chinese SOE Zijin Mining Group - who controls the remaining 90%. The joint venture holds

8 (The Wall Street Journal, 2014)

9 (Myanmar Wanbao Mining Copper Limited, 2015)

10 (Mining.com, 2014)

11 (Myanmar Yang Tse Copper Ltd.)

12 (Wanbao Mining Ltd.)

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80% interest in the Mwetaung Nickel Mine, with the Myanmar government controlling a 20%

stake. The project is located in Tiddin Township, Chin State, and latest reports suggest the

mine is not yet in operation, but in advanced stages of exploration13.

ZIJIN MINING GROUP CO., LTD / JINSHAN (HONG KONG) INTERNATIONAL MINING

COMPANY


Zijin Mining Group Co. Ltd is a large-scale Chinese state-owned mining group with its

headquarters in Shanghang County, Fujian Province. The company describes itself as the

largest gold producer and second largest copper producer in China, and an important

producer of zinc, tungsten and iron ore. Zijin is listed on the Shanghai and Hong Kong Stock

Exchanges14.

Jinshan (Hong Kong) International Mining Company is a 100% subsidiary of Zijin Mining

Group. The company controls a 90% stake in a joint venture with Wanbao Mining Ltd, who

owns the remaining 10%. The joint venture holds 80% interest in the Mwetaung Nickel

Mine, with the Myanmar government controlling a 20% stake. The project is located in

Tiddin Township, Chin State, and latest reports suggest the mine is not yet in operation,

rather in advanced stages of exploration15.

SPECIALIZED SOE SUBSIDIARIES PROVING ENGINEERING AND OTHER CONTRACTING

SERVICES

One trait of Chinese overseas investment projects is a tendency for project developers to

appoint other Chinese companies to carry out contracting work on projects, as GEI has

observed in the course of its research on Chinese OFDI.

Since the beginning of its economic rise, China’s SOEs have been responsible for developing

their respective industries at home, and as a result have developed considerable expertise

through decades of project development experience across all sectors of the economy. At

the top of the SOE hierarchy is the parent or ‘Group’ company, which typically controls

various subsidiary companies performing different functions below it. These functions can

include research and development, project design, engineering and construction services,

along with equipment manufacturing and supply, amongst others.

As these SOEs have begun to carry out projects outside China’s borders over the past

decade, it is common practice for them to contract these types of services from their

subsidiary companies, or the subsidiaries of other SOEs, which they have successfully

13 (Zijin Mining Group Co., Ltd.)

14 (Zijin Mining Group Co., Ltd)

15 (Zijin Mining Group Co., Ltd.)

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cooperated with in China. Since some of these companies have become genuine experts in

their respective fields, it has also become increasingly common for non-Chinese

organizations to contract these companies for their services.

Two such SOE subsidiaries were identified as being involved as a contractor in mining

development projects in Myanmar. China ENFI has providing contracting services in the

development of two Chinese-backed mines, while China National Heavy Machinery

Corporation (CHMC) provided services to a locally-registered company to develop the Tigyit

coal mine.

CHINA METALLURGICAL GROUP CORPORATION (MCC) / CHINA ENFI

China Metallurgical Group Corporation (MCC) is a central SOE under the direct auspice of

SASAC, with its headquarters in Beijing. Founded in 1994, MCC engages in EPC, natural

resources exploitation, papermaking, equipment fabrication and real estate development.

The China ENFI Engineering Co., Ltd. and China ENFI Engineering Corporation (China ENFI)

was established in 1953 and is now a subsidiary of MCC. China ENFI specializes in

metallurgical and mining engineering, environmental protection, chemical engineering,

architecture and construction, and rare metals and light metals engineering design services.

China ENFI has provided such services to two Chinese-backed mining projects in Myanmar.

At the Tagaung Taung Nickel Mine (invested by CNMC and TISCO), China ENFI was

responsible for overall design of the mine including process design, critical equipment

supply, on-site construction services and commissioning support. The company also

completed the feasibility study report for the Mwetaung Nickel Mine project (invested by

NORINCO and Zijin Mining Group).

CHINA NATIONAL MACHINERY INDUSTRY CORPORATION (SINOMACH) / CHINA NATIONAL

HEAVY MACHINERY CORPORATION (CHMC)

China National Machinery Industry Corporation (SINOMACH) is a central government SOE

established in 1997 and headquartered in Beijing. SINOMACH specializes in machinery

research and development, machinery manufacturing, project contracting, and trade and

service businesses in China and worldwide. The company controls 50 wholly-owned or

holding subsidiaries, 11 listed subsidiaries, and over 180 overseas service organizations16.

China National Heavy Machinery Corporation (CHMC) is a 100% subsidiary of SINOMACH

and also headquartered in Beijing. CHMC is engaged in engineering contracting and project

management in various sectors including metallurgy and mining.

16 (China National Machinery Industry Corporation (SINOMACH))

17

In Myanmar, CHMC provided design, equipment supply, technical instruction for erection,

commissioning and technical training services for the Tigyit coal mine. The open pit mine is

already operational and located at Pinlaung Township in Southern Shan State. It is owned by

Shan Yoma Nagar Co. Ltd, a locally-registered company.

PRIVATE COMPANIES WITH INVESTMENTS IN SMALL-SCALE PROJECTS AND

CONDUCTING EXPLORATION

Several private companies originating from China were also identified with interests in

Myanmar’s mining sector. A lack of available information presented a challenge when

researching these types of companies and the projects they are involved in.

The information gathered indicates that the private companies identified in the study are

much smaller players compared to their SOE counterparts, and the mining projects invested

are also smaller in scale. While SOEs tend to partner with the Myanmar government in

development projects (via the Ministry of Mines and its Mining Enterprises), there is some

evidence that private Chinese companies seek local partners in the form of other private

companies, including setting up joint ventures with local partners.

CHINA MINGHUA GROUP LTD

China Minghua Group Ltd. is a private company with Chinese origins. Sparse information on

the company’s website (Chinese-English language) includes reference to a company named

China Minghua (Hongkong) Co., which suggests links to Hong Kong and that there is more

than one company operating within the China Minghua Group, although registration details

for these companies could not be located. Contact details are provided for offices in

Thailand (Bangkok) and Myanmar (Yangon) only.

The company states that its President “has devoted himself to the development and

utilization of natural resources in Burma”, and lists several such projects that the company

has engaged in since 2002.

In 2002, the company acquired the mining rights for a tin-tungsten mine in Kalonta, Dawei,

Tanintharyi in Burma. The mine covers an area of 24.6 km2 and has an ore treatment plant

capable of daily processing 500 tons of raw ore. It is not clear from the information available

if the mine is still operational or not.

In 2007, the company submitted an application to the government for mining rights to a

new mine covering 5 km2 in the area of the original mine, the products from which are

mainly exported to Malaysia.

In 2010, the company acquired mining rights over what it describes as “three, large-sized

rocky mountains and high-quality river sand near Salween River in Hpa-an (the capital city of

Kayin State) in the south of Burma”. The gravel and stone produced from the mine are

18

mainly used for the construction of CNPC’s crude oil terminal project in Kyaukpyu and the

construction of public works in Yangon17.

ASIA PACIFIC MINING LIMITED (APML)

Asia Pacific Mining Ltd. was incorporated as a private company in Hong Kong in 200718,

although it describes itself as a “Western-led company” on its website19 in reference to the

background of the company’s management team, who it also describes as having

experience completing mining transactions in Myanmar. APMP is advised by Myanmar’s

former Deputy Minister of Mines, U Ko Ko Than.

In 2014 APML was granted approval to explore for silver, lead and zinc on lands surrounding

the existing Bawdwin mine in Shan State, under its 100% owned AP-4 exploration licence

granted by the Myanmar Ministry of Mines which covers a total of 649km2. Following

significant discoveries of sulphide silver-lead-zinc mineralisation from exploration activity

carried out, latest reports suggest that the area was expected to be ready for drilling in April

201520.

APML also reports on its website that the company is in the advanced stages of licensing

other mineral prospects in Myanmar, most notably for copper and gold in the Sagaing

Region where 3 separate applications have been lodged with the Ministry of Mines, while

also negotiating with local business groups in districts of Myanmar where there is a history

of mining activity.

17 (China Minghua Group Limited)

18 (Hong Kong Companies Registry, 2015)

19 (Asia Pacific Mining Limited)

20 (PR Newswire, 2015)

19

FIGURE 3 NUMBER AND DISTRIBUTION OF MINIG PROJECTS WITH CHINESE CAPITALS

20

HYDROPOWER

In hydropower sector the most important sections are power (generation and transmission)

and construction (mainly specialized civil and electro-mechanical construction, as well as

associated equipment manufacturing). There is some overlap, as some of the power

companies have construction activities, and some of the construction companies are

specialized in the power sector. The Chinese hydropower industry, including those

organizations relevant for international activities, is predominantly owned and controlled by

China’s central government and firmly rooted in the home market, as all these key sections

of interest for Chinese hydropower investments are among those considered to be of

national interest.

The current structure of the Chinese hydropower sector, which is now the largest in the

world since 2010 when China’s power consumption surpassed that of the US, is the result of

a major reform in 2002 that separated generation, transmission and distribution, and

ancillary industries.

TABLE 4 SOES RESULTING FROM THE BREAK-UP OF STATE POWER CORPORATION IN

2002

Generation “Big Five”

(Regulated competitive market)

Transmission and Distribution

(Regulated regional monopolies)

Support Companies

(Competitive market)

China Huaneng Group Co. State Grid Corporation China Electric Power Engineering Consulting Group Co. Ltd

China Huadian Group Co. China Southern Power Grid Co. Ltd

HYDROCHINA (now a subsidiary of POWERCHINA)

China Guodian Group Co. Sinohydro (now a subsidiary of POWERCHINA)

China Datang Group Co. China Gezhouba Group

China Power Investment Company (acquired by State Nuclear Power Technology Company recently)

21

Following analysis of the data summarized in Table 5, a total of 44 hydropower projects with

26 Chinese parent and subsidiary companies are identified with interests in Myanmar’s

hydropower sector. Among the 26 identified companies, only 3 are privately owned, while

the rest 23 are all SOEs of different kinds. Most of those identified hydropower projects are

located in upper Myanmar, particularly Kachin State and Shan State in the upstream of

Irrawaddy River and Salween River, where there are huge hydropower potentials and

geographically close to China, with a couple of others in Mandalay Region, Sagaing Region,

Rakhine State, Kayah State and Kayin State.

Similar to the cases in the mining sector, the SOEs that identified with interests in

Myanmar’s hydropower sector are some of the world’s largest hydropower development

companies. In their overseas engagement these enterprises respond to an interconnected

mix of commercial and political/foreign policy objectives or motivations. For example, a

particular project may be suggested by a company that, while state-owned, is being

operated as an essentially autonomous business entity; the commercial driver may be

dominant although the state-owned company will retain some political drivers. The same

project may be planned to receive financing from a Chinese policy bank; the motivation for

the financing may be a mix of commercial and foreign aid policies, which in turn will be

influenced by broader central governmental foreign policy objectives. In some cases in

Myanmar, due to the country’s political importance to China, higher government bodies

may be directing these investments from the view of a combination of foreign policy and

strategic resources/energy security concerns, as the case of CPI’s Myitsone cascade and

Three Gorges Corporation’s Mong Tong project.

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TABLE 5 CHINESE COMPANIES IDENTIFIED WITH INTERESTS IN MYANMAR’S HYDROPOWER SECTOR

Company Name Company Type

Company Role Local Partner Project Name Project Location Project Status

China Datang Corporation CSOE Builder Ministry of Electric Power No 1

Tapein (240MW) Tarpain River, Kachin State

In operation

Datang (Yunnan) United Hydropower Developing Co Ltd

Subsidiary company

Developer Ministry of Electric Power No 1

Tapein (240MW) Tarpain River, Kachin State

In operation

Developer Tapain-2 (168MW) Tarpain River, Kachin State

Under Construction

Developer & builder Ywathit (4000MW) Kayah State Suspended (?)

China Datang Overseas Investment

Subsidiary company

Financier Unknown Htukyan (105MW) Shan state Unknown Hanna (45MW) Shan state Unknown Thakya (150MW) Shan state Unknown Palaung (105MW) Shan state Unknown Bawlakae (180MW) Kayah State Unknown Sinedin (76.5MW) Rakhine State Unknown Laymyo (600MW) Rakhine State Under

Construction Laymyo-2 (90MW) Rakhine State Thahtay (111MW) Rakhine State Under

Construction Sinohydro Corporation CSOE Contractor Ministry of

Electric Power No 1 Tapein (240MW) Tarpain River In operation

Builder Unknown Shweli-1 (600MW) Shweli River, Shan state

In operation

Financier Unknown Thaphanseik (30MW) Sagaing Region In operation Developer & builder Ministry of Electric

Power Yeywa (790MW) Dokhtawady River,

Mandalay Region In operation

Builder Unknown Zawgyi-1 (18MW) In operation Contractor Unknown Lower Paunglaung

Dam (280MW) Sittang River, Shan state

In operation

23

Contractor Ministry of Electric Power

Myitsone (6000MW) Ayeyawaddy River, Kachin State

Suspended

Financier IGE (Myanmar) Naung Pha (1000MW)

Salween River, Shan state

Contracts signed

Financier IGE (Myanmar) Mantaung (200MW) Salween River, Shan state

Contracts signed

Builder & contractor IGE (Myanmar) Mong Tong (7110MW)

Salween River, Kayin State

Suspended

Financier & builder IGE (Myanmar) Hutgyi (1360MW) Salween River, Kayin State

Unknown

Huaneng Langcang River Hydropower Co

SOE subsidiary company

50% owner of Yunnan United Power Development Company

N/A N/A N/A N/A

Yunnan Hexing Investment and Development Co;

Private 34 % owner of Yunnan United Power Development Company

N/A N/A N/A N/A

Yunnan Union Resources & Engineering Co

Provincial government SOE

16% owner of Yunnan United Power Development Company

N/A N/A N/A N/A

Yunnan United Power DDevelopment Company Development Company Development Company

Subsidiary company

Financier Unknown Shweli-1(600MW) Shweli River, Shan state

In operation

Financier Unknown Shweli-2 (520MW) Shweli River, Shan state

Under construction

Huaneng Langcang River Hydropower Company

CSOE subsidiary company

Builder Unknown Shweli-2 (520MW) Shweli River, Shan state

Under construction

Yunnan Machinery Export Import Company


Contractor N/A Shweli-1 (600MW) Shweli River, Shan state

In operation

Contractor N/A Zawgyi-1 (18MW) Unknown In operation Contractor N/A Zawgyi-2 (12MW) Unknown In operation Unknown Unknown KengTawng/Kyaing

Tong (54MW) Pawn River In operation

Developer/Contractor N/A Lower Paunglaung Dam (280MW)

Sittang River, Shan state

In operation

Contractor N/A Kaunglangphu (2700MW)

N'Mai River, Kachin State

Suspended

24

Contractor Asiaworld (Myanmar) Lasa (1900MW) Mali River, Kachin State

Suspended

Contractor N/A Shweli-2 (520MW) Shweli River, Shan state

Under construction

China International Trust & Investment Co. (CITIC)

SOE Financier Unknown Thaphanseik (30MW) Sagaing Region In operation Financier & developer Ministry of Electric

Power Yeywa (790MW) Dokhtawady River,

Mandalay Region In operation

Builder Unknown Yenwe (25 MW) Yenwe Creek, Sittang river, Kyaukdagah Township, Shan state

In operation

Developer Unknown Mone Creek (75 MW) Mone Creek (Sidoktaya Township)

In operation

China Power Investment Corporation (CPI)

CSOE Financier Ministry of Electric Power

Yeywa (790MW) Dokhtawady River, Mandalay Region

In operation

Developer & builder Ministry of Electric Power


Suspended

Financier Asiaworld (Myanmar) Chibwe (3400MW) Chibwe River, Kachin State

Suspended

Financier Asiaworld (Myanmar) Wutsok (1800MW) Ayeyawaddy River, Kachin State

Suspended

Financier Asiaworld (Myanmar) Kaunglangphu (2700MW)

N'Mai River, Kachin State

Suspended

Financier Asiaworld (Myanmar) Yenam (1200MW) Ayeyawaddy River, Kachin State

Suspended

Financier Asiaworld (Myanmar) Pisa (2000MW) N'Mai River, Kachin State

Suspended

Financier Asiaworld (Myanmar) Laiza (1900MW) Mali River, Kachin State

Suspended

Financier Asiaworld (Myanmar) Chibwengae (99MW) Ayeyawaddy River, Kachin State

Suspended

China National Heavy Machinery Corporation (CHMC)

SOE Contractor (support for construction of transmission lines and dam)

Ministry of Electric Power


In operation

State Grid Corporation of China

CSOE Contractor (support for construction of transmission



In operation

http://www.chmc2003.com/

http://www.chmc2003.com/

25

lines) Central China Power Grid Co. Subsidiary

company Contractor (support for construction of transmission lines)



In operation

Yunnan Power Grid Corporation

Subsidiary company

Financier Unknown Keng Tong (96MW) Shan state Unknown Unknown Unknown Wantapeng (25MW) Shan state Unknown Unknown Unknown Solu (165MW) Shan state Unknown Unknown Unknown Mongwa (50MW) Shan state Unknown Unknown Unknown Keng Yan (28MW) Shan state Unknown Unknown Unknown Heku (88MW) Shan state Unknown Unknown Unknown Nankha (200MW) Shan state Unknown

China Gezhouba Group Corporation

SOE Contractor Ministry of Electric Power


In operation

Contractor (supply and installation of machinery & equipment)

N/A Kyauk Naga Dam (75MW)

Shwegyin river, Shwegyin Township, Bago region

In operation

Contractor Ministry of Electric Power


Suspended

Builder Asiaworld (Myanmar) Chibwe (3400MW) Chibwe River, Kachin State

Suspended

China National Electric Equipment Co. (CNEEC)

SOE Contractor Ministry of Electric Power


In operation

Builder N/A Yenwe (25 MW) Yenwe Creek, Sittang river, Kyaukdagah Township, Shan state

In operation

Builder N/A KengTawng/Kyaing Tong (54MW)

Pawn River In operation

Hunan Savoo Oversea Water & Electric Engineering Co

Private Contractor Ministry of Electric Power


In operation

Zhejiang Orient Holdings Co., Ltd.


Builder Unknown KengTawng/Kyaing Tong (54MW)

Pawn River In operation

Ningbo Huyong Electric Power Material Co., Ltd


Developer Unknown Lower Paunglaung Dam (280MW)

Sittang River, Shan State

In operation

HydroChina Kunming SOE subsidiary Developer Unknown Lower Paunglaung Sittang River, Shan In operation

26

Engineering Corporation Dam (280MW) State YPIC International Energy Cooperation & Development Co Ltd


Financier IGE (Myanmar) Gawlan (100MW) Nawchankha River Contracts signed

Financier IGE (Myanmar) Wxhonghgze (60MW)

Nawchankha River Cancelled

Financier IGE (Myanmar) Hkankwan (140MW) Nawchankha River Contracts signed

Financier IGE (Myanmar) Tonxinqiao (320MW) Nawchankha River Contracts signed

Financier IGE (Myanmar) Lawngdin (435MW) Nawchankha River Contracts signed

Hanergy Private Financier Hydropower Implementation Department, Asiaworld

Kunlong (1400MW) Salween River, Shan state

Under construction

China Southern Power Grid CSOE Builder & contractor IGE (Myanmar) Mong Tong (7110MW)


Suspended

China Guodian Corporation CSOE Financier Unknown Natabat (200MW) Kachin state Unknown Unknown Unknown Mawlight (520MW) Sagaing Region Unknown Unknown Unknown Natabat (180MW) Kayah State Unknown

China Three Gorges Corporation

CSOE Financier, builder & contractor

IGE (Myanmar) Mong Tong (7110MW)


Suspended

27

FIGURE 4 NUMBER AND DISTRIBUTION OF HYDROPOWER PROJECTS WITH CHINESE

CAPITALS

28

AGRICULTURE

Following analysis of the data summarized in table 6, the 10 Chinese parent and subsidiary

companies identified with interests in Myanmar’s agriculture sector can be classified into

four groups, as follows:

1) SOEs with investments in large-scale agricultural projects;

2) SOEs with investments in strategic/technical demonstration projects in collaboration

with Myanmar government;

3) Private companies with investments in small and medium-scale plantation of fruits

and crops to sell back to China;

4) Private companies from Yunnan Province and Yunnan provincial SOEs with

investments often in rubber and fruits plantation along the China-Myanmar border

as opium substitution projects.

Although the number of identified Chinese companies and projects in the agriculture sector

is very limited, these companies are very typical in their categories.

SOES WITH INVESTMENTS IN LARGE-SCALE AGRICULTURAL PROJECTS

The investments of Beidahuang in both agricultural plantation and meat cattle projects

serve as overseas bases of the company as part of its market expansion in the world. Often

the productions from these bases will either be exported back to China or exported to

international markets directly. Such investments typically have support from both the

Chinese and Burmese government, and set to be comprehensive projects including all

related facilities. It is also very likely that they have financial support from policy banks.

SOES WITH INVESTMENTS IN STRATEGIC/TECHNICAL DEMONSTRATION PROJECTS IN

COLLABORATION WITH MYANMAR GOVERNMENT

Demonstration projects are driven either by the Chinese government or by the needs of the

SOE itself, i.e. as a pilot to diversify the company’s business. In the identified two

demonstration projects, the COFCO one is the former and the Yunnan Provincial Overseas

Co. Ltd one the later. Government-driven demonstration projects are directed and funded

by government aid programs and are undertaken by SOEs or government-owned research

institutions; while in company-driven cases it is more of the SOE’s own willingness to carry

out such projects.

PRIVATE COMPANIES WITH INVESTMENTS IN SMALL AND MEDIUM-SCALE

PLANTATION OF FRUITS AND CROPS TO EXPORT BACK TO CHINA

Such companies are usually medium-scale trading companies, mostly from Yunnan Province

in the case of Myanmar, that specializes in border trade, particularly agricultural products.

29

They start their businesses from doing border trade, and as the business grows, some of

them begin to think about securing their own sources of production by investing in

agricultural plantation in Myanmar, where land and labor costs are much lower than in

China. Products from such investments are aimed to be exported back to China.

PRIVATE COMPANIES FROM YUNNAN PROVINCE AND YUNNAN PROVINCIAL SOES

WITH INVESTMENTS OFTEN IN RUBBER AND FRUITS PLANTATION ALONG THE

CHINA-MYANMAR BORDER AS OPIUM SUBSTITUTION PROJECTS

Companies involved in opium substitution projects are mostly small-scale private companies

from Yunnan Province, especially those prefectures along the China-Myanmar border, with

a couple of Yunnan provincial SOEs and local county-level implementation entities of

provincial SOEs. Most of the opium substitution projects are in Wa State, Shan State Special

Region 4 and Kokang. Companies sign contracts with local government at Myanmar side, do

plantation and export products back to China as required. According to statistics, there are

198 Chinese companies with interests in the opium substitution projects.

30

TABLE 6 CHINESE COMPANIES IDENTIFIED WITH INTERESTS IN MYANMAR'S AGRICULTURAL SECTOR

Company name Company type

Role Local partner Project Location Status

Yibin Beidahuang Food Processing Co. Ltd (jointly established by Heilongjiang Nongken Beidahuang Business Trade Co. Ltd, an SOE subsidiary, and Sichuan Hejiu Agriculture Group Co., a private company)

Partially hold by SOE subsidiary

Investor Shwe Sapar International Trading Co. Ltd

Agricultural plantation base (rice, corn, etc.) and processing and storage center

Mandalay Region Agreement reached in December 2014

Shwe Ying Trading International Co. Ltd

Meat cattle breeding, processing and storage

Naypyitaw Agreement reached in December 2014

Yunnan Provincial Overseas Investment Co. Ltd.

Provincial SOE Investor Ayeyawady local agricultural department

High yield rice species cultivation demonstration

Ayeyawady Region Operational

China National Cereals, Oils and Foodstuffs Corporation (COFCO)

Central SOE Investor Ministry of Agriculture and Irrigation

Cassava plantation demonstration

Yangon suburban areas

Operational

China CAMC Engineering Co. Ltd Central SOE subsidiary

Investor Unknown Farm (fruits plantation)

Yangon suburban areas

Operational

Baoshan Kangfeng Sugar Group Private Investor Unknown Cassava and sweet potato plantation

Kachin State, Kokang and Muse

Operational

Lincang Jingying Sugar Industry Co. Ltd

Private Investor Unknown Cassava and sweet potato plantation

Kokang, Shan State Operational

Wanting Changhe Trading Co. Ltd Private Investor Unknown Watermelon plantation

Mandalay Region Operational

Menglian Farm (of Yunnan State Farm)

Provincial SOE Investor Unknown Rubber plantation Wa State (Shan State Special Region 2)

Operational

Dongfeng Farm (of Yunnan State Farm)

Provincial SOE Investor Unknown Rubber plantation Shan State Special Region 4

Operational

Yunnan Jinchen Investment Co. Ltd Private Investor Salween River Development Company of Wa State

Rubber plantation Wa State (Shan State Special Region 2)

Operational

31

FIGURE 5 NUMBER AND DISTRIBUTION OF AGRICUTLTURAL PROJECTS WITH CHINESE

CAPITALS

32

INFRASTRUCTURE

Much has been written about China’s interest in developing large-scale infrastructure

projects in Myanmar and the various strategic motivations behind this interest. This study

does not seek to delve into the reasons behind decisions made by the Chinese government

and its companies to invest in such projects, but rather summarize the investments that

have already been made and introduce those which may yet occur.

Following analysis of the data summarized in table 7, the 9 Chinese parent and subsidiary

companies identified with interests in Myanmar’s infrastructure sector can be classified into

two groups, as follows:

1) SOEs with investments in large-scale, strategic regional infrastructure projects

2) Specialized SOE subsidiaries proving engineering and other contracting services

33

TABLE 7 CHINESE COMPANIES IDENTIFIED WITH INTERESTS IN MYANMAR'S INFRASTRUCTURE SECTOR

Company name Company type

Role Local partner Project Location Status

China National Petroleum Corporation (CNPC)

Central SOE Investor (51% ownership) and contracted to design, construct, operate and maintain both pipelines.

State-owned Myanmar Oil and Gas Enterprise (8% share)

Myanmar-China Gas Pipeline

Kyaukryu Port (Myanmar) to Guizhou (China)

Operational

State-owned Myanmar Oil and Gas Enterprise (49% share)

Myanmar-China Oil Pipeline

Kyaukryu Port (Myanmar) to Kunming (China)

Operational

Investor Ministry of Energy Kyaukpyu deep-sea port

Maday Island Operational

CITIC Group Central SOE Prospective developer (subject to tender process)

Unknown Kyaukpyu Economic and Technology Zone

Kyaukpyu, Rakhine State

Tender process ongoing

CITIC Construction Company Ltd

Subsidiary of CITIC Group

Prospective developer (subject to tender process)

Unknown Kyaukpyu Economic and Technology Zone

Kyaukpyu, Rakhine State

Tender process ongoing

China Railway Engineering Corporation

Central SOE Build, operate, transfer Ministry of Rail Transportation

Myanmar-China railway

Kyaukpyu (Myanmar) to Kunming (China)

MOU signed 2011. Project reportedly cancelled 2014

Zhuhai Zhenrong Corporation

Central SOE Joint owner of Guangdong Zhenrong Energy Co., Ltd

N/A N/A N/A N/A

Guangdong Zhenrong Energy Co., Ltd

Partially owned by CSOE

Developer Myanmar Economic Holdings Ltd & HTOO Group (JV partners)

Oil refinery Dawei, Tanintharyi Region

Approved by China NDRC. Awaiting approval from Myanmar authorities.

Yunnan Provincial EPC contractor Yuzana Group Myitkyina-Tanai- Linking Myitkyina in Under construction

34

Construction Engineering Group

SOE Pangsau Pass section of the Stilwell Road

Kachin State to Pangsau Pass on the Arunachal Pradesh border

China National Machinery Industry Corporation (SINOMACH)

Central SOE Parent company N/A N/A N/A N/A

China National Heavy Machinery Corporation (CHMC)

Subsidiary of SINOMACH

EPC contractor N/A Tigyit coal-fired power station

Pinlaung township in southern Shan State

Operational

China CAMC Engineering Co., Ltd.

Subsidiary of SINOMACH

Investor Established Myanmar Rice Mill Co Ltd (MRMC) in joint venture with Myanmar Millers Association

Rice mill Sarr Ma Lauk village in Nyaung Toun township, Ayeyarwaddy delta region

Expected to be operational by 2017

EPC, responsible for design, supply of equipment, installation, technical supervision and training

N/A Thilawa shipyard 25 kilometres south of Yangon

Completed in 2002

EPC, responsible for design, manufacturing and supply of steel structure and major equipment, construction management plan and supervision

N/A Ayeyawady bridge (Yadanabon)

Ayeyawady river, connecting Mandalay and Sagaing

Completed in 2008

Unknown Unknown Myitkyina bridge Unknown Unknown EPC - design, supply of steel truss, accessories and equipment and supervision of truss erection

N/A Ayeyawady bridge (Pakokku)

Ayeyawady River, connecting Magway and Mandalay

Completed 2012

Unknown Unknown Magwe-Minbu bridge

Ayeyarwady River, from Minbu to Magway

Completed

Unknown Unknown Kyaukse cement Kyaukse Town Completed 2002

35

plant Unknown Unknown Dedaya bridge Unknown Completed Unknown Unknown Nyaungdon (Bo

Myat Tun) bridge Ayeyarwady River Completed 1999

Unknown Unknown Yone Seik cane sugar mill

Unknown Completed

EPC - design, equipment supply, technical guidance, training, construction supervision

N/A Sarlingyi textile factory

Sarlingyi Completed

36

SOES WITH INVESTMENTS IN LARGE-SCALE, STRATEGIC REGIONAL INFRASTRUCTURE

PROJECTS

Kyaukpyu Port in Rakhine State has been and remains a target for developers from China

and other countries. This study identified three Chinese central SOEs who, along with their

subsidiary companies, are involved in large-scale infrastructure projects relating to

Kyaukpyu.

The first is China National Petroleum Corporation’s (CNPC), who’s China-Myanmar oil and

gas pipeline project is already operational. Both pipelines begin at Kyaukpyu and run across

Myanmar to China. CNPC also developed a deep-sea port at Kyaukpyu as part of the pipeline

project.

The second is CITIC Group and its subsidiary CITIC Construction Company Ltd, which has

expressed an interest in developing the Kyaukpyu Economic and Technology Zone. At the

time of writing, the decision of a Government tender process to select a developer had not

been made.

The third is China Railway Engineering Corporation (CREC), who signed an MOU in 2011 to

develop the China-Myanmar railway which was expected to follow the same route through

Myanmar to China as the oil and gas pipelines. The current status of the project is unclear

since the MOU lapsed in 2014 and there have been conflicting reports about whether the

project has been cancelled or not.

CHINA NATIONAL PETROLEUM CORPORATION (CNPC)

China National Petroleum Corporation (CNPC) is a central SOE founded in 1955 and

headquartered in Beijing. CNPC is an integrated energy company and China’s largest oil and

gas producer and supplier21. The company engages in both onshore and offshore

hydrocarbon exploration and production operations worldwide, and owns and operates

extensive networks of pipelines and storage systems. CNPC also markets and trades in crude

oil, petroleum and a variety of other materials and products, provides contracting services in

engineering construction, and is involved in financial and asset management activities22.

CNPC has been present in Myanmar since 2001 and currently operates two onshore oil and

gas development and production projects, one deep-water exploration and development

project, while also providing oilfield services and construction of chemicals facilities. In

addition, CNPC recently completed the construction of the China-Myanmar oil and gas

pipelines and is now responsible for their operation and maintenance.

21 (China National Petroleum Corporation (CNPC))

22 (Bloomberg Business, 2015)

37

MYANMAR-CHINA OIL AND GAS PIPELINES

Construction of the Myanmar-China Oil and Gas Pipelines was first proposed in 2004. In

2008, CNPC signed a 30-year agreement with South Korean conglomerate Daewoo

International to import natural gas from offshore blocks A-1 and A-3 in Myanmar.

Subsequent agreements made in 2009-10 specified that CNPC’s subsidiary Southeast Asia

Pipeline Ltd was responsible for designing, constructing, operating and maintaining the oil

and gas pipelines.

A US$2.54 billion investment gave CNPC a 51% share in the ownership of both pipelines.

Myanmar Oil and Gas Enterprise (MOGE) controls the remaining 49% share in the oil

pipeline, while the following companies share ownership of the gas pipeline: Daewoo

International (25%), Oil and Natural Gas Corporation Videsh (India, 8%), Myanmar Oil and

Gas Enterprise (Myanmar, 8%) Korean Gas Corporation (South Korea, 4%).

Construction of the pipelines began in 2010, with the gas pipeline becoming operational at

the end of 2014 and the oil pipeline operational as of early 2015. Both pipelines follow the

same course through Myanmar, starting on the west coast at Kyaukryu and entering China

at Ruili in Yunnan Province. The oil pipeline is designed to transport 22 million tons of oil per

year, while the gas pipeline is designed to transport 10-13 billion cubic meters of gas per

year.

KYAUKPYU DEEP SEA PORT

As part of the Myanmar-China Oil and Gas Pipelines project, CNPC also financed

construction of a deep-sea port on Maday Island, off Kyaukryu. The port and accompanying

infrastructure, which includes storage facilities, is designed to allow 300,000 tonne tankers

to dock and unload oil for transportation through the pipeline. Construction of the port was

completed in 2014 and it was officially opened in 2015, with the first tanker unloading crude

oil shipped from the Middle East23.

Specific information about development of the port could not be located, including the total

cost and other parties involved, although one report suggests the port was developed in a

joint venture between CNPC and the Ministry of Energy24.

CITIC GROUP CORPORATION

CITIC Group Corporation is a central government SOE based in Beijing. Together with its

subsidiaries, CITIC operates across six segments: Finance, Real Estate and Infrastructure,

Engineering Contracting, Resources and Energy, Manufacturing, and Other Services25.

23 (China National Petroleum Corporation (CNPC), 2015)

24 (Consult-Myanmar, 2013)

38

CITIC Construction Company Ltd. is one such subsidiary. Also based in Beijing, it operates as

a construction and contracting company26.

KYAUKPYU ECONOMIC AND TECHNOLOGY ZONE

In Myanmar, CITIC Group has expressed strong interest in developing the Kyaukpyu

Economic and Technology Zone. The SEZ on Ramree Island is where CNPC has constructed a

deep sea port and is the start point for the Burma-China oil and gas pipelines.

CITIC Group has proposed a conceptual plan which consists of a petrochemical industrial

zone, rail-road complex, logistics centre, export processing industries, multi-purpose

terminals and residential areas covering 120 Km² of land and 70 Km² of waterways27.

According to a feasibility study by CITIC Construction Company, the zone will require an

initial investment of US$ 8.3 billion and a total US$ 89.2 billion over 35 years28.

In 2009, Xi Jinping, the vice-president of China at the time, signed the agreement on

cooperation between Myanmar’s Ministry of National Planning and Economic Development

and CITIC Group for development of the Kyaukpyu Economic and Technological

Development Zone29. It is also reported that its subsidiary CITIC Construction Company

Limited has made agreements to cooperate on the project with the Htoo Company, which is

owned by military crony Tay Za30.

At the time of writing it remains unclear as to whether CITIC Group and its subsidiary

companies will be awarded the contract to develop the area. The Myanmar Government has

not yet announced which companies will be awarded the contract for constructing the SEZ,

a decision that has already been delayed by several months31.

CHINA RAILWAY ENGINEERING CORPORATION (CREC)

China Railway Engineering Corporation (CREC) is a central government state-owned

enterprise under the direct supervision of SASAC and headquartered in Beijing. It operates

as a holding company and through its various subsidiaries provides services including

surveying, construction, design solutions, installation, manufacturing, R&D, technical

consulting, capital management, international trade, property management, and railway

development in China and worldwide32.



27 (Bangkok Post, 2013)

28 ( Arakan Oil Watch, December 2012)

29 (Bangkok Post, 2013)

30 ( Arakan Oil Watch, December 2012)

31 (Myanmar Property Insider.com, 2015)


39

MYANMAR-CHINA RAILWAY

An MOU was signed between CREC and the Myanmar Railway Ministry in April 2011 to

construct a 1,200km railway connecting China’s Yunnan province with Myanmar’s Rakhine

Western coast, following the same route as the China-Myanmar oil and gas pipelines and

costing US$20 billion. The agreement was for a build-operate-transfer (BOT) with a period

up to 50 years. The MOU was subject to further feasibility studies being completed and

agreements on specific terms, and stipulated that construction should begin on the project

within three years.

In July 2014, conflicting reports quoted the Director of Myanmar's Ministry of Rail

Transportation as saying that the project had been "cancelled" after over three years of

inaction on the 2011 agreement, while China's Ambassador to Myanmar and state

mouthpiece the China Daily said China had not abandoned the project33.

At the time of writing, the status of the project remained unclear and no statement from

CREC could be identified.

SPECIALIZED SOE SUBSIDIARIES PROVING ENGINEERING AND OTHER CONTRACTING

SERVICES

As with other sectors, several SOEs and their subsidiary companies were identified as having

engaged in providing contracting services to other developers as part of infrastructure

projects in Myanmar.

China National Heavy Machinery Corporation (CHMC) and China CAMC Engineering Co., Ltd.

(CAMCE) are both subsidiaries of central SOE China National Machinery Industry

Corporation (SINOMACH). Between them, the companies have been involved as EPC

contractors in a range of infrastructure projects in Myanmar since 1999.

In addition, provincial SOE Yunnan Construction Engineering Group (YCEG) signed an MOU

with a local company in 2010 to provide EPC contracting services as part of a road

reconstruction project.

YUNNAN CONSTRUCTION ENGINEERING GROUP (YCEG)

Yunnan Construction Engineering Group Co. Ltd. (YCEG) is a provincial government SOE

headquartered in Kunming, Yunnan province.

The company provides construction services for infrastructure projects including roads,

bridges, municipal buildings, hydropower plants, railways, airports, ports, and others. It also

33 (Asia Times, 2014)

40

provides services such as research and design, and the supply of construction labour and

building materials34.

In October 2010, YCEG and Myanmar’s Yuzana Group Company signed an MOU to

reconstruct the 312km Myitkyina–Pangsaung section of the Stilwell Road, linking Myitkyina

in Kachin State to the Pangsau Pass on the Arunachal Pradesh border. YCEG’s role in the

project is an EPC contractor and the total cost of the project is reported to be CNY3.3

billion35. An Asian Development Bank Institute report from December 2014 indicates that

little progress has been made since the MOU was signed, due to funding constraints and

political instability in the Kachin state which are hampering the construction process36.

SINOMACH, CHMC AND CAMCE

Central government SOE SINOMACH and its subsidiary CHMC were introduced in the mining

section of this report, along with CHMC’s involvement as an EPC contract in development of

the Tigyit coal mine. Tigyit coal-fired power station neighbours the mine and was the first

coal-fired power station in Myanmar with an installed capacity of 2x60MW. As general EPC

contractor, CHMC was responsible for design & engineering, equipment supply, inspection

on civil works, installation & erection instruction37.

China CAMC Engineering Co., Ltd. (CAMCE) is another subsidiary of SINOMACH. The

company was established in 2001 and is based in Beijing38. CAMCE is engaged in contracting

EPC projects in the industrial, agriculture, water, power, communication and engineering

sectors globally39.

In Myanmar, CAMCE completed several EPC projects between 1999 and 2012 including the

construction of bridges, a shipyard, cement plant, sugar mill and a textile factory in various

locations. The company is currently involved in a project to build a rice mill in Nyaung Toun

township in the Ayeyarwaddy delta region. In February 2015 it was reported that CAMCE

had established the Myanmar Rice Milling Company (MRMC) in a joint venture with the

Myanmar Millers Association. The cost of the project is estimated between $5 and $7

million and the mill is expected to begin operations in early 2017, at which point it will have

a capacity to produce 200 tonnes of high-quality rice per day. A spokesman from MRMC was

also quoted as saying that negotiations are underway to build additional mills in Letpantan

and Zeegon townships in Bago region40.


35 (AidData)

36 (Asian Development Bank Institute, December 2014)

37 (China National Heavy Machinery Corporation)

38 (China CAMC Engineering Co., Ltd)


40 (Consult-Myanmar, 2015)

41

FIGURE 6 NUMBER AND DISTRIBUTION OF INFRASTRUCTURE PROJECTS WITH CHINESE

CAPITALS

42

TOURISM

None tourism development projects are identified during the research. During the visit, we

learned some information about a few hotel investments, mainly in Yangon city and Ngapali

beach, but more detailed information requires further digging-in. It is also unclear whether

these investments are under the cover of Myanmar local companies.

43

SUMMARY OF FINDINGS, RECOMMENDATIONS & NEXT STEPS

As Myanmar and Laos are neighbouring countries both sharing borders with China’s Yunnan

Province, the general Chinese investment pattern in Myanmar is very similar to what we

found in Laos in a previous scoping study. Large-scale hydropower and infrastructure

projects are dominated by big SOEs, with a few provincial SOEs and private companies

contracted to provide equipment and services, which is actually reflection of the dynamics

of the two sectors within China. Sectoral patterns of mining and agriculture are that large

SOEs invest limited number of large-scale projects while small and medium-scale private

companies invest much more small projects that are hard to identify and trace.

Tailored potential next steps could be developed based on the characteristics of different

sectors and findings from conversations with Chinese enterprises during the Myanmar visit.

Specific suggestions are as follows,

A majority of Chinese SOEs investing in Myanmar are very much aware of the

importance of environmental and social safeguarding conducts during their

investment, but they lack effective approaches and capacities as to how to carry out

related works on the ground. In-depth case studies on good practices of

environmental and social conducts by their international counterparts in similar

sectors to share with Chinese SOEs, experience-sharing dialogues between Chinese

and foreign enterprises on related topics, and practice manuals and capacity

buildings for SOEs through the platform of Chinese Embassy in Myanmar and/or

Chinese CoC in Myanmar, are possible future steps to consider;

Private companies are difficult to trace, therefore engagement through relevant

CoCs, such as Yunnan Association of Small and Medium Enterprises (SMEs) and

Yunnan Service Center for SMEs, will be an effective choice. Also, some private

companies mention that when it comes to environmental and social compliance,

they usually rely on their local partner companies as to knowledge and responses, so

perhaps more engagement with Myanmar domestic companies, as well as provision

of relevant information to Chinese private companies, can also be an approach;

Chinese policy banks are a major driver of Chinese investments in Myanmar,

especially large-scale development projects. Although there are foreign/strategic

policy considerations behind loan decisions, efforts can still be made in terms of

promoting the incorporation of better environmental and social safeguarding

policies during the loan approval process, such as by learning experiences from

international counterparts, quantifying environmental and social risks of candidate

projects, etc.

44

SUGGESTIONS ON FUTURE ENGAGEMENT WITH CHINESE COMPANIES

From the scoping study we found Chinese companies in Myanmar are generally more

cautious than those in Laos regarding the idea of working with NGOs. The different is very

likely caused by the complexity and sensitivity of Myanmar’s political situation and the

constant anti-Chinese investment mind-set among the general public since the Myitsone

Dam suspension. Worrying about the unfavourable political context, plus the scepticism and

distrust of NGOs stemming from ideologies in China, Chinese companies in Myanmar,

particularly SOEs, are still in very early stage of interaction with NGOs. However, we have

seen some breakthroughs recently, such as Wanbao and CPI’s openness and willingness to

meet with NGOs, CNPC’s intention to meet with Myanmar NGOs and their dialogue

initiatives with the Myanmar Centre for Responsible Business (MCRB) and Earth Rights

International (ERI), as well as CITIC’s integration of GEI’s community development

approaches into their bidding proposal of Kyaukpyu SEZ.

With increasing awareness among Chinese companies on the importance of sound

environmental and social practices when investing overseas, the key issue had been shifted

from making companies and governments aware of the issue, to providing practical

solutions/examples of how to achieve environmental and social friendly investment

behaviours. In this stage, there are undoubtedly lots of potential needs and hence a large

gap in terms of corporate-NGO collaborations. During our discussions with a couple of

Chinese companies during field visit to Yangon, we learned the following major obstacles

that prevent them from potential collaborations with NGOs,

i) Trust

Chinese companies are not familiar with the NGO sector in general, not to mention the

NGO sector in Myanmar, such as who is doing what, what is the theory of change of

each organization, how good they are and their backgrounds. Therefore they have no

idea of who may be suitable to collaborate and also feel insecure about the possibilities

of been undermined by some NGOs who turns out to have certain political pursuits;

ii) Funding

Willingness to pay. Some companies concern that NGOs have overhead and operating

costs that would need to be charged from their corporate social responsibility (CSR)

program budget, while for companies if they do CSR by their own, their staffing costs

can be paid directly through staff salaries instead of occupying the CSR budget, which

the company believes could have more actual budget utilized for on-the-ground work.

Overall we think this concern is more related to doubts about what valuable inputs

NGOs could offer to companies;

Policy constraint. We also learned that China’s State Assets Supervision and

Administration Commission of the State Council (SASAC), which is the governing body of

CSOEs and SOEs, has a regulation that limits the utilization of company’s CSR funding of

45

¥50,000 (about US$7,600) – expenses over this amount will need to be submitted to

SASAC for approval.

Based on the identified obstacles, our proposed suggestions of start-up activities as an

approach to initiate potential collaboration with Chinese companies include,

i) Develop a handbook/directory on NGOs in Myanmar tailored for interested private

sector companies. The handbook/directory should include international and local

NGOs in Myanmar particular working in environmental and social related fields, such

as environment, conservation, livelihoods development, health and education at

community level, as a guidebook and reference for companies to be more familiar

with the sector and NGO “who’s who” in Myanmar, hence improve understanding;

ii) Study on international best practices in terms of how to ensure environmental and

social friendly overseas investments, summarize findings into practical suggestions

tailored for Chinese companies, and hold knowledge/experience sharing activities to

introduce these practices and suggestions;

iii) Pilot cooperative/co-fund projects, which mean that NGO(s) sponsor their own

salaries and travel costs while the company sponsor its own. The pilots aim to gain

trusts and explore/solicit further collaborations and can range from improving

companies’ internal environmental and social safeguarding systems and capacities,

to community-based conservation and livelihoods development projects.

ORGANISED CHAOSThe illicit overland timber tradebetween Myanmar and China

INTRODUCTION

STATE OF MYANMAR’S FORESTS

BRIEF HISTORY OF THE MYANMAR-CHINA OVERLAND TIMBER TRADE

EIA INVESTIGATIONS

CHINA’S ROLE

3

4

6

8

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CONTENTSACKNOWLEDGEMENTSThis report was written and edited by theEnvironmental Investigation Agency UK Ltd. Thisdocument has been produced with the financialassistance of UKaid, the European Union and theNorwegian Agency for Development Cooperation(NORAD). The contents of this publication are thesole responsibility of EIA.

EIA expresses its gratitude to the individuals whocontributed to the production of this report and whofor safety reasons must remain anonymous.

Designed by:www.designsolutions.me.uk

Printed on recycled paper

September 2015

All images © EIA unless otherwise stated

COVER IMAGE:Log trucks in Kachin waiting to cross the border into China, April 2015

ENVIRONMENTAL INVESTIGATION AGENCY (EIA)

62/63 Upper Street, London N1 0NY, UKTel: +44 (0) 20 7354 7960 Fax: +44 (0) 20 7354 7961email: [email protected]

www.eia-international.org

EIA US

P.O.Box 53343Washington DC 20009 USATel: +1 202 483 6621Fax: +202 986 8626email: [email protected]

LOCATOR MAP:

MYITKYINAWaingmaw

Tengchong

Ruili

Wanding

JiageoMuse

Nong Dao

Ban LingN’Bapa

Lwegel Zhanfeng

Pian Ma

Houqiao

Kambaiti

3

The sweep led to the arrest of 155 Chinese nationals whohad been recruited from neighbouring Yunnan Province to cross the border to cut trees and transport timber. The case caused diplomatic tensions between Myanmar and China when the Chinese labourers were given life sentences in July. Just a few days later, all were freedunder a general presidential pardon.

The saga has shone a light on the murky and clandestinetrade in illicit timber occurring across the common borderbetween Myanmar and China. For at least two decades, timber extracted from Myanmar’s precious frontier forestsin highly destructive logging operations has been flowinginto China unhindered. It is an illicit business worth hundredsof millions of dollars a year, making it one of the singlelargest bilateral flows of illegal timber in the world.

From the outside looking in, the cross-border trade appears chaotic and complex. Most of the timber enteringYunnan is either cut or transported through Kachin State, a zone of conflict between ethnic political groups and theMyanmar Government and its military. Here, all sides tovarying degrees profit from the logging and timber trade,from the award of rights to Chinese businesses to log whole mountains, often paid in gold bars, to levying fees at multiple checkpoints to allow trucks carrying logs topass. While Kachin and Yunnan lie at the heart of trade, it reaches far wider. Logs shipped across the border areincreasingly sourced from further inside Myanmar, such as Sagaing Division, and end up supplying factories in south and east China.

Yet field research conducted by the EnvironmentalInvestigation Agency (EIA) reveals that beneath the

apparent chaos lies an intricate and structured supply chain within which different players have a defined functionand collude to ensure the logs keep flowing. Key nodes inthe chain involve well-connected intermediaries who securelogging rights for resale, cooperative groups of businesspeople who monopolise the trade at certain crossing points,and logistics companies on the China side of the borderwhich effectively legalise the timber by clearing it throughcustoms and paying tax.

The peak year for the illicit trade was 2005, when one million cubic metres (m3) of logs crossed the border. A brief hiatus occurred for a few years afterwards whenChinese authorities clamped down on the trade. But itproved to be short-lived and the scale of the business isonce again approaching the peak levels. This trade is illegalunder Myanmar law, which mandates that all wood shouldexit the country via Yangon port, and contravenes the country’s log export ban. It also goes against the statedpolicy of the Chinese Government to respect the forestrylaws of other countries and oppose illegal logging.

It is time for both countries to take urgent effective actionagainst the massive illicit timber trade across their jointborder. The 155 Chinese loggers have now returned home,but without action to end the trade others will take theirplace and further conflict, violence and forest destructionwill occur.

Environmental Investigation AgencySeptember 2015

INTRODUCTIONIn January 2015, the Myanmar army raided an illegal logging operation in a remote mountainous region in the country’s Kachin State.

4

The Greater Mekong Sub-region(Myanmar, Laos, Vietnam, Thailand,Cambodia and south China) has some ofthe largest expanses of natural forest inthe world and is widely recognised as aglobal priority for environmental conservation.1 Yet the region is in themidst of an environmental crisis.Projected forest loss by 2030 is predictedto reach 30 million hectares, with theregion labelled as one of 10 global“deforestation fronts”.2 Major causes offorest loss are the expansion of agri-businesses, illegal logging and unregulatedinfrastructure development. In manycases these threats are being driven byweak governance, absence of rule of lawand corruption within government agenciesmandated to protect the forests.3

Myanmar has some of the most ecologically intact forest remaining inthe region. Large globally significanttracts of forest exist in Tanintharyi inthe south and in the northern states ofKachin, Shan and Sagaing Division.Approximately 50 per cent of the countryis covered in natural forest, with 10 percent of this being primary forest.4

Myanmar’s forests are in the midst ofrapid decline and are increasinglydegraded, with natural forest coverdeclining by two per cent every year.5

The country lost a total of 1.7 millionhectares of forest cover from 2001 to2013. Forest loss has accelerated inrecent years, doubling from 97,000hectares a year pre-2009 to an averageof 185,000 hectares a year since.6

Myanmar’s deforestation rates areamong some of the highest in the entire region.

The rapid expansion of agri-businessplantations for various commercial

crops, including rubber, sugarcane and oil palm in the south, is the mainthreat to existing forests.7 Illegal logging is also a significant driver ofdeforestation and Myanmar’s forestshave been heavily impacted by commercial logging.8

This wave of deforestation is beinglargely driven by demand from the woodprocessing industries and plantation sectors in China, Vietnam and Thailand.All three of these countries have strictlogging controls in natural forests andhave turned to forest-rich countries inthe region, especially Myanmar andLaos, for raw material supplies.Myanmar is one of the main targets dueto its stock of valuable species, notablyits prized teak (Tectona grandis) androsewoods (Dalbergia spp.). It alsoshares a long land border of 2,129kmwith China, the biggest importer of illegal timber in the world.9

On April 1, 2014 Myanmar enacted a log export ban in an effort to slow therate of forest loss. Yet EIA investigationsreveal that the cross-border trade continues, providing raw materials toChina’s huge wood processing industry.

Aside from blatant illegality symbolisedby logs flowing across its land border to China, the Myanmar Government’sforest management system has led tosystematic over-exploitation with theofficial annual allowable quota regularly exceeded. This was especiallypronounced in the lead up to the logexport ban. For example, in the KathaForest Management Unit in SagaingDivision during the 2013-14 logging season, 60,000 teak trees were felledalthough the annual allowable cut was just 12,000.10

ABOVE:Myanmar Timber Enterprise logdepot, Sagaing Division.

STATE OF MYANMAR’S FORESTS

5

As all land in Myanmar is state owned,regardless of classification – reservedforest, protected public forests and protected area systems – all forests are deemed to be state property.11

Management of forests in Myanmar falls under the authority of the Ministryof Environmental Conservation andForestry (MOECAF) and its two subsidiary bodies, the ForestsDepartment (FD) and Myanmar Timber Enterprise (MTE).

The Forests Department’s role is toimplement the country’s Forests Lawand it is responsible for conserving andmanaging the forests. Under the law, the MTE is the only authority permittedto extract and trade timber, and it is amore powerful institution than the FD.MTE functions as a monopoly with themain purpose of maximising revenuefrom forest exploitation. Methods ofover-harvesting include felling a greaternumber of logs of a particular treespecies and extracting logs smaller indiameter than recommended. As such,the legal forest sector practices inMyanmar are a significant contributor to deforestation and forest degradation.Although MTE holds the rights to harvesting, logging is usually subcontracted to approximately 100enterprises, many of which have closeconnections to the Government. Theseconduct felling operations that act asservice providers, typically performingactivities related to timber felling and haulage.12

MTE is also in charge of a detailed hammer marking stamp system appliedto both logs and stems of trees. In theory, this system provides traceabilityin the supply chain. Yet as MTE doesnot differentiate logs at depots betweenthe types of forests from which they are derived, there is the significant riskthat timber from various supply streamscan be mixed together.13 With relativeease, timber can be inserted into a supply chain with all the official documentation yet without the requiredsteps to demonstrate a legitimate, traceable system.14

While in theory both the legal framework and traceability system seem robust, in practice widespreadinfringement occurs due to the politicalcontext in Myanmar. MTE’s priority is to generate revenue for the Governmentand the logging contractors allied to it.Corruption in the forest sector is alsowidespread. In 2014, TransparencyInternational ranked Myanmar 156thout of 175 countries surveyed in termsof corruption.15 In May 2014, the FDannounced that 700 of its employeeswere facing charges of corruption.16

Due to Myanmar’s complex history andethnic diversity, large swathes of the

country lie outside the direct control of the Government. These areas, such as Chin State and Kachin State, oftencontain significant tracts of forest andlie in strategically important borderareas. In some ceasefire areas, such as Karen State on the border withThailand, a system known as “modified procedures” occurs, whereMTE-authorised logging takes placewith a low level of legal compliance. But generally, logging in areas of ethnic conflict is deemed illegal under Myanmar’s forestry laws, with the timber from those areas effectively criminalised.

As well as overseeing the logging operations, MTE also controls the timber trade. To be deemed legal, all timber must bear the hammer mark of MTE and be shipped viaMyanmar’s main port in Yangon.17

The bulk of logs cut under the MTE system are sold through non-transparent auctions.

According to official trade data prior to the log export ban, India was thelargest importer of timber fromMyanmar, followed by China. Prior tothe beginning of political reform inMyanmar in 2010, both the UnitedStates and European Union imposedsanctions on direct imports of wood from the country. These measures have now been lifted, with teak especially sought after in those markets. In August 2014, the USTreasury Department granted a temporary waiver on sanctions against the MTE, allowing US companies to trade directly with it.18

Myanmar has embarked on discussions with the EU over aVoluntary Partnership Agreement on timber trade between the two sides.

Against a backdrop of weak forest governance, large quantities of timberare being seized by the Myanmar authorities, especially the high valuespecies of teak and tamalan. Most of theseized wood is passed on to MTE to besold at auction. Between April andDecember 2013, the Government seized35,000 tonnes of illegal timber, including5,000 tonnes of teak.19 In the threemonths after the log export ban cameinto force on April 1, 2014 more than20,000 tonnes of timber was seized inthe country, including 5,000 tonnes oftamalan. Commenting on the figures, an unnamed forestry official said: “The smuggling of timber in this year is worse than last year. Smuggling toChina is more than any other countries”.20

A major seizure in Kachin State inJanuary 2014 caused a diplomatic incidentwhen 155 Chinese labourers were arrestedat the logging site, subsequently sentenced to life imprisonment but thenpardoned by the president of Myanmar.21

BELOW:Tamalan tree, Sagaing Division.

© E

IA

The illicit cross-border timber trade from Myanmar to China has persistedfor more than 25 years. It has proven to be resilient in the face of conflict,ceasefires, recessions, Government policy changes, temporary clampdownsand nascent political reform in Myanmar.After steady growth throughout the1990s, the scale of the trade peaked in2005. The upward trend was disturbedfor a few years after adverse publicityled to policy changes in 2006 but by2013 it had returned to peak levels.

The geographical nexus of the trade isKachin State in Myanmar and the threeprefectures in China’s Yunnan provinceabutting the border; Nujiang, Baoshanand Dehong. Timber, overwhelmingly inthe form of raw logs, flows throughscores of crossing points along the1,000km border, ranging from formalinternational channels to clandestinedirt roads.

In Nujiang, the main crossing point isPianma, classified as a provincial levelopen port, where wood species logged inthe mountainous region of northernKachin, such as Chinese hemlock, birchand maple, enter China. In Baoshan,lower value species termed zamu, suchas kanyin, logged in Kachin are importedvia several crossing such as Houqiao,designated as a border economic cooperation zone by China’s State Council.In Dehong, the bulk of the timber movesvia the Jiegao special export processingzone in Ruili city. The trade here is dominated by higher value species,notably tamalan, padauk and teak whichare logged in Myanmar’s SagaingDivision, northern Shan State, andsouthern Kachin. Once over the border,the illicit timber is sold onto traders,either as unprocessed logs or semi-

processed sawn timber, with the morevaluable species transported to China’smain wood processing centres such asGuangzhou, a three-day drive away.

On the Myanmar side of the border, territorial control is complex and fluid.The Myanmar Government and its military controls about 60 per cent ofKachin state, with the remainder dividedbetween ethnic political groups and militias, principally the KachinIndependence Organisation (KIO) and its militia the Kachin IndependenceArmy, and the New Democratic ArmyKachin (NADK). From the logging site,illicit timber en route to China viaKachin often passes through territorycontrolled by different groups and theGovernment, with each levying informal‘taxes’ at a series of checkpoints.

An entangled array of operatives colludeand compete to secure logging sites andtransportation routes to the border in amodus vivendi arrangement driven byprofit. These include local governmentand military officials in Kachin, ethnicpolitical groups, Kachin and Chinesebusinessmen, and intermediaries whoplay a vital role as a link between theother parties. A common example is thepractice of buying a ‘mountain’ in areasof Kachin State. Local ethnic groupssuch as the NDAK grant logging rightsto a specified area for a defined period,generally a year. The rights are usuallybought by a group of Chinese businessmenin Yunnan through an intermediary whohas connections to the various factionson the ground, both at the logging siteand also along the route to the border.Once the deal is agreed, the Chinesebusinessmen sub-contract the loggingand transportation to smaller companieswhich employ local labour in Yunnan to

6

BRIEF HISTORY OF THE MYANMAR-CHINA OVERLAND TIMBER TRADE

ABOVE:Timber traders inspecting logsfrom Myanmar, Pianma,Yunnan, 2012.

7

cross into Myanmar to cut the trees andtransport the timber across the border.

The illicit cross-border timber trade isentirely driven by demand for comparatively low-cost raw materials inChina, and abetted by local and nationaltrade policies in China and corruption,conflict and weak rule of law in Kachin.This blend of demand for raw materialsin a country adjoining a zone of instabilityrich in natural resources with a porousborder is disastrous for the forests ofKachin, Shan and Sagaing, and for thelocal communities reliant on them forlivelihoods and ecological security.

The chronology of events leading to thecurrent massive illegal wood trade canbe broken down into three phases. Thefirst phase began in the late 1980s whena series of bilateral trade agreementsbetween the governments of China andMyanmar and ceasefire deals with ethnicresistance groups led to the gradualopening up of an area which was formerlya closed hinterland. In 1988, the twogovernments signed a cross-border tradeagreement, followed by a series of dealsbetween Myanmar and the Yunnanprovincial government in 1989, includingone on forestry. The same year the NDAKsigned a ceasefire, opening up a large areaof northern Kachin to intensive logging.At the start of this period, logging andtrade was small-scale, using mules totransport relatively small quantities ofwood for local use. A decade later, intact frontier forest in Kachin was beingopened up for exploitation. Satelliteanalysis shows that forest clearing in Kachin more than tripled between the periods 1978-89 and 1989-96, with logging responsible for half of the deforestation.23

During the second phase, cross-bordertimber smuggling escalated rapidly fromthe late 1990s to 2005. In 1997, thetotal volume of forest products tradebetween Myanmar and China was300,000 m3; by 2005 it had reached 1.6 million m3.24 Out of this total, onemillion m3 of illegal logs were transportedacross the border into Yunnan.25

A major contributory factor was theimposition of a logging ban in Yunnan in1996, followed by a national ban inChina in 1998. Overnight, the woodindustry in Yunnan faced collapse andturned increasingly to Kachin for rawmaterial supplies. A ceasefire dealbetween the KIO and Myanmar militarygovernment in 1994 also opened uplarge swathes of forests to logging.

The third phase began in 2006 whenreports by non-governmental organisationsand media turned a spotlight on thebooming illegal logging and trade takingplace in northern Myanmar. The centralGovernment realised substantialamounts of income were evading its

preferred channels via the MTE-systemand its business allies. In January 2006,the country’s forest minister publiclyadmitted that huge volumes of timberwere being traded unofficially across itsborder. A few months later, the Chineseauthorities responded to its then allies’concerns and took action to stem theflow of wood. In March, the Yunnan government announced a suspension oftimber imports across the border andbanned Chinese nationals from crossingthe border to conduct logging.26

In May 2006, the Yunnan governmentissued a new regulation aimed at managing the timber trade betweenMyanmar and Yunnan.27 This sought toformalise the trade by requiring advanceapproval for timber “cooperation projects”,registration requirements for timberimporters with a target of five per prefecture, and endorsement from thecentral Government of Myanmar. By late2006, it was reported that some parts ofthe border trade had reopened for timbertrade under a quota system for chosencompanies.28 Chinese customs data indicatedthat the measures suppressed the tradefor a few years, with only 270,000m3 oflogs crossing the border in 2008.

Yet this reduction was not to last. By2013, trade in timber products betweenMyanmar and China reached a recordlevel of 1.7 million m3 (of which 938,000m3 were logs), worth $621 million. Ofthis total, 94 per cent was registeredentering China via the Kunming customsoffice in Yunnan.29 The wood had beentransported overland across the borderin contravention of Myanmar’s forestregulations and against the intent of thepolicy changes announced by theYunnan government in 2006. The illegalcross-border timber trade has reboundedand is now back in full flow.30

“The illicit cross-border timber tradeis entirely driven by demand for comparatively low-cost raw materials in China”

MYANMAR ROSEWOOD UNDER THREAT

Extremely rapid growth in Chinese imports of ‘redwood’, ‘rosewoods’ or ‘Hongmu’ timbers fromMyanmar in the past two years is directly drivingincreased illegal and unsustainable logging.

EIA research shows that, based on current trends, the two most targeted Hongmu species in Myanmar – tamalan (Dalbergia oliveri /bariensis) and padauk (Pterocarpus macrocarpus) – could be loggedto commercial extinction in as little as three years.

Listed as a “reserved” species, only MOECAF has the legal right toharvest and trade in tamalan yet, through a vast illegal trade, it has become one of the most traded timber species over the China-Myanmar border. Data shows that $52 million worth of rosewood logs were transported across the border in the month afterMyanmar’s log export ban came into effect.22

8

Since 2012, EIA has conducted a series ofinvestigations into the illegal cross-bordertimber trade between Myanmar and China,covering areas of Kachin State and SagaingDivision, the prefectures of Nujiang, Baoshanand Dehong in Yunnan, as well as the woodtrade hubs of Kunming and Guangzhou insouthern Guangdong Province.

EIA’s findings confirm a resurgent trade after the temporaryclampdown in 2006, the scale of which is approaching the peakyears leading up to 2005 when the volume of logs flowing acrossthe border reached one million m3 a year. The only evidence oflingering impacts of the 2006 measures is a requirement forofficial papers on the China side of the border. These includeproof that the timber has been designated as legal by the central Government of Myanmar. Given Myanmar’s forest productregulations stating that only wood under the control of theMyanmar Timber Enterprise and shipped via Yangon is deemedto be legal, and the imposition of a log export ban from April2014, such documents cannot be genuine. Many traders EIA metstated that so long as the required taxes are paid on the Chinaside of the border, the shipments are deemed legal, irrespectiveof whether the wood came from illegal logging operations.

Along the Kachin-Yunnan border, EIA found shifting trade routeswith different crossing points being used according to local circumstances such as conflict flaring up and proximity to activelogging areas. In June 2011, hostilities resumed between theMyanmar military and KIO, impacting smuggling routes andcrossing points but not the scale of the trade.

During undercover meetings with EIA investigators, Chinesetraders revealed how logging operations now take place furtherinside Kachin as commercial timber supplies near the border areexhausted by intensive logging operations. Also, increasingamounts of illicit timber originate outside Kachin, especially highvalue species such as tamalan from Sagaing Division and teakfrom north Shan State. A huge surge in smuggling of rosewoodlogs across the border occurred in 2013, reaching 220,000 m3

worth about $300 million.31

Through its investigations, EIA has built up a unique picture ofthe cross-border trade, identifying the key components of theillicit supply chain and the main culprits. While the state of logging on the Myanmar side of the border and the timber flowsinto China appears chaotic and complex at first sight, it is in facthighly structured and well-orchestrated, with different factionscolluding to profit at the expense of Myanmar’s precious forests.

2012 INVESTIGATIONS:

NUJIANG AND BAOSHAN

In April 2012, EIA investigators visited the main crossing pointsfor timber entering Yunnan’s Nujiang and Baoshan prefectures,and tracked down wood traders and processing companies basedin Kunming and Guangzhou reliant on overland imports fromMyanmar for raw material supplies.

In Pianma, Nujiang, EIA witnessed large stocks of raw logs heldin storage areas along the main road. Pianma has historicallybeen the main entry point for logs entering Nujiang due to itsstatus as a provincial level open port. In 2002, Nujiang imported308,000 m3 of logs from Myanmar, compared with just 36,000m3

in 1997, with 95 per cent entering via Pianma.32 The Kachin sideof the border is under the control of the NDAK, as are concessionsto log the adjacent mountainous terrain in north Kachin.

Traders said that most of the timber stored in Pianma wasowned by the Yuandong company, which was carrying out logging in neighbouring Kachin under a hydropower dam development scheme. Sporadic conflict had disrupted the trade,with reports of an important bridge being blown up temporarilyaffecting supplies. One logger encountered by EIA told how heand 29 colleagues were recruited for RMB1000 ($15) a day tohike over 100km into Kachin to log. After cutting down trees fora week the group was attacked by soldiers and fled. He was theonly one to make it back to Pianma.33

In Baoshan prefecture the busiest crossing point was Zizhi,where EIA observed trucks using a shallow river to ferry timberto a succession of well-stocked log storage areas. Buyers wereseen visiting some of the yards to source timber species such ashemlock and laurel. The trade through Zizhi appeared to have

EIA INVESTIGATIONS

9

grown due to the construction of roads built by Chinese mining companies in neighbouring Kachin. The nearby Diantancrossing, which used to be the busiest in the area, was deserted due to higher charges being levied by the NDAK on the Kachin side of the border and the severe depletion offorest close to the border.

From the border area, EIA investigators travelled to Kunming,the provincial capital of Yunnan and an important hub for timber brought overland from Myanmar en route to wood processing hubs in southern China. At the Xinan wholesale timber market, EIA observed a decline in the amount ofMyanmar timber on sale. Sellers said it was due to loggingoperations having to go deeper into Kachin to find commerciallogging areas and the impact of renewed conflict. One traderdescribed the logging situation in Kachin: “It’s all stolen andlogged illegally. Over there, the environmental destruction isvery bad. The mountains are completely mined out. It’s actually quite horrific.”

In Guangzhou, EIA undercover investigators met with officialsfrom the Munian Wood Company. The family-run company wasformed in 1987 to trade logs from Myanmar and had grown tobecome one of the biggest processors of Burmese teak inChina, mostly for flooring. All of its supplies of teak fromMongmit, in north Shan State, are imported via Ruili, wherethe company has large factory, and it is purchased outside ofthe Myanmar Government system. As the owner of the company, Wen Shuinian, said: “We don’t care what channelsthe materials come from, so long as they bring it over toChina and declare the taxes.”

Meetings with other companies dealing in wood fromMyanmar, in both Kunming and Guangzhou, confirmed keyaspects of the trade; logging operations going further intoMyanmar as accessible forests are depleted , the importanceof paying tax on the China side of the border to ‘legalise’ the timber and the intricate relationships along the supplychain. Even major buyers do not have direct access to thewood source in Myanmar, with most deals being done once the material has moved near to the border. The trade is only made possible by the involvement of well-connectedintermediaries.

OPPOSITE PAGE:Log stockpile in Zizhi, Yunnan, on theMyanmar-China border, 2012.

ABOVE LEFT:Truck carrying logs across the river border, Zizhi, Yunnan, 2012.

ABOVE RIGHT:Pianma town, the main entry point for logs from Myanmar into NujiangPrefecture, Yunnan.

10

2015 INVESTIGATIONS:

DEHONGIn June 2015, EIA investigators posing as timber buyers travelledto Yunnan’s Dehong Prefecture to assess the level of illicit timberentering from neighbouring Myanmar and the methods used tomove the material into China. Dehong has historically been thelargest entry point for timber out of the three border prefectures.

In 2005, out of a total volume of one million m3 of illegal logsentering Yunnan from Myanmar, 600,000 m3 were recorded inDehong.34 Dehong’s prominence is due to the presence of theinternational border crossing at Muse-Ruili, including the JiegaoSpecial Export Processing Zone, and proximity to better qualityroads on the Myanmar side of the border meaning that timberentering the prefecture comes from further afield, such as teakfrom northern Shan State and rosewood from Sagaing Division.

During the week-long investigation, EIA visited log storage areasand wood factories in Ruili and nearby Nongdao, as well as significant border crossings, including the Nbapa-Ban Ling crossing. Detailed discussions with timber traders and customsclearance agencies provided insights into a well-organised network dedicated to sourcing illicit logs and sawn timber fromMyanmar, and how such imports are ‘normalised’ on the Chinaside of the border through taxation.

NONGDAOAcross from the Nanwan River, the sprawling town of Nongdaoexists mainly as a storage and trade hub for timber fromMyanmar. In April 2014, control of the main route leading to

Nongdao on the Kachin side of the border fell into the hands ofthe Myanmar military after clashes with the KIO.35

The town is dominated by log yards of varying sizes, some ofwhich contain over 20,000 m3 of logs. Many of these are storageareas used by multiple wood traders awaiting buyers. At thetime of EIA’s visit, the main species in stock were teak, tamalanand padauk. Most of the tamalan and padauk were flitches(square logs) relatively small in dimensions, with large quantitiesremaining from the 2013-14 logging season. In contrast, teaklogs and flitches were freshly cut, with one yard receiving several thousand tonnes of teak logs during EIA’s visit.

At Yifu Trading, one of the biggest importers in Nongdao, a company representative told EIA investigators that most of hertamalan and padauk were imported in 2013 but remained unsold.She said the market had been in decline since early 2014 andthat many traders in Nongdao and Ruili were sitting on stocks ofrosewood worth tens of millions of dollars while waiting for theprice to increase again. She explained that the market fortamalan and padauk was at its height in 2013 when surgingdemand for Hongmu furniture peaked. At that time, traders fromFujian, Guangdong and Zhejiang provinces flocked there to buyraw materials for their factories. The prices then were also skyhigh – large-sized tamalan flitches (above 30cm diameter) couldfetch between RMB50,000-80,000 ($7,700-12,500) per tonne.

From early 2014, the market for tamalan and padauk begandeflating after speculation led to a classic bubble market. The price of the same tamalan had almost halved by mid-2015,with traders stockpiling rather than sell at a loss. Companiessuch as Yifu were reducing tamalan and padauk imports to about25 per cent each of their total, with the remaining 50 per centcomposed of teak, the price of which was steadily increasing. A major trend observed by EIA in Nongdao and Ruili was

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escalating trade in Burmese teak and declining demand for rosewood.

Aside from the fall in price, another reason for the drop indemand for tamalan and padauk is the impact of the ChineseGovernment’s anti-corruption drive on the sale of luxury itemssuch as Hongmu furniture. One driver who used to ferry customers from Dehong’s Mangshi Airport to Ruili to buy jadeand rosewood said his business had come to standstill. Onetrader told EIA investigators: “So there’s no movement (in themarket). Only the Government officials buy these things… inone year, they make [RMB]50,000-60,000, how can they buythese? Only by being corrupt, how else can you buy these?”

RUILI

Less than an hour from Nongdao lies the urban centre of Ruiliand the adjacent Jiegao border crossing and free trade zone.Numerous log yards and wood processing factories are strewnacross the city, which appears to owe its apparent prosperity totrade in raw materials from Myanmar, especially timber and jade.

In Ruili, even though tamalan and padauk imports havedeclined, trade in large-sized materials (over 30cm diameter)has continued unabated. At log yards in Jiegao Free TradeZone, EIA investigators observed trucks unloading large-sizedtamalan and padauk flitches daily. EIA saw groups of visitingbuyers in Jiegao and Ruili purchasing such materials. Whiledemand for smaller rosewood flitches used for Hongmu furniture has fallen, the larger pieces are still sought after forinvestments. Traders revealed that these large-sized materialswere only available in Ruili and virtually non-existent inNongdao, probably due to the source of the timber and transport logistics.

OPPOSITE PAGE LEFT:Buyers inspecting illegal tamalan flitches, Nongdao, June.

OPPOSITE PAGE RIGHT:Fresh teak logs, Nongdao, June 2015.

BELOW:Log trucks in Kachin waiting to cross the border into China, April 2015.

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BORDER CROSSINGS

Although several crossing points used for timber transport liewithin 50km of Ruili, EIA learnt that several of these were largely inactive during the 2014-15 logging season, with themajor exception of the Nbapa-Ban Ling crossing. In early 2015,EIA observed long lines of timber trucks queueing up on theMyanmar side of the border to make the crossing. When EIA visited Ban Ling in late June 2015, the large log storage areahad been virtually cleared of logs, with the exception of a smallpile of fresh teak. The Chinese owner told investigators that thematerials had arrived only a few weeks earlier and he had about100 tonnes stockpiled on the Myanmar side of the border. Healso revealed that the teak logs were bought directly from theMyanmar military at a “red line” area across the border, beyondwhich he said it is unsafe for Chinese nationals to travel. At BanLing village, a sign dated September 2007 posted by the villagecommittee stated that Chinese nationals were prohibited fromcrossing into Myanmar to carry out logging or timber trading.

Ban Ling is an unofficial crossing without a full-time checkpoint.Local sources said there are at least 10 such crossings in thearea through which timber could be brought in to Nongdao.Many of these were described as unpaved mountain roads andare mostly located in KIO-controlled territory on the Myanmarside. In contrast, the geographical location of Ruili allows thecity to receive timber from a variety of crossings. Much of thetimber is still routed via the same river crossings that supplytimber to Nongdao. This is corroborated by Ruili-based companyRongmao Trading, which has a presence in key border crossingsin KIO territories to move timber from Myanmar into its logyards in Ruili.

A large portion of timber in Ruili is also transported from Museinto Jiegao, an official international crossing. Of the two woodimporters based in Jiegao, Jinxing Trading, is one of the biggestimporters of timber in the whole of Yunnan.

According to a foreman at Jinxing, 98 per cent of timber arriving at its log yard is extracted from around the Mandalayand south Kachin area, including Monywa and Ingyi. Tamalan andpadauk can come from further away, with one trader sourcingfrom Kalay and Tamu, in Sagaing Division, near the India-Myanmar border. Occasionally, seized timber auctioned off bythe Myanmar authorities also arrives in Jiegao.

Timber arriving in Nongdao is mainly from or through Kachinareas. This explains the generally poorer quality timber available in Nongdao, largely harvested from degraded forestsalready intensively logged, compared to the bigger and betterquality offered in Jiegao extracted from further inside Myanmar.One trader said loggers now have to venture up to 300km intoMyanmar to find large commercially valuable trees.

CROSSING THE LINE

On the Myanmar side of the border, the main crossing points for timber bound for Nongdao and Ruili fall under the control of different forces. The active crossing at Nbapa-Ban Ling is in KIO-territory, while Muse-Jiegao is in Myanmar Government territory. Due to these varying local circumstances, different

systems have evolved at these crossings to ensure the timberflows into China unhindered.

The cartelAll timber moving via the Nbapa crossing falls under the sway ofa group of four influential individuals known as BDYA, based onthe initials of their local names – Brang Nu, Dung Hpaung Gun,Lee Maw Yung and Ali Jie. BDYA is referred to by local timbertraders as “dazu” or big group. Using an intricate network ofcontacts embracing the KIO, Myanmar Government and militaryas well as local Chinese officials, the group plays a central rolein ensuring that wood logged by smaller Chinese firms or“xiaozu” is transported from the cutting site across the borderwithout problems

Each year, running from July to June, members of BDYA bid forthe exclusive right to tax all timber passing through Nbapa andother smaller crossings nearby. In addition, BDYA also pays offMyanmar military officials, usually in gold bars, to ensure safepassage for timber trucks moving through Government-heldareas on the way to the border. Gold has become the currencyof choice for larger payment in the cross-border timber trade,due to an influx of counterfeit currency being used for timberdeals. To make a profit on its investment, the group imposes atax on consignments of timber moving through the crossings itcontrols. In 2014, the price for tamalan and padauk was approximately RMB8,000 ($1,250) per tonne.

Members of BDYA do not confine their activities to safeguardingtimber transport routes but are also involved in logging operationsand agricultural plantations in Kachin, as well as timber tradingand processing in Yunnan.

The most notorious member of BDYA is Ali Jie (also known as Li Xinli), a Chinese woman in her mid-forties. For years she hasused close connections to both the KIO and Myanmar military tobuild a business empire spanning casino taxation, jade, mineralsand agricultural plantations. During the first half of the 2000s,she obtained logging concessions in Kachin State due to herclose relationship with the then Northern Commander of theMyanmar military, Maung Maung Swe.36

Another close relationship with a senior figure in the KIO hasallowed her to obtain lucrative business opportunities such as taxcollection and hotels in the town of Laiza, headquarters of the KIO.Independent of BDYA, she is also controls taxation of variouscommodities moving between Laiza and Yingjiang, north of Ruili.

The second key figure in BDYA is Li Maw Yung, also known by his Chinese name Li Maorong. Based in Ruili, Li owns severalcompanies including Rongmao Wood Trading and R & M Wood,producing Hongmu furniture and veneers.

Li has been involved in the cross-border timber trade for atleast a decade. In 2009, it was reported that his companyowned a large log storage area in Ban Ling and a sawmill inNbapa, and had paid $1.5 million to ethnic political groups inKachin during a single logging season. He was said to overseethe operations of several small logging groups cutting trees inKachin’s Bhamo district for a fee of RMB600,000 ($88,000)after he forged a deal with the then Myanmar military NorthernCommander Soe Win.37

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In 2015, traders in Ruili and Nongdao told EIA investigatorsthat Li effectively controlled wood supply lines into Nongdaoand had secured the contract to tax timber shipments viaNbapa for the 2014-15 logging season. He was said to be thebiggest wood trader in the area and was referred to as the“dragon’s head”. At the time of EIA’s visit, Li had a stockpileof 40,000 tonnes in storage areas in Ruili and was activelytrading teak since the rosewood price fall. Chinese customsdata shows that Rongmao imported 10,263 tonnes of teaklogs from Myanmar in 2014, making it the fourth largestimporter in China, as well as 12,720 tonnes of rosewood.38

BDYA is reported to have increased its activities since conflict flared up again between the KIA and Myanmar militaryin 2011. By 2015, a schism had appeared in the group after AliJie made a large payment to the KIA to secure logging andtimber trading rights and excluded other BDYA membersfrom the deal.39

Yet BDYA does not have a total monopoly in the area. Thereare five smaller groups in the Nongdao which avoid BDYAtaxes by using less-travelled dirt roads through territory controlled by the Myanmar military, which charges up toRMB30,000 ($4,700) per truck for logs transported throughits territory. A member of one of these groups told EIA investigators his business had increased since the conflictacross the border resumed.

Customs agentsRegardless of its origins or the crossings used, once timberfrom Myanmar enters China it is considered legal for tradeand distribution so long as the import duties are paid. Also,as Jiegao has national level free trade zone status andNongdao has provincial level free trade status, import duesare not payable on timber stored there until it is sold andmoved on. This is a useful incentive for Chinese importers,who can store the material in secure locations rather than involatile areas across the border in Myanmar.

TOP:Myanmar logs owned by Rongmao company, Ruili, June 2015.

ABOVE:Local government sign in Ban Ling dated 2007, prohibiting Chinese nationalsfrom crossing the border to do logging,wood transport and gambling.

LEFT:Ali Jie, leading member of the BDYA group.

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A key element of the cross-border trade is the system used to pay import taxes to Chinese authorities and customs clearance procedures involving submission of documents toshow compliance with the 2006 Yunnan interim measures. This function is performed by specialist trade companies registered with the Yunnan Provincial Department of Commerce.

In Jiegao, EIA investigators met with staff from Yunnan RuiliJinxing Trade Group, the largest customs clearance agent fortimber from Myanmar in the area. Jinxing provides an integratedservice for firms seeking to bring wood across the border by carrying out the clearance procedures each time a truckload of timber arrives at the Muse-Jiegao crossing and providingstorage facilities for logs in the free trade zone.

EIA investigators spoke at length about the import process withJinxing’s foreman and were shown copies of sample documentsneeded to clear consignments. According to the foreman, noexport documents from Myanmar are required to arrange theimport documents in China. He added: “Over there, it’s smuggled, so long as you pay enough money, they let you transport across.” The import requirements include documentsfor quarantine, industries and commerce, state forestry administration and customs.

EIA investigators accompanied the foreman to the Jiegao checkpoint where the procedure was observed. At the crossing,the truck driver gave his passport, documents and money to theJinxing employee, who then entered the office and handed thepaperwork and money to a customs officer. Once processed, the customs officer gave a sign to the military personnel outside in charge of inspecting trucks and the timber truck was waved through without inspection. There is clearly a close relationship between trading companies such as Jinxing and the customs officers.

Documents seen by EIA revealed that Jinxing received a quotafrom the Yunnan commerce department to import 50,000 m3 oflogs from Myanmar, issued on March 4, 2014, just before the logexport ban in Myanmar came into force. The document was stillbeing used to clear shipments of logs in June 2015.

The 2015 import duties payable to customs for tamalan andpadauk are about RMB2,200-2,300 per tonne. The duty for teaklogs is about RMB800 per tonne. The amount for tamalan andpadauk in 2014 was said to be RMB1,000 per tonne.

Chinese customs data shows that Jinxing was the biggestimporter of rosewood logs from Myanmar in 2014, with a totalvolume of 24,274 tonnes.40

EIA INVESTIGATIONS

Tamalan timber being unloaded at Jinxing company warehouse,Jiegao, June 2015.

Jiegao border gate.

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1a. Consortium of traders pool together investment capitalto lease logging access in mountains from the local military.Often, contracts are not abided and cancellations or suspensions can happen at any time. This type of operationwas prevalent in the KIO areas.

1b. Buyers source from villagers who head for the mountains to log the timber Smaller traders generally opt to source this way, as it is lessrisky compared to the heavy initial investment of leasingmountains. Increased attention on illegal logging has alsomade this a more viable option.

For the lease of a mountain, the cost is several millionRMB per mountain, depending on its size. Additionalpayments needed to build roads and hire labour. Wage paid to loggers is on average RMB300 a day.

Prices were for 2014-15 roughly as follows: RMB6,000-7,000 (tamalan)RMB4,000 (padauk)RMB2,500 / 3,600-3,800 (teak log/flitch)

HOW THE CROSS-BORDER TIMBER TRADE WORKS

TIMBER SOURCE

2a Transportation from forests to borderPrices differ according to area and route. Transportationtakes anywhere from four days to over a week, dependingon location and routes.

2b Extra payments paid during transportation from forest to border Often these payments are referred to as ‘tax’ but in realitythey are mostly bribes for personal benefits. The paymentsare made at checkpoints run by different authorities, i.e.forestry, police, military, KIO etc.

RMB80,000 per 40-tonne truck or RMB2,000 per tonne(Nongdao estimates)There is also a ‘Truck Entrance Fee’ of RMB10,000 per truck

Average RMB200,000 per 40-tonne truck, or RMB5,000per tonne (over six checkpoints – Nongdao estimates)Average RMB380,000 per truck (number of checkpointsunknown – Jiegao estimates)

TRANSPORTATION

3a Payment of Dazu Export TaxThrough the KIO crossings, payments have to be made toDazu before timber can exit Burma.

3b Payment of Myanmar Government Export TaxThough this remains unconfirmed, the export tax imposedby the Myanamr Government is said to be per truck ratherthan on a per tonne basis.

Based on 2015: RMB5,000-6,300 (tamalan / padauk) RMB4000 (teak)

Based on 30-40 tonne trucks: RMB20,000-30,000 per truck

EXPORT TARIFFS

4 China Import FeesCollectively referred to by traders as import tax, the amount paid to the Government is said to include fees forquarantine and inspection, country and local tax bureau,national tax etc. The tax is calculated based on species imported and its weight.

Prices for 2015: RMB2,200-2,400 (tamalan / padauk)(2014: RMB1,000 average)RMB7,000 (teak)

IMPORT TARIFF

Raw material in Ruili / NongdaoPrices vary depending on dimensions

RMB30,000+ (>30cm dia tamalan)RMB15,000 (<30cm dia tamalan)RMB10,000+ -20,000 (teak)

MARKET PRICE

Tamalan three-piece bed setPadauk writing tableStandard teak flooring

RMB68,000RMB26,500RMB450-500 per m2

FINISHED PRODUCTS PRICE IN CHINA

Note: All figures derived from EIA field investigations in June 2015 and are in Chinese renminbi.

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THE ARREST OF 155 CHINESE IN MYANMAR

Tengchong, the main town in Yunnan’s Baoshan Prefecture,came under the spotlight when the news broke in January 2015that 155 Chinese citizens had been arrested in neighbouringKachin State after the Myanmar military raided a huge loggingoperation in the Waingmaw area, about 100km from the statecapital of Myitkyina. Most of the arrested labourers came fromthe border town of Houqiao and were recruited by Tengchong-based companies.

Few locals had expected these arrests to later turn into a diplomatic incident. Arrests and sporadic violence are a fact oflife for Chinese workers employed to log or transport timber inKachin, described by one Chinese wood trader as “blood andsweat business”. But in remote border areas where work ishard to come by, many labourers are willing to take a chance. In 2014, at least 1,600 Chinese nationals were sent to work logging the mountains where the arrest took place.41

Tengchong has long been an important centre for the trading of natural resources from neighbouring Myanmar, mainly jadeand timber. Many of the traders EIA encountered in Ruili andNongdao came from Tengchong. Ali Jie of the BDYA group has a house there. In the past, the Tengchong county governmenthas funded road-building in Kachin to speed the import of raw materials and by 2005 it was receiving RMB78 million ($10 million) in six months from taxing the border trade, most of which was derived from timber.42 Situated just over200km from Myitkyina, Tengchong’s strategic importance in the Yunnan-Kachin trade was recognised when the Tengchong Houqiao crossing was promoted as one of the state-level ports.43

While the January 2015 incident in Waingmaw at first appears achaotic occurrence with hundreds of Chinese workers caughtbetween different factions on the ground in Kachin, detailedresearch by EIA shows that the logging operation was highlyorganised and overseen by influential intermediaries andChinese companies.

The military operation occurred in an area of Kachin under thecontrol of a breakaway ethnic political group named LasangAwng Wa, after its leader. He split from the KIO in 2005 wherehe was the security intelligence chief and agreed peace termswith the Myanmar Government, in return receiving territory andlucrative logging and gold mining rights.44 His group is allied tothe NDAK, with both operating as a Border Guard Force in conjunction with the Myanmar Government.

In a petition letter obtained by EIA, bosses who had employedthe arrested labourers claimed they had purchased the rightsto log two mountains in Lasang Awng Wa territory – named as“Guitou” or turtle head and “Wutai” or five platforms – fromthe group for the 2014/15 logging season. A key intermediary inthe deal was Guo Yungang, who arranged the deal with LasangAwng Wa on behalf of Tengchong-based timber companies. Guois a Burmese national of Chinese descent originally from Guyongnear Tengchong. He has a military background and is said to becommander of the 1003 Battalion of the Border Guard Force. Heis also said to be the adopted son of Zakhung Ting Ying, head ofthe NDAK and a member of parliament in Myanmar.

On the China side, EIA was told that most of the arrestedChinese loggers and truck drivers were hired on short-termagreements under the auspices of a Tengchong-based dazugroup of four major timber traders Guo Wei, Li Zibo, Zhang Qijinand Liu Kuanzhuang. EIA’s analysis shows that the cross-border

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wood trade via the Houqiao border crossing is structured in asimilar way to that of Ruili; a main dazu group using connectionswith powerful intermediaries to secure forest concessions inKachin from ethnic armed groups, with logging rights thensold on to a host of smaller players which pay fees to thedazu for the logging rights and using its roads. One receiptobtained by EIA from a truck driver caught up in the raidshows a payment of RMB1,250 ($200) to the four bosses paidon arrival at the cutting site.

Further payments or ‘tolls’ have to be made by the Chinesedrivers inside Kachin at six checkpoints controlled by theBGF, KIO and Government, totalling about RMB2000 ($315)per truck. Chinese traders also claim they paved the way forthe logging operation and timber transport by paying off localMyanmar military officers in gold bars.45

As in Ruili, several trading firms based in the Tengchong areafacilitate the import of timber into China via the Kambaiti-Houqiao crossing. As a truck laden with timber approachesthe Chinese side of the border, representatives of the tradingcompany are on hand to submit the relevant documents andclear the cargo. These companies are registered with theYunnan government to import timber from Myanmar andoperate on behalf of the many small trader who own the wood.

Following the arrests in January, a timber boss appealed to the local government in Tengchong to help secure therelease of his workers on the grounds that he had paid tax on imports of timber from the logging site into China in lateDecember 2015. Receipts for these payments to the ChineseGovernment covered the import of 339 tonnes of logs, withthe customs clearance carried out by Tengchong Hongyu

OPPOSITE PAGE:Arrested Chinese labourers, Myitkyina,Kachin, July 2015.

LEFT:Lasang Awng Wa.

BELOW LEFT:Receipt for taxes paid by log truck driver to dazu members.

BELOW RIGHT:Petition letter sent by timber companiesto local government in Tengchong appealing for assistance in obtainingrelease of the 155 loggers.

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Trade company. Chinese customs data shows that Hongyu andanother logistics company called Tengchong Xinghua Tradebetween them imported 17,916 tonnes of rosewood Hongmu logs from Myanmar in 2014.

The mass arrest and subsequent trial process in Myanmar hasserved to bring the murky business of logging and timber tradealong the Myanmar-China border into the spotlight afterdecades in the shadows.

Some of those who evaded arrest by fleeing told local mediathey believed they had been operating legally in Kachin, basedon stamps by Chinese officials in their border pass document as well as receipts at numerous checkpoints. Yet the ill-fatedlogging operation clearly contravened the MyanmarGovernment’s forestry regulations and log export ban, and assuch was not compliant with Yunnan’s 2006 interim measures.Although the Chinese Government officially recognised that itscitizens were arrested for illegal logging, the media portrayedthe arrested labourers as victims of an ongoing power strugglebetween the Myanmar Government and ethnic political groupsover rights to resources. On April 22, the arrested Chinese were sentenced to six months in prison under immigration laws,but higher sentencing was imminent.46

On July 22, after several postponements, 153 of the Chineseworkers were given “the highest penalty” under the PublicProperty Protection Act and anti-drug laws of life imprisonment(usually 20 years) while two adolescents received 10-year jail terms.47

But the climax was yet to come. Days later, following theChinese Government’s request “to conclude the case properlyand return those people to China as soon as possible”, the case took another twist as all 155 labourers were freed under a presidential pardon granted to 6,996 prisoners.48 While thefamilies of the Chinese workers celebrated, many in Myanmarpublically criticised the decision.49 On their return to theTengchong area, the freed loggers were told by local government officials not to talk to the media nor return toMyanmar for the rest of the year.

CASE STUDY

BELOW:Border town of Houqiao, where many of the arrested loggers come from.

BOTTOM:After being sentenced to life imprisonment the Chinese loggers werereleased under presidential pardon.

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They described trekking for days across mountainous terrain,hiding during the day, and severe financial hardship as thetrucks for which they had borrowed money to purchase wereseized by the Myanmar military. Some also spoke of beingreleased after their bosses paid off the military.

One villager from Houqiao said: “It was my first time inMyanmar, I was there to fix the roads but I will never go there again. I would have been there for two months and getRMB300 ($47per day). When I was arrested on the road, a soldier of the Government military took my wallet, mobilephone, belt and shoes. They did the same to all other Chineseand we never got them back. I had the border pass and mytruck also had a permit from Chinese authorities, so I don’tunderstand why it was illegal to work there.”

Another driver from Tengchong said: “We walked days andnights by foot, later joining other groups of the escaped. Ittook us four days to reach China. We had no food or anythingelse. Our trucks bought with loans, we had to abandon them.We ended up with only debts.”

Another logger who was arrested managed to pay for hisescape: “After the arrest started, I hid in the forest for twodays. I was so hungry that I took the risk to return to mytruck for some food. All of the sudden, there were riflespointing at my head. After 10 more days, I got hold of a noteof the Burmese money, with which I discreetly proposed payment for a release. The army officer understood and leftimmediately. When he came back with a local villager whospoke Chinese, the guy said that I can go back home if I paythe equivalent of RMB20,000 ($3,180, he would report that Ihad ran away. He kept his word.”

These testimonies back up information gathered by EIA in the course of its investigations, revealing the widespread exploitation of Chinese labourers tempted into Kachin by a lack of work opportunities. For paymentbelow $50 a day, these workers are at the sharp end of theillegal logging business, unlike the bosses in China whorecruit them and make significant profits without having toenter the forest.

Drivers are usually hired for specific jobs and sign contractsgiving minimal compensation in the event of injury or death.There have been incidences of drivers being killed or maimedby land mines. One driver recounted to EIA investigators thathe was in a company of Hunan loggers who stepped on landmines and were “blown up into pieces”.

If arrested by soldiers, release is dependent on willingness ofthe boss to pay the authorities. It was claimed that some ofthe truck drivers caught in a January 2015 incident werereleased after bosses paid RMB300,000 ($46,000) per person.In other cases, payment has been made to corrupt officials in Myanmar only for the recipient of the bribe to renege onthe deal.50

One driver told how he was arrested and handcuffed by the Myanmar army at gunpoint and his boss had to payRMB50,000 ($7,800) to get him released. The same driveradded that he “couldn't expect less from the Burmese as theChinese go over to steal their things, so how can you expectthem not to take us in!”

He added: “They won’t arrest the boss. The bosses don’t gointo Burma.”

EXPENDABLES IN A DIRTY BUSINESS

Loggers and truck drivers who evaded capture during the raid gave harrowing accounts of their escape to the media once they made it back across the border.

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In 2012, EIA research revealed thatChina was the world’s biggest consumerof illegal timber, having imported atleast 18.5 million m3 of illegal logs andsawn timber in 2011, worth $3.7 billion,constituting 10 per cent of China’s totalwood products imports.51

These findings were confirmed in a 2015study which found that illegal timberimports into 10 major processing andconsuming countries reached 60 millionm3 between 2000-13, with half of thetotal destined for China.52 The reportfound China had less strict controls ontimber imports than other major markets, causing global progress incurbing illegal logging to stall.53

China’s role as the principle driver ofillegal logging worldwide is a consequenceof increasing domestic demand for highvalue tropical timbers, demand for cheapraw material in its export-oriented woodproducts sector and a lack of regulationsto exclude illegal timber imports fromsupply chains.

Myanmar is a major source of raw logsfor the Chinese market, the vast majorityof which are illegal. Between 2000-14,China imported over 11 million m3 oflogs (HS 4403) from Myanmar, worth$2.7 billion. Of this total, 40 per cent

comprised rosewood logs and 20 percent teak logs.54 Half of China’s logimports from Myanmar by value since2000 were recorded in the three-yearperiod from 2012-14, indicating therapid rise in trade of high value rosewood logs.

In 2014, the year Myanmar implementeda log export ban, the country was thefifth biggest supplier of logs to China by volume.55 The dramatic rise of therosewood, or Hongmu, furniture sectorin China in recent years is a key driverof this demand. By early 2014, Myanmar had become the largest supplier of Hongmu logs to China, shipping 210,000m3 worth $350 million.

CHINA’S INADEQUATE POLICY RESPONSE

Unlike other major timber consumingmarkets, China has failed to take appropriate regulatory measures to curb imports of illegally logged timber.While both the United States andEuropean Union have put in place measures to prohibit imports of illegaltimber, China has opted for ineffectivevoluntary guidelines. These guidelinesare aimed at Chinese companies

CHINA’S ROLEABOVE:Rosewood timber to feedChina’s hongmu industry ,Guanlan market, Shenzhen.

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operating overseas rather than importersand as such fit the Chinese Government’snarrative that the problem of illegal logging in mainly the responsibility oftimber producing countries.

Three sets of guidelines for Chinesefirms operating abroad in the forestrysector have been produced by theChinese Government since 2007; nonehave staunched the flow of illegal timberentering the country. For example, inMay 2013 a training event for Chineseenterprises operating in Pemba, northern Mozambique, focused on theapplication of the 2009 guidelines (on sustainable overseas forest management and utilisation by Chineseenterprises) in the country. Just onemonth later, a Chinese company thathad attended the training was caughttrying to export illegal logs.

Most recently, since 2013 China’s StateForestry Administration (SFA) andMinistry of Commerce have been developing “Guidelines for OverseasSustainable Forest Products Trade andInvestment by Chinese Enterprises”which would be theoretically mandatoryfor Chinese forestry companies and,importantly, timber traders workingabroad. Yet the proposed guidelineseffectively remain voluntary, incorporateno consequences for non-compliance anddo not apply to domestic importers ortraders in China itself.

China’s SFA has also been workingsince 2009 to draft a Chinese TimberLegality Verification System (CTLVS).Two options are being considered; bilateral agreements with individual supplier country governments and a voluntary scheme under which timbercompanies follow guidance on sourcingfrom wood trade associations.

As a consequence a series of bilateralmeetings between forestry officials fromChina and Myanmar have taken place asa precursor to a possible joint timberverification scheme between the twocountries. While such dialogue is welcome in bringing together the twosides to exchange views and information,tangible outcomes such as China agreeing to observe Myanmar’s logexport ban remain elusive. In reality, a fundamental difference of opinionappears to exist between the two countries, with Myanmar seeking itsneighbour’s help to stop the flow of illegal timber across the border whileChina seeks to legalise the trade. For instance, at one such meeting inMyitkyina, Kachin State, in June 2015the Kachin Forest Department wanted to call the event “Prevention of IllegalTrade in Forest Resources” but this was changed to “Promotion of LegalTrade in Forest Resources”.56

Senior forestry officials in Myanmar havepublicly expressed their exasperationover the lack of assistance from China incombating the illegal cross-border trade.In November 2014, a MOECAF officialsaid: “I have requested the minister ofthe State Forestry Administration andthe regional government of YunnanProvince to ban the illegal import ofMyanmar’s timber. Although the centralGovernment of China does not seem tosupport the illicit trade, the Yunnanadministration prioritises its peoples’employment and the supply of raw materials.”57 In May 2015, the deputydirector-general of the ForestDepartment told the media: “Every time I visit China they pledge to do what they can. But we’ve seen no effective action.”58

“Unlike other major timber consuming markets,China has failed totake appropriate regulatory measuresto curb imports of illegally logged timber”

Luxury hongmu furnitureon sale in China.

Valuable rosewood timber inGuanlan market, Shenzhen.

China should:

• observe Myanmar’s log export ban by putting in place reciprocal measures;

• institute a clear legal prohibition on all imports of illegally logged timber;

• reform the Hongmu industry to ensure it stops stimulating demand for endangered species, and trading in illicit timber;

• investigate the activities of the well-connected and influential culprits behind the cross-border timber trade, such as the BDYA group.

Myanmar should:

• clarify all forestry and timber trade laws to all export markets, particularly China;

• reduce logging operations countrywide pending a full assessment of current forest conditions;

• develop a mechanism for dialogue in conflict areas that includes natural resources;

• continue to develop a multi-stakeholder process including representatives from ethnic states as partof the Forest Law Enforcement Governance and Trade discussions with the European Union;

• abolish the current role of the Myanmar Timber Enterprise in the oversight of logging operations and work towards greater transparency of information to all stakeholders;

• list rosewood species (tamalan and padauk) on Appendix III of the UN Convention on International Trade in Endangered Species.

RECOMMENDATIONSThe massive overland trade in illicit timber between Myanmar and China isdestroying vital areas of forests, threatening the livelihoods of local communities, provoking conflict and violence, and fostering corruption.Urgent action by both governments is needed to stem the flow.

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REFERENCES1. Critical Ecosystem Partnership Fund, Ecosystem

profile Indo-Burma biodiversity hotspot, 20122. WWF, Living Forests Report, 20153. Environmental Investigation Agency, Routes of

Extinction, 20144. Food and Agriculture Organisation of the United

Nations, Global Forest Resources Assessment, 20105. WWF 2013 op cit6. Hansen et al, High-resolution global maps of 21st

century forest cover change, Science, 15 November 2013

7. FAO 2011; CEPF 2012; WWF 20158. Forest Trends, Timber trade flows and actors in

Myanmar, 20139. EIA, Appetite for Destruction, 201210. EIA, pers comm confidential, 201511. NepCon, Myanmar Forest Sector Legality Analysis,

201312. Nepcon 2013, op cit13. Forest Trends, 2013, op cit14. NepCon, 2013, op cit15. Transparency International, Corruption Perceptions

Index, 201416. Eleven Media, 700 corrupt forestry officials targeted,

May 23, 201517. Forest Trends, Timber Trade Flows and Actors in

Myanmar, 201318. Myanmar Times, US to waive timber sanctions for one

year, August11, 201419. Eleven Media, Myanmar seized 35,000 tons of illegal

timber over past nine months, January 19, 201420. Eleven Media, Over 20,000 tonnes of timber seized in

three months to July, August 11, 2014

21. The Guardian, Chinese loggers among 7,000 prisonersreleased in Burma, July 30, 2015

22. EIA Myanmar’s Rosewood Crisis, 201423. World Resources Institute, Logging Burma’s Frontier

Forests, 199824. European Forest Institute, Myanmar Baseline Study,

201125. Global Witness, A Disharmonious Trade, 200926. Eric Tagliacozzo and Wen Chin-Chang, Chinese

Circulations, 201127. Office of Yunnan Provincial People’s Government,

Interim measures to manage timber and mineral cooperation between Myanmar and Yunnan Province, May 11, 2006

28. Global Witness, 2009, op cit29. Forest Trends, Analysis of the China-Myanmar Timber

Trade, 201430. National Geographic, Myanmar’s pending ceasefire

jeopardised by skirmishes over illegal logging, May 20, 2015

31. EIA, Myanmar’s Rosewood Crisis, 201432. Global Witness, A Choice for China, 200533. EIA, Appetite for Destruction, 201234. Global Witness, 2009, op cit35. National Geographic, 2014, op cit36. Kevin Woods, Ceasefire Capitalism: military-private

partnerships, resource concessions and military state-building in the Burma-China borderlands, 2013

37. Global Witness, 2009, op cit38. China Trade Information 201539. EIA, pers comm confidential, June 201540. CTI, 2015, op cit41. Tencent News, The trapped loggers returned home

after crossing ranges of mountains, January 23, 201542. Global Witness, 2009, op cit43. Baoshan Investment, government website, Tengchong

border cooperation zone project, 201444. Paul Keenan, By Force of Arms: Armed Ethnic Groups

in Burma, 201345. Phoenix news, Chinese traders: the Burmese officials

demanded gold bars for logging, August 6, 201546. Myanmar Times, Chinese timber smugglers face

additional charges, April 28, 201547. Myanmar Times, Chinese smugglers hit with life

terms, July 23, 201548. The Guardian, Chinese loggers among 7,000 prisoners

released in Burma, July 30, 201549. The Irrawaddy, Questions raised as Chinese loggers

cut loose, July 30, 201550. Want China Times, Cutting down Myanmar’s forests a

hard knock life for Chinese, February 19, 201551. EIA, 2012, op cit52. Chatham House, Tackling Illegal Logging and the

Related Trade: What Progress and Where Next, 201553. The Diplomat, China: The cause of (and solution to?)

illegal logging, July 21, 201554. EIA, Analysis of Global Trade Atlas data, August 201555. Global Trade Atlas, August 201556. Eleven Media, Timber smuggling thrives in Kachin,

June 5, 201557. Eleven News, Domestic issues blamed on Chinese

failure to block illegal timber trade, November 9, 201458. Myanmar Times, Public urged to help fight illegal

logging, May 25, 2015

23

ENVIRONMENTAL INVESTIGATION AGENCY (EIA)

62/63 Upper StreetLondon N1 0NY, UK

Tel: +44 (0) 20 7354 7960 Fax: +44 (0) 20 7354 7961

email: [email protected]

www.eia-international.org

EIA - WASHINGTON, DC

PO Box 53343Washington, DC 20009 USA

Tel: +1 202 483-6621Fax: +1 202 986-8626

email: [email protected]

www.eia-global.org

Independent Expert Review of the

Myitsone Dam EIA

Key Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1 — Overall Examination of the Environmental Impact Assessment Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

2 — Freshwater animals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

3 — Terrestrial biodiversity, climate change . . . . . . . . . . . . . . . . . 11

4 — Environmental impacts of the proposed flow regime (environmental flows) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

5 — Myitsone dam’s impact on sediment transportation and river delta downstream . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

6 —Impacts on Vegetation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

7 — Comparative analysis of environmental impact of different development schemes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

8 —Environmental impact mitigation measures . . . . . . . . . . . . .19

9 —Public participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

10 —Social Impact Assessment (impact on migrants) . . . . . . . . 20

11 — Myitsone dam’s impacts on local people health . . . . . . . . . 24

12 —EIA structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

Table of ContentsIndependent Expert Review of the Myitsone Dam EIA

Disclaimer

The purpose for soliciting expert opinions on the “Environmental Impact Report of Hydropower Development in the Upper Reaches of the Ayeyawady River” was to provide a better understand-ing of quality of the report prepared by the dam developer, China Power Investment . The comments provided by the experts can only be considered their personal opinion . Their opinions should not be interpreted as a reflection of the official position of their institutions. The expert opinions are based on the initial reading of relevant sections of the EIA Report to their area of expertise and are limited that that scope . We encourage reviewers to contact the relevant experts for additional information or clarification of their comments.

International Rivers protects rivers and defends the rights of communities that depend on them . With offices in four continents, International Rivers works to stop destructive dams, improve decision-making processes in the water and en-ergy solutions for a just and sustainable world .

ALARM, formally known as ECODEV is a non-governmental social and entrepreneur organization and founded by Myanmar development professionals, intellectuals and

social entrepreneurs since the 1990s . All over Myanmar, ALARM is actively involved in rural development affairs, environmental conser-vation, advocacy initiatives, and decentraliza-tion process . and combating poverty actions together with the support from many partners organizations including local and internation-al organizations as well as some government agencies. ALARM is operating 5 branch offices in different parts of Myanmar and appointed 50 staff covering different races and beliefs .

1

A survey of the “Environmental Impact Report of Hydropower Development in the Upper Reaches of the Ayeyawady River” (Report) has found that the Environmental Impact Assess-ment (EIA) contains some serious deficiencies and flawed conclusions. Based on the reviews from 12 experts in fields including ecology, fisheries, environmental and social impact assess-ment, public health, flood management and hydrology, the survey found that the analysis of the dams’ impacts on terrestrial fauna was “relatively robust,” but that there were serious flaws in the methodology and structure of the EIA, total neglect of the temporal and spatial scale of the social and environmental impacts of the dams, superficial analysis of the dams’ impacts on freshwater biodiversity, and that public participation failed to meet best practice .

The environmental transformation precipitated by even one or two of proposed dams in the Upper Ayeyawady Cascade would be significant. The impacts of Myitsone Dam alone on ri-parian communities upstream, within the reservoir inundation areas (already being subject to involuntary resettlement) and for hundreds of miles downstream of the Myitsone Dam, would be considerable . Yet, the Report commissioned by China Power Investment and published in 2011 fails to identify numerous impacts that could reasonably be expected to occur as a result of such large, complex and cascade hydropower scheme . Despite China Power Investment’s commitment to abide by international standards and conduct its work in accordance with the highest standards, seven of the eight expert opinions found that the Report falls well below best practice .

Key Findings

32

» The EIA Report considers two cascades of dams . However the comparison pre-sented may have some residual meaning for certain engineering decisions, but does not help to assess options important to society and biodiver-sity conservation . If report would seek to assess different alternative options it would at least consider the impacts and benefits from the several development schemes, such as a cascade on Malikha River alone, a cascade on Namihkva Riv-er alone, a cascades on both rivers with-out Myitsone Dam on Ayeyawady River, as well as a no-project option . Such array of options would give a chance to look for a design where hydropower generation is balanced with the need to compare river biodiversity and well being of Kachin people .

» The conclusions of the environmental impacts of the dam cascade are based on field surveys that lasted less than a week. The failure to allocate any more time to field surveys for such a large area has resulted in major gaps in knowl-edge and data underlying the primary conclusions on the dam cascade’s envi-ronmental impacts .

» The EIA Report reduces the significance of anticipated impacts as if negligible, whereas the resilience or the adapta-tion capacity of the environment or the population is disproportionately emphasized . One of the key functions of an EIA is to predict the capacity of the ecological systems and communities to adapt to the proposed project impacts and whether a gap may arise between the

two . There is little or almost no examina-tion of the magnitude of impacts from the dams as compared to the adaptive capacity .

» On the project-induced alterations in the river’s hydrological regime, the EIA Report was found to be limited in its empirical scope, and its conclusions unwarranted . The expert reviewer found that the Report seriously underestimat-ed the temporal and spatial scale of the socio-ecological impacts that would be precipitated by the dams’ construction . The reviewer recommended a more com-prehensive, objective, professional and geographically extensive EIA study over a period of several years be undertaken .

» The EIA Report understates and fails to recognise a number of project impacts on the downstream flow and sediment regime that could be reasonably antic-ipated from such a massive hydraulic development . According to the expert opinion, it can be anticipated, that the fundamental alteration of both flood and sediment-nutrient flow regimes will have negative impacts on tens of thousands river and wetland-dependent house-holds downstream over a considerable distance, who are not considered in the EIA . Direct impacts that are not exam-ined by the EIA include likely radical changes downstream in the water quality parameters (e .g . temperature, hydrogen sulphide, methane and even dissolved oxygen).

» The Report understates the impor-tance of the river’s sediment and nutrient regime and how these might

Key Findings be expected to alter over time and the resultant socio-ecological impacts . As the sediment load is to be trapped by the uppermost reservoirs, the river sections and reservoirs below will grad-ually become devoid of sediment and the water released from the Myitsone Dam at the foot of the cascade, can be antici-pated to be rather nutrient-poor, with a strong tendency for increased erosion of sand bars and riverbanks downstream . Further research on how changes in the sediment and nutrient regime might im-pact downstream areas is needed, since the resultant impacts could prove ex-tremely expensive for society to mitigate . Such changes may lead to alterations in aquatic and terrestrial biota, as well as impacts on bridges and other structures associated with the river channel . Re-duced sediment flow may have far-reach-ing detrimental impacts on downstream agriculture, fisheries and natural eco-systems, with knock-on effects to many sectors of the economy and society . The analysis and conclusions about sediment do not appear to be based on direct field studies or data collection - no specific reference to field studies, data collections or analysis in the material seem to be available .

» According to the EIA Report, average wet season downstream flows will be diminished and average dry season flows may increase, as Myitsone Dam will be operated primarily for annual base en-ergy production purposes, with possible peaking operations . There is no discus-sion however about how the other cascade of dams will be operated, and what impact this might have on Myitsone operations . Similar-ly, the EIA appears to assume that no hydropower or reservoir storage de-velopment will occur elsewhere in the Ayeyawady River system, so that the flow and sediment characteristics of all other Ayeyawady’s tributaries will remain

natural and unchanged . This assumption is not justifiable, given the wide variety of hydropower development proposals that are now being considered across the Basin.

» The importance of fishing as livelihood and food security has not been examined thoroughly . The reductive impact of dams on fisheries can have major im-pact on the food security and livelihoods of the people. The fish is also depending on the sediments that carry nutrients, and thus there are also other aspects to be considered with hydropower devel-opment than only the barrier effect of dams .

» The EIA’s judgments on the dams’ im-pacts on freshwater biodiversity seem to be superficial and based on little information . It is unclear how compre-hensive and thorough were the survey methods used to generate the lists of fau-na covered under the EIA . The EIA does not seem to take note of primary scientif-ic literature on the impacts of large res-ervoirs on freshwater biodiversity . The main impacts that are mentioned in the report relate to the transition of water from lotic to lentic conditions . The report tends to assess the impact on freshwater biodiversity as very low or zero due to the conclusion that a loss of habitat for those species that prefer a lotic habitat will be offset by gains in habitat for those species that prefer standing water . There is no reason to assume the biological or physical conditions in a reservoir would be suitable for - for instance - amphibian breeding . Moreover the opposite is more likely to be correct, since the conditions in the created reservoir would certainly not be suitable for amphibian reproduc-tion or larval growth .

» The EIA Report tends to reduce the magnitude of social impacts and predicts ultimately positive outcomes without offering a roadmap on how to

4 5

achieve such results . Resettlement is anticipated to be successful even though no convincing resettlement plan is pre-sented . Perhaps more problematic is that resettlement sites seem to have already been prepared and the project benefits are perceived to be automatically shared by displaced people as well . The limited attention to livelihood impacts is con-cerning as it would lead to the impover-ishment of resettled people . It is largely questionable whether and to what extent diverse stakeholders are involved in the social impact assessment .

» The EIA Report does not fully address the Myitsone Dam’s impact on local people health and whether the project will spread certain water related diseas-es, sexually transmitted diseases, HIV/AIDs, which are common for a dam construction site . Thus, the presence of aquatic weed along the lake and within the tributaries will affect the local human health . An increase in diseases caused by consumption of contaminated raw vegetables and fish (Fasciolopsiasis, Clonerchiasis, Diphyllobothriasis) and by swimming or bathing in contaminated water (Schistosomiasis, Dracunculiasis) is expected . Furthermore, the decline

in shrimp and clam populations caused by degradation of aquatic habitat might trigger the nutrient deficiency in local people’ health . Increase of human mi-gration in the dam construction area will result in increase of sexually transmitted disease, HIV/AIDS cases .

» The EIA Report does not address the project’s impact on the local climate . Larger water surface means larger evapotranspiration, higher albedo which reflect more solar radiation back, high saturated area which will lead to higher emission of greenhouse gases, particu-larly methane . These changes will have impact on regional climate, not solely on local climate . This could be evaluated by using a combination of ecosystem model and field observations.

» Two of the reviewers had intimate knowledge of the conduct of the EIA, with one reviewer also participating in the field surveys. Based on this, the re-viewers note that the EIA Report suffers because field survey data is lacking and because it was collected over a period of less than a week . Many of the expert recommendations and findings were also ignored, and follow-up studies never completed .

1 . Prof. Maung Maung Aye, Myanmar Environment Institute. Area of Examination: general overview

2 . Prof. David Dudgeon, University of Hong Kong. Area of examination: freshwater animals

3 . Dr. Xiaofeng Xu, Research Fellow, Climate Change Science Institute. Area of examination: terrestrial biodiver-sity, climate change

4 . Dr. David JH Blake, Ubon Ratcha-tani University. Area of examination: environmental impacts of the proposed flow regime (e-flow).

5 . Dr. Darrin Magee, Hobart and William Smith Colleges & Dr. John Gerstle, Gerstle & Co LLC, M.Sc. Aura Salmivaara, Aalto University. Area of examination: Myitsone dam’s impact on sediment transportation and river delta downstream

6 . Prof. U Nyo Maung, University of Yangon. Area of Examination: impact on vegetation

7 . Prof. Philip B Williams, University of California. Area of examination: environmental impact mitigation measures .

8 . Dr. Eugene Simonov, NGO Coali-tion “Rivers without Boundaries” Area of examination: comparative anal-ysis of environmental impact of different development schemes

9 . Prof. Thayer Scudder, California Institute of Technology. Area of examination: public participation

10 . DPhil Candidate, Narae Choi, Uni-versity of Oxford. Area of examination: Social Impact As-sessment (impact on migrants)

11 . Dr. Bandana Pradhan, Institute of Medicine, Tribhuvan University Area of examination: Myitsone dam’s impact on local people health

12. Dr. Miguel Countinho, Fernando Leão, Institute of Environment and Development. Area of examination: EIA structure

Comments on the Myitsone EIA Report were provided by:

76

Professor Maung Maung AYEPatron & Chief Advisor, Myanmar Environment Institute (MEI) C-005, Delta Plaza Building, Shwegondaing Road, Bahan Township, Yangon City, The Republic of the Union of Myanmar

I would like to make some comments on the “EIA Report of hydro-power development in the Upper Reaches of the Ayeyarwady River” from the view-points of my specialized fields of research interest such as geography, fluvial geomorphology and environmental science .

It is widely known that there are two Envi-ronmental Impact Assessment (EIA) reports on Hydro-power Development in the Upper Reaches of the Ayeyarwady River . However, nobody knows what and how the China Pow-er Investment Corporation (CPI) has stated in their EIA report . The other one was jointly prepared by Myanmar and Chinese experts, and it is known as BANCA Report. (BANCA stands for Biodiversity And Nature Conser-vation Association).

A 945-page preliminary biological assessment of seven planned dams on the Ayeyarwady (formerly known as Irrawaddy), N’Mai and Mali rivers in Kachin State, Myan-mar collected baseline information on the biodiversity of flora and fauna in the catch-ment area of the dams over a period of five months from January to May 2009.All expenses of the study were funded by China Power Investment Corporation (CPI). A team of 80 scientists from Myanmar from

BANCA and others from the Changjiang In-stitute of Surveying, Planning, Design, and Research (CISPDR) of China conducted the study .

For BANCA Report, the experts involved did not have enough time for the detailed field survey and collection of empirical data due to many such holidays as Kachin’s Manaw Fes-tival and Chinese New Year Festival . There-fore, total number of days spent for the field survey was less than a week, and accordingly one cannot expect too much reliability and validity of data and information from this kind of report.

The EIA Report cannot be regarded as a perfect observation document. Although the survey period needed to take at least about seven months normally, the experts had to conclude the report within five months due to the demands of Chinese experts tocooperate with Myanmar counter-parts . The Myanmar researchers could not have opportunity to read the MoU between the two governments before starting the observation works. As there was no Myanmar Environment Law by then for reference in the coun-try, the facts in EIA Report were com-piled from available sources.

The process of environmental impact as-sessment cannot be completed within one time. Both direct and indirect impacts have to be observed before and after the project continuously. Based on the observations, the experts will also need to assess and examine

1 Overall Examination of the Environmental Impact Assessment Report

whether the ways of lessening impacts are effective or otherwise .

EIA is a process that should be publi-cized transparently. Only then there will be no doubt about the project. There will be both advantages and disadvan-tages whenever development projects are implemented . Serious disadvantages must be reduced with high degree of lessening plans . Such lessening plans are sometime of great value, while small impacts can be solved easily . Therefore, the responsible persons are suggested to support EIA process from beginning to end .

The Report has placed much emphasis on the negative impacts of damming river on the ecosystem, flora & fauna, biodiversity, natu-ral habitats and environmental conservation of the study area .

Prior to the implementation of a gigantic developmental project in a large drainage or river basin, many more detailed re-search projects need to be carried out by experts, scientists, specialists and pro-fessionals from various disciplines taking a sufficient amount of time.

The EIA report should be based on the guidelines and standards of World Bank and the like.

As underlying geology (lithology and struc-ture) plays a very important role in the con-struction of a dam, a reliable geological map is needed for depicting different types of rock layers and geological structure in details at the dam site, especially in the potential flood-ed area after the completion of a reservoir .

As this Ayeyarwady Myitsone area has been weak in security for many years, not many detailed geological surveys have been done so far, and consequently no detailed geological maps and/or data are available. Based on the existing geo-logical maps published before and after the

independence of Myanmar, the geological conditions of the Myitsone area and its en-virons are actually not suitable for the con-struction of large dams and dam- cascade . The area in question is largely composed of serpentinite, one of the ultramafic igneous rock types, which is durable and resistance to considerable extent . However, when en-countered with the water in a reservoir, the serpentinite can cause a great danger to the dam .

The dam site lies in the Seismic Zone 4 (i.e. Severe Zone). In other words, this area can experience the earthquakes with the maximum intensity of Mercalli Scale 8 to 9. The active Sagaing Fault is approx-imately 15 miles away to the west of Myitsone Area. The engineering structure must be quite resistant to severe earthquakes and ruptures. Those research works and find-ings of Myanmar geologists should be taken into consideration by the Chinese counter-parts, and they in turn should disclose their findings to Myanmar geo-scientists.

The construction of dams on the Ayeyarwady River should be avoided due to the changes in downstream hydrology which may affect navigation, riverine ecosystem and deltaic ecosystem, and will lead to negative impacts on the economy .

The Ayeyarwady dams will threaten biodiversity. Eco-regions which are na-tionally important, regionally significant and globally outstanding will be directly affected by clearing and logging of the inundation areas and construction activities for a series of dams in Kachin State . Of particular con-cern are the loss and fragmentation of key ecosystems and the loss of key, endemic and endangered species of both flora and fauna. Definitely there will be negative impacts on potential of availability of traditional me-dicinal plants . There will be severe negative impacts on regionally significant and globally outstanding three eco-regions, one center of world plant diversity, and severe impacts on

8 9

key biodiversity areas and conservation corri-dors of Myanmar .

Downstream impacts to the whole Ayeyarwady Drainage Basin need to be examined as the river is vital to the country. The Ayeyarwady River is the most important lifeblood river in Myanmar . Millions of people are depending on this mighty river for their livelihoods . It also acts as a conduit of communication to over sixty million of people . The fragmentation of the Ayeyarwady River by a series of dams will have very serious social and environmental problems not only at upstream of dams but also to very far downstream to the coastal delta . A longer and more comprehensive EIA investigation is strongly recommended in such a big and sensitive hydropower develop-ment which may give rise to very significant adverse impacts .

The Ayeyarwady dams will have se-vere negative impacts on livelihoods, public health and safety. On account of construction of a cascade of dams in Kachin State there will be severe negative impacts on livelihoods and habitations of grassroots people of the region, disappearance of some wild rice varieties and their ancestors, dis-appearance and forever loss of the cultural heartland of Kachin people .

A Social Impact Assessment (SIA) must be conducted and decision mak-ers should balance positive and neg-ative aspects. Proper SIA must be done before construction of each dam to know real impacts on livelihoods . The main draw-back of this EIA Report is the lack of SIA at all. Therefore, systematic SIA must be carried out by competent so-cial scientists. Before approving the con-struction, the decision-makers are strongly urged to fairly balance between the negative and positive aspects of dams .

Affected people should be consulted for their consent, and local people are

currently against the projects. The public should be disclosed about the hydropower dams and resettlement programs by having public meetings. The majority people of local ethnic groups oppose construction of the Ayeyarwady dams especially Myitsone hydropower project . They consider the Ayeyarwady confluence as the cultural heartland of the Kachins . For the longevity of dams to be constructed in Kachin State, the opinion of grassroots peo-ple should be brought into due consideration .

The benefits of the project need to be shared equitably. There must be a fair and equitable sharing of benefits coming out from this hydropower development among the stakeholders concerned, including the people of Myanmar in general and Kachin people in particular . The EIA should be publicly released. The main audience for this docu-ment is the people of Myanmar .

Major salient weaknesses discovered in the EIA Report of Hydro-power De-velopment in the Upper Reaches of the Ayeyarwady River can be summarized as follows:

1. Downstream impacts, including assessments of river flows, sediment discharge, water levels, flooding patterns, salt water intrusion into the Ayeyarwady Deltaic Region, fish habitats, and riverbank erosion have not been studied yet.

2. Baseline data on the Ayeyarwady River Basin as a whole has also not been collected. [Actually, a drain-age basin or river basin should be considered as a fundamental geomorphic unit which needs to be thoroughly studied applying the ho-listic approach and general systems theory.]

3. Social, health and economic impacts of the proposed dams have not been addressed yet.

4. Consultation with affected peoples

has not been conducted yet. 5. Strong conclusions and recommen-

dations that can ensure the concerns raised in the Report are not fully addressed and included.

In conclusion, water resource management must be based on principles of ecological sustainability and social justice . Affected communities - upstream & downstream - must be protected . To ensure this as well as

transparency and accountability, national reconciliation and genuine democratiza-tion is desperately needed in Myanmar . All stakeholders should be urged, if possible, to immediately stop these harmful dam proj-ects in the Ayeyarwady Drainage Basin, and to preserve the river for future generations . And, more importantly the economic, social, health, security and environmental impacts of dams throughout Myanmar must be pub-licly disclosed from now onward .

10 11

Prof. David DudgeonChair Professor of Ecology & Biodiversity, School of Biological Sciences, The University of Hong Kong, Pok Fu Lam Road, Hong Kong SAR, China

Based on those aquatic herpetofauna (reptiles and amphibians) that I have some knowledge of, the report seems remarkably superficial. The main impacts that are mentioned relate to the transition of a formerly flowing water habitat to one that is no longer flowing (i.e. from lotic to lentic conditions) and the au-thors of the report seem to conclude that the main impact will be a loss of habitat for those species that prefer a lotic habitat (so there are negative scores for certain species) but that this will be offset by gains in habitat for those species that prefer standing water (e .g . a num-ber of amphibians breed in standing waters) so that the overall impact is typically assessed as very low or zero . However, the fact that some amphibians can breed in standing water does not mean that they will reproduce in or even be favoured by the construction of large reservoir . That is because those amphibians breeding in lentic water bodies prefer small, shallow pools or wetlands that are free of fish-es since, in many cases, the eggs or larvae are devoured by fish. Reservoirs are neither free of fish, nor are they shallow, and hence there is no reason to assume the biological or physi-cal conditions in a reservoir would be suitable for - for instance - amphibian breeding . In-deed one would expect the opposite is more likely to be correct . There are several reasons for this:

1 . Reservoirs contain fishes that eat am-phibian eggs and larvae . They are also, typically, sites where exotic species

become established, and this might make predation risk especially high (since the amphibians are not adapted for exposure to such non-native predators).

2 . The reservoir will likely be deep and steep-sided: this is certainly not suitable for amphibian reproduction or larval growth; these animals prefer shallow well-oxygenated water with ample light to sustain the growth of algae upon which many larvae feed .

3 . Deep reservoirs tend to become strati-fied, and the lower levels of the water col-umn are often deoxygenated due to the decomposition of inundated terrestrial material as the reservoir fills. In extreme cases, methane may even be generated . This is bad news for fishes, and would give rise to unsuitable conditions for amphibian breeding .

Two other comments:

4 . I have no idea what survey methods were used to generate the lists of fauna cov-ered under the EIA . One would want to know how comprehensive and thorough they were . I suspect, but cannot tell, that this EIA report was based on a minimum amount of field work.

5 . The judgements reached seem to be superficial and based on remarkably little information, aside from suspected/known distribution of species and some extrapolations based on very general as-pects of the biology of particular species (e.g. prefers streams or standing water). The primary scientific literature seems to be virtually ignored .

2 Freshwater Animals

Xiaofeng XuPostdoctoral Research AssociateEnvironmental Science DivisionClimate Change Science InstituteBuilding 2040, E275, ORNLOak Ridge, TN, 37831-6301

As requested by International Rivers, I provide my comments for the Myitsone EIA survey which investigate the potential im-pacts of the construction of Myitsone Dam in Burma. All review was conducted based on the survey report and some available search-able information from internet . Since I am an ecosystem ecologist, my comments will solely for ecological impact of the Myitsone dam on the local environment, beyond that will be out of my expertise .

Basically, the survey on the impact on ter-restrial ecology covers most aspects of the impacts on ecosystem . I am glad to see that the environmental impacts of this huge proj-ect are quite small . I would like highlight and add a few more aspects; my detailed com-ments are:

1 . The environmental impacts listed in the report are all direct impact; the indi-rect impacts are missing . For example, the destroyed habitat for biodiversity, changed water regime on regional cli-mate, even I expected a relative small effect .

2 . The report states that the submerged forest land area by reservoirs is only 1 .85% of the total area of the evaluated area, and the effects of submerged forest and is limited; this is not very accurate . First, it depends on the area of evaluat-

ed region, and it also the impact is not linearly correlated with the fraction of the region . Some small area might play a fundamentally important role for the entire region . This effect should be eval-uated in detailed aspect, for example, the economic or ecological value of the forest land submerged, etc .

3 . I expect a relatively small impact on veg-etation biomass because the vegetation biomass could be recovered quite easily .

4 . The impacts on ecological environment of the lower reaches are far more signifi-cant than described .

5 . Impact on local climate is not well stud-ied; the larger water surface means larger evapotranspiration, higher albedo which reflect more solar radiation back, high saturated area which will lead to higher emission of greenhouse gases, particu-larly methane . These changes will have impact on regional climate, not solely on local climate . This could be evaluated by using a combination of ecosystem model and field observations.

6 . The statements “increasing of water area in the reservoir area increases humidity of surrounding plants, reduces tempera-ture difference and is beneficial for the growing of plants in the reservoir area” is not robust . Increases in humidify of surrounding plants might not reduce temperature different and it might not be beneficial for the growing of plants in the reservoir area .

7 . The stated impacts on terrestrial animals (birds, migration, reptiles etc) are rela-tively robust .

3 Terrestrial biodiversity, climate change

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Dr. David JH Blakec/o Mekong Sub-Regional Social Research Centre (MSSRC), Faculty of Liberal Arts, Ubon Ratchatani University,Warin Chamrap District, Ubon Ratchatani, 34190 . THAILAND

In my opinion this is a rather low quality, sub-standard example of environmental impact assessment reporting for a major hydropower project, which would most likely not pass national standards in many other countries of the world. It is deficient in multiple respects and fails to identify numerous impacts that could reasonably be expected to occur as a result of such a spatial-ly significant, complex and multiple cascade dam hydropower scheme . If permitted, the scheme would involve the construction of seven reservoirs on two major tributaries of the Ayeyawaddy (Irrawaddy) River, the larg-est of which, the Myitsone Dam would form a reservoir with a surface area of 405 km2 and a water storage capacity of 133 billion m3 . Each dam in the cascade would form a reser-voir that backs up to the next dam upstream, creating stillwater or lacustrine conditions over a distance of approximately 580 kms and surface area of 819 km2, where presently there exists ecologically diverse riverine hab-itats, presently rather minimally disturbed by human activity . Such riverine habitats are relatively rare in the Asian sub-tropics and should deserve a high level of protection . The environmental transformation precipi-tated by even one or two of these dams being

built would be significant and the impacts on riparian communities upstream, within the reservoir inundation areas (already being subject to involuntary resettlement) and for many hundreds of miles downstream of the Myitsone Dam would be considerable . The seven dams would reportedly store a com-bined total of 328 billion m3, with the tallest dam (Kaunglanphur) standing 223 m high, and all the other major dams over 128 m high .

The report, as it is written, has a number of shortcomings and deficiencies, which ap-pear to suggest the authors’ are primarily interested in serving the interests of the dam developers and not that of objective environ-mental science or the greater common good . In terms of alterations in the hydrological re-gime and its impacts on the environment, the report is extremely limited in its empirical scope, and comes to conclusions that appear unwarranted and seriously underestimate the temporal and spatial scale of the socio-eco-logical impacts that would be precipitated by the dams’ construction . The report is remark-ably superficial, simplistic and reductionist in its consideration of impacts that could rea-sonably be expected from such a large-scale infrastructure development project on a bi-ologically diverse river system, including the Nmaihka and Malikha rivers, which combine to form the Ayeyawaddy River just upstream of the proposed Myitsone Dam site . It both understates and fails to recognise a number of project impacts on the downstream flow and sediment regime that could be reason-ably anticipated from such a massive hydrau-

4 Environmental impacts of the proposed flow regime (environmental flows)

lic development . For example, the report states in Section 5 .15 “Impact on downstream hydrological regime” (p.151), “Joint opera-tion of the cascade reservoirs will exercise some impact upon the downstream flow, and such impact will come into existence after completion of the reservoirs” . Actually, changes in the flow regime (both quality and quantity) will start to be felt starting from the time that construction work begins and the bed of the river is disturbed for structures such as coffer dams or access roads, and will continue throughout the anticipated 8 – 10 year construction and reservoir filling phase (assuming the dams are built in parallel and not one after the other). Many of the envi-ronmental impacts will be irreversible and be extremely hard to mitigate for, although mitigation does not seem to be a high priority of the developers, as they believe impacts will be minor .

Similarly, as well as overlooking the likely downstream impacts of several water qual-ity parameters expected to radically change below the dams (e .g . temperature, hydro-gen sulphide, methane and even dissolved oxygen 1), the report understates the im-portance of the equally important sediment and nutrient regime and how these might be expected to alter over time and the resultant socio-ecological impacts . As the incoming sediment load transported from upstream erosion can be anticipated to be largely trapped and settle out in the uppermost reservoirs of the cascade (i .e . the Yenan and Laza Dams), the river sections and reservoirs below will gradually become devoid of even fine silt and sediment (apart from local point sources) and the water released from the Myitsone Dam at the foot of the cascade, can be anticipated to be rather clear, silt-free,

nutrient-poor and “sediment hungry”, with a strong tendency for increased erosion of sand bars and riverbanks downstream until a new geomorphological balance is reached at an indeterminate point downstream . However, the report states (p. 226) that “[O]nly lower reaches near the dam will be affected by ero-sion” . There does not seem to be any factual basis for this conclusion and without further study of this issue, the resultant impacts could prove extremely expensive for society to mitigate for as externalised costs, especial-ly in urban areas such as Myitkyina and other communities that may lose land and infra-structure to increased erosion . The sediments removal in the reservoirs, along with associ-ated nutrients, would also have far-reaching detrimental impacts on downstream agri-culture, fisheries and natural ecosystems, with knock-on effects to many sectors of the economy and society, including some of the poorest people. It can be confidently antici-pated, based on the experiences and impacts witnessed below other large-scale dams in the Mekong Region and elsewhere in South-east Asia, that the fundamental alteration of both flood and sediment-nutrient flow regimes (the vital “flood pulse”) will have negative impacts on many tens of thousands (possibly more) river and wetland-dependent households living downstream over a con-siderable distance, who are not considered in the present professionally negligent and decidedly unscientific report produced by CPI for the benefit of the developers. A more comprehensive, objective, professional and geographically extensive EIA study over a period of several years is recommended be-fore any decisions are taken about whether to proceed with any of the proposed projects in this potentially destructive scheme .

1 The report only considers Biological Oxygen Demand (BOD) and Chemical Oxygen Demand (COD), but not the equally important levels of dissolved oxygen (DO) that might be expected in the reservoirs and dam outlets during different seasons .

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Dr. Darrin MageeAssociate Professor of Environmental StudiesHobart and William Smith CollegesGeneva, NY 14456

After reading the (very short) sediment section, my impression was that it was in general accurate but likely incomplete and inattentive to the specific conditions of that dam in that place on that river . It reads like a general assessment of dam impacts on sedi-ment transport on basically any river, and on those grounds could stand to be much more detailed .

Dr. John GerstleEnvironmental Engineer and PrincipalGerstle & Co LLC Trout Unlimited

The general conclusions and comments in the EIA Report regarding impacts to the delta far downstream - that the impact on sedimenta-tion, sediment loads and flows will be small because the proportion of the total catchment area affected/controlled by Myitsone Dam is small compared to the total watershed of the river far downstream at the mouth of Irrawaddy Delta - is reasonable as far as it goes, but can easily be misinterpreted and misunderstood . It is also incomplete because it does not describe the consequences and impacts of changes in flow and sediment load characteristics at various points along the rivers . And such general conclusions require verification with specific data and analysis from specific watersheds and proj-ect locations . For example, if the Myitsone

catchment is the source of an unexpectedly large proportion of the total sediment in the Irrawaddy River Basin, the conclusions about impacts of the project on the Irrawaddy Delta could change .

The sections of the Reportdo not adequately consider the impacts of Myitsone Dam on sections of the river over hundreds of kilo-meters from Myitsone to the delta, where the impacts of changes in flow and sediment load will be much greater on both absolute and proportional levels . The analysis and con-clusions about sediment do not appear to be based on direct field studies or data collection - no specific reference to field studies, data collections or analysis in the material seem to be available .

Because the reservoirs at Myitsone and other points in the cascade will capture much of the sediment from the upstream catchments, there will be significantly altered water flows and diminished sediment flows downstream - leading to concerns about scouring and related alteration of the river channels . These are likely to be of greatest immediate concern in the river reaches near the project . Such changes may lead to alterations in aquat-ic and terrestrial biota, as well as impacts on bridges and other structures associated with the channel, as well as human practices related to channel and flow characteristics (e.g. recession agriculture and seasonal flood irrigation, fishing etc).

According to the descriptions in the available documents, average wet season downstream flows will be diminished and average dry

5 Myitsone dam’s impact on sediment transportation and river delta downstream

season flows may increase as Myitsone will be operated primarily for annual base energy production purposes, with possible peaking operations . There is no discussion, however, about how the other cascade dams will be operated, and what impact this might have on Myitsone Dam’s operations . Similarly, the EIA Report appears to assume that no hydro-power or reservoir storage development will occur elsewhere in the Irrawaddy River sys-tem, so that the flow and sediment character-istics of all other Irrawaddy Basin tributaries will remain natural and unchanged . This assumption is not justified, given the wide variety of hydropower development propos-als which have appeared recently .

M.Sc. Aura SalmivaaraWater & Development Research GroupAalto University

In addition to impacts mentioned in the EIA report, hydrological and the sediment im-pacts will depend on the operational plans of the dams . However, the discussion on

the impacts presented in the EIA has vague founding, there is only one year time series from one hydrological station with informa-tion on the sediments . Furthermore the role of sediments for fisheries and agriculture has not been fully discussed . Sediments carry nutrients, which are important for fisher-ies and for agriculture, and thus, decline in sediment load will have impact on these activities . The role of sediments in the delta dynamics is also not addressed in the EIA . The sediment dynamics near the reservoirs are not described clearly and the linkage between water flow changes and erosion and further the impact on the sediment load are not described in the EIA . The importance of fishing as livelihood and food security has not been examined thoroughly . The reductive impact of dams on fisheries can have major impact on the food security and livelihoods of the people. The fish is also depending on the sediments that carry nutrients, and thus there are also other aspects to be considered with hydropower development than only the barrier effect of dams .

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Prof. U Nyo MaungRetd. Professor of Botany, Department of Botany, University of Yangon, Myanmar

I sincerely provide my comments and opin-ions for “Environmental Impact Report of Hydropower Development in Upper Reach-es of Ayeyarwady River” . My review was conducted based on the survey report and my experience as a person who involved in Environmental Impact Assessment (EIA) of hydropower development in upper reaches of Ayeyarwady River . Since I am a botanist and one of the participant in EIA process carried out by BANCA (Biodiversity and Nature Conservation Association Yangon, Myanmar, local counter-part of Chinese experts), my comments will concern with my experiences .

The report was rather bulky but not robust . There are serious flaws and underestimates in impact identification and analysis. The environment impacts listed in the report are all direct impacts but indirect impacts are missing. Also the impacts identified are only for the construction periods and the opera-tional period impacts are also missing . For example, the impact study was carried out only in the inundated area which caused by the construction of dam . Actually the indirect impact zone was beyond this area .

The significance analysis of impact results seems to be pre-determined imaginations . For example, in table 4 .2 .1, the comprehen-sive identification result of “Regional and National Culture” is . This means that the impact was positive as well as negative, low, irreversible, long-termed and only in the as-sessment area . In addition its conclusion was

not logical . For example, actually Myitsone area is the “Cultural heritage of Myanmar” as well as “Heart Land” of Kachin people . Kachin people believe that Myitsone is the birth-place of their civilization and it is also their sacred site like Jerusalem of Christian and Macca of Musalin . The permanent loss of such place should not be allowed by any mean . Similarly the result of impact analy-sis on landscape and tourism is also funny . This shows that they gave same value to the natural landscape vs . man-made landscape . Actually the eco-tourists may not use their money to see man-made landscape .

Again the downstream impact assessment was not carried out yet . It also fails to an-alyze a number of impacts on downstream flow and periodical flooding which produce fertile agricultural land around the down-stream of river by nutrient sedimentation . As one of the persons who carried out Biodi-versity Impact Assessment, I had pointed out that “The long-term potential impact of dam on large river like Ayeyarwady”, may cause the down river hydrological changes which can destroy riparian ecosystem dependent on periodic natural flooding (formation of fertile soil deposition so called “Maye nu kyun”), exacerbate water pollution during low flow period and increase salt water intrusion near river mouth (destroy the delta ecosystem) if storage in dam is significantly huge.

So I had recommended that:

“The construction of dam on the large river such as Ayeyarwady should be avoided due to the changes in downriver hydrology which may affect the navigation, riverine ecosystem and delta ecosystem . This will lead to nega-

6 Impacts on Vegetation tive impact on the economy of people dwell-ing in riparian along Ayeyarwady River .”

However my proposal was ignored as our separate report named “EIA report on Hy-dropower development of Ayeyarwady River Basin Above Myitkyina” by BANCA (Biodi-versity and Nature Conservation Association Yangon, Myanmar), had been totally neglect-ed .

The vegetation study was not completed . The studying on the vegetation of catchment areas of Maykha and Malikha Rivers was missing . The forests in the catchment areas are the life-supporters of the river . Table 3 .3 .3 “List of vegetation in evaluated area” is much generalized . Also, the Regional Vege-tation Map was lacking . Fig 3 .3 .1 “Diagram of vertical distribution of vegetation type in evaluated area” was also superficial. It could not be a representative of the individual area of seven cascades dam intended to build on Maykha and Malikha and Myitsone .

The forecast and assessment of social im-pacts (Pg. 205 to 212) is also superficial and predetermined imaginaries . As an examples;

1 . “The hydropower development on the upper reaches of Ayeyarwady River will not affect the living habitat of the mi-grants significantly.”

2 . “Since the hydropower stations have a long construction period, with a great number of workers, it can offer employ-ment opportunities to the migrants and local residents .”

3 . “The hydropower development at up-per reach of Ayeyarwady River will also promote the economic and social devel-opment for the whole drainage basin, Kachin State, even in the whole Myan-mar .”

— and so on. What a serious flaw it is?

The public opinions and suggestions (on pg . 272) are also based on the leading question-naires . The study on two types of questions (in Myanmar language in Annex.3) is the leading questions. Both are multiple-choice types . Such question organized by govern-ment authorities and the interview in the presence of local authorities will not be a true opinion since at that time Myanmar was under the rules of military dictatorship .

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Dr. Eugene SimonovInternational CoordinatorNGO Coalition “Rivers without Boundaries”

Two cascades compared with each other practically do not differ in their detrimental environmental and social consequences . The comparison presented may have some residu-al meaning for certain engineering decisions, but does not help to assess options important to society and biodiversity conservation .

If report would seek to assess different al-ternative options it would at least consider the impacts and benefits from the following schemes:

» cascade on Malikha River alone;

» cascade on Namihkva River alone;

» cascades on both rivers without Myiot-sone Dam on Ayeyawady River - any one of two almost identical schemes present-ly considered;

» no project option .

Such array of options would give a chance to look for a design where hydropower gener-ation is balanced with the need to compare river biodiversity and well-being of Kachin people .

The assessment presented in the report gives us no such an opportunity beyond general understanding that Myitsone dam itself is responsible for disproportionally large share of impacts . We can indirectly learn that from “example” of single hydrodam impact pre-sented at the end of the study . Two “schemes” presented a fine and relative-ly common example of “greedy hydropower development” when engineers try to utilize high percentage of hydropower potential (let us say >30%) and thus jeopardize and neglect all other values of natural river ecosystem . Less destructive options are possible only if smaller share of hydropower potential is uti-lized leaving room for retaining of important ecological services on some of major tributar-ies and in the mainstem . The document also is very contradictory, because it refers to “a lot of room for wild species” in other downstream sections of river basin, but also refers to extensive plans of hydropower development in this river basin . Therefore assessment report does not take into consideration impacts of other hydropower schemes proposed for the other portions Ayeyawady River basin . However any responsible analysis of the subject should assess proposed hydropower development basin-wide to see how much ecological func-tions and intact ecosystems could be pre-served in different development conditions .

7 Comparative analysis of environmental impact of different development schemes

Prof. Philip B WilliamsBeatrix Farrand Distinguished Visiting Pro-fessorDepartment of Landscape Architecture and Environmental PlanningUniversity of California, BerkeleyWurster Hall, Berkeley CA 94720-1839

For my field of hydrology and geomorphology it is completely inadequate for two reasons . These impacts - although mentioned in a general sort of way in other sections are not discussed in this section . Also most of these impacts are irreversible and not mitigatable .

8 Environmental impact mitigation measures

Prof. Thayer ScudderProfessor of Anthropology, EmeritusDivision of The Humanities and Social SciencesM/C 228-77California Institute of TechnologyPasadena, CA 91125

The 2009 Public Participation section is unacceptable for two major reasons . First, a series of public questionnaires is not “a best

practice” approach for achieving two way public participation in the hydro planning process . Second, the questionnaires were answered during the truce and before war-fare began again in June 2011. Though recent statements on both sides between the gov-ernment and the Kachin authorities indicate the possibility of another truce, 20 months of warfare make the 2009 questionnaires irrele-vant for current planning purposes .

9 Public participation

2120

Narae ChoiDPhil Candidate, University of Oxford

Summary of the review

The Social Impact Assessment of the Myit-sone Hydropower Project requires a signifi-cant improvement in terms of data substanti-ation, the rigour and the depth of assessment and the presentation of balanced and comprehensive views, so as to function as a technical document based on which decisions about the project can be made . Whilst lack-ing a robust examination of data, the current assessment tends to reduce the magnitude of social impacts and predicts ultimately posi-tive outcomes without offering a roadmap to achieve such results . Likewise, resettlement is anticipated to be successful even though no convincing plan is presented (more prob-lematically, resettlement sites seem to have already been prepared) and project benefits are perceived to be automatically shared by displaced people as well . The limited at-tention to livelihood impacts is concerning as it would lead to the impoverishment of resettled people . In sum, it is largely ques-tionable whether and to what extent diverse stakeholders are involved in the social impact assessment .

Comments on the Social Impact Assessment

Impact assessment – unsubstantiat-ed and overly optimistic

The statements of impact assessment are almost unanimously projecting optimistic

views that a given problem is “not serious” and can be addressed (“somehow”), without presenting evidence supporting such assess-ment: e .g . “The amount of waste is not large” (241). Even when a potential problem is pre-dicted, no sophisticated suggestions are made for dealing with it, apart from a statement that the issue should be addressed “properly .”

E.g. “The waste will have adverse impact on public health and landscape in reset-tlement area if without any proper dis-posal.” (242) – No further elaboration on ‘proper’ disposal ensues.

The combination of the two, that is, an optimistic projection of social impact that is unsubstantiated by detailed analyses or mitigation measures is such that the report contains many contradictions starting with “A will have some impacts on B” only to con-clude with “A will not affect B.”

E.g. “Domestic sewage of the resettlement area will affect the water environment of the nearby lateral ditch, but as compared to the runoff of the Ayeyawady River, the discharge of the domestic sewage of the area is tinier. The discharge of domestic sewage will not affect the water quality…” (241)

E.g. “The production and living of resi-dents will damage the existing vegeta-tion and cause some animals to loss [sic] habitat. However, resettlement area of the affected residents is located in the region where human activities are concentrated. The existing wild animals are less [sic], and most of them are small animals such as snakes, rats and birds. These animals

10 Social Impact Assessment (impact on migrants)

have strong adaptation to new habitats. Thus the resettlement of affected residents will not directly affect the animals.” (242-243)

These paragraphs illustrate the predominant style of argument in the report whereby the significance of anticipated impacts is reduced as if negligible (e .g . “less”, “little”, “small animals”), whereas the resilience or the ad-aptation capacity of the environment or the population is disproportionately emphasised . For example:

E.g. “For migrants settled behind in situ, the production and living styles after settlement vary little against the former one. They can adapt to local production and living styles quickly. The hydropow-er development on the upper reaches of the Ayeyawady River will not affect their living habits significantly.” (205)

E.g. “The environment capacity of land is relatively large, and influence of reset-tlement on the land bearing capacities is small, which will not impact the residents’ production and living in the settlement area.” (206)

Promises than planning

There is little or almost no examination of the magnitude of impact as compared to the adaptive capacity whereas an impact assess-ment is commissioned for predicting whether a gap may arise between the two (i .e . impacts and adaptive capacities). Consequently, the report fails to provide convincing mitigation measures for addressing such gaps, leav-ing the possibility unattended whereby the project may generate myriad adverse impacts on the environment and existing settlers . The limitation is most pronounced in its forecast of impact on migrants’ living styles (Section 6.1 (1)) where concerns for the weak adapta-tion capacity of the aged, women and other vulnerable groups are expressed and the long-term adaptive cycle is acknowledged but

only to reach an abstract conclusion that “But on a long term basis, traditional plantation conditions before and after the settlement are not changed fundamentally” (205). There is no analysis regarding the process of adap-tation, short- and medium-term challenges, and how the long-term equilibrium can be reached .

The same applies to the discussion of reset-tlement . To begin with, the internationally recognised resettlement standard is acknowl-edged in the report: “The living standard of the affected residents shall be restored to the original level and improved further” (239). The assessment also makes a few important points regarding resettlement such as main-taining the existing socio-cultural fabric and tradition, moving residents by villages and reconstructing key religious and cultural in-stitutions such as churches and Pagoda . The importance of incorporating third parties such as non-governmental organisations in survey, planning and assessment is also noted .

However, discussions of practical methods to achieve the stated goals are very limited . It is suggested that resettlement sites will be located in the region with good road trans-port conditions and large land environmental capacity (e .g . along the road from Myitkyina to Myitsone) (239). Without further data on how such large and cultivable land has been left empty and how it is to be distributed and used, a promise is made that “After reloca-tion, production and living conditions will be guaranteed and living standard of the affect-ed residents will be improved” (239).

Expectation than examination

In addition to rather optimistic assessment of adverse impacts and unplanned promises of positive resettlement outcomes, there are many wishful statements in the report that potential benefits from the hydropower proj-ect will accrue to project affected people . As an illustration, a statement below anticipates

22 23

an economic ‘boom’ in the region that would benefit affected people (i.e. ‘migrants’):

E.g. “[…] some of migrants can find la-boring opportunities in the hydropower development, which plays an active role in improving living standard and adapt-ing life styles” (205).

Existing researches present mixed outcomes regarding the extent to which the influx of construction workers generate employment opportunities2 and the overall picture is generally quite far from what the assessment predicts to be the case that the project would promote catering industry, service industry, culture and entertainment, and traffic and transportation . Furthermore, there are well-known risks of having a number of ‘outsiders’ migrating into the region such as the poten-tial of new diseases or socio-cultural norms to be introduced .

More broadly, a missing link between the costs and the benefits of a project has long been pointed out and subsequently, an equitable distribution of project effects has been the most contentious and critical issue pertaining to development-induced displace-ment since displaced/resettled people have not necessarily been beneficiaries of a proj-ect . The issue of accessibility and account-ability needs to be discussed for a wider share of project benefits by raising questions such as: who can access the anticipated ben-efits and how? Who is in charge of ensuring that promised benefits are delivered?

Without a rigorous examination of project benefits and an actual discussion of their distribution, the report presents abstract, macro statements such as: (a) the construc-tion of Myitsone Hydropower station will

promote economic and social development in Myitkyina City; (b) the level of medical treatment and cultural education will be improved considerably; and (c) hence the hy-dropower project will benefit medical treat-ment, culture and education of the affected residents because they will be relocated close to the City (243). No convincing links are made between these statements apart from an implicit assumption that the project will create broad (but unknown) socio-economic benefits, which hopefully may also be shared by project affected people by a simple factor of physical proximity to the City .

Key limitations/missing points

In addition to the shortfalls detailed above, a few fundamental limitations are found that jeopardise the quality and the purpose of the social impact assessment . First, if an assess-ment is conducted for scoping out anticipat-ed social impacts of the hydropower project, how can there already be a prepared resettle-ment site with newly built houses (see page 240)? Other parts of the report also suggest that resettlement sites may already exist (e .g . “In resettlement area, the vegetation … has been disturbed by people” (242)). This seems to indicate the possibility that the project would proceed or was already on-going re-gardless of the social impact assessment out-come, which undermines the whole purpose of conducting such assessment .

Second, the report is predominantly con-cerned with the impact of resettlement on the environment (although important in itself) as compared to socio-economic and cultural issues surrounding resettlement . For in-stance, it is not clear to what extent the social implication of an environmental change was explored or whether the inherent intercon-

nectivity between the two was recognised . Likewise, the lack of attention for the liveli-hood impacts is one of the biggest gaps in the report . This makes the reviewer/reader of the report wonder whether social impact assess-ment was conducted by a trained specialist (or it was carried out by engineers or envi-ronmental impact assessment specialists). Without intending to draw an unnecessary divide between different expert groups, I still argue that population displacement and re-settlement is such complex and controversial an issue that it is critical to have an experi-enced specialist(s) together with others.

A minor point regarding terminology is the use of ‘migrants’ for people who are forceful-ly removed from their homes and commu-nities . In a rather rigorous academic term, ‘migrants’ refer to those whose movement is more voluntary than forced in nature . Thus, using migrants in this context can be confus-ing, if not inappropriate, since there can also be ‘migrants’ in the region such as migrant workers moving between provinces and cities . That existing residents are to be dis-placed by the project should not be disguised and the report needs to be more specific in whom it refers to and call them displaced people or resettlers .

Comments on the Table of ContentsThis is a brief comment on the table of con-tents, which works more as a checklist rather than as a critique of actual contents .

No mitigation measures for social impact

The table of contents does not contain a sec-tion that presents a resettlement and recon-struction plan or any recommendations in

this regard; whereas the Section 7 is dedicate to ‘environmental impact mitigation mea-sures’ . As already mentioned, social impact assessment in fact does not provide much input in this regard, whereas, oddly enough, it appears that resettlement sites and houses are already prepared for people to be dis-placed .

Public participation (Section 10)

For social impact assessment, the views and voices of people to be affected are crucial and public participation needs to be facilitated maximally and in the most appropriate way . Based on the outline of the Section 10, below questions can be raised to examine the extent and the quality of public participation for the EIA .

» What does the questionnaire explore? Does it include questions or provide information about displacement (and resettlement)?

» Were any other more participatory meth-ods than a survey used?

» Who were the stakeholders included in the survey? How were the “subjects” de-fined (by what criteria? Who was includ-ed and who was excluded)?

» Does the survey include a range of potentially affected people and broader stakeholders such as civil society organi-sations and local government officials?

» What was said by people regarding the environmental and social changes that they anticipate or experience?

2 See research on the Lesotho Highlands Water Project (Ryan Hoover, 2001, International Rivers) or research on Three Gorges Dam (e.g. Brook Wilmsen et al., 2011, Environment and Development 20(4))

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Dr. Bandana Pradhan Department of Community Medicine and Public HealthInstitute of Medicine, Tribhuvan UniversityMaharajganj, Kathmandu, Nepal

In water related diseases, waterborne and vector borne diseases are already mentioned in the EIA Report. But other water related diseases and STD, HIV/AIDs which are com-mon for a dam construction site are listed here . They are:

1 . Water related

» Prevalence of diseases due to consump-tion of contaminated raw vegetables and fish will increase (Fasciolopsiasis, Clonerchiasis, Diphyllobothriasis).

» The presence of aquatic weed along the lake and within the tributaries will affect the local human health . The weeds provide the necessary habitat for black-fly, mosquitoes and snails, which are the vectors of water-borne illnesses such as bilharzia, river blindness and malaria .

» Additionally, the degradation of aquat-ic habitat might result in the decline of shrimp and clam populations . The nutri-ent deficiency in local people’ health will be from the loss of shellfish populations, as they provided an essential source of dietary protein . Likewise, the rural and industrial economies will experience the financial losses associated with the deci-mation of river aquaculture .

» Water based diseases caused by swim-ming or bathing in contaminated water like Schistosomiasis and Dracunculiasis will increase .

2 . STD and HIV/AIDs

» Dam construction attracts a large num-ber of migrant workers from different ar-eas . There is enough global evidence on the vulnerability of construction workers to HIV/AIDS .

» The people in construction site are char-acterized by high mobility, isolation and working in confined environments. They are often very young adults in sexually active age group but without an adequate access to health services. A significant proportion of workers are migrants and prone to HIV infection .

» Increase of human migration in the dam construction area will increase the chance of increasing STD (sexually trans-mitted disease), HIV/AIDS.

» Commercial sex workers will increase in the resettlement area

» Mothers to child transmission of HIV/AID will increase in such areas

Preventive measures » Water sanitation awareness program to

prevent water born, water washed and water based and vector borne diseases .

» Appropriate interventions such as toilet coverage, water coverage, water quality maintenance

» It has been compulsory to provide pe-riodic awareness program of HIV/AIDs to all the worker of any big construction work is being performed (ILO 2008).

11 Myitsone dam’s impacts on local people health

Dr. Miguel CountinhoFernando LeãoIDAD – Institute of Environment and Devel-opmentCampus Universitário3810-193 AVEIRO - Portugalhttp://www .idad .ua .pt/

After a Review of the EIA of the Myitsone dam planned for the Ayeyawady river in Bur-ma we’ve got the following comments:

» the analyzed EIA concerns the “hydro-power development in the upper reaches of Ayeyawady river” and includes the assessment of 2 layout alternatives ( 5 or 7 dams).

» the document is well structured . The EIA content is organized in natural, ecological and social environments .

» nevertheless the content of the study is not sufficiently detailed and not adapted to the complexity of the project . The EIA pretends to assess 2 layout alternatives for the hydropower development: 5 or 7 dams . Information included in the EIA is insufficient, non-technic. In many components there isn’t enough technical information to allow a correct assess-ment of impacts and identification of the adequate mitigation measures .

» to have an adequate assessment the EIA should describe in detail and separately

impacts caused by each one of the 7 dams .

» chapter 1 .5 describes the objectives of environmental protection . One of the aims of the EIA should be to check if this objectives are fulfilled: this is not done.

» page 140 shows an impact matrix that pretends to be very objective . There isn’t any information in the text that supports the objectiveness of the matrix . The ma-trix should be shown as a synthesis of the study and not the other way around .

» the text is biased: positive impacts are overemphasized and negative impacts are underemphasized .

» the EIA should include the assessment of this project in climate change from both mitigation and adaptation perspective . What are the emissions of greenhouse gases caused by flooding 660 km2 of forest? Is this project resilient to climate changes estimated for the region?

» Flooding of the rivers causes severe im-pacts on the systems provided by ecosys-tems from which some local populations depend: EIA should mention and assess these impacts .

From my perspective this EIA would not be approved in the European Union context for lack of background information and subse-quent analysis .

12 EIA structure

26

“The Social Impact Assessment of the Myitsone Hydropower Project requires a significant improvement.”

Narae Choi, DPhil Candidate, University of Oxford

“Most of these impacts are irreversible and not mitigatable.”

“The Ayeyarwady dams will threaten biodiversity. Eco-regions which are nationally important, regionally sig-nificant and globally outstanding will be directly affected by clearing and logging of the inundation areas and construction activities for a series of dams in Kachin State.”

“The environmental transformation precipitated by even one or two of these dams being built would be significant and the impacts on riparian communities upstream, within the reservoir inundation areas (already being subject to involuntary resettlement) and for many hundreds of miles down-stream of the Myitsone Dam would be considerable.”

Dr. David JH Blake, Ubon Ratchatani University,

Thailand

Professor Maung Maung Aye, Patron & Chief Advisor,

Myanmar Environment Institute (MEI)

Prof. Philip B Williams, Beatrix Farrand Distinguished Visiting Professor, University of California, Berkeley

Letpadaung Copper Mine

Letpadaung

Artisanal mines near Letpadaung Mountain. Manyof the people who work these mines were

displaced by the mine project. They process oremined by Wanbao

Highest pointElevation 162 m (531 ft)

Coordinates 22°07′12″N 95°02′13″EGeography

Location Sagaing, Myanmar

v · t · e Internal conflict in MyanmarArmed conflicts

Insurgent groups · Ceasefires

2010–12 Myanmar border clashes ·Campaign at the China–Burma border ·

Communist insurgency · Kachin conflict · Karen conflict· Kokang conflict · Rohingya insurgency

Protests and government changes

1962 coup d'état · 1962 protests · 1974 crisis ·1988 uprising · 1990 election · Roadmap to democracy

· Saffron Revolution · 2010 election ·2011–15 political reforms

Incidents and attacks

1947 · 1983 · 1999 · 2003 · 2005 · 2010 ·2010 cyberattacks · 2013

Anti-Muslim violence

2012 · 2013

People's Republic of China and theRepublic of the Union of Myanmar

From Wikipedia, the free encyclopedia

The Letpadaung Copper Mine (Burmese: လက ပံေတာင းေတာငက ေးနီသတ္တုတ င း) is a large surface mine in the Salingyi Townshipof Sagaing Region of Myanmar. Since Myanmar began liberalizing in2011 the mine has been the site of contentious protest and come tosymbolize the shortcomings of political reform. Villagers displaced bythe Chinese-operated mine contend that they have not received faircompensation while the company claims that it has been socialresponsible throughout the process.

Contents1 Background

1.1 China2 Villager grievances3 November 2012 white phosphorus4 Letpadaung Taung Investigation Commission Report5 December 2014 shooting6 References

Background [ edit ]

Letpadaung is a large mine project operated by the Wanbao MiningCopper Ltd. company, in cooperation with the Union of MyanmarEconomic Holdings Ltd (UMEHL)[1] Wanbao, a subsidiary of ChinaNorth Industries Group Corp. or Norinco, a large armsmanufacturer, bought the project from Ivanhoe, a Canadian miningcompany in 2011.[2] Ivanhoe had won the initial project from theMyanmar government pursuant to a series of agreements andfeasibility studies from 1994 to 1996. The joint venture agreementwas signed on April 10, 1996.[3] Ivanhoe divested its share of theproject in 2011, citing the impact of the negative stigma of workingwith the military government on its other business throughout theworld. The final agreement with Wanbao, reached after protests in2012, gave it a 30% share of the eventual profits, 19% going toUMEHL, a massive military-owned company and 51% to Myanmar’sgovernment. A later agreement gave 2% of profits to localdevelopment. The project is reported to have cost approximately$1 billion to develop.[1]

China [ edit ]

Through its decades of economic isolation resulting from Western sanctions,Myanmar found China a critical ally and investment partner. However the largeprojects undertaken with China often served to exacerbate anti-Chinasentiment in the country, which has always had a contentious relationship withits northern neighbor. Though a substantial ethnic-Chinese population has longbeen a part of Myanmar’s demographic landscape, an influx of Chineseimmigrants with business connections in Northern Myanmar over the past 20years has caused tensions and anti-Chinese feelings to rise[4]

Like many issues in Myanmar, anti-Chinese feelings have come to the surfaceand been manipulated since the democratic transition removed censorship andcreated a new political economy. In September 2011 the Thein Seingovernment abandoned the Myitsone Dam project in Kachin State. Ninety percent of the electricity produced by the

Coordinates: 22°07′12″N 95°02′13″E

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$3.6 billion dam would have gone to China, which, combined with its environmental impact, led to broad protest inMyanmar.

More recently, the Director of Myanmar’s railway ministry, Myint Wai, announced in July 2014 the cancelation of aproposed $20 billion railway link between Myanmar’s oil-producing Rakhine State and China’s Yunnan Province citing“public demand.” Some, however, speculate that the Myanmar government simply decided that the long timescale ofthe project would not provide it ample revenue, and that the termination of western sanctions has given it other options.

And despite these few lags in the economic relationship between the two countries, A large number of projects are stillunder way. During a visit to Myanmar in November 2014 by Chinese Premier Li Keqiang, China and Myanmar signedinvestment deals in energy, agriculture, telecommunications, infrastructure and finance worth $7.8 billion. LikeLetpadaung, the controversial Kyaukpyu-Kunming oil pipeline has been built despite massive public protest. Many inRakhine State resent their small share of revenues.[2]

Villager grievances [ edit ]

Villagers protesting the Letpadaung copper mine have expressed dissatisfaction with the resettlement process,compensation schemes, environmental and health effects, and the destruction of an important religious site. Thecompensation plan offered to the displaced villagers has been at the center of the protests since the beginning of theproject. The agreement between Wanbao and the Myanmar Government held the company to certain standards ofcompensation, social spending and employment for residents. Wanbao and the Myanmar government have madeclaims of fairly compensating villagers which villagers and rights groups like Amnesty International have rejected asinadequate.

Geng Yi, Wanbao’s local representative told The Economist magazine in May 2014 that the company was spendingeven more than required by that agreement. He claimed that the company spent $1.8m on “corporate socialresponsibility” work in 2013, which he said was more than the $1m that the contract requires each year. Additionally,2% of profits are supposed to be allocated to local villages when the mine is operational.

In December 2014 Wanbao Spokesman Dong Yunfei said in an Interview with the Democratic Voice of Burma (DVB)that the company intends to offer compensation to all 1,032 villagers affected by the mine. He said that about 70% ofvillagers have accepted the compensation offered by the company and that they have been working with and listeningto affected villagers. For example, through “door-to-door consultations” the company learned that many of those whohave not accepted the plan and are protesting want higher compensation. The company has tried to accommodate, heclaimed. In July they began a “Livelihood Contribution Plan” to help people who were promised jobs at the mine butwhich can only be fulfilled once the mine is totally operational.

In statements Wanbao has conceded that about 100 villagers have refused to discuss compensation, despite severalattempts. They have refused even to admit Wandbao employs, government officials and police officers into the “threeold villages” in which they live. “We learnt that quite a few villagers are actually willing to talk to us, but a few trouble-makers won’t let them,” Dong said, and added that the company would only pursue the matter through peacefuldialogue.

Villagers, international rights groups and Myanmar activists have contested the fairness of the compensation scheme.Amnesty International, estimates that approximately 2,500 villagers have been affected by the project, more than twicethe company figure of 1,032 affected,[5] on what villagers say is 8,000 acres of land from 26 villages.[6] The mine andthe support industries that have followed it have radically increased the price of land in the area, making it harder fordisplaced villagers to settle nearby and devaluating their compensation.[7] Amnesty International has said that thecommunity consultation process was inadequate and that villagers who refused to be relocated were excluded fromdiscussion. Wanbao allegedly excluded them from consultation on direction of the Myanmar Government.[5] As recentlyas November 2014 Amnesty International urged the government to stop work at the project, citing a flawed acquisitionprocess, the presence of environmental and social repercussions and the lack of official accountability regardingviolence against protesters at the mine in 2012.[8]

Villagers near the mine claim that the sulfuric acid plant on the mine’s property is rendering the surrounding farmlandinfertile and leading to an increase in the number of children born blind.[9]

November 2012 white phosphorus [ edit ]

Accounts of the violence that erupted on the morning of November 29, 2012 vary widely between protesters and rightsgroups on one hand and the government on the other. Thousands of villagers, monks and activists had beenparticipating in protests at the mine site for the previous three months. Protests had generally taken the form of a sit-in,though in recent weeks protesters had become more daring, possibly emboldened by the recent visit of AmericanPresident Barack Obama. Recently protesters had begun blockading the sulfuric acid factory that has been the subjectof intense condemnation. Protesters had also been blocking bulldozers and trucks. National League for Democracy


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A wanted sign for activists wantedfor their connection to protests at theLetpadaung Copper mine.

NLD Chair Daw Aung San Suu Kyi

Chairwoman Daw Aung San Suu Kyi, daughter of Burmese independence leader Aung San and the most popularopposition figure in the country, was to meet with protesters at the mine on the morning of the following day, November30, to hear their grievances.

Police claim that they repeatedly warned the protesters to leave, saying that they had tolerated the “illegal” protest fora long time but that the addition of people from other areas and “outside groups” had forced their hand. PoliceLieutenant Colonel Thura Thwin Ko Ko, 49, one of commanders on duty during the clean-up, claims that protesterswere warned fifteen times to disperse. Protesters dispute this narrative, saying that they were taken totally by surpriseby the police move. A truckload of police arrived at the site of the protests shortly before the dispersal. Protesters saythey formed in ranks to withstand the police action but were put to a run as soon as it began.

Protesters claim that they were fired upon by a combination of water cannons,tear gas, and an unspecific incendiary device. The protesters scrambled as sixexplosions rang out, fired from what some called flare guns; "They fired blackballs that exploded into fire sparks. They shot about six times. People ran awayand they followed us," one protester told The Guardian.[10] The incendiarydevices exploded, sometimes in the laps of praying monks, throwing sparks andburning material onto the clothes and skin of other protesters. Many of thosehospitalized had black spots and burns over much of their bodies, whichindicate the use of white phosphorus in the incendiary devices.

Lawyers Network and Justice Trust. an unofficial investigation group, publisheda report after the event which included lab results from a canister found at thescene indicating the presence of phosphorus. The sticky substance thrown bythe canisters stuck to tents and people and could not be extinguished by pulling off, rolling on the ground or dousingwith water. Estimates of the number of people injured in the operation range from 68 to over 100, mostly monks. Manyof the monks were hospitalized for several weeks in Mandalay, Monyua and Bangkok.[11] Operations at the mine weresuspended until a commission could determine what happened.

Two types of munitions were found at the mine after the clearing. One had CS written on it, an abbreviation for 2-chlorobenzalmalononitrile, the active ingredient in tear gas. The other, smaller munitions bore no marking. LieutenantColonel Thura Thwin Ko Ko later claimed that the police thought that the munitions they were firing were all tear gas.[12]

Letpadaung Taung Investigation Commission Report [ edit ]

In the wake of the November clash a parliamentary investigation commissionwas established to investigate the clashes and larger problems at the mine.The commission, chaired by Aung San Suu Kyi and made up of ministers,members of parliament and company representative,[13] missed severaldeadlines before releasing a report containing 42 recommendations concerningland utilization, environment, compensation and society, and religiousconcerns.[14] It recognized that the mine had not met internationalenvironmental or social standards and did not compensate villagers sufficiently.

To the disappointment of many protesters, however, the commission did notrecommend the closing of the mine. Though it acknowledged the minimal directbenefit that the mine gave to Myanmar, the commission recommended that themine remain open, citing Myanmar’s fragile relationship with China and theimpact that shuttering such a large project could have on Myanmar’s internalinvestment climate.[13]

The commission provided for the creation of a Committee for theImplementation of the Letpadaung Report, tasked with implementing therecommendations outlined in the report. That committee has since come underintense criticism for a lack of transparency and sluggishness in implementingchanges, not least from Aung San Suu Kyi, who claimed after the shooting in December 2014 that violence haderupted because of the Implementation Committee’s failure to implement the Investigation Committee’srecommendations.

In response to criticisms from Aung San Suu Kyi, Tin Myint, a member of the investigation committee and the secretaryof the implementation committee, said on January 8, 2015 that criticisms were unfounded. In its annual report thecommittee claimed to have already implemented 29 of the Investigation Committee’s recommendations, and to be in theprocess of implementing the remaining 13.


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December 2014 shooting [ edit ]

On December 22, 2014 approximately 200 villagers were protesting the erecting of a border fence on 1,000 acres offarmland seized by the mine. The land was owned by villagers who had refused to accept the compensation planoffered by the mine. Villagers allegedly protested by throwing rocks and firing slingshots at workers and the policeofficers brought with them, and by physically blocking the work. In an interview with the Democratic Voice of Burma, avillager from Sete claimed that “The police stood in a line, armed with riot shields, and warned the villagers they wouldbe shot if they did not move…The protestors tried to block them from entering the plots and refused to give in.”[15]

When police opened fire one woman, 56-year-old woman from Mogyopin village, was shot in the head and died shortlyafterwards. Another man was shot in the leg. The ministry of information said in a statement that eleven police officersand nine protesters were injured in the clash,[16] though some media sources have questioned that number. Thefollowing day renewed protests were met with more resistance from police, who fired rubber bullets into the crowd,injuring two or three protesters.[17]

Wanbao’s public relations manager Cao Desheng expressed regret at the shooting and put blame on the police;

We know nothing about the police’s handling before the accident happened…We made no request for thepolice to use any kind of violence…On behalf of everyone at Wanbao we extend our deepest sympathiesand heartfelt condolences to her [Daw Khin Win’s] family and share in their grief at this difficult time…Weunderstand the police were at the scene, and we hope they will start investigating this event.[18]

The Myanmar Ministry of Information issued a report, run in state media outlets, which took a less conciliatory note thanthe statement made by Wanbao. The report said that tensions erupted when a group of about 30 protesting villagersprevented a bulldozer from clearing a path for an extension of the border fence by lying on the ground. Wanbaoemployees were:

[Wanbao employees were] targeted by slingshot fire by 15 villagers from the same group, wherebysecurity forces retaliated by firing three warning shots from 12-bolt crowd control guns…Despite efforts todilute tensions, around 100 villagers who had been disturbing the third work team near Ingyin Hill snatchedsignal flags off the [Wanbao staff], set those on fire, and surrounded the 10 workers…At 11:15am, securityforces demanded the villagers release the 10 workers; in response the villagers demanded theconstruction vehicles and machinery used in the fence construction be removed from the site…Negotiations failed and tensions rose to the point of danger. The security forces again fired eight shots todisperse the crowd…The security forces then successfully recued the 10 workers. Eleven police officersand nine villagers were injured in the incident. Daw Khin Win of Mogyopyin died from injuries.[5]

After the incident, Aung San Suu Kyi blamed the administration of President Thein Sein for the shooting and theviolence at the mine in general. Referring to the report that the commission she chaired filed after violence at the minein 2012, Daw Aung San Suu Kyi said;

We have provided ample recommendations. They [the Thein Sein administration] have to implement theirfair share. If they want [me] to do it all, then hand over administrative power [to me] so that I can doeverything…The committee did carry out some recommendations, but it has not fully implemented therecommendations. It has not followed the recommendations to the letter.[19]

On December 29, a week after the shooting of Daw Khin Win, dozens of protesters tussled with police outside of theChinese embassy in Yangon where they were attempting to lay a wreath to commemorate her death. Protesters alsocalled for an end to violence at the mine. The following morning Nay Myo Zin, an activist and former Myanmar militaryservicemen, was arrested by waiting police as he began the trip to the Letpadaung site. Though they did not givespecific charges, police allegedly told Nay Myo Zin that his arrest was due to his participation in the protests of the nightbefore. Fellow activists Naw Ohn Hla, Daw Sein Htwe and Tin Ptut Paing were apparently arrested the samemorning.[19]

References [ edit ]

1. ̂a b 2014b. “Woman Fatally Shot at Myanmar Mine Protest.” The New YorkTimes.http://www.nytimes.com/aponline/2014/12/22/world/asia/ap-as-myanmar-mine-protest.html (March 5, 2015).



https://en.wikipedia.org/wiki/Slingshots

https://en.wikipedia.org/wiki/Rubber_bullets

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2. ̂a b “China’s Influence in Myanmar Facing Growing Scrutiny.” The Diplomat.http://thediplomat.com/2015/01/chinas-influence-in-myanmar-facing-growing-scrutiny/ (March 5, 2015).

3. ^ “The Letpadaung Project Executive Summary,” Ivanhoe Mines LTD. and Myanmar Ivanhoe Copper Company LTD.http://www.ivanhoe-mines.com/i/pdf/letpadaung-info.pdf June 1999

4. ^ Marshall, Andrew R. C. 2012. “Special Report: Myanmar’s Deep Mine of Old Troubles.”Reuters.http://www.reuters.com/article/2012/12/28/us-myanmar-reforms-idUSBRE8BR02P20121228 (March 5, 2015).

5. ̂a b c Says, Tocharian. “Latpadaung Death ‘senseless’, Says Chinese Mining Firm.” DVB MultimediaGroup.https://www.dvb.no/news/latpadaung-death-senseless-says-chinese-mining-firm/46839 (March 5, 2015).

6. ^ “Letpadaung Copper Mine Remains Mired in Problems.” Radio FreeAsia.http://www.rfa.org/english/news/myanmar/letpadaung-06272013194052.html (March 5, 2015).

7. ^ “Kidnapped.” 2014. The Economist.http://www.economist.com/news/business/21602719-chinese-miner-tries-be-nice-kidnapped (March 6, 2015).

8. ^ “China Expresses Concern after Protests at Myanmar Mine.” 2014.Reuters.http://www.reuters.com/article/2014/12/24/us-china-myanmar-idUSKBN0K20GT20141224 (March 5, 2015).

9. ^ Burke, Jason, and Swe Win in Monywa. “Burma: Riot Police Move in to Break up Copper Mine Protest.” theGuardian.http://www.theguardian.com/world/2012/nov/29/burma-riot-police-mine-protest (March 5, 2015).

10. ^ Burke, Jason, and Swe Win in Monywa. “Burma: Riot Police Move in to Break up Copper Mine Protest.” the Guardian.http://www.theguardian.com/world/2012/nov/29/burma-riot-police-mine-protest (March 5, 2015).

11. ^ “Submission of Evidence to Myanmar Government’s Letpadaung Investigation Commission” Lawyers Network and JusticeTrust, http://www.burmalibrary.org/docs15/Letpadaung-Lawyers_report-en-red.pdf . 5 February 2013

12. ^ “Suu Kyi Blames Myanmar Government’s Inaction for Letpadaung Killing.” http://www.irrawaddy.org/burma/suu-kyi-blames-govt-inaction-letpadaung-killing.html (March 5, 2015).

13. ̂a b “Burma Recommends Controversial Mine Continue.” VOA.http://www.voanews.com/content/burma-recommends-controversial-china-backed-mine-continue/1619836.html (March 5, 2015).

14. ^ “Letpadaung Committee Rejects Suu Kyi’s Remark on Protest.”http://www.mizzima.com/mizzima-news/latpadaung/item/16674-letpadaung-committee-rejects-suu-kyi-s-remark-on-protest/16674-letpadaung-committee-rejects-suu-kyi-s-remark-on-protest (March 5, 2015).

15. ^ Naw Noreen, “Riot police open fire on Latpadaung protestors,” Democratic Voice of Burma, https://www.dvb.no/news/riot-police-open-fire-latpadaung-protestors/46803 , (22 December 2014)

16. ^ The Associated Press. 2014a. “Woman Fatally Shot at Myanmar Mine Protest.” The New YorkTimes.http://www.nytimes.com/aponline/2014/12/22/world/asia/ap-as-myanmar-mine-protest.html (March 5, 2015).

17. ^ “More Villagers Injured in Letpadaung Mine Protests.”http://www.irrawaddy.org/burma/villagers-injured-letpadaung-mine-protests.html (March 5, 2015).

18. ^ Says, Tocharian. “Latpadaung Death ‘senseless’, Says Chinese Mining Firm.” DVB MultimediaGroup.https://www.dvb.no/news/latpadaung-death-senseless-says-chinese-mining-firm/46839(March 5, 2015).

19. ̂a b “Four Charged in Myanmar Anti-Mine Protest.” Radio Free Asia.http://www.rfa.org/english/news/myanmar/charged-12312014153818.html(March 5, 2015).

Categories: Surface mines


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MYANMAR’S “BIG STATE SECRET”JADE:

OCTOBER 2015

2 JADE: MYANMAR’S “BIG STATE SECRET”

This report would not have been possible without the many organisations and individuals who have contributed their time, knowledge and

expertise. We would like to thank in particular Myanmar’s Ministry of Mines, Myanmar Gems Enterprise and the Myanmar Gems and Jewellery

Entrepreneurs Association for the data and assistance they have provided. We thank too the companies which have taken the time to share

information and their perspectives on the jade industry. These include large firms such as Myanma Economic Holdings Limited, Htoo Group,

KBZ, Max Myanmar, Myanmar Takaung and the Ruby Dragon Group as well as small-scale miners based in Hpakant. In analysing company

records, Global Witness has benefited from the invaluable support of OpenCorporates and the Open Knowledge Foundation.

In reviewing the environmental and social impacts of jade mining, we have been able to draw on research findings generously shared with

us by the Kachin Development Networking Group (KDNG).

We also appreciate the assistance we have had from a range of expert contributors including Tom Kramer, Mathieu Pellerin, Bertil Lintner,

Yeshua Moser-Puangswan and Kevin Woods.

ACKNOWLEDGMENTS

JADE: MYANMAR’S “BIG STATE SECRET” 3

EXECUTIVE SUMMARY 5

Who’s who, and how much are they making? 10

Jade and armed conflict 14

Opportunities for reform and the role of Myanmar’s international partners 15

Recommendations 19

METHODOLOGY AND REPORT STRUCTURE 22

CHAPTER 1: WHAT IS IT WORTH AND HOW DOES IT WORK? 24

Introduction 24

The multi-billion dollar state secret 24

– What is the State’s take of Myanmar’s jade billions? And where does the money go? 27

– EITI: Window-dressing or game-changer? 28

Slicing up the pie 29

– Awarding jade licences: the official account 29

– Big hats and bribes: how to get your own jade mine 33

Playing the jade game: tax evasion, money-laundering, price-manipulation, underselling and smuggling 34

China’s appetite for the stone of heaven 37

The rise of the machines 38

CHAPTER 2: WHO’S BENEFITTING? 40

Military and political leaders and their families 41

1. Retired Senior General Than Shwe 41

2. Minister for Livestock, Fisheries and Rural Development Ohn Myint 44

3. Former Ruling Party General Secretary Maung Maung Thein 46

4. The tip of the iceberg? 49

Army companies 50

– Myanma Economic Holdings Limited 50

Crony companies 53

1. Ever Winner 53

2. KBZ Group 57

3. Asiaworld 60

4. Htoo Group – an unlikely transparency trailblazer? 61

Ceasefire groups 62

1. United Wa State Army / United Wa State Party 62

2. Ruby Dragon 67

International companies 69

1. The real thing – MEHL and Coke’s shared partner 69

2. Travels with my CAT, by Zaw Bo Khant 71

CHAPTER 3: WHO’S LOSING OUT? 73

Kachin’s stolen inheritance 75

The environmental and social collapse of Hpakant 78

Living the jade rush 80

CHAPTER 4: JADE AND ARMED CONFLICT 86

What’s it got to do with jade? 86

The backstory 87

Everything to lose – the licensed jade mining companies 89

A mafia in the mines – the Tatmadaw and jade 89

The KIA/KIO’s main artery 90

CONCLUSION 95

Glossary and acronyms 97

Appendix 1: Estimating the value of Myanmar’s jade industry 98

Appendix 2: Kachin Development Networking Group: ‘Solutions to current DestructiveNatural Resource Development Process and Related Conflicts’ 107

Endnotes 110

CONTENTS


M YA N M A R

C H I N A

L A O S

T H A I L A N D

I N D I A

B A N G L A D E S H

KACHIN

YUNNAN

Myitkyina

SAGAING

MANDALAY

SHAN

WaSelf-Administered

Zone

Pa-OSelf-Administered

Zone

KokangSelf-Administered

Zone

KAYAH /KARENNI

NAYPYI

TAW

KAYIN /KAREN

TANINTHARYI

YANGONAYEYARWADY

RAKHINE

CHIN

MAGWAY

BAGO

MON

Laiza

Hpakant

Ruili

Yingjiang

Tengchong

Sihui

HONG KONG

GuangzhouPingzhou

GUANGDONG PROVINCE

C H I N A

Map of Myanmar and jade trading centres in China


EXECUTIVE SUMMARYi

Since 2011, Myanmar’s rebranded government has told the world it istransitioning from a pariah state runby a ruthless military dictatorship to a civilian regime committed to wholesale political and economic reforms.

In important respects, there has been real change. Oft-cited examples include the release of Aung San Suu Kyi and other political prisoners,and the government’s peace talks with ethnic armed groups. But in other critical areas, the reformist narrative bears little scrutiny. Nowhere is this truer than in the jade sector.

Drawing on over a year of investigations, this report shows for the first time how a multi-billion dollar trade in one of the planet’s most precious gemstones is tightly controlled by the same militaryelites, US-sanctioned drug lords and cronycompanies that the government says it is consigning

to the past. Companies owned by the family of former dictator Than Shwe and other notorious figures are creaming off vast profits from the country’s most valuable natural resource, and the world’s finest supply of a stone synonymous with glitz and glamour. Meanwhile, very few revenues reach the people of Kachin State, the site of the Hpakant jade mines, or the population of Myanmaras a whole.

As the country approaches an historic election, the importance of these findings to Myanmar’sfuture is hard to overstate. Our investigations show that the elites who between them have most to lose from an open and fair future also have ready access to a vast slush fund in the shape of the jade sector. This raises urgent questions for reformers and their international partners. What is happening to all this jade money? Is it only being spent on real estate, fast cars and lavish parties, or is it being used for political purposes as well?

Traditionally associated with royalty in China, jade has long been valued above gold and silver and is now a status symbol for the expanding class of super-rich. In 2014, a 27 piece jadeitenecklace sold in Hong Kong for a record-breaking US$27.44 million after a seven-way bidder battle.CREDIT: TYRONE SIU/Reuters/Corbis

i References for the points made in this section can be found in the main body of the report. The pull-out quotes are all from interviews by Global Witness in 2014 and 2015.


The sums involved in what one industryrepresentative calls “the government’s big state secret” are staggering. Until now the jade sector’s worth has been almost impossible to determine. However, based on new research and analysis, Global Witness estimates that the value ofofficial jade production in 2014 alone was well over the US$12 billion indicated by Chinese import data, and appears likely to have been as much as US$31 billion. To put it in perspective, this figure equates to 48% of Myanmar’s official GDP and 46 times government expenditure on health.

Clearly, if openly, fairly and sustainably managed, this industry could transform the fortunes of the Kachin population and help drive development across Myanmar. Instead, the people of Kachin State are seeing their livelihoods disappear and their landscape shattered by the intensifying scramble for their most prized asset. Conditions in jade mines are often fatally dangerous, while those who stand in the way of the guns andmachines face land grabs, intimidation and violence.

“Hpakant is one of the most valuable places on earth because you can earnbillions from a very small area... and yet only a small number of people are

getting advantages.”Community leader, Kachin State

Kachin State in northern Myanmar is home to the world’s largest and most valuable jade deposits. Instead of helping to drive much-needed local development, and improve infrastructure and healthcare for ordinary people, these riches are pocketed by a small and powerful elite.

“Now jade mountains disappear in just a

few days.” Jade businessman

Government-licensed companies have brought in machines to carry out large-scale extraction in Hpakant, with operations ramping up massively over the past year. CREDIT: Minzayar


These injustices stoke unrest and resentment in one of the country’s most volatile regions. The jade business is a significant driver of Myanmar’s most intractable armed conflict, which pits the central government against the KachinIndependence Army / Kachin IndependenceOrganisation (KIA/KIO). The industry generates funds for both sides in a war which has claimed thousands of lives and seen 100,000 peopledisplaced since it reignited in 2011.

While the situation is dire, the opportunities for change are real. Government reformers have signed Myanmar up to the Extractive Industries Transparency Initiative (EITI), an international framework for combating corruption. They have

also initiated peace talks with the KIA/KIO. These are promising moves but both risk falling short if they do not address directly the need for a fairer and more accountable system of managing the country’s most important natural resource.

Western governments that support the government, especially the US, have a key role to play here. With a range of sanctions imposed on individuals named in this report, and a leading role in the EITI process, the US is uniquely well placed to help take the jade trade out of the hands of military hardliners and crony companies. This report spells out precisely why it must use that leverage without delay.

A call for change from Kachin State

In October 2014, 4,923 people in the jade mining township of Hpakant signed a letter to President Thein Sein demanding an end to the abuses by jade mining companies. The letter details devastatingenvironmental and social impacts caused by company activities:

“As part of jade mining activities in Hpakant, a limited number ofcapitalists have been granted permits for blocks, whereas local ethnic groups have been granted no jade blocks. Although certain companies are affiliated to ethnic groups, such affiliation is in title only and thesecompanies are dominated by foreign nationals.”

“The mining companies are dynamiting the hills and mountains to allowexploration activities prior to the expiry of their contracts, and they areacting solely for their own benefit in the excavation of valuable jade via short-term rather than long-term processes. This poses a serious potential health hazard to residents, and causes a wide range of diseases or fatalities.”

“Companies do not systematically stabilise sites where they have undertaken deep excavations and created reservoirs. As a result, heavy rains cause reservoirs to burst, and reservoirs are also sometimes destroyed

intentionally, leading to the death of cattle and loss of property. However, the companies never take responsibility for such incidents.”

“The huge vehicles used by the companies have left the streets congested, and accidents are frequent.”

“Although valuable resources, priceless gems, forests, and gold are all vanishing due to excavations bycompanies equipped with machinery, the public does not benefit from these activities. Conversely, people are suffering as a result of health hazards and are even dying due to the air pollution created by the dynamite mining of the companies.”

“Issuing grants to these companies to work on blocks will lead to a rapid decline in the state of local residents’ properties as well as the region’s valuable jade, leading to serious repercussions for the next generation.”


A single mother of three children who has lived in Maw Sizar – in the Hpakant area – since 1991,described to local researchers the impact of Kyaing International, a jade mining company owned by the family of former military dictator Than Shwe:

“Up until around 2005 I had good opportunities to make a living for my family through small-scale jade trading. When the company arrived, however, I was told I must leave

my house and accept one million kyats compensation. I did not wish to accept, but then backhoe diggers came and destroyed my home. This was the rainy season and my

family and I had no shelter. Many others were in the same situation. In 2012 thecompany had to suspend its operations and I had opportunities once again to trade

small amounts of jade dug in the company’s concession by artisanal miners. But then in 2014 the suspension was lifted, the police came and chased the small-scale miners

away and the company returned to exploit the area once more.”

Life in the margins of Hpakant’s jade rush

Local people who traditionally made their living from jade have been systematically squeezed out by government-licensed concessionaires. Some make a living picking for pieces of jade in waste dumped by the companies. CREDIT: Minzayar

“Out of all the money made [from jade] if even 1% was spent on healthcare,education and infrastructure in Kachin, it would make an immense difference.

But the benefits just go to a handful.” Community leader, Kachin State


Drug user in Myitkyina, Kachin State – heroin and methamphetamine use is rampant amongst jade miners in Hpakant, and local people are increasingly taking a stand against the harm the spread of drugs is doing to their communities. CREDIT: Adam Dean

As companies ramp up mining activity, life-threatening landslides are increasingly common. At this site, at least 20 people were killed in January 2015 when heavy rains caused a waste dump collapse.CREDIT: Minzayar

Frantic jade extraction has destroyed Hpakant’s environment, turning its mountains into craters, polluting its lakes and streams, felling its forests and – as shown in this picture taken in 2014 – causing flooding in Hpakant Town. CREDIT: KDNG

The colossal vehicles used by jade companies pose a daily threat to those living and working in Hpakant. Here, a mother holds the picture of her late son, killed in an accident while searching for jade in a company waste pile. CREDIT: Minzayar

.

“The Kachin State government must have the right to manage the naturalresources in the state. Moreover, the local government and the local people

must get involved in the management.” KDNG / Kachin State Natural Resources Development Policy Discussion Paper


Who’s who, and how much are they making?

For years, Myanmar’s jade sector has been mired in secrecy. Ordinary people have been unable to access even basic data on which companies hold mining licences; who those companies’ real owners are; how licences are allocated; what the terms of their contracts are; what they are paying the government; and how much they are producing.

Because of this, little attention has so far been paid to who is really benefitting from the jade rush, or how this sits alongside the reformefforts. This report aims to begin to change that, identifying for the first time key players behind the companies awarded jade concessions by the government.

Myanmar’s jade licensing system is wide open to corruption and cronyism. The main concessions are in government-controlled areas of Hpakant Township, Kachin State, and blocks are awarded through a centrally-controlled process which multiple industry sources say favours companies connected to powerful figures and high-ranking officials. In the words of one jade businessman, “if there is a big hat involved [in a bid], they will surely get it”.Our list of those involved in the jade trade today reads like a who’s who from the darkest days of junta rule in Myanmar.

In addition to the family of former dictator Than Shwe, they include:

– Senior ruling party figures, notably:

• Minister for Livestock, Fisheries and Rural Development, and former army commander in Kachin State, Ohn Myint;

• former General Secretary of the UnionSolidarity and Development Party, retired army general Maung Maung Thein;

• Deputy Minister for Social Welfare, Relief and Resettlement and former army Brigadier-General Phone Swe;

• and Deputy Minister for Communications and Information Technology, and former major general and director of defence procurement at the Ministry of Defence, Win Than.

Global Witness research indicates that these figures are making vast amounts from jade. The Than Shwe, Maung Maung Thein and Ohn Myint families hold multiple concessions which between them generated pre-tax sales of US$220 million at the 2014 jade emporium (the official government jade sale), and US$67 million at the 2013 emporium. Another company which Global Witness believes to be part of the Than Shwe family group posted sales of another US$150 million across the 2014 and 2013 emporiums combined. As the country heads towards election, when many fear hardliners may finance sectarian violence and dirty tricks, Myanmar’s citizens urgently need to know where the jade money is going.

Jade companies linked to former dictator Retired Senior General Than Shwe, former army commander of Kachin State and serving minister Ohn Myint, drug lord Wei Hsueh Kang and Ever Winner Company supremo Aike Htwe recorded around US$430 million in pre-tax sales at the 2014 official government jade sale alone.

General Than Shwe Minister Ohn Myint Wei Hsueh Kang Aike Htwe


– Myanmar’s army – the Tatmadaw holds official stakes in the jade sector, primarily through its companies Myanma Economic Holdings Limited and Myanmar Economic Corporation. GlobalWitness’ analysis of 2014 emporium data suggests these companies sold the highest quality jade, commanding an average price of over US$13,000 per kilogram. Between them, official emporium sales of army companies amount to US$180million in 2014 and US$100 million in 2013. These firms are regarded as an off-budget fund for the Commander-in-Chief. Many people in Kachin State believe jade revenues are helping to underwrite the army’s war against the Kachin Independence Army / Kachin Independence Organisation(KIA/KIO).

– ‘Crony’ companies – firms that emerged and prospered under the Than Shwe military junta are key players in the jade business. Most notable are the Asia World group established by Kokang drug lord Lo Hsing-Han and the Htoo Group run by ‘number one crony’ Tay Za, both of whom are subject to US sanctions. Much more significantbut virtually unknown is the powerful Ever Winner group of companies, which appears to encompass 12 jade mining firms. The Ever Winner firmsbetween them made around US$190 million in official emporium sales in 2014 and just over US$120 million in 2013. Global Witness research indicates that its owners are connected to politicallyinfluential tycoons including Aung Ko Win, the head of KBZ Group and Myanmar’s biggest bank, and media mogul Kyaw Win, the operator ofSkynet satellite TV.

“If military families do not have a jade mining company the others will kickthem out. Those without one will be seen as black sheep. They will not be

speaking the same language.” Former official

Minister for Livestock, Fisheries and Rural Development Ohn Myint was previously Myanmar’sNorthern Commander, the top general in Kachin State. He became notorious for a public speech in 2014 in which he threatened to slap faces, and suggested that anyone who opposed the government would be jailed. CREDIT: DVB


– Drug lords – Wei Hsueh Kang is a narcotics kingpin and long-time financier of the United Wa State Army / United Wa State Party (USWA/UWSP) ethnic armed group who has a US$2 million US government bounty on his head. There is strong evidence that he controls a group of companies that are now arguably the dominant players in Myanmar’s jade industry. Companies run by Wei Hsueh Kang and other UWSA/UWSP-relatedfigures have been heavyweights in the jadebusiness since the 1990s. The introduction of US sanctions forced a shuffling of the pack in the mid-2000s, but Global Witness investigations have identified five firms we believe are now the front for Wei Hsueh Kang’s jade ventures. Thesecompanies recorded pre-tax sales of US$100million across the 2013 and 2014 government gems emporiums.

The extensive involvement of this range ofindividuals and organisations in the jade trade should sound alarm bells for all those with a stake in building a peaceful and prosperous future for Myanmar. These are not just political concerns, either. The secrecy and abuse at play in the jade

sector can also pose major problems for global businesses operating in the country.

For example, the Coca-Cola Company andCaterpillar Inc. have both recently been caught out as new information on their in-country partners and associates has come to light. Despite a seven figure due diligence process, Coca-Cola failed to identify their local partner’s interests in the jade industry, including a long-running association with army company Myanma Economic Holdings Limited. The drinks giant stated in a letter that “The Coca-Cola Company has been transparent about our joint venture and operations in Myanmarand we continue to go above and beyond the Department of State’s Reporting Requirements on Responsible Investment in Burma.” Caterpillar,meanwhile, has hosted in at least five countries the front man for a group of jade companies Global Witness believes to be controlled by drug lord Wei Hsueh Kang. In a response to questionsthe company said that its due diligence had not demonstrated that the companies named by Global Witness are owned or controlled by “a sanctioned party”.

Global Witness research indicates that infamous drug lord Wei Hsueh Kang, a long time financier of the United Wa State Army ethnic armed group, is behind a group of jade companies that are arguably the most dominant in Hpakant.


Caterpillar Inc. is one of the many international machinery suppliers providing equipment for Hpakant’s massive mining operations. Global Witness research reveals that its local dealership is linked to a group of companies which appears to be controlled by US-sanctioned narcotics kingpin Wei Hsueh Kang.

Stone marker on a bridge on the road to Hpakant, stating that it was built by jademining firm Xie Family and US-sanctioned army company Myanma Economic Holdings Limited (MEHL). Coca Cola’s due diligence checks failed to pick up their local director’s stake in Xie Family, or the jade company’s long-running business relationship with MEHL.


Jade and armed conflict

Jade is inextricably linked to the conflict in Kachin State. Watching licensed companies controlled by their worst enemies gobble up their natural inheritance is a source of simmering resentment amongst the Kachin people. As some put it, “the tree is in our garden, but we are not allowed to eat the fruit”. Such perceptions are deep-rooted and an important part of the nationalist narrative that drives Kachins to distrust or actively resist central government control. The relationshipbetween jade and conflict matters for at least three other reasons:

• The army families and companies that own many of the jade mines would lose out in an equitable peace deal. They have the financial incentive and possibly the political reach to keep the conflict going until long-term centralgovernment control over Hpakant can be assured.

• The Tatmadaw officers in Kachin State are making

personal fortunes through extortion of the jade business, and so have a reason to justify their deployment and keep the money flowing.

• Jade is the main source of income for the KIA/KIO. This makes the battle for control of jade revenues a strategic priority for both sides in the conflict.

“All of this is a reason for the conflict. And it will happen into the future too

because the government knowsHpakant is the biggest jade mining area in the world. Local people see

jade but they get no benefit.”Jade company owner

It is very unlikely that a peace agreement that does not meaningfully address the question of who manages and benefits from Kachin State’s jade will be a lasting one.

Locals’ sense of injustice over their systematic exclusion from the jade sector feeds into the Kachin State conflict, as does the fact that both the KIA/KIO and the Tatmadaw (government army) see control of jade as a strategic priority.


Opportunities for reform and the role of Myanmar’s international partners

International partner governments have invested heavily in supporting the reform process in Myanmar. This is the right thing to do, but donors need to make sure their efforts deliver results for Myanmar’s people as well as warm relations with its leaders. Reform of the jade business is one of the issues that they should use as a benchmark for future aid disbursements. To date jade has not figured in the dialogue between Nay Pyi Taw and its new friends – this is a gaping blind spot which must be addressed.

In 2014 President Obama claimed that “if Burma succeeds, we will have gained a new partnerwithout having fired a shot”. Certainly the approach taken by the US government will be pivotal. In practice, the US is the ultimate international arbiter on Myanmar’s political transition and both Washington and Nay Pyi Taw governments know it. US diplomats have spoken up strongly for ethnic minority rights, and have sought to play aconstructive role in resolving the conflict in

Kachin State. It is critical that they focus on what is happening in the jade sector.

The US and other donors have three mainchannels of influence to the jade sector: EITI, peace negotiations, and sanctions.

“Jade is the least transparentbusiness in the world.”

Local community leader, Kachin State

EITI

Under President Thein Sein, the Myanmargovernment has taken the important step ofsigning up to the Extractive Industries TransparencyInitiative (EITI), an internationally recognised framework for opening up the oil, gas and miningbusinesses. The US, UK, Norway, Australia and EU countries have all strongly supported this move. How EITI is implemented in the jade sector will be a key test of the government’s commitment to reform.

The EITI could bring much-needed transparency to the country’s most valuable extractive industry, if the government implements its standards effectively. But locals have questioned whether the government is willing to live up to its promises when it comes to jade.


The EITI could allow the public to see whichcompanies are being given access to jadeconcessions and who these companies areultimately owned and controlled by. It could also reveal the amounts of jade being produced and the government take of jade revenues derived both from tax and royalty receipts and through arrangements with state-owned enterprises. The publication of such data, combined with requirements to protect civil society space, could allow local groups to hold companies and officials to account for corruption or financial mismanagement.

“That’s why the government won’t invite representatives of the jade

business to join this discussion [about EITI] because they are afraid that all the corruption and misery will come

out and the world will see.” Jade industry representative

Conversely, if the scheme’s principles are notapplied to the jade business as a matter ofurgency, the opportunity would be lost and EITI’s credibility in Myanmar severely damaged. There are signs of positive movement, and from some unexpected quarters. Some governmentofficials have begun to show a commendablewillingness to make the sector more open,sharing data on policies, practices and, mostsignificantly, which companies control which mines. This is an important first step towards the EITI goal of publication of the identities of the individuals who ultimately control jade and other extractive companies.

Some of the big companies, too, have provided data that needs to be released under EITI. Asurprising early champion of transparency isHtoo Group, owned by Myanmar’s most famous crony tycoon, Tay Za, which has made an early disclosure of data on its jade mining businesses,

detailing its sales revenues and the taxes it has paid in respect of each of its jade concessions, in line with EITI standards. Another major jade miningplayer, the Ruby Dragon Group, has disclosed limited information on its ownership, including the names and national identification numbers of its shareholders; details which allow the backgrounds of these individuals to be checked.

These chinks of light show that there is nothing to stop jade companies in Myanmar from being more transparent, as long as they have necessarysupport and incentives to do it. In the coming months Myanmar will publish its first EITI report, and the government has the chance to show that it is serious about reform by making public key data on jade licence terms, licence holder identities, production levels and revenues received. The US and other donors, including the World Bank and the UK, should use their influence to help support this outcome.

The companies licensed by Myanmar’s government to mine jade make billions ofdollars, both throughofficial sales at thisgovernment gemsemporium and through smuggling direct to China. Even basic informationon who these companiesare and where jade revenues are really going is kept under wraps, however.


Peace negotiations

Another key potential opening concerns the peace negotiations between the central government andthe KIA/KIO. As with EITI, the US and other westerngovernments are heavily invested in this process. Given the current situation and the history of jade and armed conflict in Kachin, the government and its partners need to recognise the reality that a peace deal that once again avoids this question will not last.

To his credit, the minister overseeing peace talks, Aung Min, has publicly highlighted the need for wealth sharing to resolve armed conflict in Myanmar. To date, however, there has been no meaningful discussion of what this would mean in the Kachin context.

While the onus is on the government and the KIA/KIO to take the initiative, it is crucial that local voices can feed into this debate. Kachin civil society organisations have already begun developing ideas

on what future natural resource management policies might look like, and an excerpt from a recent proposal by the Kachin DevelopmentNetworking Group is included as an appendix to this report. Both sides in the conflict should urgently build on these foundations by consulting with a diverse range of civil society groups across Kachin State, and beginning a dialogue on a new model of shared ownership, management and revenue distribution for jade.

“A ‘bottom to up’ development process engages local people in decision

making and provides benefits to the local citizens. If people are not

engaged in the process of managing their own natural resources, morepolitical problems will emerge and

peace in the country may be affected.” KDNG / Kachin State Natural Resources Development

Policy Discussion Paper

In November 2014 around 2,000 people in the jade town of Hpakant staged a protest against abuses by thegovernment-licensed mining companies. Some demanded that all company operations be suspended until the conflict in Kachin State is resolved. CREDIT: KDNG


US sanctions

Both the peace process and the EITI are magnets for western donor funding. This brings with itexcellent opportunities for donors to push for substantive change, but also risks of them ducking difficult issues that get in the way of the positive narrative of Myanmar’s transition that somewestern capitals want to broadcast. Both the Kachin conflict and jade are difficult issues.Neither can be dodged or deferred.

The US also has the unique leverage of sanctions.Its JADE Act, which prohibits the import of jade, was originally designed to stop members of “the Burmese [Than Shwe] regime and its supporters[financing] their ongoing violations of human rights, undemocratic policies and military activities”. Our investigation shows that some of these same people remain the main beneficiaries of the jade business. The US Treasury also has sanctions on ‘crony’ tycoons as well as sanctions targeting drug lords. Again, both groups are well represented at jade’s top table.

Global Witness does not believe that all of these sanctions should be maintained forever. But neither should they be discarded too hastily; nor treated as a giant ‘on/off’ switch whereby stringent measures suddenly give way to no safeguards at all. As the US government knows well, from its experiencein Liberia for example, a process of measured, incremental lifting of sanctions in post-conflict countries can provide one of the best guarantees ofmeaningful reform of natural resource industries thatare enmeshed with armed violence and corruption.

The opportunity is there for the US, other governmentsand international donors and their reformistpartners in the Myanmar government to agree a set of measures and milestones by which, as the jade industry becomes more open, and the benefits are shared far more equitably, the sanctions are progressively scaled back. Some suggestions on what these specific measures should include are set out in the recommendations section below.

It is yet to be seen whether Myanmar will become a foreign policy success for President Obama’s administration, but if the US uses its influence to support a more transparentand fair approach to jade this could make animportant contribution to development and prospectsfor peace.


Recommendations

To the Government of the Republic of the Union of Myanmar:

• Develop new ownership, management and revenue sharing arrangements with Kachin State for jade and other natural resources in conjunction with the KIA/KIO and local civil society groups, as part of a comprehensive peace agreement. Ensure that thesearrangements maximise the social and economic benefits for the local and national population, taking account of the needs of both current and future generations.

• Prioritise full implementation of EITI in the jade sector. As such, publish data on: jade licence bidding processes; who current licence-holders are and what licences they hold; jade production volumes; government

revenues from jade concessions (broken down by project); other revenues from jade, including revenues from government shares of state-owned enterprises; full contract and licence terms (including environmental and social protections); and arrangements with state-owned enterprises.

• In line with EITI recommendations, require jade concession holders and companies biddingfor concessions to disclose publicly the identities of the individuals by whom they are ultimately owned and/or controlled (the‘ultimate beneficial owners’). In additionrequire disclosure of any associations with public office holders (past or present), and any past record of corruption or environmental or human rights abuse together with details of measures taken to address such issues.

• Make the above EITI provisions on datadisclosure a requirement of new mining, gemstone and other laws governing the jade business.

Myanmar’s international partners have the opportunity to support reform of the country’s most valuable natural resource industry so that itbenefits local people and supports sustainable development. CREDIT: Minzayar


ii For detailed recommendations on preventing corruption in the award of oil, gas and mining licences, see the ‘Citizens’ Checklist’ set out in Global Witness, ‘Rigged’, January 2012; available at https://www.globalwitness.org/reports/rigged/.

• Immediately review and revise biddingprocesses for jade concessions in consultationwith Kachin and Myanmar civil society to make them open and fair. This should includeintroducing explicit protections against conflicts of interest and corruption which take account of the identities and histories of bidders.ii

• Reinstate the company shareholder details in Myanmar’s company registry, and publishadditional information on the ultimate beneficial ownership of companies.

• Require the accounts of state-ownedenterprises (including entities that arepartly or wholly owned by the army) to be independently audited and details of all jade revenue receipts and transfers to thegovernment to be published.

• Publish a detailed breakdown of government expenditure so as to allow local people to track where jade money ends up.

• Review and revise existing laws to bring them into compliance with the EITI Civil Society Protocol and to ensure that civil society and the media are free to hold the government and companies to account over jade sector management and operations without fear of physical, legal, or other forms of retribution.

• Simplify and clarify taxes on jade, with input from the private sector, local government and civil society and strengthen revenue collection systems to reduce tax evasion, particularly at the mine site.

• Investigate jade-related corruption involving army, police, government officials andcompanies; prosecute perpetrators and hold to account those with command responsibility.

• Cancel any jade mining licences obtained through corruption or held by companies that have broken the law or contributed to human rights or environmental abuses.

• Review and revise laws, regulations, policies governing the jade sector, and the terms of licences and contracts for jade concessions

to ensure they include environmental and social protections in line with international standards including: the UN Human Rights Council’s Guiding Principles for Business and Human Rights; the Voluntary Principles on Security and Human Rights; the International Finance Corporation’s Sustainability Framework; and the International Council on Mining and Metals’ Sustainable Development Principles. Amongst other measures, a grievance redress mechanism should be established, in a form agreed after public consultation within Kachin State, with effective penalties for companies which fail to comply with environmental and social protection requirements.

• Establish an independent monitor to ensure that environmental and social protections are implemented promptly and fully, with regular public reports on breaches identified and how they are being addressed.

• Pass legislation that prohibits the military, police and other security services, and their individual serving officers, from establishing, operating, or exercising beneficial ownership over companies.

To all donor governments,international financial institutions, and other partners of the Myanmar government:

• Make funding and other forms of support to the Myanmar government and (in the case of the US) the lifting of sanctions conditional on delivery of the above reforms.

• Provide technical support to the government’s efforts to implement EITI, particularly with reference to reforms of the jade sector, and to efforts to incorporate EITI principles into laws on natural resource management.

• Provide technical support to the government, KIA/KIO and Kachin civil society’s development


of new ownership, management and revenue sharing arrangements for the management of jade and other natural resources as part of a comprehensive peace agreement.

• Support, financially and politically, civil society organisations in Kachin State and across Myanmar that are working to increaseaccountability in the management of natural resources.

To the KIA/KIO:

• Publish data on management of the jade sector by KIA/KIO authorities, in line with EITI, including details of the KIA/KIO taxation regime, expenditure and oversight.

• Draw up policy proposals for how Kachin State would manage the jade sector under a federal system, with input from a diverse range of civil society groups in Kachin State.

• Investigate jade-related corruption involvingKIA/KIO officers and officials, prosecute perpetrators and hold to account those with command responsibility.

To jade mining and trading companies:

• Disclose data in line with EITI requirements. This includes: tax and other payments to government from jade concession holders (broken down by project); names and identifyinginformation (including national identification numbers) of the individuals who own and/or control them; and jade contract and licence

terms (including any environmental or social provisions). State-owned enterprises, includingarmy companies, should disclose their stakes in jade mining and trading ventures and transfers of money to other branches of government in line with EITI.

• Immediately review existing mining operationsand halt activities that breach national or international laws and standards onenvironmental, social, human rights and worker rights.

• Establish and implement policies andprocedures to minimise and mitigateenvironmental, social and human rights impacts of jade mining operations, in line with international standards including: the UN Human Rights Council’s Guiding Principles for Business and Human Rights; the Voluntary Principles on Security and Human Rights; the International Finance Corporation’s Sustainability Framework; and the International Council on Mining and Metals’ Sustainable Development Principles.

To current or prospectiveinternational investors in Myanmar:

• Carry out rigorous due diligence on existing or prospective local partners particularly those with potential connections to thegemstone sector.

• Publish the names and national identity numbersof all individuals who own and/or control stakes in local ventures, together withbackground information on these individuals.


Global Witness carried out the research and analysis on which this report is based between February 2014 and September 2015.

We gathered information through meetings and correspondence with over 400 public officials, industry representatives and community membersacross Kachin State, Yangon, Nay Pyi Taw and Mandalay in Myanmar, and various locations in China.

Amongst others in Myanmar, Global Witness has met with and/or exchanged correspondence with:• The Ministry to the President’s Office.• The Directorate of Investment and Company

Administration (DICA) which is responsible for the country’s company registry.

• The Myanmar Gems and Jewellery Entrepreneurs Association, the industry body which represents jade companies in Myanmar.

• Army companies Myanma Economic Holdings Limited and Myanmar Economic Corporation.

• Leading private companies including the Htoo Group, KBZ, Max Myanmar, the Ruby Dragon Group, the Ever Winner group, Myanmar Takaung, Xie Family and Gold Uni.

• Multinationals the Coca-Cola Company and Caterpillar Inc., and a representative ofanother major machine company.

• The Kachin Independence Army / KachinIndependence Organisation.

• Members of the upper and lower houses of Myanmar’s parliament.

• Jade company staff, independent jade traders, carriers and ‘hand-pickers’.

In addition, we have interviewed a range of jade traders and industry representatives in China.

Given the sensitivity of the issues, we do not reveal the identities of most interviewees in this report, and the references to meetings with them in the endnotes have been coded.

Data analysis:

Global Witness has reviewed, analysed and used a wide range of data sets for this report including:

• Ministry of Mines data on jade licence holders, including detailed jade concession maps for the Hpakant area. These maps are reproduced in Chapter 1 of this report.

• Company records made available in DICA’s online company registry at http://dica.gov.mm.x-aas.net/. In 2014, data including the names, identification numbers and addresses of directors and the names of shareholders for all Myanmar companies was published through this website. This information had been taken down by the end of 2014, and it was subsequently partially reinstated in mid-2015. However, OpenCorporates, the world’s largest open database of companies, has collected and published the records made available in 2014. The Open KnowledgeFoundation and OpenCorporates supported Global Witness in analysing these records.

• Various detailed breakdowns of sales at the 50th, 51st and 52nd gems emporiums (geared towards foreign buyers) which were held,respectively, in 2013, 2014 and 2015. Alongsidethis we reviewed summary data on jade sales at the emporiums held between 2002 and 2012, and two emporiums open only to Myanmar traders that were held in January and October 2014. Analysing this information, alongside official production data, Chinese import statistics and industry estimates of the informal sector, Global Witness has produced new estimates for the value of Myanmar’s jade industry and total sales figures for key players in the business. Details of these calculations are set out in Appendix 1 of this report.

• The Htoo Group has also provided details of each of the jade blocks it holds, together with

METHODOLOGY AND REPORT STRUCTURE


levels of production and the associated sales and tax figures for each of these blocks. This project level data has fed into Global Witness’ economic analysis of the jade industry.

• Information gathered by the KachinDevelopment Networking Group on the social and environmental impacts of jade mining in Kachin State. We have used this data alongside Global Witness interviews carried out across Myitkyina, Hpakant and the surrounding areas to build up a picture of the effect the industry is having on inhabitants of Kachin State.

Report structure:

This report sets out the main findings of Global Witness’ investigations into the jade sector,divided into four chapters:

• Chapter 1: ‘What is it Worth and How Does it Work?’: This sets out Global Witness’ estimates of the value of Myanmar’s jade sector, and briefly explains how jade licences are awarded and how the stone is mined and traded – as well as the corruption and mismanagement at different stages of the process.

• Chapter 2: ‘Who’s Benefitting?’: This identifiesthe powerful individuals behind some of the biggest government-licensed players in the jade industry. This section is separated into four sub-categories representing the four types of companies Global Witness has identified as reaping the greatest benefits: companies owned by army families; army companies; ‘crony’ companies’; and ceasefire groupcompanies.

• Chapter 3: ‘Who’s Losing Out?’: This sectionconsiders the impact the government’s current approach to jade mining is having on theinhabitants of Kachin State, both ethnic Kachin and members of other ethnic groups such as the Shan, Bamar and Rakhine, all of whom are suffering devastating social and environmental impacts.

• Chapter 4: ‘Jade and Armed Conflict’: This section reviews the linkages between the jade industry and the long-running armed conflict between the Myanmar government and the Kachin Independence Army / KachinIndependence Organisation.


CHAPTER 1: WHAT’S IT WORTH AND HOW DOES IT WORK?

Introductioniii

Hpakant in Myanmar’s northern Kachin State holds the world’s most valuable jade deposits.However, our investigations reveal that thegovernment system for allocating and managing jade mines is fraught with corruption, allowing a powerful elite to cream off most of the profits. Little, if any, of the vast sums generated are spent on the infrastructure, health and education that the people of Kachin State and Myanmar as a whole deserve.

With the possibility of both a new government and a peace agreement with the KIA/KIO around the corner, licensed companies are ramping up their mining operations, using massive machines to extract all the jade they can now, in case a change in the political climate leaves them out in the cold.

The multi-billion dollar state secret

Described as Myanmar’s “big state secret”, even basic information on the jade industry has long been kept under wraps.2

Chinese government import data for 2014 indicatesthat the category of gemstone imports from Myanmar that covers – and overwhelmingly comprises – jade was worth US$12.3 billion.3 This is an astonishingsum. However, as explained below, numerous industry sources have told Global Witness that 50%-80% of jade is smuggled straight over the Myanmar-China border, (see next page for map of smuggling routes used). Chinese customs data supports these claims, showing that less than a third of Myanmar’s official jade production entered China legally, even though China is where almost all Myanmar’s jade ends up.4 This suggests that the US$12.3 billion figure, huge though it is, significantly underestimates the true value of Myanmar’s jade production.

“How come we are LDC [Least Developed Country]? A country so rich in oil, gas and gems should not be an LDC. For the answer you need to look at the military.

The country is being stripped of all its resources. We shouldn’t be that poor.No way! The key issue is transparency!”

Former official1

iii ‘Jade’ is a generic term for two distinct gemstones: jadeite and nephrite. Jadeite is rarer and more valuable than nephrite. Myanmar is the world’s dominant supplier of jadeite, and it produces the highest quality stones. The specific gemstone referred to in this report is jadeite, but we use the term jade throughout the text.

For over 250 years, the Kachin Hills have been famed as the home of the biggest and most valuable jade mines in the world. Of the many colours and varieties of jade which can be mined, the most highly prized is alwaysimperial green jadeite from Myanmar; prices for flawless stones canapproach those of diamonds. CREDIT: Adam Dean


Hpakant jade mines

jade route via roads

jade route via rivers

jade route via paths

jade route via railways

rivers

combined gov. agencies checkpoints

Tatmadaw checkpoints

Tatmadaw & police checkpoints

police checkpoints

KIA checkpoint

state & division boundaries

KEY

0 50 KM

Jade-carrying routes -Upper Myanmar

INDIA

SagaingDivision

ShanState

KachinState

MagwayDivision

CHINA


Global Witness has therefore undertaken a new and in-depth analysis of the value of the jadebusiness that draws on a range of unpublished data. Our estimates put the value of Myanmar’s official jade production in 2014 alone as high as US$31 billion, and up to US$122.8 billion over thelast decade (2005 to 2014). To put this in perspective,US$31 billion equates to 48% of Myanmar’s entire official GDP.5 This breaks down to at least US$21,000 per person in Kachin State where jade is mined and up to 46 times the country’s total health expenditure for 2014-15.6

How can these figures be so high and how are they calculated?

Good quality jade is extraordinarily valuable and Myanmar is the world’s main source. The 2014 Myanmar Gems Emporium – the primary official government jade sale which is geared towards international buyers – featured jade that sold for as much as US$2.89 million per kilogram. For the very best stones, values can approach those of diamonds, carat for carat.7

Our calculations are described in detail in Appendix 1 to this report. In summary, they take Myanmar government jade production data and combine it with price data derived from a detailed breakdown of sales from the 2014 Myanmar Gems Emporium. They also factor in aggregated sales figures from an October 2014 jade fair for low grade stones for the domestic market, together with data from the 2013 Myanmar Gems Emporium and emporiums held in previous years.

Rampant smuggling means that the Myanmar Gems Emporium sales figures significantlyunderstate the percentage of highest value

‘imperial’ and medium value ‘commercial’ grade jade as a share of overall jade production. We have therefore used the estimate of the respective percentages of imperial, commercial and utility (low) grade jade employed by Harvard Ash Center and Proximity Designs in their 2013 assessment of the business.8 This estimate is based oninterviews with industry leaders.

The opacity of Myanmar’s jade business means that available data is incomplete and any valuation involves choosing between different methodologies and assumptions. It is therefore worth highlightingthat another, completely different method ofassessing 2014 jade production also yields anestimate of well over US$30 billion. If one calculates the average price per kilogram of jade imports as indicated by the Chinese government in 2014 and combines it with Myanmar government production figures for the same year, this suggests a value of almost US$38 billion.

Finally, since all our estimates are based onofficial production data, they take no account of the significant portion of jade output which is kept entirely off the books and never recorded by the Myanmar authorities at the mines. Consequently, our calculations may significantly understate the real value of Myanmar’s total jade production.

All of these estimates are just that – estimates. Our intention, in publishing some specific figures, based on the incomplete data available, is not so much to have the last word on the value of Myanmar’s jade business as to trigger a debate and encourage the full disclosure of the information the public needs to make more definitive assessments on an ongoing basis.

The mines in the Maw Sizar area of Hpakant are famed for the high quality jade they produce. For the most sought after mines, bidders depend on high-level connections and bribery to secure official licences. CREDIT: Minzayar


So far internationally-supported reform efforts have focused on Myanmar’s petroleum industry. Natural gas, which generated export revenues of US$4.2 billion in 2014, is seen as the key driver of the country’s economy.14 Jade dwarfs gas, however. It should be the focus of efforts to combat corruption and channel extractive industrybenefits to those in most need, rather than an afterthought.

Real reform could see the benefits of jadere-directed towards much-needed development. Myanmar has one of the lowest life expectanciesin the region, and the people of Kachin State suffer acutely from the impacts of a decades-long conflict.15

A single kilogram of the highest priced jade sold at the 2014 emporium would have generatedenough revenue to fund 147 health clinics in Kachin State for one year.16

“The government wants to keep [jade data] secret because, if published, the whole world would know that the locals get no benefits… and how much mining tax the government

should get. They don’t want the world to see.”Jade businessman9

Jade businesses are required to pay a range of fees, royalties and taxes to the Myanmar government. These include licence and administrative fees, a 20% value-based tax on jade at the mine site, a 10% tax on emporium sales, and standard business taxes including a commercial tax.10 In addition, Myanmar’s state-owned enterprises the Myanmar Gems Enterprise (MGE) and army companies like Myanma Economic Holdings Limited have stakes in the majority of large jade mines and receive 40% of post-tax sales revenues from each of them.11 Theoretically, therefore, the lion’s share of jade revenues should end up in state coffers.

Based on the limited government data available, however, Global Witness estimates that the state may have received less than US$374 million in official jade revenues in 2014; under 2% of our production estimate of US$31 billion.12 Without detailed data on Myanmar’s budget and expenditure, it is impossible to track exactly what the government does with the jade money it receives – and how much is spent on much-needed development of Kachin State and the country more broadly. What is clear, however, is that Myanmar’s military is a significant beneficiary of the revenues from jade.

The Ministry of Defence receives a direct cut of state revenues through its 12% share of the national budget, and army companies such as Myanma Economic Holdings Limited hold stakes in various jade mining operations.13 More significantly, as Chapter 2 shows, the families of retired army generals stand behind some of the jade industry’s biggest players, giving them access to a major revenue stream which has, until now, been kept in the dark.

“Taxes and revenues on the use of natural resources must be collected by a democratically elected Kachin State government and the process clearly and transparently explained to the

residents of the state.” KDNG / Kachin State Natural Resources Development Policy Discussion Paper

What is the State’s take of Myanmar’s jade billions? And, where does the money go?


“Jade companies won’t publish any clear information on the business and theycertainly won’t announce it internationally. That’s why the government won’t invite

representatives of the jade business to join this discussion [about EITI] because they are afraid that all the corruption and misery will come out and the world will see.”

Jade businessman17

Under President Thein Sein, Myanmar has committed to tackling the secrecy and opacity which has dogged its natural resource industries for so many years. In July 2014, the country became a candidate member of the Extractive Industries Transparency Initiative (EITI), a global standard for governance of the oil, gas and mining sectors.18

The EITI sets out requirements and recommendations for the publication of extractive industry data. These include: production volumes; information on licence allocation processes; concession licence and contract terms; the identities of individuals behind companies which bid for, operate or invest in oil, gas and mining projects; payments to the government from extractive companies (including state-owned enterprises); and government receipts from such companies.19 EITI also requires that civil society has the freedom to express views on issues relating to natural resource governance.20

“For limited protection mechanisms such as EITI to work properly, there must be freedom of movement and information. These freedoms are currently not guaranteed as there is

continued harassment and intimidation of media, CSOs and local people by central authority structures such as the military, police and government officers.”

KDNG/Kachin State Natural Resources Development Policy Discussion Paper

The impact EITI has varies tremendously from country to country depending on the level of commitment of the government concerned. The Liberian government, for example, has incorporated not only the EITI provisions into national law but also additional anti-corruption measures.21 By contrast, in Azerbaijan the implementation of the EITI has failed to tackle corruption in the country’s oil industry and the government has imposedrestrictions on civil society organisations’ ability to hold public officials and extractive companies to account.22

Some Myanmar government officials are demonstrating real commitment to greater transparency.During the course of the research for this report, both the Ministry of Mines and its state-owned enterprise,Myanmar Gems Enterprise (MGE), have provided assistance and information on the jade industry to Global Witness. There is also growing awareness of EITI amongst companies. Two of the prominent jade businesses profiled in Chapter 2, Htoo Group and Ruby Dragon, have already started disclosing data on their operations to Global Witness.23

This is a promising start, but the real test will be Myanmar’s first EITI report which is due to be published in the next few months. The extent to which this makes data on jade available to local people will be a critical marker of whether Myanmar’s EITI is a credible reform process or an empty promise.24

EITI: Window-dressing or game-changer?


Slicing up the jade pie

In Myanmar the established narrative holds that jade is produced in a remote, conflict-riven corner of the country which it is not possible for thegovernment to administer or regulate. The conflict element of this is true (see Chapter 4) – the rest is not. In reality, the Nay Pyi Taw authorities have full control of the major jade mines in the Hpakantarea. They decide who has access to valuable concessions and on what basis.

Evidence collected by Global Witness strongly suggests that the licensing process is weighted heavily in favour of a powerful elite connectedor allied to the ruling Union Solidarity andDevelopment Party (USDP) and the military, who use networks of anonymous companies and proxies to disguise their identities. The notion of Kachin State being ungovernable allows this elite to perpetuate the idea that applying transparency reforms such as EITI to the jade business is not possible. This sustains the secretive, abusive and highly lucrative status quo.

Awarding jade licences: the official account

According to the Ministry of Mines’ gemstone division, MGE, the jade mining area in Hpakant amounts to nearly 35,000 acres, although itappears that not all of this is actually mined.25

The value of deposits varies considerably dependingon the grade and type of stone they hold, and changes in fashion and consumer demand for different colours and varieties of jade.26 Certain mining sites such as Maw Sizar, Kawng San, Kayin Chaung, Nam Maw and Gwi Hka are widelyreputed to hold the most valuable deposits, and are therefore particularly sought after.27

Concession areas are either known mines which the Ministry of Mines has demarcated or mines which have been discovered by a party who has then sought permission to explore from the Ministryof Mines.28 For known mines, the government will

publish invitations to tender in the newspapers and interested companies will register at the Myanmar Investment Commission.29 They then have a month during which they can study maps at MGE and make site visits before submitting a bid.30 Where a mine has been newly discovered, the site will be inspected and if MGE then decides to award it to the applicant, a signature bonus will be payable.31 Licences are awarded for three or five year periods but can be extended by up to ten years.32

Companies can hold jade concessions in three forms:

• Under the ‘a kyo thu’ system, whereby they have a profit-sharing arrangement with the Ministry of Mines’ state-owned enterprise MGE. Private companies take 60% of post-tax revenues and the government takes 40%.33 There are various advantages to an a kyo thu licence, including bigger block sizes (up to 50 acres), longer licence periods and easier extension processes than are allowed for ‘private’ licences. According to an industry representative, companies which enter into a kyo thu arrangement are not required to pay a licence fee.34 However, it remains the sole responsibility of the private partner toundertake the mining operations and cover costs.35

• As entirely private concessions under which the

companies take all post-tax sales revenues. ‘Private’ permits are awarded for one-acre blocks, and these can be ‘designated’ or‘discovered’ licences. Companies can apply for multiple licences up to a limit of 50 acres per company.36 There does not, however,appear to be any obstacle to an individualsetting up several companies to avoid this limit.

• In partnership with an army company such as Myanma Economic Holdings Limited (MEHL). These are classified as ‘private’ licences, but revenues are shared between the private partner and the army company. The share split is kept secret, but industry figures say that the army company commonly takes a


40% post-tax share.37 Both MGE andMEHL deny that the army company and its partnerships have a distinct or specialstatus.38 However, numerous accounts from industry sources indicate that militarycompany joint ventures are effectively aparallel system.39

According to MGE, the minimum bid for a‘discovered’ block is 500,000 kyat (roughly US$500), and at least one million kyat (US$1,000) for a ‘designated’ block.40 Bids can, however, go up to 50 million kyat (US$50,000).41 The transfer of licences is strictly prohibited, so if a company wishes to relinquish a jade mine it is supposed to hand it back to the Ministry of Mines, rather than selling it or passing it on to any other party.42

Decisions on jade licence awards are made bya committee composed of the Minister, the Deputy

Minister and the Managing Directors of the Ministry of Mines, following a review of sealed bids and a consideration of the background of each bidder.43 This decision is then approved by a “leading” cross-ministry committee comprising the Minister of Mines, the Deputy Minister of Mines, the Deputy Minister of Home Affairs, the Deputy Minister of Finance, the Deputy Minister of National Planning and Economic Development, the Deputy Attorney General, the Director General of the Directorate of Water Resources and Improvement of River Systems, the Director General of the Department of Forestry and the Director General of theDepartment of Mines.44 Maps – never previously published – showing which companies hold official licences to major jade concession areas across Hpakant are shown below and on the following pages.

Note: In this and the following two maps we have, wherever possible, written the names of the companies in the same way that they are registered in DICA Englishlanguage / Roman script records to make it easier to look up who these firms are. This introduces some inconsistencies in the way particular words and names are written.

Gwi Hka (30)Myintzu Thar

Gwi Hka (16)Pwint Htoo San

Jan Kar (8)Golden Star

Jan Kar (4)Myanmar Mee

Maung

Jan Kar (12)Aung Saw Min

Jan Kar (5)Arne Myanmar


Jan Kar (6)Huu Poo

Gwi Hka (7)Dagon

Yadanar

Gwi Hka (6)Myat NoeSan Eain

Gwi Hka (3)Hole in One

Gwi Hka (4)Sai & Wine

Gwi Hka(27) Gold Uni

Gwi Hka (5) Moe Min Htet

Gwi Hka (1)Long Byit

Jan Kar (1)Jade Land

Jan Kar (7)Ana Get

Yadanar Myae

Jan Kar (2)Shwe Gaung Gaung

Hmaw GaLone (15)Sayar San

Kaung Taw

Hmaw GaLone (10)Gems City

Hmaw Ga Lone (14)Jade Rays

Hmaw Ga Lone (2)Ame Myanmar

Hmaw Ga Lone (12)KBZ Shwe Taung Gya

Hmaw Ga Lone (3)Pan Huke Duwa

Hmaw Ga Lone (11)Sea Sun Star

Hmaw Ga Lone (8)Htoo Group

Hmaw Ga Lone (4)Myanmar Win GateHmaw Ga Lone (5)

Thiri Bat Sone

Hmaw Ga Lone (11)Lu Nge


Hmaw Ga Lone (13)Nay Lin & Sons


Hmaw Ga Lone (9)Swe Thiha Aung

Hmaw Ga Lone (1)Shwe Gaung Gaung


Gwi Hka (10)Seinn Lei Aung

Gwi Hka (9)Jade Padathar

(Kyauk SeinPadathar)Gwi Hka

Joint Venture (2)Myanmar Si Thu

Gwi HkaBawga Gone

Gwi Hka (23)Thet Hein

GwiHka -ShweWintHtel

Ma Kar Pin (1)Natural Myae

To Ho Pin

Gwi Hka(25) U

Ru Sein

Gwi Hka(24) Sein Min

Gwi Hka (22)Kyauk Aung Sayar

Gwi Hka (18)Htay Paing

Whay Khar (13)Winn Phoe

Gwi Hka (12)Kyauk Seinn Yadanar

Gwi Hka (37)Rays Family

Gwi Hka (38)Jade Rays Gwi Hka (36)

Nilar Lin Lat

Gwi Hka (34)Thu Ya Shwe

Yi Aung

Gwi Hka (1)Myanmar

Naing Group

Gwi Hka (8) New Jade

Gwi Hka (8)New Jade

Gwi Hka (14)Kyauk Sein Shae Saung

Gwi Hka (19)Sein Mya Aung

Gwi Hka (23)Maha Kyae

Gwi Hka (17)Yadanar Sin Thiri

Gwi Hka (15)Kyauk Seinn Min

Gwi Hka (28)Pan Myat No Yon

Gwi Hka (30)Sein Phyo

Gwi Hka (29)Bawga Gone

Gwi Hka (26) Lin Moe

Gwi Hka (35)Kyauk Seinn Win


Gwi Hka (30)Myintzu Thar

Gwi Hka (16)Pwint Htoo San


Jan Kar (4)Myanmar Mee

Maung

Jan Kar (12)Aung Saw Min

Jan Kar (5)Arne Myanmar


Jan Kar (6)Huu Poo

Gwi Hka (7)Dagon

Yadanar

Gwi Hka (6)Myat NoeSan Eain

Gwi Hka (3)Hole in One

Gwi Hka (4)Sai & Wine

Gwi Hka(27) Gold Uni

Gwi Hka (5) Moe Min Htet

Gwi Hka (1)Long Byit


Jan Kar (7)Ana Get

Yadanar Myae

Jan Kar (2)Shwe Gaung Gaung

Hmaw GaLone (15)Sayar San

Kaung Taw

Hmaw GaLone (10)Gems City


Hmaw Ga Lone (2)Ame Myanmar

Hmaw Ga Lone (12)KBZ Shwe Taung Gya

Hmaw Ga Lone (3)Pan Huke Duwa

Hmaw Ga Lone (11)Sea Sun Star

Hmaw Ga Lone (8)Htoo Group

Hmaw Ga Lone (4)Myanmar Win GateHmaw Ga Lone (5)

Thiri Bat Sone



Hmaw Ga Lone (13)Nay Lin & Sons


Hmaw Ga Lone (9)Swe Thiha Aung



Gwi Hka (10)Seinn Lei Aung

Gwi Hka (9)Jade Padathar

(Kyauk SeinPadathar)Gwi Hka

Joint Venture (2)Myanmar Si Thu

Gwi HkaBawga Gone

Gwi Hka (23)Thet Hein

GwiHka -ShweWintHtel

Ma Kar Pin (1)Natural Myae

To Ho Pin

Gwi Hka(25) U

Ru Sein

Gwi Hka(24) Sein Min

Gwi Hka (22)Kyauk Aung Sayar

Gwi Hka (18)Htay Paing

Whay Khar (13)Winn Phoe

Gwi Hka (12)Kyauk Seinn Yadanar

Gwi Hka (37)Rays Family

Gwi Hka (38)Jade Rays Gwi Hka (36)

Nilar Lin Lat

Gwi Hka (34)Thu Ya Shwe

Yi Aung

Gwi Hka (1)Myanmar

Naing Group

Gwi Hka (8) New Jade

Gwi Hka (8)New Jade

Gwi Hka (14)Kyauk Sein Shae Saung

Gwi Hka (19)Sein Mya Aung

Gwi Hka (23)Maha Kyae

Gwi Hka (17)Yadanar Sin Thiri

Gwi Hka (15)Kyauk Seinn Min

Gwi Hka (28)Pan Myat No Yon

Gwi Hka (30)Sein Phyo

Gwi Hka (29)Bawga Gone

Gwi Hka (26) Lin Moe

Gwi Hka (35)Kyauk Seinn Win


- Added Private blocks (1 acre each)

- Added A kyo thu blocks (joint venture with MGE)

- A kyo thu blocks (joint venture with MGE)

Key

Jade mining concessions in Gwi Hka (Whay Khar) area


San Hkar TanJoint Venture (1)

Kyaw Naing & Brothers

San Hkar Tan (7)Shwe Eain Si Company

San Hkar Tan (8)Shwe Nagar

Thitsar

San Hkar Tan (9)Aung Myin MuAhtwin Ahtet

SanHkar

Tan (10)


Ye Man Hein


Myanmar ShweYadanar

Yadanar Si

To G

insiMEHL San Hkar

Maw 125 blocks

Hpa Wa (3)Shwe Pyi Lyan

San Hkar Tan (6)Ye Lwin Oo Company

Taw Maw

MEHL

Hte Lone Seinn

Taw Maw (2)Jade Land

San Hpe (1)Kyaw Naing & Brothers

San Hpe (1)Kyaw Naing& Brothers

San Hpe (2)Winner

San Hpe(3) Sein

Meik Swe

San HpeRiver

SamaTract

Taw MawVillage

MEHL

Taw Maw (1)Jing Hpaw Academy

Khutter (2)Kaung Mon Yadanar

Khutter (1)Pwint Phoo Nadi

Lamaung (5) Khaing Lone

Lamaung (2)Lone Sein

Bang Ngu (2)Jade Mountain

(Kyauk Sein Taung)

Lamaung Joint Venture (1)Aung Su Myat

LamaungJoint Venture (4)Yuan Gemstone

HkaiChyin Mine

Bang Ngu (1)Wan Brothers

Maran GamMaw

War BoeMaw

Ah BaMaw

Bam GaMaw

San Hkar Tan (4)Super Seinn

Hpa Wa (2)Shwe Byaine Phyu

San Hkar Tan (3)Ye Man Hein

San Hkar Tan Joint VentureAung Ngwe Moe

Htay Aung Kyaw

Nam Jang

San Hkar Tan (2) Lau Lu

SanHkar

DumpNam Jang (6)Kyauk Seinn

Yadanar

Nam Jang (6)Kyei Ta Gun

Nam JangPyae

Yadanarmon

Wah Kye JointVenture (7)

Thit Thone Lone

Nam Jang (8)King Myanmar

San Hkar River

San Hkar Tan Joint Venture (1) Oo Ya

Wah Kye (1)Myanmar Pahtama

Wah Kye (4)Great Genesis

(Maha AsaPahtama)

Wah KyeJoint Venture (5)

Myanmar Win Gate(Aung Naing Yay

Mote Oo)


Richest Gems(Kywe Wa Sone)

Wah Kye (7)

Moe PinJoint Venture (9)

Shwe YwetHlwar

Mya SeinnGolf Course

KadayJoint Venture (6)

Golden JadeDragon Kaday

JointVenture (7)Yadana Kya

Phyu

Kaday Joint Venture (2)Myat Yamon

Ma Lawng (3)Myanmar Seinn Lei Aung

Nyein ChanThar Yar (1)Crystal Jade

Ma Lan Joint Venture (2)Aung Myin Di Yadanar Myay

Ma Lan Joint Venture (3)San Myat Yadanar

Ma LanJoint Venture (1)

Thein Kabar Aung

Nam Mahpit

Nam MahpitJoint Venture

Nam Mahpit Joint VentureMyanma In Arr Kyee Mar Kyel

Nam Mahpit (3)Man Shwe Thitsar

(1) Jan Khat (4) Shwe Wah Myay (Mandalay)

(2) Jan Khat (2) Unity

(3) Jan Khat (1) Bayani

(4) Jan Khat (3) Taung Ni Taung

(5) Jan Khat (5) Nan Oo Yadanar

(6) Jan Khat (6) Maha Jade

Jan Khat (7)Pyi Taw Wai Sar Phyo

1

2

34

4

5

6

Loi NguBum Tracts

Nam Mahpit

Maw Wan Gyi (17)Aye Aye Khaing

Maw Wan Gyi Joint VentureSeinn Mya Aung

Loi NguBum TractsMaw Wan Ka Lay Joint Venture (4)

Phyo Si Thu

Maw Wan Ka Lay (2)Htun Tauk Sa

Maw WanKa Lay (3)

Aye Aye Khaing

Maw WanQuarter

Jade Emperor

Mawsizar Joint Venture (24)Aye Aye Khaing

Mawsizar Profitsharing (21)Zaw Kyaut Myet Co/op

Green Light Company

Mawsizar Tracts

Mawsizar Joint Venture (9)Yadana Inwa

MawsizarCommon dump

MoeThauk Kyel

Mawsizar Joint Venture(9) Jade Power

Ma LawngJoint Venture (2)

Thi Raw Mani


Myanmar Naing Group

Common dump

Lone Khin

KadayJoint

Venture

MyanmaGongyi

Moe Pin Joint Venture (4)Xie Family

Kaday (4)Pan Huke Duwa


Htoo Group



Shining Star Light(Taut Pa Thaw

Kye Alin)

Wah KyeJoint Venture (2)Silver Elephant

(Ngwe Sin)Moe Pin Joint Venture (5)Wai Aung Gabar

Reserve Tracts

Aung Seinn Joint VentureSeinn Meit Swe

Masa

Hpa Wa (1)Pho Thar Htoo


Max Myanmar transferredto Ayar Jade

KadayJoint Venture (1)Jade Mountain

(Kyauk Sein Taung)

In Ma (16)Kyauk Sein Swan Ar


Kaday Joint Venture (1)Jade Mountain (Kyauk Sein Taung)

In Ma River

Ma Lawng Joint Venture (1)Myanmar Thiri Yadanar

In MaJoint Venture (1)Phyo Thiha Kyaw

Mawsizar (3)Myanmar Rich Land

Mawsizar (1)Si Htun

MawsizarJoint Venture (4)

Ayar Pyi Phyo

In Ma (2)Than Lwin

Aye Yar

In MaJoint Venture (11)Sein Shwe Kyaw

In MaJoint Venture (10)Theint Win Htet

In Ma Joint Venture (4)ARS Company

In Ma (12)Win Paing Kyaw

In MaJoint Venture (13)

Myanma NeYongehe

Maw Wan GyiJoint Venture (4)

Gwi Hka

MawsizarJoint Venture(13) Hawq Kyi

Maw WanGyi Joint

Venture (2)Aung Shwe

Nan


Jade Emperor

Maw WanGyi Joint

Venture (1)Ngwe Hein

Htet

In MaNew tracts


Kaung SuYadanar

Maw Wan Gyi (15)

In MaJoint

Venture (7)New Golden

In MaJoint

Venture (5)Kyauk

Myat Min


Northern Star(Du Wun Kye)

In Ma (3)San Mihtasu

PrayerHill

In Ma Joint Venture (15)Lonn Khinn Aung Myay

In Ma River

In MaJoint

Venture (6)Aung Hein

Min

Maw Wan Ka LayJoint Venture (1)

Ba Wa Tet Lan

MEHL

Mawsizar Joint Venture(16) Suu Htoo Pan

Mawsizar (2) Mahar Kyaut Seinn

Mawsizar Joint Venture (17)Kyauk Myat Min


Kaung MonYadanar

MawsizarJoint

Venture

MawsizarJoint

Venture

Mawsizar (6)Pyi Tan Yadanar

Mawsizar Joint Venture (2)Kyaing International

Moe Pin Joint Venture (3)Khun Pa-Oh


Linn Lett Win Yadanar

Moe Pin Joint Venture (6)Khin Zaw Aung & Brothers

Moe PinJoint Venture (8) Unity

61 acresKyauk Myat

Myodaw

- Private blocks (1 acre each)


Key

Art

icle

144

Are

a

Article 144 Area

San Hkar River

Uru

Riv

er

Uru

Riv

er


Kyaw Naing & Brothers

San Hkar Tan (7)Shwe Eain Si Company

San Hkar Tan (8)Shwe Nagar

Thitsar

San Hkar Tan (9)Aung Myin MuAhtwin Ahtet

SanHkar

Tan (10)


Ye Man Hein


Myanmar ShweYadanar

Yadanar Si

To G

insiMEHL San Hkar

Maw 125 blocks

Hpa Wa (3)Shwe Pyi Lyan

San Hkar Tan (6)Ye Lwin Oo Company

Taw Maw

MEHL

Hte Lone Seinn

Taw Maw (2)Jade Land

San Hpe (1)Kyaw Naing & Brothers

San Hpe (1)Kyaw Naing& Brothers

San Hpe (2)Winner

San Hpe(3) Sein

Meik Swe

San HpeRiver

SamaTract

Taw MawVillage

MEHL

Taw Maw (1)Jing Hpaw Academy

Khutter (2)Kaung Mon Yadanar

Khutter (1)Pwint Phoo Nadi

Lamaung (5) Khaing Lone

Lamaung (2)Lone Sein

Bang Ngu (2)Jade Mountain

(Kyauk Sein Taung)

Lamaung Joint Venture (1)Aung Su Myat

LamaungJoint Venture (4)Yuan Gemstone

HkaiChyin Mine

Bang Ngu (1)Wan Brothers

Maran GamMaw

War BoeMaw

Ah BaMaw

Bam GaMaw

San Hkar Tan (4)Super Seinn

Hpa Wa (2)Shwe Byaine Phyu

San Hkar Tan (3)Ye Man Hein

San Hkar Tan Joint VentureAung Ngwe Moe

Htay Aung Kyaw

Nam Jang

San Hkar Tan (2) Lau Lu

SanHkar

DumpNam Jang (6)Kyauk Seinn

Yadanar

Nam Jang (6)Kyei Ta Gun

Nam JangPyae

Yadanarmon

Wah Kye JointVenture (7)

Thit Thone Lone

Nam Jang (8)King Myanmar

San Hkar River

San Hkar Tan Joint Venture (1) Oo Ya

Wah Kye (1)Myanmar Pahtama

Wah Kye (4)Great Genesis

(Maha AsaPahtama)


Myanmar Win Gate(Aung Naing Yay

Mote Oo)


Richest Gems(Kywe Wa Sone)

Wah Kye (7)


Shwe YwetHlwar

Mya SeinnGolf Course


Golden JadeDragon Kaday

JointVenture (7)Yadana Kya

Phyu


Ma Lawng (3)Myanmar Seinn Lei Aung

Nyein ChanThar Yar (1)Crystal Jade

Ma Lan Joint Venture (2)Aung Myin Di Yadanar Myay

Ma Lan Joint Venture (3)San Myat Yadanar

Ma LanJoint Venture (1)

Thein Kabar Aung

Nam Mahpit

Nam MahpitJoint Venture

Nam Mahpit Joint VentureMyanma In Arr Kyee Mar Kyel

Nam Mahpit (3)Man Shwe Thitsar

(1) Jan Khat (4) Shwe Wah Myay (Mandalay)

(2) Jan Khat (2) Unity

(3) Jan Khat (1) Bayani

(4) Jan Khat (3) Taung Ni Taung

(5) Jan Khat (5) Nan Oo Yadanar

(6) Jan Khat (6) Maha Jade

Jan Khat (7)Pyi Taw Wai Sar Phyo

1

2

34

4

5

6

Loi NguBum Tracts

Nam Mahpit

Maw Wan Gyi (17)Aye Aye Khaing

Maw Wan Gyi Joint VentureSeinn Mya Aung

Loi NguBum TractsMaw Wan Ka Lay Joint Venture (4)

Phyo Si Thu

Maw Wan Ka Lay (2)Htun Tauk Sa

Maw WanKa Lay (3)

Aye Aye Khaing

Maw WanQuarter

Jade Emperor

Mawsizar Joint Venture (24)Aye Aye Khaing

Mawsizar Profitsharing (21)Zaw Kyaut Myet Co/op

Green Light Company

Mawsizar Tracts

Mawsizar Joint Venture (9)Yadana Inwa

MawsizarCommon dump

MoeThauk Kyel

Mawsizar Joint Venture(9) Jade Power

Ma LawngJoint Venture (2)

Thi Raw Mani


Myanmar Naing Group

Common dump

Lone Khin

KadayJoint

Venture

MyanmaGongyi

Moe Pin Joint Venture (4)Xie Family

Kaday (4)Pan Huke Duwa


Htoo Group



Shining Star Light(Taut Pa Thaw

Kye Alin)

Wah KyeJoint Venture (2)Silver Elephant

(Ngwe Sin)Moe Pin Joint Venture (5)Wai Aung Gabar

Reserve Tracts

Aung Seinn Joint VentureSeinn Meit Swe

Masa

Hpa Wa (1)Pho Thar Htoo


Max Myanmar transferredto Ayar Jade

KadayJoint Venture (1)Jade Mountain

(Kyauk Sein Taung)

In Ma (16)Kyauk Sein Swan Ar


Kaday Joint Venture (1)Jade Mountain (Kyauk Sein Taung)

In Ma River

Ma Lawng Joint Venture (1)Myanmar Thiri Yadanar

In MaJoint Venture (1)Phyo Thiha Kyaw

Mawsizar (3)Myanmar Rich Land

Mawsizar (1)Si Htun


Ayar Pyi Phyo

In Ma (2)Than Lwin

Aye Yar

In MaJoint Venture (11)Sein Shwe Kyaw

In MaJoint Venture (10)Theint Win Htet

In Ma Joint Venture (4)ARS Company

In Ma (12)Win Paing Kyaw


Myanma NeYongehe


Gwi Hka

MawsizarJoint Venture(13) Hawq Kyi

Maw WanGyi Joint

Venture (2)Aung Shwe

Nan


Jade Emperor

Maw WanGyi Joint

Venture (1)Ngwe Hein

Htet

In MaNew tracts


Kaung SuYadanar

Maw Wan Gyi (15)

In MaJoint

Venture (7)New Golden

In MaJoint

Venture (5)Kyauk

Myat Min


Northern Star(Du Wun Kye)

In Ma (3)San Mihtasu

PrayerHill

In Ma Joint Venture (15)Lonn Khinn Aung Myay

In Ma River

In MaJoint

Venture (6)Aung Hein

Min

Maw Wan Ka LayJoint Venture (1)

Ba Wa Tet Lan

MEHL

Mawsizar Joint Venture(16) Suu Htoo Pan

Mawsizar (2) Mahar Kyaut Seinn

Mawsizar Joint Venture (17)Kyauk Myat Min


Kaung MonYadanar

MawsizarJoint

Venture

MawsizarJoint

Venture

Mawsizar (6)Pyi Tan Yadanar

Mawsizar Joint Venture (2)Kyaing International

Moe Pin Joint Venture (3)Khun Pa-Oh


Linn Lett Win Yadanar

Moe Pin Joint Venture (6)Khin Zaw Aung & Brothers

Moe PinJoint Venture (8) Unity

61 acresKyauk Myat

Myodaw



Key

Art

icle

144

Are

a

Article 144 Area

San Hkar River

Uru

Riv

er

Uru

Riv

er

AREA 1

AREA 5

AREA 4

AREA 3

AREA 2

Jade mining concessions in the Lone Khin area of Hpakant


MEHL

Maw Mau (11)Ngwe Si Hein /Aung Saw Min

Maw Wan Kalay (5)Pan Myat No Yon

Maw Mau (2)Sut Kaba

Maw Mau(8) Unity

Maw MauShwe Wah Myay

(Mandalay)Balahka (1)Tun Naing

Aung

Taung Cho (7)Kyauk Sein Bayin & Bayin Ma

Balahka (2)Wet Thit Cha

Balahka (2)Yadanar Sin Thiri

Balahka (1)Tun Naing Aung

Kala MawJoint Venture (1)

Shwe Pyi Thar

Kala Maw (3)Sein Tharaphu

Kala Maw (2)Agga Yadanar

Myauk PhyuVillage

Kala Maw (4)Yadanar Sai Kaung

Myat Kyaw

Sharaw Hkar Tracts- Shwe Innwa

MyanmarEconomic

Corporation

Kala Mawcommon dump

Maw Mau (8)Kachin Taing Yin Thar

Maw MauThiha & Brothers

Thaung Cho (3)New GoldenThaung

Cho (2)Richest Gems

(Kywe Wa Sone)Htoo

ThaungChyoThaung Cho (5)

Myat Phone Si

Area 6Reserved new tracts

Hpakant Gyi Maw

Hpakant Gyi (1)Kyauk Seinn

Nagar

San KyoiVillage

Yadanar Moe Myay (1)

Yu Mar

Sik Mu old village

Sik MuCommon

Dump

Sik Mu

Sai Taung (2)Sat Dat Kwin Ahar

Ba Zan Chauk (6)Sat Dat Kwin Ahar

Ba Zan Chauk (7)Lon Seinn

Kyauk Sein Joint Venture (1)Khine Myanmar

Ingga ChaukJoint Venture (3)

Ba Wa Tet Lan

Sai Taung (1)New Jade

Sik Mu

Ta Ma Hkan Maw

Ta Ma Hkan (1)BMW

Ta Ma Hkan (3)Pyi Tan Yadanar

Seinn Like

Ta Ma Hkan (1)Winner

Ko Ma (1)Sein Light

Ahtet Sabaw (2)Tabar Wa Swan Ar


Khaut Kyaw (1)Htoo Myint Maw

Maw Shan / Spot (4)Kaung Su Wai Hlyan

Maw Shan / Spot (7)Shwe Wah Myay (Mandalay)

Maw Shan / Spot (8)Kan Pwint Oo Sai Aung (1)

Linn Htet Aung

Maw ShanSabaw (5)

Seinn OuruMaw Shan SabawJoint Venture (3)

Su Htu Pan

Maw Shan / Spot (2)Shwe Hein Htet

Maw Shan Sabaw (1)Myanmar Myaykyee

Shwe Thee

Kayin Chaung -Sein Lom Taung Tan

YadanarSan Shwin

YadanarYaung Chi

Seven StarKan Thar Oo

Kayin Chaung (1)Myanmar Takaung

transferred toYar Za Htar Ne

Ma Mone (1)Myanmar Si Thu

Ma Mone (5)Myanmar Naing Group

Ma Mone (6)Theint Win Htet

Ma Mone (2)Than Lwin

Aye Yar

Ma Mone (3)Richest Gems

(Kywe Wa Sone)

Met Lin Chaung (3)Kyauk Seinn Nandaw

Shwe Gaung Gaung

Met Lin Chaung (1)Shwe Gaung Gaung

Met Lin Chaung (2)Yadanar Taung Tann

Ma Na (1)Myo Nwe

Ma Na (3)Lyan Shan

Kyet PaungChaung (2)

Kan Kaung ThawKyauk Seinn Bayin

Sharaw Hkar Tracts- Myanmar Gongyi

Sharaw Hkar Tracts- Kan Lin Win

Ma Na (6)San Kyel Pwint

Kyet Paung Chaung (1)Kyaing International

Kyet Paung Chaung (3)Max Myanmar transferred

to Ayar Jade

Ma Mone (4)Kyauk Seinn Nagar

Nay La Pwint

Seng Taung

Ingga Chauk (5)Chaow Brothers


Nay La Pwint

Maw Mon SabawJoint Venture (6)

Myanmar Seinn Lei Aung

Tawng Kaw (1)Htoo Group

Haung Pa

Haung Pa (1)Nyunt Nyunt Aung

Khaut Kyaw (1)Patta Myar Chintae

To Sik Mu

Myauk Phyu (3)Kyauk SeinYaung Chi

Myauk Phyu (2)Sein Lin

Myauk Phyu (1)Kyaing International

Myauk Phyu (4)Win Paing Kyaw

Hpakant Town

ThaungChyo (1)

Shwe HkitNay Pyi Taw

Maw

Mau Stream



Key

N

Gwi Hka Stream

Uru River

AREA 10

AREA 6

MEHL

Maw Mau (11)Ngwe Si Hein /Aung Saw Min

Maw Wan Kalay (5)Pan Myat No Yon

Maw Mau (2)Sut Kaba

Maw Mau(8) Unity

Maw MauShwe Wah Myay

(Mandalay)Balahka (1)Tun Naing

Aung

Taung Cho (7)Kyauk Sein Bayin & Bayin Ma

Balahka (2)Wet Thit Cha

Balahka (2)Yadanar Sin Thiri

Balahka (1)Tun Naing Aung

Kala MawJoint Venture (1)

Shwe Pyi Thar

Kala Maw (3)Sein Tharaphu

Kala Maw (2)Agga Yadanar

Myauk PhyuVillage

Kala Maw (4)Yadanar Sai Kaung

Myat Kyaw

Sharaw Hkar Tracts- Shwe Innwa

MyanmarEconomic

Corporation

Kala Mawcommon dump

Maw Mau (8)Kachin Taing Yin Thar

Maw MauThiha & Brothers

Thaung Cho (3)New GoldenThaung

Cho (2)Richest Gems

(Kywe Wa Sone)Htoo

ThaungChyoThaung Cho (5)

Myat Phone Si

Area 6Reserved new tracts

Hpakant Gyi Maw

Hpakant Gyi (1)Kyauk Seinn

Nagar

San KyoiVillage

Yadanar Moe Myay (1)

Yu Mar

Sik Mu old village

Sik MuCommon

Dump

Sik Mu

Sai Taung (2)Sat Dat Kwin Ahar

Ba Zan Chauk (6)Sat Dat Kwin Ahar

Ba Zan Chauk (7)Lon Seinn

Kyauk Sein Joint Venture (1)Khine Myanmar


Ba Wa Tet Lan

Sai Taung (1)New Jade

Sik Mu

Ta Ma Hkan Maw

Ta Ma Hkan (1)BMW

Ta Ma Hkan (3)Pyi Tan Yadanar

Seinn Like


Ko Ma (1)Sein Light

Ahtet Sabaw (2)Tabar Wa Swan Ar


Khaut Kyaw (1)Htoo Myint Maw

Maw Shan / Spot (4)Kaung Su Wai Hlyan

Maw Shan / Spot (7)Shwe Wah Myay (Mandalay)

Maw Shan / Spot (8)Kan Pwint Oo Sai Aung (1)

Linn Htet Aung

Maw ShanSabaw (5)

Seinn OuruMaw Shan SabawJoint Venture (3)

Su Htu Pan

Maw Shan / Spot (2)Shwe Hein Htet

Maw Shan Sabaw (1)Myanmar Myaykyee

Shwe Thee

Kayin Chaung -Sein Lom Taung Tan

YadanarSan Shwin

YadanarYaung Chi

Seven StarKan Thar Oo

Kayin Chaung (1)Myanmar Takaung

transferred toYar Za Htar Ne

Ma Mone (1)Myanmar Si Thu

Ma Mone (5)Myanmar Naing Group

Ma Mone (6)Theint Win Htet

Ma Mone (2)Than Lwin

Aye Yar

Ma Mone (3)Richest Gems

(Kywe Wa Sone)

Met Lin Chaung (3)Kyauk Seinn Nandaw

Shwe Gaung Gaung

Met Lin Chaung (1)Shwe Gaung Gaung

Met Lin Chaung (2)Yadanar Taung Tann

Ma Na (1)Myo Nwe

Ma Na (3)Lyan Shan

Kyet PaungChaung (2)

Kan Kaung ThawKyauk Seinn Bayin

Sharaw Hkar Tracts- Myanmar Gongyi

Sharaw Hkar Tracts- Kan Lin Win

Ma Na (6)San Kyel Pwint

Kyet Paung Chaung (1)Kyaing International

Kyet Paung Chaung (3)Max Myanmar transferred

to Ayar Jade

Ma Mone (4)Kyauk Seinn Nagar

Nay La Pwint

Seng Taung

Ingga Chauk (5)Chaow Brothers


Nay La Pwint

Maw Mon SabawJoint Venture (6)

Myanmar Seinn Lei Aung

Tawng Kaw (1)Htoo Group

Haung Pa

Haung Pa (1)Nyunt Nyunt Aung

Khaut Kyaw (1)Patta Myar Chintae

To Sik Mu

Myauk Phyu (3)Kyauk SeinYaung Chi

Myauk Phyu (2)Sein Lin

Myauk Phyu (1)Kyaing International

Myauk Phyu (4)Win Paing Kyaw

Hpakant Town

ThaungChyo (1)

Shwe HkitNay Pyi Taw

Maw

Mau Stream



Key

N

Gwi Hka Stream

Uru River

AREA 10

AREA 6

Jade mining concessions around Hpakant Town


Big hats and bribes: how to get your own jade mine

Global Witness interviews with key players in the business suggest that, behind the scenes, high-level connections and bribery are needed to secure the most sought-after concessions. A former official explained that whilst the Minister of Mines does sit on the allocation committee, a more senior political figure is also involved and is, in practice, the real decision-maker.45

Multiple industry sources have described howthe award system favours a powerful elite. Onebusinessman explained that whilst there is no set policy on how licences are awarded, if an army figure is involved in the company that is making the bid, there is a 90% chance that they will get it.46 A second businessman detailed how high quality jade deposits go to senior officials and their children and other relatives or well-connected businessmen, whilst deposits which yield lower quality stones go to less-connected players.47 Another industry figure confirmed this, saying that companies without connections can apply for licences but are almost certain to be granted blocks which have only low-grade jade reserves.48

“If there is a big hat involved, surely they will get [the concession]!”

Jade businessman49

“If no relationship with thegovernment, then no mining licence.”

Jade businessman50

“All good quality jade belongs to the families of generals.”

Jade businessman51

“Every cabinet minister is involved in jade – it’s their best source of income, even though they have never been to

Hpakant.”Jade businessman52

One businessman described a typical scenario, whereby a crony tycoon will approach a minister and say, “I really need to get this area in Hpakant to mine jade. Whatever it costs, I will do it.” The Minister will then ensure that he gets the licence, in return for a cut of the profits.53

Both the a kyo thu and the army company partnership arrangements come in for criticism from people in the jade business and some of the challenges facing army company partners are described in the next chapter. Commenting on the a kyo thu system, one long-time jade businessman noted that:

“Every a kyo thu company is related to militaryofficers in uniform… in practice, [a kyo thu] means it’s open to whoever is related to the ruling families. Even if you have money you cannot get into Hpakant without connections”.54

Those involved do not want outside scrutiny and they “fear transparency”.55 One businessmanexplained that if it appears that the connection of a military figure to a mining company may become known, the names associated with him will simply be removed from company records.56 More generally, according to another industry representative:

“Companies are aware of the risks of becoming too high profile – the government will pay more attention to them and the KIO will target them. So the strategy is to divide up their operations amongst smallcompanies to disguise [them].”57

This description was backed up by anotherbusinessman who explained that companies often set up “branches” in the names of their wives and sons so as to avoid becoming conspicuous by having one person or company holding a huge number of acres.58

Consequently, whilst there are around 100 big companies actually operating (out of 937 permit holders), industry sources suggest that they are controlled by only 10 or 15 owners. The mines are under the control of a few top names.59


“When you go to see high-ranking officials, you don’t go empty handed.” Former jade businessman60

Industry representatives have provided details of the system of pay-offs typically needed to obtain licences, particularly for the most valuable jade concessions.61 They described various scenarios including the following:

• If you want a licence, there are several categories of bribes you may need to pay: – Firstly, you need to pay a bribe to get the land surveyed and measured in line with the Gemstone Law.– Secondly, you may need to bribe township officials, including the jade department, particularly for the more significant concessions.– Thirdly, you may need to bribe the Tatmadaw Northern Commander (the top army general in Kachin State), the Kachin State Chief Minister or officials in Nay Pyi Taw.62

“All companies need one or two big hats” Jade businessman63

• If the concession is highly sought-after, you also need connections such as family ties or friendship with powerful figures. Such connections can also reduce the amount of money you need to put down as a deposit.64

• If you are a drug lord, for example, you can offer a payment to an army general for his assistance in securing a particular jade concession. If the licence comes through, this general or one of his family members will get a share in the mining company that is then set up to carry out operations.65

• If you are a company without a ‘big hat’, you can approach a company which has high-level connectionsto act as a broker for you. In this case, you would offer to pay the connected company to apply for a licence in its name, and then allow you to use that licence. Some companies that undertake this ‘brokering’ role “have never been to Hpakant; they just use their company name [to secure licences]”.66

• If you are the son of a general who wants to take control of a certain jade mine, then you can team up with one of the big companies. They can create a new company with a new name and shareownership with you. These big companies can then repeat this process with the sons of other generals.67

Greasing the jade wheel: corruption in practice

Playing the jade game: taxevasion, money-laundering,price-manipulation, underselling and smuggling

On paper, there are strict rules and regulations that govern Myanmar’s jade trade. When stones are mined in Kachin State, they are required to be officially recorded and evaluated, and a 20% tax is

levied.68 If companies then want to sell their jade legally to the Chinese buyers who constitute the major market for the stone, they transport it to Nay Pyi Taw where it can be sold at the government-organised Myanmar Gems Emporium which is currently held once a year. It is also possible to sell very low grade jade at occasional ‘local’ emporiums in Nay Pyi Taw that are aimed only at Myanmar merchants.69 Another option is the market in Mandalay that generally caters to lower grade stones.70


At big Myanmar Gems Emporium events, companies typically sell rough stones that are cut to display their quality.71 Jade is either sold through a tenderprocess whereby interested bidders submit sealed bids above a reserve price or, for the most valuable stones, through an auction.72 Any jade sold is then subject to a 10% sales tax, after which it can be exported out of the country.73

In practice, however, these formal processes are widely circumvented. A common complaint of industry figures is that Myanmar’s tax structure means that there is no money to be made infollowing the law and companies have to bypass taxation and official sales and smuggle their jade.74 Moreover, there are no standard market rates for jade, and prices are extremely subjective,with demand for different colours and types fluctuating over time.75 This makes it easier for companies to manipulate jade prices and escape paying duties on their jade sales.

People in the business describe a variety oftactics in use to cheat the system, including:

• Tax evasion – at the mine site: Jade is liable to a 20% of value tax when it is first mined, but Global Witness has received numerous accounts of companies paying off officials to reduce or avoid this tariff.76 In the words of one jade company manager, “All of us, all the companies do this”.77 Others talk of substituting

low-value for high-value stones during theofficial valuations.78 Such manoeuvres are generally a prelude to smuggling, as described below.79 Our calculations, based on 2014 jade production and jade grade and price distributions at the 2014 emporium, indicate a discrepancy of up to US$6 billion between what this tax could have generated in 2014 and what the government actually received. This could be due, in part, to legitimate reasons. We do not have data on the costs of transporting jade from Hpakant to Nay Pyi Taw, and therefore do not adjust the discrepancy for these costs. Similarly, we cannot estimate the degree to which cutting and polishing jade added to the value of some stones before they were sold at the emporium, so again we cannot adjust for this. It is also possible that companies may have chosen to hold part of the jade they mined as stock rather than selling it in Nay Pyi Taw. Given the size of the discrepancy, however, the likelihood is that a significant part is due to tax evasion.

• Tax evasion – at the official sales: If a company

finds a valuable piece of jade, it may deliberately cut a window into a part of the stone which is of lower quality than the rest. This allows it to set a floor price for the jade at a fraction of its real value. Next, the company makes sure that its own agents or proxies secure the winning bid on the stone. Because the sales price is artificially deflated, the level of tax the company then has to pay is far lower than it should be. Once the (reduced) tax has been paid, the company can legally transport the stone to China. Here it cuts the stone again, this time in a way which displays the valuable part of the jade, and sells it at a much higher price. According to a prominent industry figure, approximately 60% of 2014 emporium sales involved vendors buying their own jade back and the top companies use this method for around 80% of the jade they sell.80

• Market manipulation: At the emporiums, buyers who have already stockpiled a certain kind of jade sometimes win bids on stones of the same type but then fail to pay for and collect them. This enables them to restrict supply and to command high prices for the jade they already have.81

‘Windows’ are cut into jade sold at the emporium so that buyers can assess the quality of the stone. Many sellers deliberately cut into lower quality sections of jade blocks to make them appear less valuable than they really are. They arrange for proxies to buy the stones for them, at an artificially low price, so that they pay less tax on the sale. They then export the jade to China and cut again, this time to show its most valuable sections so that it can be sold at a massive mark-up.


The main official route for selling jade mined in Hpakant is through the Myanmar Gems Emporium in Myanmar’s capital, Nay Pyi Taw. High, medium and low grade jade is sold to international buyers, particularly from China, the major consumer market for jade.

• Money laundering: In some cases, vendors will buy back their own stones for inexplicably high prices. One former official told Global Witness he “[had] no doubt that this is money laundering”.82

• Smuggling: Jade businessmen estimate that companies smuggle between 50% and 80% of jade directly to China, bypassing official controls on both sides of the border.83 (A map showing the routes used to carry jade to the

Chinese border is shown on page 25 above.84) Some describe how licensed companies typicallysell high volume, low value jade through government-sanctioned channels, along with a token amount of “good jade … for show” but other jade including top grade stones are smuggled.85 This is in line with data from the 2015 emporium which shows that, out of over 8,000 sales lots, a mere two comprised imperial jade, the most valuable grade.86

A government official inspects jade in Hpakant, assessing its value and the amount of mine site tax to be charged before the stones are transported to market. This process is prone to corruption and smuggling, particularly of the most valuable stones, is endemic. CREDIT: Minzayar

This half tonne block of commercial (medium-grade) jade was offered for sale at 12 million euros at the 2015 Myanmar Gems Emporium. According to those in the business, however, licensed companies typically offer only token amounts of their most valuable jade at the government sales in Nay Pyi Taw. The rest is smuggled directly to China, bypassing the emporium altogether.


China’s appetite for the stone of heaven

Jade has always held a special place in Chinese culture, as illustrated by the saying: “Goldhas a value; jade is invaluable”.87 Traditionallyassociated with royalty and privilege, for today’s expanding class of rich and super-rich in China the stone is a status symbol and this is pushing up demand and prices, particularly for top-quality jade. Conveniently, the world’s main supplier is right next door.88

Nearly all of Myanmar’s jade goes to China, either formally or informally, and prices depend on Chinese demand.89 According to several sources in the business, Chinese President Xi Jinping’s current corruption crackdown is having a direct impact on the market and some of the highest profile corruption cases so far have involved jade. For example, over a hundred kilograms of jade was seized from the basement of the former vice chairman of China’s Central Military Commission, General Xu Caihou.90 Former provincial governor Ni Fake was found to have accepted US$2 million in bribes, 80% of which were in carved jade, whilst mining tycoon Li Huan was accused of paying off government officials using the gemstone.91

As well as buying the stone, many Chineseinvestors are said to engage directly in mining jade, providing the funding to secure the best concessions and to bring in large-scale machines to work them.92 Global Witness has heard multiple accounts of “shadow companies” being used to circumvent restrictions on foreign investment involving either Myanmar citizens providing a front for Chinese backers, or Chinese individuals taking Myanmar identities so as to directly control companies themselves.93

Industry figures described to Global Witness the joint arrangements which can be set up, withChinese backers obtaining machinery usingstaggered payment plans or hire purchasearrangements not available to Myanmar people, whilst their local partners manage logistics and connections with high level power brokers.94 One interviewee recounted being approached by aChinese general, who was interested in partneringup and offered to facilitate the import from China of large trucks to use in the jade mines.95 Heestimated that the big jade players receive up to 70% of their financing from inside China.96 The useof front companies to facilitate such arrangements adds an additional layer of opacity, making it even more difficult to work out who is really being given access to jade and what the implications are.

Jade is highly prized in China and is traditionally associated with royalty and status. Some of the highest profile cases in China’s recent anti-corruption crackdown have involved the seizure of valuable jade carvings and jewellery. CREDIT: Adam Dean

The architect of Myanmar’s independence Aung San, together with Chairman Mao, overlooks a makeshift showroom in Yingjiang, a jade trade hub in Yunnan Province, China, near the border with Kachin State.


Up until the 1990s, jade mining was done by hand and the environmental footprint remained limited. This photo shows Hpakant Gyi – at the time the main jade mine – in 1994, the year that the KIA/KIO signed a ceasefire with government.

In their haste to dig for jade, the big mining companies have recentlyunleashed “vehicles [the size of] two storey buildings”, each costing US$2 million, on Hpakant’s broken landscape.101

According to one industry source, a site which a year ago took 30 days to work can now be mined in only four days. The big question is who is really benefitting from the huge amounts of jade being extracted from Hpakant?102 CREDIT: Minzayar

The rise of the machines

As described in Chapter 4, in the early 1990s, Myanmar’s military junta pushed the KIA/KIO out of Hpakant and then began parcelling the area into blocks which it handed out to companies it approved, as a means of consolidating control of Kachin State’s most valuable resource.97 Since then, the small-scale miners who previously mined the area have been squeezed out by state-licensed companies, which have brought in heavy machinery to carry out large-scale jade extraction. Jade mining

in Hpakant today is all about the biggest machines and the most rapid rate of extraction. This intensity stems from a series of perverse incentives:

• The need to pay substantial bribes makes the process of securing a good mine very costly. Licence-holders are in a hurry to extract jade as quickly as possible to recoup this initial outlay.98

• The short duration of the licences, which typically run for only three or five years, furtherencourages concessionaires to grab what they can, while they can.99

• Because the big companies are, in many cases, owned or aligned with entrenched military and ruling party figures, they have everything to lose if the rules of the game change following the November 2015 elections or in the event of an equitable peace agreement between Nay Pyi Taw and the KIA/KIO.100

The satellite images over the page show theintensification of jade exploitation over the two decades that the government has reigned in Hpakant. The question of who is benefitting from all of this is explored in the next chapter, where we profile some of the biggest licensed players in Myanmar’s jade industry. We then turn to the adverse impact of their activities on local people in Chapter 3.


0 5 km

Expansion of jade miningin Hpakant since 1988

1988 1994 2005

2015


CHAPTER 2: WHO’S BENEFITTING?

The secrecy which pervadesMyanmar’s jade trade makestracking down its real beneficiaries extremely difficult. This partlyexplains the lack of internationalattention on this issue to date.

Global Witness has identified some of thecompanies receiving licences from the Ministry of Mines / Myanmar Gems Enterprise, and pieced together who is really behind them. The main players can be divided into four, sometimesoverlapping, categories:

• Military and ruling party families – families of retired generals associated with the Than Shwe military dictatorship and the ruling Union Solidarity and Development Party (USDP). Some are members of the current cabinet.

• Army companies – notably the infamous Myanma Economic Holdings Limited.

• ‘Crony’ companies – firms that emerged and flourished as proxies and favourites of the Than Shwe military junta.

• Drug lords – Myanmar’s most famous drug lord Wei Hsueh Kang and associates, some of whom are subject to US sanctions for narcotics trafficking and money laundering.

The table below summarises the official pre-tax sales these major players made at the 2013 and 2014 emporiums. In some cases, buyers at the emporiums failed to make payment so these sales were not completed (according to Ministry of Mines information, only 55% of 2013 sales were completed; industry sources put the 2014 completionrate at 30%).103 At the same time, as detailed in Chapter 1, industry estimates indicate that licensed companies typically smuggle between 50% and 80% of their jade directly to China.Consequently, these figures do not represent the true value of jade revenues, but they provide a useful indication.

Who is making money from jade?

CATEGORY NAME 2014 SALES104 2013 SALES105 TOTAL SALES

Army / USDPfamilies

Than Shwe family and associated firm Kywe Wa Sone

US$116,541,880 US$103,499,788 US$220,041,668

Ohn Myint family US$80,429,544 – US$80,429,544Maung Maung Thein family US$105,430,521 US$36,621,049 US$142,051,570

US$442,522,782

Armycompanies

Myanma Economic Holdings Limited US$149,425,506 US$80,492,459 US$229,917,965Myanmar Economic Corporation US$32,000,008 US$20,826,415 US$52,826,423Northern Star US$1,070,355 – US$1,070,355

US$283,814,743

‘Crony’companies

Ever Winner group of companies US$192,457,693 US$123,881,602 US$316,339,295Asia World US$27,264,433 US$20,944,520 US$48,208,953Htoo Group US$13,223,634 – US$13,223,634

US$377,771,882

‘Ceasefiregroup’-related

Wei Hsueh Kang / United Wa State Army-associated

US$43,009,842 US$58,770,400 US$101,780,242

Ruby Dragon Group / Pa-O National Organisation-associated

US$58,637,973 US$46,141,698 US$104,779,671

US$206,559,913

GRAND TOTAL US$1,310,669,320


This should ring serious alarm bells for theMyanmar government and its internationalpartners. All four of these categories of players have much to lose from meaningful politicalreform and from peace in Kachin State. Their dominance of the jade business is denyingopportunities for development to the people of Kachin State and Myanmar as a whole. But the implications go much further. In Myanmar’scurrent political landscape, money is power.Everyone wishing to see peace and genuinedemocracy in Myanmar should urgently consider the implications of allowing hundreds of millionsof dollars a year to be siphoned off by some of the most determined and ruthless opponents of reform.

Military and political leaders and their families

1. Retired Senior General Than Shwe

Than Shwe is synonymous with the darkest days of military rule in Myanmar. The junta he ledfrom 1992-2011 denied citizens their basic humanrights, undertook vicious counter-insurgency campaigns and launched bloody crackdowns against opponents.106

The former dictator is widely believed to retain considerable power through his influence over the still-dominant Myanmar military.107 In June 2015 he is reported to have warned Union Solidarity and Development (USDP) party head Thura Shwe Mann, President Thein Sein and Tatmadaw (armed forces) Commander-in-Chief Min Aung Hlaing, that he might “take things into my own hands”.108 In August Thura Shwe Mann, who had recently proposed ending the military’s de facto veto on changes to the constitution, was deposed in a “palace coup”.109

Meanwhile, Than Shwe’s family continues to play gatekeeper to choice cuts of Myanmar’s economy. According to one well-respected analyst, money is the basis for authority in the new Myanmar and “If you want to do business, you have to deal with Than Shwe’s family.”110

Previously unpublished government jade concessionmaps and company records shows that Than Shwe’s sons, Kyaing San Shwe and Htun Naing Shwe, control two companies called KyaingInternational and Myanmar Naing Group which have obtained licences to six jade mines inHpakant. According to a senior Ministry of Mines official, mining concessions were handed to the Kyaing International company without any of the usual procedures being followed.111

Officially, Senior General Than Shwe stepped down as Myanmar’s head of state in 2011. However, it is widely believed that he continues to exert considerable power through his influence over the still-dominant Myanmar military. Is the money his family is making from jade being used to maintain his behind-the-scenes influence?

Whilst former dictator Than Shwe is said to have devolved some of his control over family businesses to his children and grandchildren, his wife, Daw Kyaing Kyaing, is reported to remain very much involved.112 One of the family’s jade companies is called Kyaing International. Locals in Hpakant have also named a lake, created by a mining crater filling with water, after the former first lady of Myanmar.


A third firm – Kywe Wa Sone, registered under its English name Richest Gems – is run by a director of Kyaing International and Myanmar Naing Group named Win Tin, who shares a registered address with two of Than Shwe’s sons.113 Long-time jade

industry monitors identify this company as partof the same group of businesses as KyaingInternational.114 Kywe Wa Sone controls a further three jade mines in Hpakant.

Figures for the 2014 and 2013 Myanmar Gems Emporiums show that, across the two sales events, Kyaing International and Myanmar Naing Group recorded pre-tax sales of US$70 million.

If one adds in the sales notched up by the associated Kywe Wa Sone company, the total take across the two emporiums leaps to US$220 million.124

Hpakant jade mines controlled by Than Shwe family companies and Kywe Wa Sone NB names of mines typically include a number, such as Maw Sizar (#2)

KYAING INTERNATIONAL MYANMAR NAING GROUP KYWE WA SONE

Maw Sizar (#2)115 Kaday (#5)116 Wah Kye (#6)117

Kyet Paung Chaung Phyar (#1)118 Ma Mone (#5)119 Thaung Cho (#2)120

Myauk Phyu (#1)121 Gwi Hka (#1)122 Ma Mone (#3)123

Jade companies controlled by the family of former Senior General Than Shwe

NOTE: Directorships reflect listings in the DICA companyregistry as of October 2015. More complete DICA records from

October 2014 indicate that directors are also shareholders.

Figures for the 2014 and 2013 Myanmar Gems Emporiums

show that, across the two sales events, Kyaing International,

Myanmar Naing Group and Kywe Wa Sone recorded pre-tax

sales of jade of US$220 million.

SON SON

NAMED

AFTER

SON

SPOUSE

SPOUSE

SHARED

REGISTERED

ADDRESS

DIRECTOR

DIRECTOR

DIRECTOR

DIRECTOR

CHAIRMAN

DIRECTOR

MYANMARNAINGGROUPGEMS

KYAINGINTERNA-

TIONALGEMS

KYWE WASONE GEMS

(RICHEST GEMS)

Khin Thanda

Than Shwe Kyaing Kyaing Maw SizarKyaing Lake

Htun NaingShwe a.k.a

Htun Htun Naing

Kyaing San Shwe Win TinThant Zaw

Shwe


The relationship between the Than Shwe family jade empire and China is unclear, but many claim that the family’s jade mining operations are, in practice, undertaken by Chinese nationals.125 The Kyaing and Naing companies are also reported to operate in partnership with a group of companies associated with the United Wa State Army / United Wa State Party (UWSA/UWSP), which is profiled later in this report.126 Until recently Kywe Wa Sone shared a director with Wa firm Tet Kham Gems, which is run by Aik Haw, the son-in-law of UWSA/UWSP leader Pao Yu Hsiang.127 Tet Kham Gems, Aik Haw and Pao Yu Hsiang are all on the US sanctions list because of their links to the narcotics business.128

The Than Shwe family’s mining in Hpakant is heavily mechanised and takes little account of the interests of local people living in the area.129 Their companies’ concessions are protected by armed military and police officers who are charged with deterring unwanted visitors.130 Such is the notorietyof the Kyaing International company that the flooded mine crater gouged into the famous Maw Sizar jade tract where the firm operates has been named ‘Maw Sizar Kyaing Lake’ after Than Shwe’s wife, Daw Kyaing Kyaing.131

The Than Shwe’s family’s stake in a corrupt and militarised jade business poses a serious challengeto reformers’ efforts to bring real changeto Myanmar’s extractive industries, and topeacemakers’ attempts to forge a lastingsettlement in Kachin State. But the potential repercussions stretch well beyond Kachin. The former dictator’s family is famous for its lavish weddings, luxury real estate and extravagant shopping trips.132 But as Myanmar prepares for historic elections and a possible political transition, some fear hardliners may use their illicit wealth to finance sectarian violence and political dirty tricks.133 Myanmar’s people urgently need answers on what Than Shwe’s family are doing with their ill-gotten jade loot.

A villager looks on as dump trucks from the Than Shwe family’s Kyaing International mine pass by, Seng Ja Bum village, Hpakant. CREDIT: Minzayar

A still from a video of the ostentatious wedding of Than Shwe’s daughter, Thandar Shwe to army major Zaw Phyo Win which was leaked to the press in 2006.134 The clip provided a glimpse into the family’s lavish lifestyle, sparkingoutrage as people questioned where the money for the ropes of jewels, rounds of champagne and multi-million dollar gifts was coming from.

According to one commentator, “if you want to do business in Myanmar, you have to deal with Than Shwe’s family”.135 The business interests of Than Shwe’s sons Htun Naing Shwe and Kyaing San Shwe extend beyond jade. They are widely reported to be the owners of the J’s Donuts chain of pastry shops in Myanmar. CREDIT: Minzayar


2. Minister for Livestock, Fisheries and Rural Development Ohn Myint

“I dare to slap anybody’s face.”Minister Ohn Myint

Minister Ohn Myint has long exercised considerableinfluence over the fate of Hpakant’s resources. His previous roles include member of parliament for Hpakant and Tatmadaw Northern Commander – the top general in Kachin State.136 Many Kachins accuse Ohn Myint of exploiting his Northern Commander position to solicit bribes, seize a share of major jade finds, promote the jadebusinesses of ‘crony’ companies, and sow division amongst the different ethnic and political groups in the state.137

According to jade industry sources, Ohn Myint’s family owns a lucrative jade mining venture called Myanmar Win Gate, which is named after British World War II general Orde Wingate.138 DICA company records show that:

• Myanmar Win Gate Gems and Jewellery Min-ing Co. Ltd was incorporated in 2007, during Ohn Myint’s tenure as Tatmadaw NorthernCommander in Kachin State.139

• Its managing director and 40% shareholder is Kyaw Thiha, which is the name of Ohn Myint’s son.140

• Another director and owner of 30% of the company’s shares is Daw Nway Ei Ei Zin, which is the name of Kyaw Thiha’s wife.141

Government maps and a KIA/KIO register of jade mines designate Myanmar Win Gate as the concessionaire for the Wah Kye (#5) and Gwi Hka Lone (#4) mines in Hpakant.142 Army company Myanma Economic Holdings Limited has told Global Witness that Myanmar Win Gate is one of its jade mining partners.143

Myanmar Win Gate did not figure in the unpublished 2013 Myanmar Gems Emporium figures reviewed by Global Witness. But at the 2014 event, the company posted pre-tax sales of US$80 million.144 This included the sale of a single 24 kilogram piece of jade for nearly US$40 million.145

In 2005, Ohn Myint was appointed Northern Commander, a military post which gave him exceptional power over the administration, economy and local population in Kachin State. Today, he holds the civilian post of Minister of Livestock, Fisheries and Rural Development, but he retains an interest in Kachin State through his family’s Myanmar Win Gate jade company.

A military history enthusiast, Ohn Myint has reportedly named his jade company after British Major-General Orde Wingate, the commander of a special operations force which operated in Myanmar during World War II.


Minister Ohn Myint hit the headlines in 2014 following a speech he gave to a group of villagers in Magwe Division who had requested a water purification system:

“There is no country who really loves Myanmar or helps us. They may f*** your front or maybe the back. Ok? f*** your front or back. No one is giving you anything for free.”

“I am sent from the Army, I am not a politician. I am not elected, but selected. So you know about this, I am telling you.”

“I don’t give a f*** about any politicians. You guys remember! I have been giving speeches saying that I am General Ohn Myint – General Ohn Myint who is travelling all over and I dare

to slap anybody’s face.”

“I will begin with political language. The political language is to attack to those who insult the ruling government. If a verbal attack from me does not work, they will be put in jail. This is as it is practiced internationally. Those that oppose the government, go! Stay in jail. You be

released when our government’s term ends. That’s it.”146

These comments prompted a protest in Yangon in which the demonstrators challenged the minister to come and slap them.147

The Minister for Livestock, Fisheries, Rural Development… and slapping


Retired general Maung Maung Thein was, until recently, the General Secretary of the ruling Union Solidarity and Development Party. Reputedly a political hardliner, Maung Maung Thein is behind two jade mining companies which recorded official pre-tax sales of over US$140 million in 2013 and 2014.

3. Former Ruling Party GeneralSecretary Maung Maung Thein

Retired general Maung Maung Thein is therecently deposed General Secretary of the ruling Union Solidarity and Development Party (USDP), a former fisheries minister and a member of the Pyithu Hluttaw (lower) chamber of Myanmar’s parliament.148 He has a reputation as a political hardliner. Global Witness has previouslyuncovered evidence of his son’s involvement in illegal logging.149

Two jade businessmen with extensive knowledge of the key players in Hpakant told Global Witnessthat Maung Maung Thein controls both Myat Yamon and Myo Nwe jade mining companies, which are listed in government maps as running the Kaday (#2) and Ma Na (#1) mines.150 Local people living near the Kaday (#2) mine alsoidentified Maung Maung Thein as the owner of Myat Yamon.151

These statements are supported by other data, notably company registry records, which show that:

• Myat Yamon and Myo Nwe companies share an office, as well as a director and shareholder.152

• One of Myo Nwe’s three listed directors and shareholders is Nay Aung, which is the name of one of Maung Maung Thein’s sons, accordingto the politician’s profile on the Myanmarparliament website.153

• Myo Nwe director Nay Aung’s NRC(national registration card) number(13/KAMANA(NAING)001592) immediately precedes that of Maung Maung Thein’s son Min Thein: (13/KAMANA(NAING)001593),suggesting that the two were registered in the same township at the same time.154

It is possible, just, that the Nay Aung involved in Myo Nwe company is not the brother of Min Thein but coincidentally has the same name and registered for an NRC card at the same time and place as Min Thein did. However, it is common in Myanmar for families to register more than one child at a time and therefore for siblings to be issued with sequential or near-sequential NRC numbers.155

Global Witness wrote to Myo Nwe director Nay Aung and put it to him that he was the son of Maung Maung Thein and that Maung Maung Thein was the beneficial owner of Myat Yamon and Myo Nwe companies. Nay Aung replied to say that he would not be able to answer the questions at this time.156


Myat Yamon mine site Kaday (#2), Kaday Village, near Lone Khin, Hpakant. According to locals the Myat Yamon mine is one of the most heavily guarded in Hpakant and conditions are notoriously dangerous. CREDIT: Minzayar

Waste water draining from the Myat Yamon site near Kaday Village, Hpakant. According to local residents, water from a drainage channel created by the company has destroyed nearby homes. CREDIT: Minzayar


According to local residents, the Myat Yamon mine is one of the most heavily guarded in Hpakant, and conditions are notoriously dangerous.157 In April 2015, a torrent of mud and waste water ripped through Myat Yamon’s Kaday (#2) mine, killing between 30 and 60 people, according to local residents.158

But this poor safety record has not stopped Maung Maung Thein companies generating eye-watering sums of money. At the Myanmar Gems Emporiums in 2014 and 2013, the Myat Yamon and Myo Nwe companies and joint ventures recorded between them pre-tax sales over US$140 million.

Flooded crater left by Myat Yamon company, Hpakant. CREDIT: Minzayar

Stills from a video of a massive mud slide that took place at the Myat Yamon Kaday (#2) mine in April 2015. Local residents put the death toll at 30 to 60 people. The accident is said to have occurred due to the company’s persistent dumping of tailings on a bed of liquid mud above the mine. The waste then shifted and flooded into the crater, engulfing workers and machines in its path.


4. The tip of the iceberg?

Global Witness: “We have heard that most jade mining companies probably have involvement from military families.

Does that fit with yourunderstanding?”

Former official: “Not probably, definitely! If military families do not have a jade

mining company the others will kick them out. Those without one will be

seen as black sheep. They will not be speaking the same language.”159

In addition to these heavyweight figures, Global Witness’ investigation found other big hitters in Myanmar’s ruling party holding interests in the jade trade, including two deputy ministers:

• Retired General Phone Swe is Deputy Minister for Social Welfare, Relief and Resettlement. As such, he is responsible for the wellbeing of 100,000 people in Kachin State who have been displaced by a conflict that relates, at least in part, to the jade that his Shwe Innwa Gems company is mining.160

• Deputy Minister for Communications and Information Technology Win Than waspreviously a major general, director of defence procurement in the Ministry of Defence and managing director of Myanma Economic Holdings Limited.161 DICA records retrieved in October 2014 list him as the sole shareholder of Myanmar Imperial Jade (Gems & Jewellery) Co. Ltd, which is MEHL’s main jade-mining and trading subsidiary.162

When MEHL agreed to meet with Global Witness in February this year, the army company proposed that General Win Than attend the meeting as a company representative.163 In a letter sentsubsequently to Global Witness, MEHL denied that he was a shareholder in Myanmar Imperial Jade, however.164 MEHL’s role in the jade business is profiled in the next section.

We believe that these findings are just the tipof the iceberg. Many familiar with the jadebusiness say that if you crack the shell of any major jade company, you will find a militaryfamily inside. This is the question reformers should be most worried about: who else in the USDP / Tatmadaw hierarchy is benefitting from Kachin State’s jade?

Deputy Minister for Social Welfare, Relief and Resettlement, Phone Swe, is another USDP party heavyweight with a stake in Myanmar’s lucrative jade industry.


Army companies

Companies controlled by military families cast a long shadow over the jade business, but that is not the end of the Tatmadaw’s involvement. Thearmy also has its own, formally constituted,conglomerates which make huge sums from jade. Previously unpublished figures from the 2014 and 2013 Myanmar Gems Emporiums show that across the two events, these firms collectively recorded pre-tax sales of at least US$280 million.165 This begs the inevitable questions of where the money is going and whether it is being used to wage the government’s war against the KIA/KIO in Kachin State.

The Tatmadaw’s top-rankingbusiness: Myanma EconomicHoldings Limited166

Global Witness is aware of at least four army companies involved in jade mining: Myanma Economic Holdings Limited (MEHL), Myanmar Economic Corporation (MEC), Shwe Innwa Gems (mentioned in previous section) and Northern Star Gems.167 The most important and notorious of these is the US government-sanctioned Myanma Economic Holdings Limited (MEHL). Over the years this sprawling company has profited from exclusive licences to import high value products, from tax exemptions and from foreign investors being forced to make joint ventures with it.168

Along with its sister company MEC, it is broadly understood to provide off-budget finance for secret military projects and an income stream for retired army officers.169

Some analysts have highlighted how MEHL and MEC have had their wings clipped by economic reforms that have trimmed their de factomonopolies, yet others suggest that behind the scenes their grip on important revenue flows remains significant.170 Our research suggests jade is one such example.

MEHL and jade: “The sleepingpartner that takes the lion’s share”171

MEHL is a prominent player in Myanmar’s extractiveindustries and its Letpadaung copper mine project has faced persistent allegations of land-grabbing, pollution and the use of violence against protestors.172 There has been far less scrutiny of its extensive portfolio of jade mines, however.

MEHL first became involved in jade mining in 1995 after the government took control of Hpakant from the KIA/KIO, and it proceeded to dominate the business for the next decade.173 During this period the conglomerate helped itself to large tracts of the best jade land, over the heads of the Ministry of Mines.174 Many of the main jade miningcompanies in Hpakant worked as its subcontractors.175

One notable case is Xie Family Company, profiled later in this report, one of whose directors is the joint venture partner of Coca-Cola in Myanmar.176 MEHL also organised its own jade auctions.177

Things began to change from April 2000 when, under the auspices of Military Intelligence chief and State Peace and Development Council (Than

Myanma Economic Holdings Limited has faced controversy over its joint venture copper mining project in Letpadaung. Accusations of land grabbing and violence against protestors, including the use of white phosphorus, have made the project notorious within Myanmar and beyond. CREDIT: Burma Partnership/Han Win Aung


Shwe junta) Secretary Number One Khin Nyunt,

the government began encouraging private

companies to enter into joint ventures with the

Ministry of Mines.178 Hereafter MEHL’s dominance

diminished, but it has remained one of the largest

and most formidable of the jade mining companies

in Hpakant.179 In the words of one long-time

observer of the gems and minerals business,

“MEHL is as powerful as ever.”180

In February 2015 MEHL met with Global Witness

to discuss its mining ventures and its participation

in the EITI. For a company which has a reputation

for opacity, this was an encouraging move.181

The MEHL officials – who included Colonel Khin

Maung Latt, the managing director of subsidiary

firm Myanmar Imperial Jade Company – emphasised

their awareness of, and support for EITI as follows:

“EITI is a unique opportunity for the extractives

industry… MEHL will cooperate with whatever EITI

requires. Working with other companies, we’ll

comply with Myanmar EITI and with higher EITI

authorities.”182

The company representatives also made several

specific comments with regard to the MEHL jade

business. Some of these confirm statements

made by other industry sources while others

present a very different picture:

MEHL says that it is not a leading company in the jade mining business and has licences to only 150-200 acres of jade mines in Kachin State.183

But this does not tally with data from official

documents and testimony from those in the

business. Government maps designate around

300 acres as licensed to MEHL.184 This does not

include mines run under the names of joint

venture partners. One such partner estimates

MEHL’s share of Hpakant’s jade tracts to run to

1,000 acres in all.185

MEHL confirmed that it works through jointventure partners, which are said to include a number of Chinese companies.186 The partners MEHL named included the Myanmar Win Gate company owned by the family of Minister Ohn Myint and Jing Hpaw Aung, which is owned byKBZ Group.187 MEHL stated that the production split with its partners was a secret but is generally20% for the army firm and 80% for the private company.188 This contrasts with the accounts of four businessmen that have partnered with MEHL and one industry representative, who all say that MEHL takes a 40% share.189

MEHL says that it follows the rules laid down by the Ministry of Mines and that its jade mining is not regulated by the military.190 However others in the jade trade characterise the conglomerate as a thuggish entity which seizes mines and foists itself on other concessionaires with impunity, often in collaboration with ‘crony’ companies such as Tay Za’s Htoo Trading.191 In a letter to Global Witness, MEHL denied these charges.192

Another allegation made by a sometime partnerof MEHL is that the army company uses theemergency powers provision of the Myanmar Penal Code – Section 144 – to seize valuable jade land for its mining operations: “Everyone is scared of Section 144, even children. 144 means they’ll shoot us if we go there. If they have 144, they can do what they like.”193 One Myanmar Gems Enterprise map reviewed by Global Witness marks an area near San Hkar village bordering a MEHL mining concession as a Section 144 zone, but it is not clear whether it is being mined or not.194 In response to this accusation, MEHL says that “MEHL does not have the authority to enact Section 144. Only the Ministry of Home Affairs has the authority to enact and announce Section 144 in accordance with procedures.”195

The head of MEHL’s Myanmar Imperial Jade subsidiary, Colonel Khin Maung Latt, describes it as a management company and explained that MEHL relies on its partners to carry out theactual mining operations.196 This fits with theaccounts from a firm that has previously partnered


with MEHL. This partner describes how the army firm appoints a military officer, usually a retired major, as its representative at mine sites in which it has a stake.197 Companies are said to regard the officers as a nuisance because they have limited knowledge of jade or how to run a business but insist on giving the orders.198 In one case this interference is reported to have been so extreme that the MEHL partner asked the Ministry of Mines to cancel its mining licence.199 Others in the business similarly complain that MEHL’s parasitic behaviour stops its partners turning a profit.200

Some evidently see MEHL staff’s ignorance as an advantage however. One jade businessman noted that partner companies could just show the military officers “something green” as evidence of their mining production and smuggle the rest of the jade out under their noses.201 Another stated that whenever companies found valuable jade they would simply bribe the MEHL representative not to enter it in their stock records.202 In a letter to Global Witness, MEHL stated that “We have been instructed not to accept any bribes or engage in any bribery... We also impose very strict policies on all our employees with regard to such actions. Any employee found to be engaged in bribery will be subject to penalties or legal proceedings.”203

Pension fund or war chest?

At the 2014 Myanmar Gems Emporium MEHL’s Myanmar Imperial Jade subsidiary recorded the second highest sales figures of any company, with private and joint venture lots together totalling almost US$150 million.204 MEHL representatives bristle at the suggestion that their ventures pay for defence procurement and insist that revenues are spent only on the welfare of soldiers’ families and national development.205 But both MEHL and sister company MEC have their work cut out to persuade the public that they are something other than “an immense slush fund on behalf of military leadership” or, worse still, one of the major cogs in the Tatmadaw’s war machine in Kachin State.206

In this regard, MEHL’s support for EITI is a good start and provides the company with a platform

for publicly disclosing such data as its licences, ownership of extractive companies, includingsubsidiaries and joint ventures, contracts, payments to the government and shares of production and other revenues collected in kind. Ultimately what is required, however, is for the Nay Pyi Tawgovernment and legislators to draw a line under the era of the military conglomerate by passinglegislation that prohibits the military, police and other security services, and their individual serving officers, from establishing, operating, or exercising beneficial ownership over companies.

What do the army companies do with the jade revenues they receive? MEHL disputes allegations that it is a slush fund for the Myanmar army, insisting that its jade money is spent instead on the welfare of soldiers’ families and national development. Full transparency is essential to put the rumours to rest and address public fears about where the jade money is going.

An allegation made against Myanmar army company MEHL is that it uses the emergency powers provisions of the Penal Code to take control of areas of Hpakant, and keep others out. CREDIT: Minzayar


Crony companies

The military are not the only ones who benefit from Myanmar’s vast jade trade at the expense of ordinary people and the environment. A number of major jade companies are owned by or otherwise associated with ‘crony’ tycoons with connections to the pre-2011 military junta. Again, this posesa serious potential obstacle to reform andunderscores the need to bring greatertransparency to the jade sector, particularlyregarding companies’ ultimate beneficialownership, as quickly as possible.

1. Ever Winner

Ever Winner is one of the most powerful clusters of jade companies and its role exemplifies many of the most troubling aspects of the business. The group’s origins, ownership, and operations are obscure. It controls and benefits from some of Kachin State’s most valuable assets and yet membersof the public – whether Kachin or Myanmar – have no access to information about what it is taking from Hpakant, or where the money goes.

Ever Winner has close connections with politically influential tycoons, notably Aung Ko Win, the head

of KBZ Group of Companies, and media mogul Kyaw Win, the owner of the Shwe Than Lwincompanies. The relationship between KBZ and Ever Winner is described in more detail in the next section. A further hint of high level connections comes in the form of the Buddha statue made from Ever Winner jade which President Thein Sein presented to a pagoda in China in June 2014.207

In 2014 companies that Global Witness believes to be members of the Ever Winner group together with partner firms recorded pre-tax sales of over US$190 million at the Myanmar Gems Emporium. In 2013 the group and its partners postedcombined pre-tax sales of over US$120 million.208

The Ever Winner web

Ever Winner has been a major force in the jade business for at least a decade. The big boss is Aike Htwe, also known by the Chinese name Zhang Yingchun. At least two of his five daughters are also involved in the business.209 Aike Htwe’s key lieutenants are Dr Tun Kyi, who is said to be his brother-in-law, and Dr Saw Lin, who is also reported by some sources to be a relative bymarriage.210 These two men manage a range of associated jade mining ventures for the EverWinner group, as described in the chart over-page.211

In June 2014, President Thein Sein presented this Buddha statue made from Ever Winner jade to a pagoda in China. This hints at the high level connections those behind the EverWinner group may have, and underlines the need for greater transparency regarding who these individuals are.


One of the sites mined for jade by Ever Winner, near Nam Maw, Hpakant. The Ever Winner group is one of the most powerful players in thebusiness, and is connected to politically influential tycoons; yet the group’s origins, ownership and operations remain obscure. CREDIT: Minzayar


Connections between Myanmar’s biggest jade business and its biggest bank: the Ever Winner group and KBZ

MYITSONE AYAR GEMS

YADANAR SIN THIRI TRADING

YADANAR PYI PHYO

AUNG GEMS

KHINE MYANMAR

GEMS

ARSINTERNA-

TIONAL

KAUNGMYAT

THUKHA

THAN LWIN AYEYAR

GEMS

LINN LETT WIN

YADANAR GEMS

SHWETHAN LWIN

GROUP

PHO THAR HTOO GEMS

DIRECTOR

DIRECTOR

DIRECTOR

SHAREHOLDERDIRECTOR

SELL JADE

TOGETHER

SHARE ADDRESS

MAIN JADE

BUSINESS

MANAGERSCHAIRMAN

BROTHERS

IN-LAW

DIRECTOR

DIRECTOR

DIRECTOR

DIRECTOR

DIRECTOR

DIRECTOR

CLOSE FRIENDS

DIRECTOR

INVESTOR

SISTERS ?FATHER

FATHER

CHAIRMAN

SUBSIDIARY

DIRECTOR

DIRECTOR

PARTNERS IN

JADE

BUSINESS

MANAGES

TRADING ARM

FORMER

DIRECTOR

DIRECTOR

CHAIRMAN

SHARE ADDRESS

SHARE ADDRESS

(SPOUSE?)

SHARE ADDRESS

(SPOUSE?)

DIRECTOR

OPERATES

PROVIDED

START-UP

CAPITAL

DIRECTOR

OF TRADING

ARM

FORMER

RUBY MINES

MANAGER

YADANAR SHWE YI

WIN GEMS

BAYANI GEMS

Yin Yin Aye

Ei Ei Htwe

Aung Ko Win

Aike Htwe a.k.aZhang Yingchun

JING HPAW AUNG JADE

EVERWINNER

GEMS

Wai Wai Htwe

At the 2014 Myanmar Gems Emporium the Ever Winner group of jade companies and its partners recorded

combined pre-tax sales of over US$190 million. At the 2013 Emporium the total stood at over US$120 million.

NOTE: Directorships reflect listings in the DICA company registry as ofOctober 2015. More complete DICA records from October 2014 indicate that

directors are also shareholders.

Kyi Kyi Htwe

Kyi Kyi Aye

Kyaw Win

Dr Saw Lin Dr Tun Kyi

(Satellite TV)

(Subject to USsanctions)

MYANMA ECONOMICHOLDINGS LIMITED


Aike Htwe is described by his former employer KBZ as “the most successful jade miner in Myanmar” and by a Chinese commentator as Myanmar’s largest jade mine owner.212 Chinese media and government publications state that he is thehonorary vice-president of the Chinese Jewellery and Jade Industry Association and the Chairman of the Yunnan Chamber of Commerce in Yangon.213

Like several other big jade mining firms, Ever Winner is in fact a web of companies which have different names but are known to people in the business and residents of Hpakant as part of the same entity.214 The use of a range of names may be an attempt to disguise the scale of the Ever Winner group’s dominance of the jade business and its ultimate beneficial ownership. Company registry records that show overlapping directorships and shareholdings, as well as governmentdocuments and testimony from jade businessmen and local residents, suggest that there are at least a dozen Ever Winner companies active in Hpakant or in selling jade.215

In a letter to Global Witness, Aike Htwe’s daughter Ei Ei Htwe stated that she was a director of Yadanar Shwe Yi Win Gems and not a director of Ever Winner. However, she did give answers to questions aboutEver Winner and she denied that it is a group of companies. She added that “My family members have invested in Yadanar Pyi Phyo Aung Gems and Bayani Gems along with other business investors. However, these companies have differentmanagement teams with different shareholders and they are not under Ever Winner. The rest of the companies that are mentioned in the letter [the eight firms indicated in the bottom row of the Ever Winner chart] are not related to Ever Winner.”216

In legal terms, this may be correct: Ever Winner is not incorporated as a group, neither does it have formally listed subsidiaries. However, in practice it does appear to operate as an association of inter-related firms.

The Ever Winner group’s fatal footprint

Like the Than Shwe family-run Kyaing International, Ever Winner’s imprint on Hpakant is now soindelible that it has a flooded mine crater – Ever Lake – named after it.217 The group is one of a small number of jade mining ventures that have recently deployed exceptionally large Komatsu PC2000 backhoe diggers to accelerate their jade production. According to one machinery supplier, Ever Winner has recently purchased 40 such machines, each weighing around 200 tonnes and priced at US$2 million apiece.218

Dr Tun Kyi is reported to be the brother-in-law of Ever Winner boss Aike Htwe, and is a manager for the Ever Winner Trading company. He is the director of three firms that are part of the Ever Winner jade mining group: Lin Lett Win Yadanar, Pho Thar Htoo Gems and Kaung Myat Thukha, and is a shareholder in a fourth – ARS International.

‘Ever Lake’ in Seng Ja Bum Village, Hpakant; so-called because it was formed from a crater caused by the EverWinner company’s past miningoperations. Now it serves as a dumping ground for mining companies looking to dispose of waste from their operations and locals fear the lake may overflow and cause flooding.CREDIT: Minzayar


The Ever Winner companies have a poor safety record when it comes to disposing of the waste from their mining operations. Yadanar Sin Thiri, managed by Dr Saw Lin, was one of three firms that were using a tailings dump in the Maw Mau Bum area which collapsed in early January 2015, killing a number of jade hand-pickers.219 In March, a machine owned by another Ever Winner group company, Lin Lett Win Yadanar, which is run by Dr Tun Kyi, killed a jade hand picker at a tailings dump near Lone Khin. The victim’s family claim that the company refused their requests forcompensation.220

2. KBZ Group

Kanbawza, or KBZ Group, owned by tycoon Aung Ko Win and his family, is one of Myanmar’s biggestcompanies and includes the country’s largest bank. KBZ has a dedicated jade mining subsidiary, but in meetings and correspondence with Global Witness has stressed that it plays only a small part in the industry.

According to a leading economic analyst, KBZ’s bank is now around three times larger than its

nearest private sector rival. What is it doing that its competitors are not? Does jade provide part of the answer and, if so, where and whom is it coming from?221

Competing histories

KBZ has won a range of awards, internationally as well as in Myanmar.222 It tops the Ministry of Finance’s list of Income Tax-paying companies for the financial year 2013-2014.223 It also came out top in a 2014 survey of leading Myanmar companies’levels of transparency by the Myanmar Centre for Responsible Business and third in the equivalent index in 2015.224 Its code of conduct contains an anti-corruption policy.225 Unusually for a Myanmar company, it has a statement about its beneficial ownership on its website.226

While the company’s commitment to greater transparency is laudable, its relationship with the jade business remains opaque. In meetings and correspondence with Global Witness, KBZ has downplayed its role. Company representatives say that KBZ mined jade at the Hpakant Gyi (#2) mine in Hpakant from 2000-2003 but then stoppedbecause of risks of environmental damage and civil unrest.227 They add that they then switched

The accessories of a small-scale miner named Zaw Win Maung who died in March this year, leaving behind a wife and five-year-old son, after being hit by a backhoe digger at a waste dump being used by the Ever Winner-associated company Lin Lett Win Yadanar. The miner’s family says that the company has not taken any responsibility for his death and has refused requests for compensation. CREDIT: Minzayar

Kanbawza or KBZ Group is one of Myanmar’s largest businesses and by far the largest bank. Has jade helped KBZ head Aung Ko Win outgrow his rivals? KBZ claims it has not been involved in jade mining in Hpakant since 2003, but a range of sources tell a different story. CREDIT: Minzayar


their attention to Hkamti, a deposit in Sagaing Division that is generally considered far less productive than Hpakant.228 KBZ says that the only jade it now trades is from its two Hkamti mines and that it has no activities in Hpakant.229

Other sources suggest a rather different chronologyand level of involvement in Hpakant, however. A2008 US Embassy cable, which reported on a meeting with Aung Ko Win, describes him as “owner of several jade and gem mines in Mong Hsu [a ruby mining site in Shan State] and Hpakant”.230

Meanwhile, a KBZ 2011 brochure states that the company mines jade in Hpakant, as well as Hkamti.231 It reinforces the point with a set of jade mining photos that all depict Hpakant and adds that “Sales of Jades and Gems for KBZ Group [are] US$40-50 million each emporium; apart from record sales.”232 KBZ has decorated its bank branches with similar photos of jade mining operations in Hpakant, many of which were taken some years after it says it left the area.233

According to a consultant to the company andalso a senior jade industry figure, KBZ did this todemonstrate that its capital came from jade rather than drugs.234

KBZ told Global Witness that it has not been involved in mining jade in Hpakant since 2003, instead operating two mines in Hkamti, Sagaing Division – an area considered much less productive than Hpakant. This seems inconsistent with a presentation given by KBZ itself in 2011 which indicates that, at that time, the group was still active in Hpakant and making sales worthUS$40-50 million at each jade and gems emporium.

The 2011 presentation shows a series of images of large-scale jade mining operations – all of them taken in Hpakant…

pictures of jade lots sold for massive amounts in different emporiums, including these three stones which sold for over 33 million euros in 2011…

and this picture of KBZ Chairman Aung Ko Win showing a large piece of jade to Myanmar President Thein Sein.


KBZ and Ever Winner – just good friends?

“KBZ is transparent in its dealings with all stakeholders”

KBZ Code of Conduct235

According to a well-placed source in the jade business, KBZ boss Aung Ko Win has a longassociation with Ever Winner supremo Aike Htwe and has partnered with him in the jade business.236 For its part, KBZ has told Global Witness that the company provided the start-up capital for Ever Winner, that Aike Htwe is a former ruby mines manager for KBZ and that he is a close friend of Aung Ko Win.237 According to one of KBZ’s business partners, the two men also have a familialconnection: Aung Ko Win’s nephew is the husband of Aike Htwe’s daughter Wai Wai Htwe.238 KBZ denies this, however.

KBZ also denies that Aung Ko Win is a beneficial owner of Ever Winner but confirms what company records show: that Aike Htwe’s daughters are directors and shareholders of its new insurance company, IKBZ.239 IKBZ’s other directors and shareholders are Aung Ko Win, his wife and their two daughters.240 KBZ says that Aike Htwe is not a beneficial owner of the insurer.241 However Aike Htwe’s daughter informed Global Witness that he is, in fact, an investor in IKBZ.242

What to make of all this? If Aike Htwe is a hidden owner of IKBZ, might Aung Ko Win in turn be a hidden owner of Ever Winner, or at least a partner in its astonishingly lucrative jade business? KBZ denies this.243 But these rebuttals would carry more weight if both KBZ and Ever Winnerpublished evidence of the beneficial ownership of each of their jade mining operations and of their relationship with one another.

KBZ’s camouflaged partnership with the Myanmar army

KBZ has told Global Witness that it has “has never entered into business of any nature with MEHL and has no intention to do so.”244 However, data from the June 2014 Myanmar Gems Emporiumrecords that KBZ jade mining subsidiary Jing Hpaw Aung racked up US$24 million in pre-tax jade sales and that all of these were made in partnership with Myanmar Imperial Jade Co. Ltd, which is a subsidiary of Myanma Economic Holdings Limited.245 In a letter to Global Witness, MEHL confirmed that Jing Hpaw Aung is itspartner in the jade business.246

KBZ’s mining assessment plan and the need to go further and faster

KBZ’s advisors shared with Global Witness an outline of a proposed internal assessment of KBZ’s mining portfolio. Encouragingly, thissuggests that the company may, in the future, disclose information about mine locations, mining activities and ownership share, as well as land acquisition.247

Global Witness believes that if KBZ wants to live up to its rhetoric on transparency it needs to go much further and faster, however. In meetings with top KBZ managers and also in writing, we have suggested that the Group makes an immediate disclosure of data covered by the EITI standard such as:

• location, type and duration of the jade mining licences KBZ holds;

• the beneficial owners of KBZ’s jade mineventures and their level of ownership;

• payments to the government over the past year, regarding each KBZ jade mining concession;

• total production volumes and the value ofproduction from each of KBZ’s jade mines;

• details of the contracts between KBZ and the government to mine jade; and

• arrangements KBZ has with state-ownedenterprises such as Myanmar Gems Enterprise and MEHL.


3. Asiaworld

Asiaworld, another of Myanmar’s largest companies, was established by Kokang drug lord Lo Hsing-Hanand his son, Steven Law, who currently runs the business and is on the US sanctions list.248 Asiaworld is widely reported to have had close relations with senior State Peace and Development Council (SPDC) generals, including Than Shwe, his number two Maung Aye and Tin Aung Myint Oo, who later served as vice president in thepost-2011 Thein Sein government.249

In Kachin State, Asiaworld is best known for its role as a partner in the controversial Myitsone Dam hydropower project which President Thein Sein suspended in 2011.250 However, recentresearch by Global Witness shows it also operates a major jade mining company in Hpakant called Yadanar Taung Tann Gems which, according to official figures, notched up pre-tax jade sales of US$27 million in 2014 and US$21 million the previous year.251

Mr Asiaworld’s jade mines

During a review of company records retrieved in October 2014, Global Witness noticed that Steven Law – under his Burmese and Chinese names Htun Myint Naing and Lo Ping Zhong – was listed as managing director and shareholder of Yadanar Taung Tann, alongside another director named ‘Mr Asiaworld’.252 In February 2015 we wrote to Steven Law, to request a meeting about the potential for making the jade business more transparent through EITI. Mr Law did not reply and, as ofSeptember 2015, the names Htun Myint Naingand Lo Ping Zhong had been removed from the company registry entry for Yadanar Taung Tann.253

It was in the guise of Lo Ping Zhong of Yadanar Taung Tann Gems, however, that Steven Law gained entry to Canada as part of a Burmese government trade delegation in June 2014.254 A Canadian government spokesman subsequently

commented that “Canadian immigration officials failed to do their job properly screening thisindividual under our immigration laws”.255

Yadanar Taung Tann has a large jade mine at Met Lin Chaung (#2), west of Hpakant Town.256 Two well-informed sources told Global Witness that the company also has jade mines in the Gwi Hka area south of Hpakant.257 Official maps lend weight to this claim, showing that Gwi Hka Joint Venture (#7) is held by Dagon Yadanar Gems Co. Ltd, a firm controlled by two of Yadanar Taung Tann’s directors.258 One of these two directors, Law Sni Chant, has a six digit NRC number that is the same as Steven Law’s aside from the final two numbers.259 The similarities in name and NRC number could indicate a familial relationship; however Steven Law declined to respond to written questions on this and other aspects of his jade business.

Steven Law, the son of Kokang drug lord Lo Hsing-Han, currently runs one of Myanmar’s largest conglomerates, Asiaworld, and controls jade mines through the Yadanar Taung Tann Gems company. He is on the US sanctions list and Asiaworld is widely reported to have had close relationships with senior figures from the military junta, including former dictator Than Shwe, his number two Maung Aye and Tin Aung Myint Oo, who later became vice president.


An unholy trinity

An associate of Lo Hsing-Han told Global Witness that Steven Law originally obtained Yadanar Taung Tann’s Gwi Hka mines through a partnership with army firm Myanma Economic Holdings Limited and that this brought the company into conflict with the KIA/KIO, which has historically regarded Gwi Hka as its sphere of influence.260 The dispute was resolved via a meeting at the KIA/KIO HQ in Laiza between Steven Law and KIA General N’ban La. Steven Law offered to involve the KIA/KIO in Asiaworld’s jade mining ventures and N’ban La accepted, although whether he did so on behalf of the KIA/KIO or in a personal capacity is unclear.261 The General did not respond to a request forcomment on this point.

Either way the outcome appears to have been a three way partnership between a Myanmar army company, a ‘crony’ firm likely founded on drug money and a leader of the KIA/KIO. This illustrates well how battlefield enemies have found common cause in exploiting Kachin State’s jade.

4. Htoo Group – an unlikelytransparency trailblazer?

Another noteworthy crony business with a hefty stake in jade is the Htoo Group, which recorded pre-tax sales of US$13 million at the 2014Myanmar Gems Emporium.262

Htoo Group’s colourful boss, Tay Za, has been trying to shake the label of Myanmar’s ‘number one crony businessman’ for years.263 Subject to international financial sanctions since 2004,he has been described by the United Statesgovernment as “an arms dealer and financial henchman of Burma’s repressive junta”, whose Htoo Group ”carries out key projects on behalf of the Burmese junta, including the purchase of military equipment and aircraft for the Burmese military”.264 Links to military and ruling partyfigures have also been cited as a basis for sanctions, including his business association with Aung Thet Mann, son of Thura Shwe Mann, the third highest ranking figure in the former military government and current Speaker of Parliament.265

KIA/KIO General N’ban La became involved in Yadanar Taung Tann’s Gwi Hka jade mines as part of a deal made with Asiaworld boss Steven Law. The nature of this agreement and the question of whether General N’ban La took a stake in these ventures, either in a personal capacity or on behalf of the KIA/KIO, remains unclear. Global Witness’ efforts to obtain a comment from the General on this point have so far been unsuccessful.

‘Number one crony’ Tay Za built his business empire through connections with the military junta, and has been subject to US sanctions for years. He is said to have a personal penchant for jade and, until last year, he chaired the Myanmar Gems and Jewellery Entrepreneurs Association.


Despite attempts by Tay Za’s circle to refutethe claims against him and the Htoo Group, the sanctions remain in place.266 He is now said to be suffering financially, and there are rumours that he has been selling off jade business ventures to “Wa companies” (Wa involvement in jade is the subject of the next section).267 Company represen-tatives have denied that there have been any such sell-offs, however.268

Htoo Group’s jade mining activities have attracted a good deal of criticism from others in thebusiness and people living in Hpakant. Thecompany is accused of tipping off MEHL when other concessionaires discovered valuable jade deposits; thereby paving the way for the army company to muscle in on the mines.269 Locals also describe how Htoo relocated the village of Tawng Kaw so that it could slice in half the hill it was perched on and access the jade within. The remodelled hill is now known locally as “Htoo Kabar” (Htoo Cliff).270 Global Witness has put these allegations to Htoo Group but has notreceived a response.

Now, however, the Htoo Group has pledged to support reforms of the jade sector. To demonstrate its commitment to the EITI, the conglomerate provided Global Witness with details of its jade joint ventures, mine locations and 2014 sales and tax payments, broken down by project.271 This sets an important precedent for other players in the country’s most opaque sector and shows that concerns that leading jade companies cannot or will not comply with EITI standards are misplaced.

Ceasefire Groups

Following decades of armed opposition from Myanmar’s many ethnic minority groups, themilitary government negotiated a series ofceasefires from 1989 to 1995. The so-called ‘ceasefire groups’ were rewarded with access to valuable business opportunities including jade concessions in Kachin State.272 Two of these are particularly significant to efforts to reform the jade business: the United Wa State Army / United Wa State Party and the Pa-O National Organisation.

1. United Wa State Army / United Wa State Party

The United Wa State Army (UWSA) / United Wa State Party (UWSP) have been heavyweights in the jade business since the early 1990s. Evidence gathered by Global Witness suggests that theultimate boss of the Wa-associated jade companiesthat now operate in Hpakant is drug lord Wei Hsueh Kang, the former financial affairs chief for the UWSA/UWSP. The US government has offered a reward of up to US$2 million for information leading to his arrest or conviction and imposed sanctions on him, his associates and his companies.

The Htoo Group has provided to Global Witness detailed information on its jade mining operations in Hpakant, including the sales revenues generated and taxes paid in relation to each of its mines. This shows that it is perfectly possible for jade companies to disclose data, broken down by project, on their mining and trading activities. If Tay Za can do it, why not the other major players in the business? CREDIT: Htoo Group


One outstanding question is whether Wei Hsueh Kang and his associates currently control these jade ventures on behalf of the UWSA/UWSP, in an entirely personal capacity, or somewhere inbetween. This is hard to gauge, although long-time observers of Wa State suggest that its leaders still work hand in glove with Wei Hsueh Kang, even though they now seek to downplay his role within the UWSA/UWSP leadership.273

What is clear, however, is that this group of jade companies exploits the fact that it is believed to represent the UWSA/UWSP, whom neither the Tatmadaw nor the KIA/KIO wish to antagonise.274 Using the Wa name, it has mastered the mafia-style landscape of Hpakant to become exceptionally powerful.

The following is a summary of a longerbackground paper on the Wa-associated jade companies that will be published separately to this report.

Both Wei Hsueh Kang and the UWSA/UWSP are subject to US sanctions and indictments for drugs trafficking. Today, Wei Hsueh Kang is behind a web of powerful jade companies which operate in Hpakant usingthe Wa name.

Representing the Wa ethnic group, the UWSA/UWSP administers Myanmar’s largest ceasefire zone, located in Shan State on the China border. The UWSA/UWSP has been granted an unparalleled level of autonomy, and it is the largest and most well-equipped non-state armed group in Myanmar, with an estimated 20,000-30,000 regular troops and up to 50,000 reserves.


Pao Yu Hsiang(Subject to US

sanctions)

Wei Hsueh Kang(Subject to US

sanctions)

Aik Haw(Subject to US

sanctions)

MYANMAR TAKAUNG

GEMS

MSPMINING

AYEYAR YADANAR

GEMS

HONG PANGCOMPANIES

(Subject to USsanctions)

EX-HEAD OF

FINANCIAL

AFFAIRS

LEADER

UNITED WA STATEARMY/PARTY

(Ethnic armed group)

KACHIN INDEPENDENCEARMY/ORGANISATION(Ethnic armed group)

DIRECT

REPRESENTATIVE

FATHER-IN-LAW

FOUNDING

DIRECTORMANAGES

JADE MINING

OPERATIONS

DIRECTOR

BENEFICIAL OWNER

MANAGING DIRECTOR

BENEFICIAL OWNER

MANAGING

DIRECTOR

FORMER MANAGER

MANAGING

DIRECTOR

DIRECTOR

DIRECTOR

MYANMAR

DEALERSHIP

SHARE COMMON

DIRECTOR

INVITED TO VISIT FACILITIES IN:

AUSTRALIA / GERMANY /

SPAIN / UK / FRANCE

These five companies collectively control over 50 jade mines.

Their combined pre-tax sales across the 2013 and 2014 Myanmar Gems Emporiums topped US$100 million, according to official figures. This does not include the much larger amounts they are alleged to have smuggled.

Narcotics kingpin Wei Hsueh Kang’s jade business network

REPRESENTATIVE

DIRECTORDIRECTOR

DIRECTOR

BUSINESS

PARTNERS

COLLECTS TAXES

FROM JADE

COMPANIES FOR

BROTHER

WORKS FOR

RUN COMPANIES

REGISTERED TO

SAME ADDRESS

YAR ZAHTAR NE

GEMSAPHO TAN SAN CHAIN HMI

(registered as Value Standard

General Trading)

THAW TAR WIN GEMS

Sai Philip Yee

REPRESENTATIVE

REPRESENTATIVE

DIRECTOR

Li Myint(Subject to US

sanctions)

Khin Maung MyintYan Aung Win Zaw Bo Khant

NOTE: Directorships reflect listings in the DICA company registry as of October 2015. More complete DICA records

from October 2014 indicate that directors are alsoshareholders. According to one Hong Pang group

director, the Hong Pang companies are no longer active. They are still listed, however.


Perpetual evolution – theshape-shifting Wa-associated jadebusinesses

“If one company name is destroyed, the people behind it stay the same and

they use another name.” Jade businessman on the Wa-associated jade companies275

Originally the main UWSA/UWSP-associated company mining jade in Hpakant was Wei Hsueh Kang’s Hong Pang.276 But as US governmentpressure increased on Wei’s businesses, the Hong Pang brand was shelved.277 What happened next? Global Witness has reviewed a range of documents and gathered testimony from a wide range of well-informed sources that lead us to the following conclusions:278

• Hong Pang’s jade business has effectively morphed into jade mining operations in Hpakantrun by the company Myanmar Takaung inconjunction with four other licensed mining firms: Ayeyar Yadanar, Yar Za Htar Ne,Thaw Tar Win and Apho Tan San Chain Hmi(registered under its English name Value Standard). Listed or former Hong Pangdirectors and managers are instrumentalin the running of all five companies.279

• These five companies carry out jade mining operations together and can be regarded as part of the same business group.280

• Wei Hsueh Kang is a beneficial owner of the jade mining ventures of the five companies and exercises ultimate control over them.281

• This group of five companies may represent the business interests of the UWSA/UWSP.282

Below Wei Hsueh Kang, the key players overseeing this group of jade mining companies are Aik Haw, the son-in-law of UWSA/UWSP supremo Pao Yu Hsiang, Zaw Bo Khant, a director or representative of all five firms, and Li Myint.283 All three previously worked with the Hong Pang Group.284 Aik Haw and Li Myint are subject to US sanctions for narcotics-related business activities.285

An expanding share of the pie

“We can take all the jade fromHpakant within three years.” Myanmar Takaung company representative286

An official document seen by Global Witness details 49 mines controlled by Myanmar Takaung and its associated companies.287 But we have gathered additional information that suggests this tally is too low, as the UWSA/UWSP-associatedcompanies have moved into other mines, including at least one licensed to Tay Za’s Htoo Group.288

Alongside the expansion of their portfolio of jade mines, the top dog status of the UWSA/UWSP-associated companies is visibly reflected in their fleet of 40 giant Komatsu PC2000 backhoe diggers, which cost US$80 million and matches that of Ever Winner.289 These machines are described by one jade businessman as looking “like a two storey building”.290

While the UWSA/UWSP-associated companies have spent heavily on machinery for digging jade, they do not appear to have invested in systems to dispose of the tailings safely. Twice in March 2015,

Dump trucks from the Myanmar Takaung company in Gwi Hka, Hpakant,tipping waste which jade hand pickers then search through. Myanmar Takaung and its associated companies have become very powerful players in Hpakant; controlling at least 50 mines. CREDIT: Minzayar


a 500 foot high tailings dump built up by Yar Za Htar Ne and the Aung Hein Min company in the Sik Mu / Seng Tawng area collapsed. Accounts from

local residents and media suggest that dozens may have been killed.291

“A gangster group doing blackbusiness”292

“The Wa use money, power andweapons; they even kill people. Local

people cannot confront them.” Jade businessman293

Apart from the scale of their assets and operations, the main distinguishing feature of the Wa-associated companies is the way in which they are able to invoke the UWSA/UWSP name and its unique strategic position to bend other companies to their will. The tactics they are reported to use are straight out of a gangster’s playbook and include the following:

• Offering companies the protection of the UWSA/UWSP name in exchange for payment or a share of production.294 This protection option has reportedly been taken up not only by smaller firms but also big names such as Myanmar Naing Group, the firm controlled by sons of Than Shwe, and Yadanar Taung Tan, run by Asiaworld tycoon Steven Law.295

• Coercing other businesses into coming under the UWSA/UWSP umbrella by blocking road access to their mines.296

• Making threats: these include less than subtle references to how UWSA/UWSP companyrepresentatives have had people killed in the past.297

• Using law suits to harass other businesses whom they accuse of stealing their jade.298

Myanmar Takaung and its associated companies operate not only in their own mines, but also in those licensed to other companies. Here Myanmar Takaung works the Kaday (#3) mine licensed to Tay Za’s Htoo Group.

UWSA/UWSP supremo Pao Yu Hsiang. The Wa-associated jade miningcompanies in Hpakant operate like a protection racket; using the UWSA/UWSP name to bully other firms into making business deals with them.


2. Ruby Dragon

The UWSA/UWSP is the biggest but not the only ceasefire group in Hpakant. After the Pa-ONational Organisation (PNO) laid down arms in 1991, the government awarded valuable gemstone mining concessions to the Pa-O company group Ruby Dragon.299

Over the years, the Ruby Dragon Group has become a prominent player in the jade and ruby industries. In 2000, it became one of the first companies to enter into a joint venture with the Ministry of Mines to mine jade, and it subsequently hit the headlines when it discovered the world’s biggest ever jade boulder – a whopping 3,000 tonne stone which it gifted to Myanmar’s military junta.300

The group has diversified from its gemstoneorigins to a range of other sectors; from wine making and agriculture to manufacturing and hospitality, with some of its companies nowfeaturing in Myanmar’s top taxpayer lists.301

Its gemstone interests continue to provide asignificant revenue stream, however. Ruby Dragon Group companies and joint ventures recorded pre-tax jade sales in excess of US$58 million at the 2014 Myanmar Gems Emporium and US$46 million the previous year.302

Business meets politics

For the PNO, business and politics are closely linked. The Ruby Dragon Group has stated to Global Witness that “funds from [its] jade, jewellery and mining businesses [go] to the PNO anddevelopment of the [Pa-O] region”.303

The Ruby Dragon Chairman, Nay Win Tun, was formerly responsible for “special economic affairs” for the Pa-O, and in the 2010 parliamentary electionshe ran unopposed as a PNO candidate and secured a seat in the Amyotha Hluttaw (the upper house of parliament).304

Global Witness’ research indicates that theChairman of the Pa-O Self-Administered Zone, Saw Lwin, and another PNO parliamentaryrepresentative, Khin Thein Pe, also holddirectorships of various companies, in some cases alongside Nay Win Tun.305

During his parliamentary term, the Ruby Dragon chairman has taken a leading role in the ongoing revisions to the laws which govern Myanmar’s jade industry. As chair of the Amyotha Hluttaw committee on natural resources and environmentalconservation, he has had a front row seat in closed door negotiations over new mining and gemstone laws.306

Effectively, this means that a prominent industry player is involved in setting the rules which will regulate his own business. This typifies a wider problem of conflicts of interest affecting Myanmar’s legislature, which undermines the chances of it producing laws and regulations which truly serve the public interest.

The chairman of the Ruby Dragon Group, Nay Win Tun, has also headed the parliamentary committee responsible for revising Myanmar’s mining and gemstone laws. Addressing conflicts of interest of this kind is critical to building public trust in the legislature and ensuring that new laws and regulations best serve the interests of ordinary people in Myanmar.


In December 2000, the Ruby Dragon Group made the record-breaking discovery of a 3,000 tonne block of jade from its operations in the famed Nam Maw area of Hpakant.307

The find was described by the company as being “of the best imperial jade quality. A world record indeed, in size and value”.308

On 26 May 2002, the jade block was donated to the government in a formal ceremony involving Lieutenant-General Khin Nyunt, then head of the Military Intelligence Service and the primary architect of theceasefires with ethnic armed groups such as the PNO and the UWSA/UWSP.309

The speech Khin Nyunt made at the handover ceremony shows just how Kachin State’s valuable jade was used to further the Myanmar government’s political agenda:

“The Union of Myanmar is anation at which other nations are

casting a covetous eye, as it is world-famous for its inexhaustible

precious gems. When theTatmadaw started to assume

the duty of the State, it has, with the spirit of solidarity and unity,

invited in all the nationalorganisations which were

launching armed opposition against the state; as a result, 17 nationalities’ armed groups have returned to the legal fold… The

Government has… seen to it that they are able to do business.

Arrangements have been made to enable the national

organisations to do business such as gems mining. As thenational organisations have worked hard with the aim of serving the interests of the

people and the state, their business has become successful.”310

What would you do with the world’s biggest block of jade?


International companies

The “new” Myanmar is open for business. For multinational powerhouses with few fresh markets left to tap, the opportunities are obvious. But for household names with reputations to defend, there are major risks too. The dangers posed by the secrecy and abuse that currently pervades Myanmar’s jade sector are highlighted by therecent experiences of two of the US’ biggest names – Coca-Cola and Caterpillar. Their unwitting links to some of the most notorious of the companiesfeatured in this report underline the need for greater openness regarding company ownership in Myanmar and beyond.

1. The real thing – MEHL and Coke’s shared partner

When the Coca-Cola Company established itself in Myanmar in 2013, it spent “a seven figure” sum hiring prominent firms including Kroll and PWC to carry out due diligence on its prospective partner and director, Daw Shwe Cynn, the head of a Myanmar soft drinks company called Pinya Manufacturing.311

This was the right thing to do. Yet seemingly no one picked up that Daw Shwe Cynn is a 20% shareholder in Xie Family, a prominent jade mining company and long-time contractor for Myanma Economic Holdings Limited.312 She is also a director and the majority shareholder in one of Myanmar’s biggest jade trading firms, Gold Uni, which she runs with her husband U Chaow. Gold Uni company is listed on government maps as holding the jade mine Gwi Hka (#27) just south of Hpakant.313 According to Chinese media reports and industry sources, the firm was investigated by the Chinese authorities as part of a crackdown on jade smuggling in 2010-11.314

Involvement in jade should be a big red flag,given the corruption, military involvement and environmental and human rights abuses, and the fact that Myanmar jade and key players in the business, including MEHL, are still subject to US sanctions.315

Xie Family’s links to MEHL go back to 1995 when it became a primary jade mining contractor to the military firm.316 A MEHL annual report shows that by 2002 Xie Family operations accounted for 98% of jade stocks from the army company’s mines.317 The same document records Xie Family making “supervision charges” to the Tatmadaw Northern Command in Kachin State.318 An MEHL annualreport covering the year 2007-2008 lists XieFamily in a table of “MEHL-Owned Businesses”.319

MEHL’s jade division, Myanmar Imperial Jade, told Global Witness that it no longer worked with Xie Family and Daw Shwe Cynn and U Chaow said that Xie Family has not had a mining contract with MEHL since 2012.320 However, it appears that the two companies have continued trading together: Myanmar Gems Emporium figures for 2014 describe the two companies jointly selling jade worth over five million euros.321 Aside from its dealings with MEHL, official maps show that Xie Family holds a joint venture mine with Myanmar Gems Enterprise in Hpakant.322 According to U Chaow the company holds several other mining licences.323

In a letter to Global Witness, Daw Shwe Cynn said that her role in Xie Family is as a non-executive director and minority shareholder and that she is not involved in the day to day running of the company.

This stone marker on the bridge on the road to Hpakant states that the bridge was built by MEHL and Xie Family. The business relationship between the two companies dates back to 1995.


She said she acquired the 20% stake in the firm in 2009 as security against a substantial debt that Xie Family still owes to U Chaow. This relates to a loan that U Chaow extended to Xie Family for purchase of equipment in 1995 – the period when it was first incorporated and began partnering with MEHL. As regards Gold Uni, Daw Shwe Cynn wrote that the company has a licence to mine in the Maw La Kin area in a joint venture with the Ministry of Mines. She denies that Gold Uni has been investigated by the Chinese authorities.

Where does this leave Coca-Cola? Trade in jade is subject to US sanctions and so is MEHL. But joint ventures with jade company owners or MEHL contractors are not. No laws were broken; still, Coca-Cola’s indirect connection with Xie Family and MEHL puts the onus on the multinational to use its considerable influence with its partner to encourage greater accountability in the murky jade business.

Global Witness has been in discussions with Coca-Cola for several months about what steps it can take. On the back of these communications, the company published the names of the directors and shareholders of its local subsidiary, anddisclosed information on the Xie Family connection as part of the report it submitted under the US Reporting Requirements in June 2015.324

This represented a good start, but the report does not address certain critical issues. It lists the shareholders of its subsidiary in Myanmar asbeing two companies – Coca-Cola MyanmarOverseas Holding Pte. Ltd and Pinya Manufacturing– but provides no details on the identities of the beneficial owners of these firms and what their other business interests and connections are. Coca-Cola also did not report on the fact that Xie Family has had a long-standing partnership with MEHL.

Global Witness asked Coca-Cola in a letter in August this year who are the ultimate beneficial owners of Coca-Cola Myanmar Overseas HoldingPte. Ltd and Pinya Manufacturing. Coke did not answer this question.325 The company did say, however, that “The Coca-Cola Company has been transparent about our joint venture and operationsin Myanmar and we continue to go above and beyond the Department of State’s Reporting Requirements

on Responsible Investment in Burma.”326

Meanwhile, at Global Witness’ request, Coca-Cola facilitated a dialogue between Global Witness and Daw Shwe Cynn. This enabled Global Witness to put a proposal directly to Xie Family that it make early disclosures of information about its jade mining activities in line with EITI, including details of the volumes of jade it produces, its payments to the government and any arrangements with state-owned enterprises including army companies. Daw Shwe Cynn’s 20% stake in Xie Family and herhusband’s role as a key company creditor would appear to give her a strong platform for demanding the company start being more transparent.327 She stressed in her letter, however, that “my minority shareholding in Xie Family is atypical and does not allow me any influence over [its] business”.

After months of written correspondence and two face to face meetings with Daw Shwe Cynn, there is little to suggest that Xie Family is willing to edge out of the shadows and play a constructive role in reforming the jade business. The contrast between the image of positive global modernity expounded by Coca-Cola and the sordid, secretive character of the jade sector is as stark as ever. In July Coca-Cola commented that “We hope that Global Witness… is willing to play a role to work with related parties in Myanmar to bring about positive and long-lasting change in the country.”328 But how does the company see its own role?Coca-Cola has been handed the opportunity to turn a potential public relations disaster into a showcase for its commitment to responsiblebusiness practices. However its professed efforts to use its influence to push for better practicesin its partner’s jade business have yieldednothing tangible. Is the company that once exhorted the world to “make it real” hoping the issue will simply go away?329

Clearly, Coca-Cola’s fingers have been burnt, but this episode is just a symptom of a much deeper problem. The company’s experiences show why Global Witness is calling for more robust due diligence and public reporting by international companies. Likewise, investors should publish the names and identifying information of the individuals who own and control their in-country ventures, together with information on these people’s other business interests and any political or military connections.


2. Travels with my CAT, by Zaw Bo Khant

Global Witness’ investigations into the web of companies associated with drug lord Wei Hsueh Kang and the UWSA/UWSP turned up anunexpected connection in the form of USmachinery giant, Caterpillar Inc.

Zaw Bo Khant is the managing director of Myanmar Takaung, the pivot for a group of jade miningcompanies Global Witness believes to be controlled by Wei Hsueh Kang and which are profiled in the previous section of this report. He is also the director and shareholder of Myan Shwe PyiMining, whose associated company Myan Shwe Pyi Tractors describes itself as “Myanmar’spremier Caterpillar dealership” and uses the branding MSP CAT.330 Zaw Bo Khant’s brother is one of Myan Shwe Pyi’s customer service managers.331

Since 2011, Zaw Bo Khant has been hosted atCaterpillar facilities around the world, including:

Australia332

The United Kingdom334

Spain333

Germany335

France336

… And along the way, found time for sightseeing, champagne on the Eiffel Tower, Rolex shopping and several rounds of golf.337


Caterpillar Inc. has stated to Global Witness that, as far as it is aware, any business courtesies provided to Zaw Bo Khant during his visits to Caterpillar facilities are in line with the company’s Code of Conduct which prohibits bribes, kickbacks or any other measure which is unethical or which would tarnish Caterpillar’s “reputation for honesty or integrity”.338 In addition, Caterpillar Inc. has said that whilst it cannot monitor the use of every piece of its equipment around the world, it expects customers to use its products in a responsible, lawful and productive manner.339

The US giant has further explained that it primarily sells its products through independent dealers. In line with its Code of Conduct, it carries out “robust screening procedures to ensure that its transactions do not violate relevant exportcontrol laws”.340 It emphasises that neither Zaw Bo Khant nor Myanmar Takaung feature on US sanctions lists, and goes on to state that CaterpillarInc.’s due diligence has not demonstrated that companies named by Global Witness are owned or controlled by “a sanctioned party”.341

Caterpillar Inc.’s unwillingness to take theinformation provided to it by Global Witness more seriously is both disappointing and short-sighted. As explained above, there is strong evidence that Wei Hsueh Kang and his associates have used an array of front companies precisely in order to avoid US sanctions and indictments. As such, there is a good reason why the ‘public faces’ of UWSA/UWSP-linked companies will not be on current US sanctions lists. Moreover, Zaw Bo Khant’s previous role as manager for Wei Hsueh

Kang’s Hong Pang companies is well known and should be grounds enough for a responsiblecompany to make further enquiries.342

The international firms which make and supply machinery to mining operations in Hpakant risk causing serious harm to local people by building relationships with the wrong mining companies. In these circumstances, the onus is onmanufacturers to be completely transparent regarding who they are doing business with. They should be proactively seeking information on their local partners and other associates, rather than simply referencing the US sanctions list as atick-box exercise.

The US government has recognised theparticular risks facing western companies lookingto invest in Myanmar, and US companies are therefore required to publish information on their business activities and their approach to corruption, human rights, environmental and other risks.343

These requirements do not currently apply to companies which operate through, for example, independent dealerships, but Global Witness asked Caterpillar Inc. if it could produce a reportin line with the designated standards on avoluntary basis.344 Unfortunately, the companytakes the view that as “There is no current obligation for Caterpillar to file such a report… Caterpillar does not intend to file such a report.”345 This suggests that the US government will need to expand itsreporting requirements if companies like Caterpillar Inc. are to take a more responsible approach.

The big jade players are spending millionsof dollars apiece on huge machines frominternational suppliers to carry out large-scale exploitation. This highlights the globalised dimension of the jade industry, and raises questions for machine companies likeCaterpillar Inc. – do they really know who they are doing business with? CREDIT: Minzayar


CHAPTER 3: WHO’S LOSING OUT?

The impact of the jade trade’sexpansion and capture by Myanmar’s elites has been devastating for the people of Kachin State, who have been robbed of their naturalinheritance. Within the miningregion of Hpakant itself, it hascreated a dystopian wasteland in which the local population grapples with environmental and socialcollapse on a daily basis.

The consequence is a palpable sense of anger against the big companies which rake in the benefits at the expense of local people, as well as the Nay Pyi Taw authorities that license them to operate.

This in turn feeds into support for a harder line stance against the Myanmar government in the context of the armed conflict in Kachin State, an issue which is examined in the next chapter.

At the same time, many are using peaceful means to call for change. Last year just under 5,000 residents of Hpakant signed a letter to President Thein Sein setting out their concerns over the exclusion of local people from the jade business, and the irresponsible and short-term approachto mining taken by licensed companies.346 InNovember 2014, 2,000 people took to the streets to protest against the killing of a local miner by an employee of one of the big companies.347 It is now up to the government to show that it is willing to listen, and to start addressing the issues that local people are raising.

A call for change from Kachin State

In October 2014, 4,923 people in the jade mining township of Hpakant signed a letter to President Thein Sein demanding an end to the abuses by jade mining companies. The letter details devastatingenvironmental and social impacts caused by company activities:

“As part of jade mining activities in Hpakant, a limited number of capitalists have been granted permits for blocks, whereas local ethnic groups have been granted no jade blocks. Although certain companies are affiliated to ethnic groups, such affiliation is in title only and these companies are dominated by foreign nationals.”

“The mining companies are dynamiting the hills and mountains to allow exploration activities prior to the expiry of their contracts, and they are acting solely for their own benefit in the excavation of valuable jade via short-term rather than long-term processes. This poses a serious potential health hazard to residents, and causes a wide range of diseases or fatalities.”

“Companies do not systematically stabilise sites where they have undertaken deep excavations and created reservoirs. As a result, heavy rains cause reservoirs to burst, and reservoirs are also sometimes destroyedintentionally, leading to the death of cattle and loss of property. However, the companies never take responsibility for such incidents.”

“The huge vehicles used by the companies have left the streets congested, and accidents are frequent.”

“Although valuable resources, priceless gems, forests, and gold are all vanishing due to excavations bycompanies equipped with machinery, the public does not benefit from these activities. Conversely, people are suffering as a result of health hazards and are even dying due to the air pollution created by the dynamite mining of the companies.”

“Issuing grants to these companies to work on blocks will lead to a rapid decline in the state of local residents’ properties as well as the region’s valuable jade, leading to serious repercussions for the next generation.”


“The tree is in our garden but we are not allowed to eat the fruit”Jade businessman348

In November 2014 around 2,000 miners and local inhabitants of Hpakant took to the streets to signal their opposition to the way the jade business is currently managed. CREDIT: KDNG


Kachin’s stolen inheritance

Discuss jade with a Kachin and they invariably hark back to the old days, when families could draw on Hpakant’s natural riches to build homes and make their livelihoods. However, since the military junta parcelled the jade mines out inthe early 1990s, the industry has gone from asmall-scale business in which many local minerscould participate to one run by government-approved companies who are often backed up by military force.349 In the words of one church leader, “The native people are voiceless. After the ceasefires, companies were brought in by the authorities but they showed no respect for local people’s rights”.350

The few Kachin companies licensed to mine jade compete against bigger players, described by one former jade trader as having “deep pockets and

lots of power”.351 Some smaller-scale Kachinminers have become “workers on their own land”; but in fact many licensed companies prefer to employ workers from other states and divisions, leading many locals to move to other regions or even overseas to look for work.352

Government regulations restricting transportation routes and cutting and polishing activities mean that the mere possession of valuable jade by people in Kachin State is, in most cases, a criminalact.353 This gives rise to the perception that “the government doesn’t want Kachin people to become rich; Kachins are discriminated against when it comes to the jade trade”.354 In June2014, following intensive lobbying by local jade businessmen, a market for jade and amber was formally opened in Myitkyina.355 While a step in the right direction, the market is only allowed to sell the lowest grade jade, and handling and trade of raw commercial or imperial grade jade in Kachin State remains illegal.

Today, ethnic Kachin are largely left out in the cold whilst jade concessions go to “big companies… controlled by lowlanders, not locals… which represent the military, cronies and elite groups…” The Kachin who remain in the business are largely relegated to digging through the waste left by licensed mining companies. CREDIT: Minzayar


These grievances have been compounded by the massive upswing in jade extraction by licensed companies over the past year. Fears are now

widespread that with “jade mountains going day by day” soon “all the jade will be gone”, leaving nothing for future generations of Kachin State.359

On the massive revenues from jade, the big questionsare “where is Kachin’s share?”, and “where is the money really going?”. One community leader explained that “… now there is no transparency,

there is no discussion about jade and about sharing resources. We need transparency and therefore trust between Kachin State and the centralgovernment.”356

A jade miner on his way to a mining site in Hpakant. As one Kachin community leader explained, after the ‘big companies’ arrived, most local people lost their jobs in the mining business: “Young people cannot make any money from mining, so there is a kind of ‘brain drain’. They go to other states and divisions or even overseas to find work. So there is a waste not only of natural resources but of human resources too.” CREDIT: Minzayar

“Fair and unfair – forget about it! As long as this policy of 50 years stands, how can we talk about fair?”

Kachin businessman357

“Now there is no transparency, there is no discussion about jade andsharing resources. We need transparency and therefore trust between Kachin

State and the central government.” Kachin community leader358


A small-scale miner inspects a stone he has found in a waste dump, whilst large-scale mining operations continue behind him. With licensed companies bringing in bigger machines than ever before, locals fear that Hpakant, for centuries the world’s most important source of high value jade, will soon be empty of the stone. CREDIT: Minzayar

A truck stuck on the muddy road to Hpakant, waiting to be dragged out by elephants. As a Kachin community leader explained: “Huge amounts of precious jade have been mined in Hpakant over decades and yet in Kachin State there are insufficient schools and supply of electricity, and the roads are in very poor condition.” CREDIT: Minzayar


The environmental and social collapse of Hpakant

The concentration of vast natural wealth and militarisation in a remote place has condemned Hpakant to become Myanmar’s answer to the old Wild West – a place where those with money and guns have total impunity and display minimal respect for the local environment and culture. The impacts have been catastrophic for the people who inhabit the area.360

One small-scale miner, an ethnic Shan who movedinto the area at a young age, described the changeshe had seen to Hpakant’s environment:

“I came 40 years ago. At that time Hpakant was like a jungle, with forest everywhere. Now the environment around Hpakant has changed. 40 years ago the water

in the river was very clean. There were even tigers living there. That time was the BSPP [Burma Socialist Programme Party / Ne Win dictatorship] era. People did not find it easy to dig jade. Now the rivers become dry, the forests are felled, the tigers have gone… Now jade mountains disappear within just a few days… Now no more malaria here, because all the forests have gone!”361

A former jade miner gave another account of the changes wrought by industrial scale mining:

“When I worked in the jade mines, the Uru River was clean and clear. You could drink the water. Now that is no longer possible. The streams that feed the Uru River now only flow during the rainy season. This is because the tailings from the jade mines now block their natural course. In the old days, the KIOcontrolled a landscape of mountainous forests, but now there is no forest. Mountains have becomevalleys and valleys have become mountains.”362

The jade business is a fundamental part of life in Kachin State. The hero of this Kachin film, entitled ‘Seng Htu Brang and Ja Hnang Shayi’ (in English: ‘The Jade Mining Boy and the High Class Girl’) is a young jade miner who risks the perils of police and landslides to make his living from the famed stone.

Frantic jade extraction has destroyed Hpakant’senvironment, turning its mountains into craters,polluting its lakes and streams, felling its forests and – as shown in this picture taken in 2014 – causing flooding.


Untrammelled jade exploitation has turned Hpakant into a moonscape, with mining bringing down “jade mountains”, leaving behind water-filled craters and causing widespread flooding and pollution.363 In recent months there have been a series of fatal accidents resulting from the common company practice of dumping huge quantities of waste into lakes and streams or in massive mounds which are prone to collapse. One 28-year-old teacher living in a village near the Maw Sizar mine described how a landslide caused his house to fall into a mine. He managed to escape, but the school in which he works is very close to a mining area and so very dangerous for the children.364

In April 2015 the Kaday (#2) mine operated by Myat Yamon – a company controlled by former USDP General Secretary Maung Maung Theinand profiled in Chapter 2 – was the scene of a particularly deadly accident. A film of the incident shows a torrent of liquid mud cascading over the edge of the crater where the company’s staff were operating, engulfing the machines and their operators in its path.365

According to local residents the company claimed that 11 people died but the real total was between30 and 60. They added that the disaster was caused by Myat Yamon’s dumping of tailings on a bed of liquid mud above the mine. The waste then shifted and flooded into the crater.366 To the best of Global Witness’ knowledge no judicial measures have been taken to hold the company accountable for the accident.

Landslides are not the only impact of reckless company activities. In March 2015, KDNGrecorded just a few of the accidents caused by the vehicles brought into Hpakant by licensedcompanies. These included: a dump truck hittingpeople washing at a river crossing and killing a 22-year-old and a 13-year-old; another dump truck hitting a small vehicle, causing one of its passengers to fall out and be run over by the next truck in the convoy; and another brake failure incident, causing a truck to seriously injure a38-year old-woman.367

Local people report that companies’ use of explosives is forcing them to leave their homes

and they blame the blasting for “chickens no longer laying eggs”.368 The wholesale stripping of the Hpakant region’s forests is said to have made the “environment more dry than before”.369 Traditional livelihoods of farming and mining have been disrupted by the loss of land, pollution and the takeover of the jade industry by government-licensed companies.370 A single mother of three children who has lived in the Maw Sizar area since 1991 described the impact of the operations of Kyaing International, a mining company owned by the family of former military dictator Than Shwe:

“Up until around 2005 I had good opportunities to make a living for my family through small-scale jade trading. When the company arrived, however, I was told I must leave the house and accept one million kyats compensation. I did not wish to accept, but then backhoe diggers came and destroyed my home. This was the rainy season and my family and I had no shelter. Many others were in the same situation. In 2012 the company had to suspend its operations and I had opportunities once again to trade small amounts of jade dug in the company’s concession by artisanal miners. But then in 2014 the suspension was lifted, the police came and chased the small-scale miners away and the company returned to exploit the area once more.”371

There is widespread drug use amongst jade miners, and the jade boom has brought with it increased prostitution and gambling.372 In the face of indifference or complicity on the part of the authorities, local groups are undertaking their own efforts to combat the harm the jade industry is causing. In July 2015, for example, a church-organised anti-drugs committee instigated the bustof one of Hpakant’s main dealers. This resulted in the seizure of a massive drugs haul and the equivalent of US$3 million in cash, together with a document setting out around US$500,000 in bribes the dealer had apparently been paying to members of the police, Special Branch and local officials.373

Despite the strength of these voices, their calls for a new approach to jade mining which benefits local people and mitigates harm have so far been ignored. This has direct implications for the conflict which we explore in the next chapter.


“We feel that we have no security for our lives here. The companies came back here recently. The man was killed with a backhoe digger. Hpakant will soon

disappear without any benefit to the local people if they use such big machineryto mine. They are useless for the area. Every company is connected with an

army general. The Chinese are also behind them. Indonesia spends 70 percent of the profits from resources extracted in Aceh in the region. What are the benefits

for Kachin State from resource extraction? That’s why we staged the protest.” Local clergyman, Hpakant378

Living the jade rush

Tens of thousands of people from across the country have flooded into Kachin State to chase the jade dream, all hoping to make their fortune with the right jade find.374

One 41-year-old described how he came to Hpakant 20 years ago to make his fortune. Without theresources to secure a jade licence he has become a yemase collector – a hand-picker who combs through the company waste for jade.375 During the 2012-2014 mining suspension, when licensedcompanies withdrew from Hpakant, he was able to move into the concession areas, working on the cliffs in Maw Sizar “even though it’s risky, because there is good jade”.

He has made two lucky finds of jade pieces worth five million kyat (around US$5,000) and six million kyat (around US$6,000), but like many others has become caught in “a cycle of jade and drugs” and unable to save money. Six months ago, he went home to take the monkhood and gave up drugs, but fell back in feeling tired and depressed. He still holds out hope that he will one day become a “laoban [jade boss] billionaire”, promising that if he finds a 10 million kyat piece of jade he will return home for good.

This experience is typical of the ordinary miner in Hpakant. Without legal authorisation to mine, they find themselves at constant risk of arrest and have to flee or pay off police. For those found trespassing on company property the consequences may be even more serious. In October 2014, a yemase collectorcalled Gum Ja Aung was separated from his two friends whilst searching for jade. The friends later found his dismembered body on the compound of the Shining Star mining concessionaire, where he had been killed by a company machinery operator.376 He left behind a pregnant 22-year-old wife and their one-year-old daughter.377


As one old jade hand explained, “if you have capital to invest, you will be happy, but ordinary jade miners are like rubbish – they only get soil”. Most of those who go to the jade mines become ‘yemase’ collectors who “just find stones in the debris left by big companies”.379 CREDIT: Minzayar

A group of jade miners who have migrated from other regions of Myanmar to find their fortune in Hpakant inspect a stone they found during the day. CREDIT: Minzayar


Yemase-collectors search through waste dumped by licensed company trucks in Gwi Hka, to the south of Hpakant Town. CREDIT: Minzayar

At night, yemase-collectors with torches search for raw jade stones in a pile of waste dumped by licensed companies in the Maw Sizar area of Hpakant. CREDIT: Minzayar


Teams of small-scale miners use pneumatic drills to work jade plots in Hpakant in July 2014, during the mining suspension. Since the ban has been lifted and the licensed companies have returned to Hpakant, these ‘unofficial’ small-scale miners have been largely excluded from the major jade mining sites. CREDIT: Minzayar


Small-scale miners typically operate without government licences. Here a group of miners are interrogated by the police, their machines are confiscated and their laoban (boss) is required to go to the police station the next day. The miners claim that they have been targeted because they have not yet bribed the police, whereas another mining team next to them, who have already paid up, are left completely undisturbed. CREDIT: Minzayar

A group of freelance miners hold a piece of jade they have just dug in a mining company concession area near Lone Khin, Hpakant Township, in July 2014, during the period that the licensed companies’ operations were suspended by the government. CREDIT: Minzayar


Locals protest the death of a yemase-collector, whose dismembered body was found on the compound of the Shining Star mining company. He had been killed by a company machinery operator. CREDIT: KDNG

A heroin seller prepares a shot of the drug which he sells at 2,000 kyat – which happens to equate to the lowest price of a small piece of jade. Artisanal miners typically take up to five of such shots of heroin a day. CREDIT: Minzayar


CHAPTER 4: JADE AND ARMED CONFLICT

The war in Kachin State that re-ignited in June 2011 after a 17 year ceasefire has left thousands dead and around 100,000 civilians displaced.381 Both sides have been accused of abuses. For its part, the Kachin Independence Army / Kachin Independence Organisation (KIA/KIO) has faced allegations of recruitment of children and use of landmines.382 The charge sheet against theTatmadaw is a good deal longer however, andincludes extrajudicial killings, physical and psychological torture and forced labour.383 Some commentators have concluded that the Tatmadaw is deliberately targeting women in Kachin State for rape and other kinds of sexual violence.384 In the course of doing research on the jade business,Global Witness has also heard accounts of Tatmadaw troops using civilians as human shields during fighting at Awng Ba Le, north of Hpakant, in early 2015.385

What’s it got to do with jade?

“Currently the development process

is a top-down one handled by the Nay Pyi Taw government and companies.

The local state governments and local people have no right to take part in

it. This kind of development program brings more harm than benefit to local

people and creates conflict.” KDNG / Kachin State Natural Resources Development Policy

Discussion Paper

The conflict in Kachin State has a range of causes, many of them linked to the aggressive centralisationpolicies of successive governments in Myanmar andthe growth of Kachin nationalism in response.386

Jade is a significant factor, however. As described in the previous section, the perception amongst Kachins that their jade is being stolen from them by military families, companies and cronies is a powerful driver of nationalist sentiment. The relationship between jade and conflict matters for at least three other reasons:

• The army families and companies that control many of the jade mines would lose out in the event of an equitable peace deal. They have the financial motivation, and possibly the political reach, to keep the conflict going until central government control over Hpakant can be assured.

• The Tatmadaw officers in Kachin State are making personal fortunes through extortion of the jade business, and so have a reason to justify their deployment and keep the money flowing.

• Jade is the main source of income for the KIA/KIO. This makes the battle for control of jade revenues a strategic priority for both sides in the conflict.

It is unlikely that a peace agreement that does not meaningfully address the question of who benefits from Kachin State’s jade will be a lasting one.

“Why did the ethnic groups rise against the government? It is because they don’t enjoy equality, autonomy and rights. We must give them to them. To do so, we

need to consider power as well as wealth sharing” Minister to the President’s Office responsible for the peace process Aung Min380


The backstory

The KIA/KIO first established itself in Hpakant during the 1960s and jade became the group’s main source of funding for over two decades.387 In the early 1990s, following ceasefire deals with other armed groups, the Tatmadaw was able to concentrate its fire on the KIA/KIO and progressivelytook full control of the jade mines.388 This was almost certainly a pivotal factor in the KIA/KIO’s decision to sign a ceasefire with the government in 1994.389

The Myanmar government proceeded to allocate jade mining concessions to Tatmadaw families, friends and conglomerates, as well as ceasefiregroups such as the United Wa State Army / Party.390

The 1994-2011 ceasefire period saw a scramble for Kachin State’s natural resources – timber as well as jade – which made some KIA/KIO leaders and Tatmadaw officers very rich.391 But for most Kachins, the ceasefire brought deforestation, land grabs, Buddhist Burmese migration and an increasingly pervasive Tatmadaw.392

Starting in 2009, the government issued increasingly insistent demands that the KIA/KIO and other ceasefire groups become part of ‘Border Guard Forces’ under the Myanmar Army.393 This broke promises to defer discussions about the KIA/KIO giving up its arms until after a new government was in place, and set in motion a chain of events that culminated in the conflict re-igniting in June 2011.394

As the KIA has been pushed further away from Hpakant, the buildings it previously used have been abandoned. This is a golf club in the San Hkar area previously used by KIA officers. CREDIT: Minzayar


KIA-held area until capture byTatmadaw in January 2015

KIA Battalion 6 base until capture byTatmadaw in November 2012

Tatmadaw base &Tactical Command HQ

Tatmadaw posts

KIA Battalion 6 positionsoverrun by Tatmadaw

major jade mines

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KIA Battalion 6 base until capture byTatmadaw in January 2013

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KIA-held area until capture byTatmadaw in January 2015

KIA Battalion 6 base until capture byTatmadaw in January 2013

Tatmadaw and KIA positions around Hpakant 2012-2015

There is a widespread perception that Hpakant’s jade mines are not under full government control and this is why reforming the business and making it more transparent will have to wait. However, as indicated in this map, the government is, in fact, in full control of the main jade mining areas. Although the KIA/KIO retains considerableinfluence in the area and has succeeded in taxing the companies, this does not impair the government’s allocation of licences, its own taxation of theconcessionaires or its ability to disclose data on these and other issues to the general public.


Everything to lose – the licensed jade mining companies

“They want to get as much jade as possible – ceasefire or no ceasefire.

This is their plan.”Jade businessman395

The major jade mining companies, profiled earlier in this report, will be the biggest losers in anyloosening of the government’s territorial control over Hpakant or the introduction of a system that gives more benefits to the population of Kachin State. Some of the families standing behind the big jade mining companies are very powerful, notably those of former Senior General Than Shwe, Minister Ohn Myint and former USDP General Secretary Maung Maung Thein.396 Military company MEHL meanwhile, is an investment vehicle for retired military officers associated with the State Peace and Development Council military junta.397 Many other companies are believed to have connections with powerful military figures.398

A number of sources claim that a group of the biggest jade mining companies approached the government in late 2011 or early 2012 requestingthe Tatmadaw launch an offensive to dislodge KIA positions around the mining areas.399 In the second half of 2012 the Tatmadaw did launch a major offensiveagainst the KIA in Hpakant which, as the map featured in this chapter shows, mostly achieved the outcome the companies are said to have been looking for.

A mafia in the mines – theTatmadaw and jade

“There are no rules here: battalion

commanders, small officers andothers all want to benefit from each

find of good jade. If we don’t pay them enough, then their intermediaries come and demand more money.”

Jade businessman400

The Tatmadaw’s main priority in Hpakant is milking money from the jade business and this imperativefrequently trumps its designated function of fighting the KIA. The impacts weigh most heavily on small-scale miners and traders although the larger operators also have to pay off the army to facilitate their mining and trafficking of jade.

Military officers work through a network of brokers, informers and plain clothes police to extort money from small scale miners at a rate of 20% of the value of each stone found.401 The Tatmadaw also makes lots of money through the provision of security to companies.402 According to one miningfirm this involves the licence-holders making one-off lump sum payments to the TacticalCommander – the commanding officer in Hpakant – of 5-10 million kyat (US$5,000-US$10,000) and then providing stipends to the soldiers or police billeted to their compounds.403

Another key source of income for the Tatmadaw is bribes from companies and carriers who smuggle jade into China. Large companies and moreestablished jade carriers must cultivate relationswith the Northern Commander – the most senior officer in Kachin State – as well as other militarypersonnel, the heads of the police and other agencies,

A Tatmadaw soldier walks through a jade mining site in Lone Khin as the police and military forces come to arrest illegal jade miners and the miners’ families stand and shout in the background. The Tatmadaw systematically extorts from illegal miners and demands a payment of 20% of the value of each stone that they find; generating a substantial off-budget revenue stream. CREDIT: Minzayar


and pay them off systematically.404 The main checkpoints on the roads out of Hpakant during 2014 and 2015 are illustrated in the mapon the following page.405 Global Witness hasinterviewed a range of specialist jade carriers, who describe how the checkpoints work:

• The most powerful and best-connected companies pass straight through the checkpoints because their trucks are guarded by soldiers or accompanied by an officer – such as the Northern Commander’s principal staff officer.406

• The medium-sized jade carriers send a car in advance to pay off each checkpoint.407 The agents give the checkpoint officers the number plate of the jade-carrying vehicle behind so they do not stop it by mistake.408

• Small-scale carriers who lack connections and money try to hide their jade. If they are caught, they have to pay bribes which are often far in excess of the value of the stone they are carrying.409 If they do not pay they face prosecution and potentially a jail term of several years.410

Close observers of the situation in Hpakant claim that the Tatmadaw and the KIA/KIO actively collude to sustain their mutual interest in the jade trade. One observed that the Tatmadaw turn a blind eye to the KIA/KIO’s jade transportation routes: “they know which ones they are, but they don’t say anything.”411 Another described how the Tatmadaw and KIA maintain close contact in Hpakant to agree on how much tax each will receive from significant jade finds.412

“Fighting is fighting, but business

is business. Sometimes therelationships are very good!”413

KIA/KIO intelligence officer

The Tatmadaw Tactical Commander and KIABattalion 6 use the same jade brokers both to levy

payments from small-scale miners and to maintaincommunications, thereby reducing the scope for misunderstandings that might lead to armed confrontation.414 During a stand-off between the Tatmadaw and KIA in October 2014, the Tactical Commander in Hpakant sent his KIA counterpart a message – via jade brokers – that he did not want to launch an attack, but that he was forced to follow orders from Nay Pyi Taw.415

As with war economies the world over, genuine peace and outright war are the main enemies of the military entrepreneur in Kachin State. Far preferable are the grey areas in between that justify the deployment of the troops needed to intimidate and extort but do not demand much actual fighting. Peace-makers, both within the government and outside it, must recognise and confront these incentives and behaviour patterns if they are going to find a way of persuading the Tatmadaw to support a substantive peaceagreement.

The KIA/KIO’s main artery

“The Burmese military government said that the main artery of the KIA/

KIO is the Hpakant region. That is why that main artery had to be destroyed. They do not fight physically with us,

they do it behind our backs”KIA/KIO official, 2002.416

The KIA/KIO made Hpakant a key strategic target when conflict resumed in June 2011. The group’s representatives told Global Witness in a letterthat their aim was “to resume control andmanagement of the jade business”.417 In practice this involved deploying KIA troops in and around Hpakant, as a basis for taxing the jade mine concessionaires, taxing small scale miners and trading jade.418


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KM

Jade-carrying routes - Kachin State


From a KIA/KIO perspective the government had breached the ceasefire and this meant that any agreement to stay out of the mining areas and not tax the companies was null and void. Officialsat the KIA/KIO’s Laiza HQ wrote to the main licence-holders demanding taxes and, according to one source close to the KIA/KIO, many of the bigger concessionaires each paid over between US$100,000 and US$500,000.419 In January 2012 alone the KIA/KIO collected over US$20 million from the companies.420 Senior ministers were incensed and the KIA/KIO was surprised by itssuccess.421 Shortly afterwards Nay Pyi Taw, in an apparent attempt to stop the KIA/KIO making money from jade, suspended mining with effect from May 2012.

“If mega development projects are started before political resolution,

there will be more conflict between the government and ethnic armed

groups and more conflict between the government and local communities.

Therefore there must be amoratorium on all new projects.”

KDNG / Kachin State Natural Resources Development Policy Discussion Paper

After the mining suspension was lifted in September 2014, the KIA/KIO began taxing the companies once more.422 Its taxation system is based on

Elephants which transport food supplies between the KIA forward positions and its main base pass a KIA checkpoint north of the major jade mines in July 2014. When the government-KIA/KIO ceasefire broke down in 2011, the KIA/KIO made Hpakant a key strategic target, deploying troops in and around the area to tax licensed jade companies and small scale miners and to take a direct role itself in the jade trade. By the start of 2013 all the KIA posts in the immediate vicinity of the big jade mines had been overrun by the Tatmadaw, however. CREDIT: Minzayar


the government’s own records, which it secretly bought from a Ministry of Mines official.423 The US$500 spent on a flash drive full of government data has enabled the KIA/KIO to extract millions of dollars from the concessionaires.424

According to the KIA/KIO’s written response to Global Witness, its Department of Commerce “is responsible for taxation of jade mining concessions and taxation on the sale of jade which varies dependingon its value ranging from 10-20% of the value and up to one third of the profits. The companies are taxed on the number of miners working, the type ofmachinery used and the fuel used to run the machinery.Each person entering the jade mining area is required to pay an entrance fee.”425

While the KIA/KIO’s taxation of the companies appears systematic on paper, its representatives told Global Witness that in practice the amounts the companies pay are negotiated.426 Furthermore,sources familiar with the KIA/KIO’s revenue generation activities say that taxes are collected from the companies by a broker – Aik Haw – who is the son-in-law of United Wa State Army / United Wa State Party leader Pao Yu Hsiang and is a business associate of drugs kingpin Wei Hsueh Kang.427 The KIA/KIO denies that it works with Aik Haw or any other middleman.428 However, the perception that much of the KIA/KIO jade taxation is lost to corruption is widespread within Kachin State.429

Like the Tatmadaw, the KIA/KIO also taxes small scale miners, with a standard levy on small jade finds of 10% of value.430 While the more exacting20% Tatmadaw fee is widely recognised as corrupt and illegal, the KIA/KIO’s is perceived by many Kachins as a legitimate taxation system, albeit a basic one, and the payer receives a receipt.431 The receipt is also a permit to transport the jade to the border with China without paying any more duties.432

KIA Deputy Chief of Staff Gun Maw is seen as the face of a younger and more reform-minded generation of KIA/KIO leaders. But questions remain about how much the KIA/KIO old guard is willing to open up about how it manages its jade taxation system and what it does with the money. CREDIT: Susan Morelands

KIA/KIO receipt for tax paid on a piece of jade. Both armies levy payments from small-scale miners, but whilst the Tatmadaw demands are generally regarded as straightforward corruption, the KIA/KIO charges are perceived by many Kachins as a legitimate form of taxation. CREDIT: Minzayar


The KIA/KIO actively trades and exports jadeitself, using a network of paths running north from Hpakant.433 In some cases its jade taxation teams offer traders a choice between paying the value tax and exporting their stones themselves or doing a deal with the KIA/KIO. Such deals either consist of selling the jade outright to the KIA/KIO, or going into partnership with them on thetransportation and sale of the stones and receivinga share of the final sale price.434 This process of

the KIA/KIO carrying the jade out to China via its Laiza HQ and then selling it can take up to a year.435

Prior to the conflict the KIA/KIO had a company registered in Yunnan Province called Yingchin which was specifically dedicated to trading jade.436 It was wound up in 2012 following the resumption of the conflict and it is not clear whether the KIA/KIO has set up another firm to take its place.437

A KIA checkpoint north of the main Hpakant jade mines and around 1000 metres from the nearest Tatmadaw post, July 2014. This checkpoint was overrun in a Tatmadaw offensive just a few months later, as the government sought to weaken the KIA/KIO’s capacity to tax the licensed jade mining companies. CREDIT: Minzayar


CONCLUSION

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. As long as the ghosts of the military junta are allowed to dominate a business worth equivalent to almost half the country’s GDP, it is difficult to envisage an end to the conflict in Kachin State. Lessons from other nations afflicted by the resource curse, as well as Myanmar’s own history, suggest that the threats to the country’s wider political and economic stability are also very real.

A view of Hpakant’s ‘treasure land’. Root and branch reform is essential if Myanmar’s jade riches are to benefit local people. CREDIT: Minzayar

The cast of characters we have unmasked are not only the least deserving but also amongst the most dangerous recipients of Hpakant’s jade wealth one could imagine. More worrying still is that we have only scratched the surface. What if the widespread assumption that all major jade companies are controlled by military families is true? Then there is the issue of who in China is benefitting, and what influence they may exert behind the scenes in Kachin State and in Myanmar

as a whole. This is a question we have not even begun to answer, but it is clear that immense amounts of money from jade are accumulating onthe Chinese side of the border as well as in Myanmar.

The challenge is daunting. It is easy to see why evenreformers in Nay Pyi Taw have been reluctant toface up to what is really going on. Many governmentsin countries emerging from conflict or tyranny try to defer the question of who will benefit from


natural resources. This calculation is sometimes underpinned by vague notions of a grand bargain: the idea that former despots, rebels and military commanders can be sated with a super-size slice of the nation’s resources and will agree not to be ‘spoilers’.

It rarely works out that way. Looted resource wealth does not just rob local people of theopportunities for a better life that they deserve. It empowers opponents of peace and democracy who have little popular support but may attempt a comeback if handed the keys to a war chest.

Myanmar has a good chance of avoiding this fate. For all its limitations, the Thein Sein government has crossed some very significant thresholds, in terms of both natural resource governance and peace negotiations, which it will be hard, although not impossible, for a successor regime to step back from. Myanmar also, for now at least, has the world’s attention.

Whoever leads Myanmar’s next government has the opportunity to start transforming jade from the curse it currently is to the blessing it should be for people in Kachin State and all over Myanmar.Indeed, they will need to do this if they are to take the country further along the path to peace, democracy and prosperity. Moreover, with the plunder accelerating, they will have to act fast.

The new government’s initial priorities should be urgent and concerted action to build transparencyand accountability in the jade business and to bring the issue of resource management into the peace process. To be successful, it will require considerable support from its international partners. That is why the recommendations at the front of this report are addressed as much to foreign governments and international organisations as to the winners of November’s historic election.


Glossary and Acronyms

a kyo thuA joint venture arrangement between state-owned enterprise Myanmar Gems Enterprise and a jade mining company, whereby the former takes 40% of post-tax sales revenues and the latter takes 60%.

beneficial owner (or ‘ultimate beneficial owner’)

A company’s ultimate beneficial owners are the individuals (or single individual) who ultimately own or control the company, either directly or indirectly. This means the persons who control the actions of the company and/or who ultimately receive the profits. Significantly, a beneficial owner must be a real, live individual and not another company or trust. For companies with complicated ownership structures, involving many different corporate vehicles and, in some cases, private agreements over ownership and/or control, the beneficial owners are the individuals who are right at the top of the chain.

DICAMyanmar’s Directorate of Investment and Company Administration. DICA is a directorate of the Ministry of Planning which administers Myanmar’s company registry.

EITIExtractive Industries Transparency Initiative. EITI is a global standard for transparency in the oil, gas and mining industries which is currently being implemented in Myanmar.

HpakantAn area within Myanmar’s northern Kachin State where the world’s most valuable deposits of high value jadeite (jade) are located.

JADE ActTom Lantos Block Burmese JADE (Junta’s Anti-Democratic Efforts) Act of 2008. This is a United States law that prohibits imports of jade and rubies from Myanmar.

KIA Kachin Independence Army. A non-state armed group representing the Kachin ethnic group.

KIO Kachin Independence Organisation. The political wing of the Kachin Independence Army.

kyat A unit of Myanmar’s currency.

laobanThe Chinese word for boss, used in Hpakant to mean jade mining boss. This term is often used to refer to someone who manages a group of small-scale (often illegal) miners.

MEC Myanmar Economic Corporation. A Myanmar army company.

MEHLMyanma Economic Holdings Limited. A Myanmar army company. Unlike MEC, MEHL writes its name in English without an ‘r’ at the end of Myanma.

MGEMyanmar Gems Enterprise. A state-owned enterprise which also acts as a sub-division of the Ministry of Mines responsible for managing the mining and marketing of jade and other gemstones.

MGJEAMyanmar Gems and Jewellery Entrepreneurs Association. The major industry body that represents jade businesses in Myanmar.

Nay Pyi Taw (orNaypyidaw)

The capital of Myanmar.

NRC (or CSC) numberNational Registration Card number (or Citizenship Scrutiny Card number). This is a national identification numberallocated to each citizen of Myanmar.

OFACOffice of Foreign Assets Control. An office of the United States’ Department of the Treasury which administers and enforces American economic and trade sanctions.

PNO Pa-O National Organisation. The political wing of the non-state armed group which represents the Pa-O ethnic group.

SPDC State Peace and Development Council. The name used by the ruling military junta in Myanmar between 1997 and 2011.

SLORCState Law and Order Restoration Council. The name used by the ruling military junta in Myanmar between 1988 and 1997.

Tatmadaw Myanmar’s armed forces, administered by the Ministry of Defence.

yemase-collectorA ‘jade-picker’ who searches through the waste dumped by mining companies to find pieces of jade which they have missed.

USDPThe Union Solidarity and Development Party. The ruling party of Myanmar, and the successor to the Union Solidarity and Development Association (USDA), a mass organisation set up by the military junta’s State Peace and Development Council (now dissolved).

UWSA United Wa State Army. A non-state armed group which represents the Wa ethnic group.

UWSP United Wa State Party. The political wing of the United Wa State Army.


Appendix 1: how much is Myanmar’s jade business really worth?

The following estimates are just that – estimates. Our intention, in publishing some specific figures, based on the incomplete data available, is not so much to have the last word on the value of Myanmar’s jade business as to trigger a debate and encouragethe full disclosure of the information the public needs to make more definitive assessments on an ongoing basis.

This paper sets out the basis for the estimates of jade production value described in the main body of the report and covers the following:

• Key considerations• Data sources• Estimates of the value of Myanmar’s jade

production based on Emporium data• Using Chinese trade data to make an alternative

estimate• Adjusting the 2014 jade production estimate

based on Emporium data to account for jade sold through local jade fairs

• Estimating the value of total production,including jade mined but not officially recorded

• Estimating the Myanmar government’s take of the country’s most lucrative natural resource

(A) Key considerations

Any assessment of Myanmar’s jade industryis limited by the absence of detailed anddisaggregated public data on production and sales. Calculations are further complicated by a range of factors including the following:

• As explained in Chapter 1, there are very high rates of jade smuggling, particularly in relationto the most valuable stones. This means that sales at the Myanmar Gems Emporium, the main official route for jade traders to sell to the international market, in fact represent only part of Myanmar’s jade trade.

• Jade smuggling is aimed at evading taxation not only in Myanmar but also in China, the main market for the gemstone. Consequently,

Chinese import records cannot be relied upon as a comprehensive data source on Myanmar jade imports.

• The sales data that is available from the annualemporiums is distorted by price manipulations, and the systematic smuggling of high-grade jade means that these stones are under-represented at emporium sales.

• An additional shortcoming in sales data is that buyers frequently do not complete the purchase of jade lots on which they win bids at the Myanmar Gems Emporium. According to state-owned enterprise and regulatory body Myanmar Gems Enterprise (MGE), only 54.84% of sales at the 2013 Emporium were completed, and industry sources estimate that the completion rate went down to 30.38% at the 2014 Emporium. This means that records of sales made at the emporiums do not reflect the volume and value of cleared sales.

• 2014 is an atypical year in that, in addition to official sales of jade through a major emporium geared towards the international market (51st Myanmar Gems Emporium), two official jade fairs (or local emporiums) were also held. Only very low-grade jade was available for sale at these fairs and buyers were domestic rather than international.

• There are huge variations in the value of jade depending on quality, which itself depends on a range of factors including colour,translucence, texture and consumer trends. As explained in Chapter 1, the price of a single kilogram (kg) at the 2014 Emporium ranged from less than US$2 to over US$2.89 million.Valuations cannot therefore simply be based on volume, but also require data on the grades of the jade.

(B) Data sources

Global Witness has obtained a range of unpublished data sets which provide a basis for more reliable estimates of Myanmar’s jade industry than have been made previously.


These include:

• A detailed breakdown of sales at the 51st Myanmar Gems Emporium, the only official jade sale for the international market in 2014 (the ‘2014 Emporium’). This contains informationon weight, sale, price, owner and buyer for over 6,000 jade lots. It is separated into two categories:– Jade lots sold by tender. This is the process used to sell lower value lots at the Emporium. Tender data contains jade grade information, with most lots marked as one of three categories: imperial (high-grade); commercial (medium-grade); or utility (low-grade).– Jade lots sold by auction. Jade grades are not marked in the data set we have, but the auction is the process used to sell the higher value stones.

• Breakdowns of jade lots – and theircategorisation by grade – offered for sale at the 52nd Myanmar Gems Emporium in 2015.

• Breakdowns of the top-selling companies and their sales at the 50th Myanmar Gems Emporium in 2013.

• Data on jade sold at every Emporium heldbetween 2005 and 2014, broken down byoverall aggregate revenues and weights.438

• Data on aggregate sales at jade ‘fairs’ aimed at the domestic market in 2014.

• Data on official revenues from mine site taxes in 2013.

This data is not comprehensive and it is subject to various biases, but it is more detailed than anyinformation used in previous public assessments of the jade industry. In conjunction with public data, it allows us to make new valuations ofMyanmar’s jade industry.

(C) Variables

Our calculations of total sector size of Myanmar’s jade industry are based on three variables:

(1) Total volume of jade produced: This is comprised of the officially recorded jade production and we use government statistics as the basis of ourcalculations of the sector’s value. However,multiple jade industry sources have provided

evidence of systematic evasion of official controls and it is clear that, in reality, the official productiondata is a very significant underestimate. We examine the question of what total production (recorded and unrecorded) might amount to below in section (G).

(2) Proportion of production of each of the threemain grades of jade (imperial, commercial andutility): The relative distribution of jade production by grade is the variable with the least information– simply put, no one knows how much of thedifferent grades of jade are produced in Myanmar every year. However, knowing a rough percentage for different grades is essential because of the significant variation in price. We have calculated grade proportions based on data from the 2014 Myanmar Gems Emporium. However, systematic smuggling of higher value jade means that the Emporium under-represents the proportion of more valuable jade produced. We have therefore also used an additional estimate of the relative proportions of the three main jade grades as shares of production that is based on industry estimates gathered by Harvard University and Proximity Designs and used in their 2013 study on the jade business.439

(3) Values of the three main grades of jade (imperial, commercial and utility): To calculate prices fordifferent categories of jade, we have takenaverages of the prices per kilogram of imperial, commercial and utility jade sold at the 2014Emporium. As described below, under (F), we have adjusted these averages to accommodate figures from the October 2014 local jade fair; although we recognise that this data is notrepresentative of the business as whole, given the irregularity of such local fairs, their orientation to the domestic market and their focus on the lowest quality utility jade. Drawing on the jade fair price data is likely to pull our average price estimates down below the actual level.

(D) Estimates of the value ofMyanmar’s jade production based on Emporium data

Table 1 below sets out the distribution of jade across grades and average prices per grade we have calculated based on the 2014 Emporium data.


One notable feature is that the proportion of imperial grade jade is very low – less than 1.5%. As explained above however, multiple industry sources have suggested that the higher value jade (particularly high-grade imperial) is typicallysmuggled, and it is the lower quality, higher weight stones which are sent to the Emporium. This means that the proportional split between the three grades at the 2014 Emporium is notrepresentative of the jade that was mined, with

the former underrepresenting higher grade jade. To compensate for the distortion in the Emporiumdata caused by the widespread smuggling of higher quality jade, we have used industry estimates of how jade production is split across the three grades gathered by Harvard University/Proximity Designs and used in their 2013 study on jade. The split indicated by their research is set out at Table 2, and indicates higher proportions of high and medium-grade jade.

In Table 3, we then apply this percentage splitbetween the three grades, together with our average price per grade, to Myanmar’s official annual jade production figures to estimate the overall value of all jade mined and officially recorded each year over the past ten years.

Since line-by-line sales data is not available for all emporiums held in Myanmar over the past decade, we extrapolate from the 2014 Emporium figures to estimate the value of jade production for previous years. We assume that the proportional share of each jade grade remains constant. We also assume that jade prices for each grade change by the same percentages over time. So, if for example the three grades were priced at US$1, US$4 and US$10 one year, the next year they might be US$2, US$8 and US$20. This method is imperfect, of course, but the lack of

information makes more accurate estimations impossible.

Combining these estimated prices with official production figures, and the estimated splitbetween imperial, commercial and utility jade,we are able to calculate the total value of jade production for each of the past ten years incolumns E and F. While we include the calculations in column E using the split between jade grades indicated by the 2014 Emporium, these estimates are likely to be significant under-valuations, as evidenced both by testimony from industry sources and by Chinese customs data (examined in more detail in the next section). In column F we have set out the estimates generated when we use the split between grades identified byHarvard/Proximity, which we consider morereliable.

Table 1: Prices and distribution of jade across grades at 2014 Emporium440

Jade grade Total weight (in kg)

Percentage of total volume

Total value of sold jade (US$ millions)

Average price (per kg)

Percentage of total Emporium

revenue

Imperial 53,537 1.49% US$1,044 US$19,491.97 29.58%

Commercial 407,137 11.33% US$901 US$2,213.89 25.55%

Utility 3,131,870 87.18% US$1,583 US$505.52 44.87%

Table 2: Distribution of jade production across grades based on interviews with industry sources by Harvard/ Proximity

Estimated share of total jade production

High-grade jade (imperial) 5%

Medium-grade jade (commercial) 35%

Low-grade jade (utility) 60%


(E) Using Chinese trade data to make an alternative estimate The production value estimates from Table 3 / column F above are backed up by an alternative valuation based on price estimates drawn from trade data from China, the pre-eminent consumer market for Myanmar’s jade. Chinese customs data for 2014 indicates that precious and semi-precious stone imports from Myanmar were worth US$12.3 billion. An analysis of the codes used to classify these imports shows that the vast majority of this US$12.3 billion was jade. The US$12.3 billion worth of gemstone imports account for less than a third of the weight of Myanmar’s official jade production for 2014, and therefore is a significant underestimate of the value of Myanmar’s jade production by itself. However, combining this import data withMyanmar’s production data allows us to make another estimate of the total value of Myanmar’s jade production. Before going any further, how do we knowthat this US$12.3 billion worth of precious and semi-precious stones was almost all jade?

China’s gems imports from Myanmar are classifiedby codes according to a method for recording traded goods called the Harmonised System (HS). These codes, while relatively precise, can lump together more than one type of stone into a single figure. The US$12.3 billion figure includes three HS codes: HS710310 (precious or semi-precious stones unworked), HS710399 (worked precious or semi-precious stones) and HS711620 (articles of precious or semi-precious stones). These HS codes do not cover any diamonds or gold, and also exclude worked rubies, emeralds or sapphires, which fall under HS710391 (rubies, emeralds and sapphires worked but not set). None of these gems could be included in the US$12.3 billion figure.

Of the gemstones covered by these three HS codes, imports that entered China under the code HS710399 were by far the most valuable – worth US$11.1 billion of the US$12.3 billion. Whiledisaggregated data on the values of the sub-categories of gemstones that make up this US$11.1 billion is not available, there is more detailed data available when it comes to their weight. This shows that the vast majority – 99.2% – of these precious and semi-precious stones were either HS71039910 (the sub-code for jadeite– the higher value type of jade) or HS71039940 (the sub-code for nephrite – the lower value type of jade).

Table 3: Estimated valuations of official jade output from 2005 to 2014

A B C D E F

YearVolume of jade sold

at emporium (in thousand kg)441

Total value of sales at emporium (in US$ millions)442

Total annual production (in

thousand kg)443

Total sector size (2014 Emporium split between grades) (in

US$ millions)

Total sector size (Harvard/ Proximity

split between grades) (in US$ millions)

2005 3,377 US$165 20,005 US$974 US$2,039

2006 11,073 US$366 20,458 US$677 US$1,415

2007 15,043 US$693 20,266 US$933 US$1,951

2008 12,830 US$794 32,924 US$2,039 US$4,262

2009 12,938 US$926 25,795 US$1,847 US$3,860

2010 16,416 US$2,890 46,810 US$8,241 US$17,225

2011 16,313 US$5,277 43,185 US$13,969 US$29,199

2012 4,221 US$677 19,080 US$3,060 US$6,396

2013 3,927 US$3,192 15,062 US$12,242 US$25,589

2014 3,865 US$3,580 16,684 US$15,453 US$34,248

Totals US$59,435 US$126,184


Other unspecified precious stones accounted for 0.7% of the weight. As noted, these would not have included diamonds or rubies, which are listed under other HS codes, but could have included quartz. Tourmaline and crystal accounted for 0.1% of the weight of HS710399 imports, though this amounted to only 37 kg. What about the other two HS codes, which make up the remaining US$1.2 billion not covered by HS710399? HS710310 (precious or semi-precious stones unworked) could include precious or semi-precious stones other than jade. However, while the average price of US$127.69 per kg for gemstones in this category is a plausible value for pieces of very low grade jade, it would certainly not apply to some of Myanmar’s other famous gem exports such as rubies and sapphires. HS711620 (articles of precious/semi-precious stones) is harder to define or eliminate from, though given the fact that HS710399 (worked precious or semi-precious stones) was almost all jade, it seems likely that ‘articles of precious or semi-precious stones’ would also consist of almost all jade-based products. We thereforebelieve it is reasonable to assume that almostall of the semi-precious and precious stonesaccounted for in the $12.3 billion figure are jade. If we use the Chinese US$12.3 billion gemstone imports figure to calculate an average price of jade imports, this yields a figure of US$2,276.93 per kg of jade. We can apply this average priceto the total volume of Myanmar’s official jadeproduction of 16.684 million kg in 2014 to make analternative valuation of the sector. This calculationputs the value of 2014 jade production at US$37.988 billion in 2014.

It is worth noting that this average price, and therefore the estimate derived from it, is more likely to be too low than too high. Firstly, as already described, a high proportion of the more valuable jade is smuggled and evades Chinese customs, thus pulling down the average price of Myanmar jade as indicated by the Chinese data. Secondly, traders who do present their jade for

legitimate export at the border have no reason to overestimate the value, as this will incur a higher tax bill. Conversely, they will have an incentive to under-declare.

These results are truly striking: two different methodologies both showing estimates of well over US$30 billion for Myanmar’s jade sector in 2014.

Finally, it is worth returning to the question of how this Chinese import data sits with Myanmar government production data. The total weight of the $12.3 billion worth of jade imports was 5.402 million kg, which equates to less than a third of Myanmar’s official jade production in 2014. This strongly supports numerous accounts fromindustry insiders who say 50-80% of jade is smuggled straight over the border into China.444

(F) Adjusting the 2014 jade productionestimate based on Emporium data to account for jade sold throughlocal jade fairs

Our estimates above rely on data from the 2014 Emporium about prices of jade, and use these to estimate the size of production for other years. As already noted however, 2014 is an atypical year because two local fairs were also held, selling low quality jade to Myanmar rather than international buyers. Prior to 2014, only one local fair had been held in nine years.

To recap: in contrast to the main emporium, these local fairs are irregular events focused on selling low-grade utility grade jade (in effect the lowest of the low) to the domestic market. The data they yield on prices is not therefore representative of a business which is overwhelmingly focused on trade with the international (Chinese) market.

While we believe that using this local fair data introduces a significant risk of under-estimating jade prices, we have decided to incorporate it rather than simply putting it to one side. As such,


we have recalculated the average price for utility grade jade in 2014 to take into account the sales data we have on the local fair held in October.445 Since these fairs have typically not been held in the years running up to 2014, we do not undertake a similar recalculation for the 2005-2013 period.

If we combine the local fair data we have with the 2014 Emporium data, this yields a reduced average price of US$166.95 per kg for utility grade jade. In Table 4, we use this revised figure torecalculate our two valuations of 2014 jadeproduction.

Using the proportions of imperial, commercial and utility jade drawn from 2014 Emporium sales figures, the valuation falls to US$5,643 billion. However, this estimate is clearly flawed since it falls well below the value of jade imports from Myanmar recorded by Chinese customs in 2014. As set out in Section D above, Chinese trade data on imports from Myanmar records a figure of US$12.3 billion in 2014 for the category of gemstonethat includes – and overwhelmingly comprises – jade. This can effectively be treated as a minimum estimate of Myanmar’s jade sector in that year, moreover one that does not consider thecross-border smuggling which is evidentlyrampant.

Using the proportions of jade across the three grades employed by Harvard/Proximity, the estimate of production value in 2014 becomes US$30,859 billion. While the Harvard/Proximity split between grades is drawn from qualitative data and is an estimate only, we believe it is more accurate than the one offered by the 2014Emporium data, given how the latter isdistorted by the smuggling of more valuable jade.

In our conclusions, we have chosen to highlight this more conservative estimate of US$30,859 billion over the US$34,248 billion figure set out above in Table 3 (column F).

We consider US$30,859 billion to be the most reliable estimate of 2014 jade production available, since it is based on the most realistic splitbetween grades of jade and the most conservative price data. Moreover, it still comes in considerably lower than the estimate yielded by the alternativemethodology based on Chinese import data which is outlined under (E) above.

If we combine this revised estimate with theestimated valuations of official production in 2005-2013 using the Harvard/Proximity split between grades (set out in Table 3 column F), the overall estimate for the value of jade production over the past decade becomes US$122.8 billion.

Table 4: Re-calculation of official production value using sales data from October 2014 local fair446

A B C D E F

YearVolume of jade

sold at emporium(in thousand kg)447

Total value of sales at emporium (in US$ millions)448

Total annual production (in thousand kg)

Total sector size (2014 Emporium split between grades split)

(in US$ millions)

Total sector size (Harvard/ Proximity

split between grades) (in US$ millions)

2014(excluding data from local fair)

3,865 US$3,580 16,684 US$15,453 US$34,248

2014(including data from local fair)

10,943 US$3,701 16,684 US$5,643 US$30,859


(G) Estimating the value of totalproduction including jade minedbut not officially recorded

Neither our 2014 Emporium price data-based production estimates nor the alternative valuation based on Chinese import figures take account of jade which is never officially recorded.

Interviews with industry sources in both China and Myanmar indicate that whilst some jade production may be officially recorded before it is smuggled, a significant proportion is also kept off Myanmar’s books altogether (for example, bypaying off officials to under-record production).449 At the same time, industry sources indicate that the smuggling is aimed not only at evading taxes in Myanmar but also those in China, and sosmugglers are endeavouring to dodge Chinese border controls as much as Myanmar ones. This means that Chinese trade data under-records jade imports from Myanmar.

It is, however, possible to estimate the value of smuggled jade that is not recorded at the mine

site if we combine official data with information from industry sources. According to industry sources, 50-80% of the total jade produced is smuggled into China. This could mean that as little as 20% of the jade which reaches Chinaenters the country legally.

According to official trade data, just over 72million kg of jade has been imported to China from Myanmar over the past decade. If we use the upper estimate of 80% of jade being smuggled as a basis for calculations, this would mean that jade recorded in Chinese import figures represents a fifth of the total volume which goes to China from Myanmar. Total production of jade between 2005 and 2014 may therefore be up to 361 million kg.

We can apply the Harvard/Proximity figures on the split between imperial, commercial and utility jade and the average prices extrapolated from the 2014 Emporium data to calculate a value. As Table 5 shows, on this basis we estimate that Myanmar’s total production over the past decade –including ‘unofficial’ / unrecorded jade – could be worth as much as US$170.764 billion.

Additional notes on calculations • The price we calculated for imperial grade

jade is based on the average price of allauction (as opposed to tender) sales at the 2014 Emporium. This is because higher value jade was sold by auction, but we do not have data specifying which lots were imperial grade. We do have full data on which stones

were which grades for the 2015 Emporium. This shows that of the 334 lots offered for auction in 2015, only two were imperial grade jade. It is likely that a similarly small number of lots at the 2014 auction sales were imperial grade, and this in turn suggests that theimperial grade jade price we have estimated for the 2014 Emporium has been dragged down by lower grade lots that were sold by auction that year. This is backed up by one

Table 5: Estimates of maximum possible sector value

A B C D E F

YearOfficial jade

imports to China450 (in million kg)

Maximum estimate of total sector

size (using upper industry estimate

of 80% unrecorded jade) (in million kg)

Official production in Myanmar in 2005-2014

(in million kg)

Estimated size of unofficially produced jade over 2005-2014

(in million kg)

Maximum estimated sector value (based on volume in C and Harvard/Proximity

split between grades)(in US$ billion)

2005-2014 72.389 361.943 260.269 101.674 US$170.764


data point we have for a piece of imperial grade jade sold at the 2014 Emporium by Htoo Group company. This jade was sold for 40 times the price we have estimated for imperial jade based on the 2014 Emporium data set.As such, our calculation of the average price of imperial jade may be a substantialunderestimate, and consequently the true value of production may be much higher than our figures indicate.

• As detailed in Chapter 1, price manipulation is widespread at government emporiums. Industry sources indicate that such manipu-lation is primarily about companies selling to themselves (via proxies or agents) at an artificially low price as means of reducing the taxes that they have to pay. There are also accounts of price inflation either for money laundering purposes or to keep certaincategories of jade off the market; however,interviewees suggest that artificially depressingprices is far more prevalent. Again, we do not have sufficient information to take account of these issues in our calculations, and are unable to determine the overall effect of these manipulations on jade prices.

• Sales at the July 2015 Myanmar GemsEmporium fell sharply due, it is thought, to the imposition of a deposit system todiscourage buyers from placing winning bids and then failing to make payment. In the absence of a detailed sales breakdown, it is not possible for us to analyse which grades of jade have been impacted by the fall, or what the implications are. For the purposes of this calculation, we assume that the introduction of a deposit impacted all grades of jade equally and does not therefore affect the pricing distribution.

(H) Estimating the Myanmargovernment’s take of the country’s most lucrative natural resource

We have also made a rough estimate of the likely government take from Myanmar’s jade sector in 2014.

Our calculation is set out in Table 5, and it is based on the following information and assumptions / estimates:

• Data available on licence fees is extremely limited. According to Myanmar Gems Enter-prise (MGE), 937 companies had licences to mine jade in the 2014-2015 Fiscal Year. One industry estimate suggests that only 30% of these companies are likely to operate privately (that is, outside a kyo thu arrangements) and therefore be liable for licence payments. Licence-holders can hold up to 50 permits of 1 acre each, and if we assume that 30% of 937 hold an average of 25 acres, this gives a total of 7027.5 acres held under private licence. This estimated acreage aligns with information from other industry sources who haveestimated licensed mining acreage at between 12,000 and 35,000 acres, which would yield a median of 23,500 acres.451 If we use the same estimate of 30% of mines under private licences, we get a figure of 7,050 acres.

• There are huge variations in the possible prices for licences, but we have taken an average price of over 16.5 million kyat for a three year licence based on the average of various data points provided by MGE.452 Using these figures we have calculated a rough average for licence revenues on an annual basis, which we estimate at US$5,615.34 per year.

• MGE has provided details of mine site tax revenues for the Financial Year 2013-2014 and we have assumed that this figure remains constant in the Financial Year 2014-2015.

We have reviewed data on companies which operate wholly or partially in the jade sector, and which appear in Myanmar’s top commercial and income tax payers lists to calculate approximate tax payments derived from jade. We have calculated their payments based on the tax payment bands that they are listed in, using a median figure for each band.


One striking feature of the calculation above is the low level of revenue from the 20% mine site tax, particularly when compared to the US$108 million in revenue generated by the 10% sales tax at the 2014 Emporium.

We have calculated in Table 7 an estimate of what the mine site tax could generate if it was implemented properly. For the purpose of this calculation, we assume that jade undergoes no significant value add between the mine site and

the emporium (and therefore its value should be essentially unchanged between these locations).

We do not make any adjustment for transportationcharges between the mine and emporium as reliable estimates are not available. However, transportation charges are unlikely to account for anywhere near the US$369.56/kg discrepancy between the tax that should have been collected and the tax actually paid.

Table 6: Estimate of Myanmar government jade revenues in 2014

Item Estimated value (in US$ millions)

Estimated licence fees (assuming average licence price of US$5,615.34 per year and 7,027.5 private jade licences) US$39.46

Mine site tax revenues (based on FY2013-2014 figure) US$6.12

Revenues from 10% sales tax at 2014 Emporium (assuming 30.38% completion rate) US$108.77

MGE 40% share of completed a kyo thu sales (estimated) (assuming 30.38% completion rate)453 US$138.93

MEHL and MEC revenues from jade ventures (including joint ventures in which we assume they take a 40% share) (assuming 30.38% completion rate) US$38.74

Estimated commercial tax payments by jade businesses (based on FY2013-2014 data) US$39.86

Estimated income tax payments by jade businesses (based on FY2013-2014) US$2.11

Total US$373.99

Note: Emporium sales are subject to an additional 1% levy which goes to the Central Committee of Myanmar Gems Emporium. This has not been included as it is not strictly part of the Myanmar state’s take of jade revenues. According to Myanmar Gems & Jewellery Entrepreneurs Association, money raised through this levy goes to a fund which is spent on emporium organisation, administration and building maintenance costs as well as “works leading to development of the gem market” and ”CSR”.

Table 7: Discrepancy between actual and estimated potential mine site tax revenue

Share of production Average 2014 Emporium Sale Price (per kg)

20% ‘Mine Site’ Tax (per kg)

Total theoretical tax collections in FY2014 based on 2014 official

production (US$ millions)

Utility 60% US$166.95 US$33.39 US$334.25

Commercial 35% US$2,214 US$442.78 US$2,585.56

Imperial 5% US$19,492 US$3,898.39 US$3,252.04

Total value of properly assessed 20% mine site tax (not including any adjustment for transportation charges or value added between mine site and emporium)

US$6,171.85

Mine site tax paid US$6.12

Estimated MGE mine site tax revenue loss in 2014 US$6165.73


Appendix 2: Kachin Development Networking Group: ‘Solutions to Current Destructive Natural Resource Development Process andRelated Conflicts’

The following is taken from Chapters V and VI of the Kachin Development Networking Group (KDNG) ‘Kachin State Natural Resources Development Policy Discussion Paper’ on the constitutional changes required as a basis for equitable and sustainable natural resource management in Kachin State. The full paper, published in June 2015, is available at http://www.kdng.org/press-release/455-press-statement-of-kdng-kachin-state-natural-resources-development-policy-discussion-paper.html.

Solutions to Current Destructive Natural Resource Development Process and Related Conflicts

1. Immediate Constitutional Reform

A constitution should clearly establish legal rights to the nation’s natural resources in order toprovide the foundation for proper natural-resources management and development, and social peace. The 2008 constitution must bere-written or replaced to address the issue ofnatural resources, specifically in the areas of ownership, management, and revenue collection.At the same time, the army must be brought under the control of a civilian government and the state governments must be completely directly elected. Specific measures to integrate natural resources powers into constitutional reform should include:

A) Ensure Kachin State has full ownership of all natural resources and this is written into the federal and state constitutions

If there are no proper and clear ownership rights to the natural resources in the constitution, problems will arise between the central, state, and local governments and it can lead to renewed conflicts. Only when there is a clear ownership

right will the political situation be resolved,investors will be convinced to invest, and people can improve the quality of their lives. The ownershiprights stated in the current 2008 constitution in Chapter 1, Clause 37 (a) must be changed in afederal constitution from: The Union is the ultimate owner of all lands and all natural resources above and below the ground, above and beneath the water and in the atmosphere in the Union to The people of Kachin State are the ultimate owners of all lands and all natural resources above and below the ground, above and beneath the water and in the atmosphere in the State.

In addition, ownership rights for Kachin State should also include the following principles:

(a) One must have the right to own one’s land and property, (and/or) ethnic groups must have the right to common ownership.(b) If the property belongs to the people by customary law, all the local residents must be allowed to use it. (c) Local people must be granted permission to extract the natural resources on their own land.

B) Ensure Kachin State has full management, legislative, and enforcement powers over natural resource development, including licensing

Currently the development process is a top-down one handled by the Naypyidaw government and business companies. The local state governments and local people have no right to take part in it. This kind of development program brings more harm than benefit to local people and creates conflict. A “bottom to up” development process engages local people in decision making andprovides benefits to the local citizens. If people are not engaged in the process of managing their own natural resources, more political problems


will emerge and peace in the country may be affected. Therefore, the Kachin State government must have the right to manage the natural resources inthe state. Moreover, the local government and thelocal people must get involved in the management. Local constitutionally-based management powersover land and natural resources can protect minorities by bringing decision making power closer to the affected peoples. Specific aspects of management can be divided between the central and state governments, for example certainstandards on environment or safety could be set at the national level. Management powers give legislative and executive authority over natural resources; they determine who has ability to make and enforce laws on the development and exploitation of natural resources. In this way, management rights are more important than ownership because the power to legislate and regulate natural-resources developmentdetermines the rights, and the limits of the rights, of ownership.

Therefore Clause 37 (b) of Chapter 1 of the current 2008 constitution must be changed in a federal constitution from: “The Union shall enact necessary law to supervise extraction and utilization of State owned natural resources by economic forces” to “The state shall enact necessary law to supervise extraction and utilization of State owned natural resources by economic forces.”

Natural resource management rights for Kachin State should be based on the following principles:

(a) A fully democratically elected Kachin State government must have its own administrative, legislative, and judicial power to manage resources within the state and the right to delegate management powers to local levels of government. (b) A fully democratically elected Kachin State government must have the right to manage and administer development plans based on its natural resources.(c) The central government and foreign companies must not directly manage resource extraction and related development projects or control the process. The Kachin State

government should not be dependent on the central government in this regard but stand on its accord.(d) A fully democratically elected Kachin State government may further devolve management powers to township or other local government entities to best address the needs of local populations needs.(e) All levels of government must recognize the management of the natural resources by the local people according to their customary law as the situation requires. (f) Detailed natural resource management powers must be written into both the federal and Kachin State constitutions.

C) Ensure Kachin State has the power to collect revenues from the state’s natural resources

Taxes and revenues on the use of natural resources must be collected by a democratically elected Kachin State government and the process clearly and transparently explained to the residents of the state. If the local and state governments do not use the revenues according to the wishes of local populations, officials can be voted out. In this way, the government will be more transparent and accountable to the needs of local people.

Natural resource revenue rights for Kachin State should be based on the following principles:

(a) The Kachin State government must collect taxes and revenues from the extraction and use of natural resources and related development projects. The majority of the revenue should remain and be used within Kachin State. A portion can be shared to the central (Union) government for national use. (b) The collected tax revenues for Kachin state should be further divided among local government bodies. Every level of government, local, state and union must be democratically elected.(c) The Kachin State government must use the revenues to design, implement, and manage social, educational, health, and infrastructure development programs with the collected natural resource taxes. Local government entities should also play a role in determining


such programs. (d) The revenue provided to the central (Union) government should support an “equalization fund” to provide revenue to the poorer states of Burma for their health, education and development programs.

The following guidelines should be followed in the collection and distribution of revenues from natural resources:

(a) People living in the area of natural resource extraction or the related development project must receive a dividend of the profits.(b) Tax collection must support the people’s economy and reduce their poverty.(c) The largest percentage of the profits should not go to foreign investors.(d) The local people must be provided employment. Training and job opportunities should be opened to them.(e) Working people must be paid a minimum wage which is to be democratically determined within Kachin State to allow sufficient income for their survival.

2. Interim Steps

A) Halt large scale resource extraction andrelated development projects during peaceprocess to minimize conflict

Political resolution, particularly around natural resource management rights, in Kachin Stateis essential for ending the conflict. If megadevelopment projects are started before political resolution, there will be more conflict between the government and ethnic armed groups and more conflict between the government and local communities. This will have subsequent social

impacts on communities and lead to environmental destruction. Therefore there must be a moratorium on all new projects involving an area larger than 50 hectares.

Large scale mono-crop plantations and factorieshave been established within the boundaries of the Hugawng Tiger Reserve. Therefore to avoid further exploitation of resources under the charade of a designated conservation area, there must also be a moratorium on the establishment ofany conservation areas or parks until constitutional reform is instituted and local governments can properly manage conservation areas.

Existing projects must be re-negotiated under the new constitution.

B) Allow and protect unrestricted civil participation

It is vital that civil society and community-based groups play their role by monitoring the use of natural resources and implementation of the new constitution and laws.

1. Community-based groups must raise awareness among local people to know and understand their rights.

2. The media and other monitoring groups must operate freely to provide information.

3. Local communities must have the right to organize referendums on large scale natural resource development projects to determine their consent.

People must have freedom of expression and the right to protest if the company and government confiscate land, exploits the community, or only consider their own economic profits.


1. Global Witness interview with former official; 2014. (Global Witness interview 256-B).

2. Global Witness interview with jade businessman; 2014. (Global Witness interview 240-D).

3. Chinese trade data taken from CTI (China Trade Institute) and UN Comtrade Database. See Appendix 1 for further details of data used and analysis conducted.

4. See Appendix 1 for details of calculations.

5. World Bank, ‘Myanmar profile’; undated, http://data.worldbank.org/country/myanmar, last accessed 14 September 2015.

6. Calculations based on: (1) Kachin population estimate of 1,442,235. UNICEF, ‘Kachin State’; undated, http://www.unicef.org/myanmar/Kachin_State_Profile_Final(1).pdf, last accessed 19 August 2015; and (2) Health figures taken from Myanmar government budget for the financial year 2014-2015.

7. Roger Keverne (Ed.), ‘Jade’, Anness Publishing; 1991, updated 2010, p.268.

8. Ash Center for Democratic Governance and Innovation, Harvard Kennedy School/Proximity Designs/Rajawali Foundation Institute for Asia, ‘Creating a Future: Using Natural Resources for New Federalism and Unity’; July 2013, http://ash.harvard.edu/links/creating-future-using-natural-re-sources-new-federalism-and-unity; last accessed 1 August 2015.

9. Global Witness interview with jade businessman; 2014. (Global Witness interview 135-B).

10. Under s.31 of Myanmar’s 1995 Gemstone Law, a licence holder who pays the 10% tax on emporium jade sales is exempted from paying other taxes. Despite this exemption, however, according to information provided by MGE and a current jade licence holder, under the 1995 Union Tax Law a 15% commercial tax is also payable. In addition, companies are subject to a 25% income tax on net profits earned in kyat.

11. According to one estimate from an industry leader, around 70% of jade mining companies operate through 60%/40% joint ventures with the state-owned enterprise MGE. In addition, as set out in Chapter 2, various army companies also hold stakes in jade mining operations, again on a 60%/40% basis.

12. See Appendix 1 for calculations.

13. Myanmar government budget for the financial year 2014-15.

14. World Bank, ‘Myanmar: Ending poverty and boosting shared prosperity in a time of transition. A Systematic Country Diagnostic’; November 2014, http://www.worldbank.org/content/dam/Worldbank/document/EAP/Myanmar/WBG_SCD_Full_Report_English.pdf, last accessed 2 August 2015.

15. ibid.

16. According to Physicians for Human Rights, the monthly running cost for three health clinics in Kachin State including rent, staff (10 people includ-ing medical staff and administrators), medicine and communications amounts to US$4,900.

17. Global Witness interview with jade businessman; 2015. (Global Witness interview 135-H).

18. For further details on the EITI, see http://eiti.org. It should be noted that Global Witness has a representative sitting as an alternate member of the EITI International Board which oversees the scheme globally.

19. EITI International Secretariat, ‘The EITI Standard’, EITI; 11 July 2013, https://eiti.org/files/English_EITI%20STANDARD_11July_0.pdf, last accessed 19 August 2015.

20. EITI International Secretariat, ‘Civil Society Protocol’, EITI; 1 January 2015; https://eiti.org/files/EITI_CivilSocietyProtocol_Jan2015.pdf, last accessed 19 August 2015.

21. Ministry of Foreign Affairs, Liberia, ‘An Act Establishing the Liberia Extractive Industries Transparency Initiative’; 10 July 2009, http://www.leiti.org.lr/uploads/2/1/5/6/21569928/act.pdf, last accessed 19 August 2015. Moore Stephens, ‘Liberia Extractive Industries Transparency Initiative (LEITI) Post Award Process Audit, Final Report’; May 2013, http://www.leiti.org.lr/uploads/2/1/5/6/21569928/leiti_post_award_process_audit_fi-nal_report.pdf, last accessed 19 August 2015.

22. Global Witness, ‘Azerbaijan Anonymous’; December 2013; https://www.globalwitness.org/sites/default/files/library/azerbaijan_anonymous_lr.pdf, last accessed 19 August 2015. Human Rights Watch, ‘Reporters’ Guide: 2015 European Games in Baku, Azerbaijan’; 2015, http://www.hrw.org/sites/default/files/related_material/Azerbaijan_Reporter’s_Guide.pdf, last accessed 19 August 2015.

23. Htoo International Industry Company & Htoo Gems and Jewellery Company, ‘Presentation on Jade Mining Operations’; 13 March 2015. Letter from Kyauk Seinn Nagar (Gems) Co., Ltd to Global Witness; 2015.

24. EITI, ‘Myanmar admitted as EITI Candidate’; 2 July2014, https://eiti.org/news/myanmar-admitted-eiti-candidate, last accessed 19 August 2015.

25. Global Witness interviews with MGE; 2014 and 2015.

26. Global Witness interview with jade businessmen and with jade traders in Mandalay; 2015. (Global Witness interviews 69, 124-B and 155-156).

27. Global Witness interviews with jade businessmen, army company source and with Mandalay jade traders; 2015. (Global Witness interviews 155-156, 205-B and 258).

28. Global Witness interview with MGE; 2015. Letter from MGE to Global Witness.

29. Global Witness interview with MGE; 2014.

30. ibid.

ENDNOTES


31. Global Witness interview with former official; 2014. (Global Witness interview 256-A).

32. Global Witness interview with representatives of the MGJEA; 2015.

33. Letter from MGE to Global Witness; 2015.

34. Information provided to Global Witness by industry representative. (Global Witness reference 125).

35. Letter from MGE to Global Witness. Global Witness interviews with jade businessmen; 2015. (Global Witness interviews 218-B and 286).

36. Letter from MGE to Global Witness. Global Witness interview with MGE; 2015.

37. Please see Chapter 2, Part 2 (Army Companies) for further information on concession share arrangements with army companies.

38. Global Witness interview with MEHL; 2015. Global Witness interview with MGE; 2014.

39. Global Witness interviews with seven jade businessmen and an employee of MEHL; 2014 and 2015. (Global Witness interviews 6, 14, 58, 135, 258, 384, 472 and 473).


41. Global Witness interview with representative of MGE; 2014.

42. Ministry of Mines, ‘Statement of the Ministry of Mining (121/99)’, 1 October 1999. [Translated from Myanmar language to English by Global Witness.]

43. Global Witness meeting with MGE; 2015.



46. Global Witness interview with jade businessman; 2015. (Global Witness interviews 135/137-A).


48. Global Witness interview with jade businessman; 2014. (Global Witness interview 14-A).




52. Global Witness interview with jade businessman; 2015. (Global Witness interview 6-C).

53. ibid.

54. Global Witness interview with former jade businessman; 2014. (Global Witness interview 243-C).

55. Global Witness interviews with former and current jade businessmen; 2014 and 2015. (Global Witness interviews 218-B and 243-C).


57. Global Witness interview with jade businessman; 2015. (Global Witness interview 135/137-A).





62. Global Witness interview with jade businessman; 2014. (Global Witness interview 310).

63. Global Witness interview with former official; 2014. (Global Witness interview 256-A).


65. Global Witness interview with former jade businessman; 2014. (Global Witness interview with 243-C).


67. Letter from MGE to Global Witness. Global Witness interviews with three jade businessmen; 2014 and 2015. (Global Witness interviews 136-D, 136-E and 218-B).

68. Global Witness interviews with representatives of MGE; 2015.

69. Letter from MGJEA to Global Witness; 2015.

70. According to MGE, jade can also be sold at the Mogoke Htaa Pwe Gems market and the Yangon Gems Market. In addition, as set out in Chapter 3, a new market for very low-grade jade has recently been established in Kachin State. Letters from MGE, MGJEA and Kyauk Seinn Nagar (Gems) Co. Ltd to Global Witness; 2015. Global Witness meeting with MGJEA; 2015.

71. Global Witness interviews with representatives of MGE; 2015.

72. Global Witness interviews with representatives of MGE; 2014.73. Myanmar Gemstone Law 1995, s.17.


74. Global Witness interview with representative of jade company; 2015. (Global Witness interview 124-B).

75. ibid.

76. Global Witness interviews with jade traders, two jade businessmen and the employee of a jade company; 2015. (Global Witness interviews 124, 54-AG, 14-G and 427).

77. Global Witness interview with jade businessman; 2014. (Global Witness interview 14-G).

78. Global Witness interview with former jade businessman; 2015. (Global Witness interview 54-AG).

79. Global Witness interviews with an official and with three jade businessmen; 2014 and 2015. (Global Witness interviews 14-G, 54-AG, 56 and 124-B).

80. Global Witness interview with prominent jade businessman; 2015. (Global Witness interview 218).

81. Global Witness interviews with two jade businessmen; 2015. (Global Witness interviews 218 and 384).

82. Bertil Lintner and Michael Black, ‘Merchants of Madness: The Methamphetamine Explosion in the Golden Triangle’, Silkworm Books, Chapter 6; April 2009. Global Witness interview with former official; 2014. (Global Witness interview 256).

83. Jade businessmen, traders and a KIA/KIO official interviewed by Global Witness in Myanmar and China gave consistent accounts of companies selling some jade at the official emporium whilst smuggling the rest directly to China. Three jade businessmen estimated that “big companies smuggle at least 50% of the good jade they produce”, and a fourth that “large companies … carry… more than 50% [illegally]”. A prominent jade mine owner estimated that “60-70% goes straight to the border” and another that “80% of jade from Hpakant is smuggled”, while an experi-enced jade businessman and trader said that since 2011 50% of jade is typically smuggled. One Chinese jade trader suggested that “80% of production is smuggled” whilst another said that “outside trade is more than 5-10 times legal trade”. A KIA/KIO official stated that 80% of jade is smuggled out and sold on the black market. Only one interviewee gave an estimate of less than half of jade being smuggled, but he went on to explain that the majority of legal sales are subject to price manipulation and tax evasion (Global Witness interviews 6-C, 47, 135-G, 218, 259-260, 378/243/263-B, 384-A and 411). See also Eleven, ‘Timber, jade account for more than half of smuggled goods seized’; 22 October 2014.

84. The data in this map is based on interviews with seven jade businessmen and one civil society representative; 2014 and 2015. (Global Witness interviews 47, 101, 142, 234, 350, 352, 353 and 377).

85. A range of prominent and smaller scale jade businessmen and traders and a KIA/KIO official explained that high-value jade goes straight to China, with a few stones going to the emporium for show. Typically, lower grade stones go to the emporium because they are bulky and harder to smuggle. In one incident described to Global Witness, a small-scale jade businessman weighed up the costs of selling a jade boulder at the emporium and smuggling it to China. Because the latter would have cost 40 million kyat (approximately US$40,000), and the jade piece was medium quality commercial grade, he decided that using the official emporium sale would yield the better return. (Global Witness interviews 14-A, 14-G, 54-AI, 259 and 287).

86. Sales catalogue for the Fifty-Second Myanmar Gems Emporium in 2015. [Translated from Myanmar language to English by Global Witness.]

87. Wu Dingming, ‘A Panoramic View of Chinese Culture’, Simon & Schuster; May 2014.

88. The British Museum, ‘Chinese Jade’, undated, http://www.britishmuseum.org/explore/online_tours/asia/chinese_jade/chinese_jade.aspx, last accessed 2 June 2014. Celine Ge/AFP, ‘Bubble Trouble hits Hong Kong jade market’; 16 September 2013, http://www.chinapost.com.tw/business/asia/hong-kong/2013/09/16/389014/Bubble-trouble.htm, last accessed 2 June 2015.


90. Jeremy Page and Brian Spegele, ‘Chinese Communist Party Ousts a Former Top General’, Wall Street Journal; 30 June 2014, http://www.wsj.com/articles/chinese-communist-party-ousts-a-former-top-general-on-bribe-taking-allegations-1404126279, last accessed 31 July 2015. The Economist, ‘Rank and vile: Xi Jinping flexes his muscle against army corruption’; 14 February 2015, http://www.economist.com/news/china/21643225-xi-jinping-flexes-his-muscle-against-army-corruption-rank-and-vile, last accessed 31 July 2015. China Times, ‘Fallen PLA general Xu Caihu dies of cancer prior to trial’; 16 March 2015, http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20150316000079&cid=1101, last accessed 31 July 2015. Reuters, ‘Former top China military official hoarded cash, jade in basement: Phoenix’; 20 November 2014; http://www.reuters.com/article/2014/11/20/us-china-politics-corruption-idUSKCN0J412Q20141120, last accessed 31 July 2015. What’s on Weibo, ‘Money, Money, Money: General Xu Caihou’s House Filled With Cash & Jade’; 20 November 2014; http://www.whatsonweibo.com/money-money-money-general-xu-caihous-house-filled-with-cash-jade/, last accessed 31 July 2015.

91. Li Qian, ‘Craving for gemstone leads to deputy governor’s downfall’, Shanghai Daily; 16 December 2014, http://www.shanghaidaily.com/national/Craving-for-gemstone-leads-to-deputy-governors-downfall/shdaily.shtml, last accessed 5 August 2015. South China Morning Post, ‘Chinese official ‘traded influence for jade in cash-free graft case’; 8 January 2014, http://www.scmp.com/news/china/article/1400580/chinese-official-traded-influence-jade-cash-free-graft-case, last accessed 5 August 2015. South China Morning Post, ‘Provincial official Ni Fake jailed for 17 years over multimillion dollar jade bribes’; 1 March 2015, http://www.scmp.com/news/china/article/1726392/provincial-official-jailed-17-years-over-multimillion-dollar-jade-bribes, last accessed 5 August 2015. Dan Levin, ‘A Corruption Case Laden With Jade’, New York Times; 15 December 2014, http://sinosphere.blogs.nytimes.com/2014/12/15/a-corruption-case-laden-with-jade/?_r=0, last accessed 5 August 2015. Harrison Jacobs, ‘Here’s the ridiculous loot that’s been found with corrupt officials’, Business Insider; 22 January 2015, http://uk.businessinsider.com/the-ridiculous-loot-thats-been-found-with-corrupt-chinese-officials-2015-1?r=US&IR=T, last accessed 5 August 2015. Tom Philips, ‘China executes Ferrari-loving billionaire ‘gangster’, The Telegraph; 9 February 2015, http://www.telegraph.co.uk/news/worldnews/asia/china/11399732/China-executes-Ferrari-loving-billionaire-gangster.html, last accessed 5 August 2015. Benjamin Kang Lim, David Lague and Charlie Zhu, ‘Special Report: The power struggle behind the corruption crackdown’, Reuters; 23 May 2015, http://www.reuters.com/article/2014/05/23/us-china-corruption-special-report-idUSBREA4M00120140523, last accessed 5 August 2015.

92. Global Witness interviews with jade businessman and with local community leader; 2014 and 2015. (Global Witness interviews 142-C and 242).

93. Global Witness interviews with two prominent and small-scale jade businessmen, a local official, a former Ministry of Mines official, a former jade company security guard, a Buddhist monk and two parliamentarians; 2014. (Global Witness interviews 14-A, 142-C, 239-C, 243-A, 256, 323, 326 and 339).

94. Global Witness interviews with two businessmen working with Chinese companies/backers; 2014. (Global Witness interviews 311-B and 320).


96. ibid.

97. Ministry of Mines, ‘Jade mine tract areas map for phatsat [joint venture] mining and Myanmar Gems and Jewellery Trading Enterprise: Hpakant, Lonekhin and Ta-mahkan regions’; 8 April 1991.

98. Global Witness interviews with former and current jade businessmen; 2014 and 2015. (Global Witness interviews 202-A and 218-B).


99. Global Witness interview with jade industry representative; 2014. (Global Witness interview 135-A).

100. Global Witness interviews with representative of machine supplier and with jade businessmen; 2015. (Global Witness interviews 416, 6-C and 286.).

101. Global Witness interviews with machine company representative and jade businessman; 2015. (Global Witness interviews 65 and 416).

102. Global Witness interviews with two jade businessmen; 2015. (Global Witness interviews 6-C and 65).

103. Letter from MGE to Global Witness. This states that 8,491 lots were sold at the 50th gemstone emporium in 2013, for 2,403,216,267 euros. Payment was received for 6,971 lots in the amount of 1,317,916,432 euros.

104. The sum given here in US dollars is based on the conversion rate of 1.3596 US dollars to the euro which was the average daily exchange rate across the days that the 2014 Myanmar Gems Emporium took place, http://www.oanda.com/currency/converter/.

105. The sum given here in US dollars is based on the conversion rate of 1.3187 US dollars to the euro which was the average daily exchange rate across the days that the 2013 Myanmar Gems Emporium took place, http://www.oanda.com/currency/converter/.

106. International Human Rights Law Clinic at Harvard Law School, ‘Crimes in Burma’; 2009, http://hrp.law.harvard.edu/wp-content/uploads/2009/05/Crimes-in-Burma.pdf, last accessed 19 August 2015. International Human Rights Law Clinic at Harvard Law School, ‘Legal Memorandum: War Crimes and Crimes against Humanity in Eastern Myanmar’; November 2014, http://hrp.law.harvard.edu/wp-content/uploads/2014/11/2014.11.05-IHRC-Legal-Memorandum.pdf, last accessed 19 August 2015. Benedict Rogers, ‘Than Shwe – unmasking Burma’s Tyrant’, Chapter 4, Silkworm Press; 2010.

107. Jared Ferrie / Reuters, ‘Photo of Myanmar’s reclusive former dictator Than Shwe surfaces on Facebook’; 27 March 2015, http://www.independent.ie/world-news/asia-pacific/photo-of-myanmars-reclusive-former-dictator-than-shwe-surfaces-on-facebook-31099311.html, last accessed 19 August 2015. Min Zin / New York Times, ‘Return of the Myanmar Military?’; 17 November 2014, http://www.nytimes.com/2014/11/18/opinion/return-of-the-myanmar-military.html?_r=0, last accessed 19 August 2015. Bertil Lintner / Foreign Policy, ‘The Military’s Still in Charge’, http://foreignpolicy.com/2013/07/09/the-militarys-still-in-charge, last accessed 20 August 2015.

108. Larry Jagan / Bangkok Post, ‘Thein Sein in Palace Coup to Boost Support’; 14 August 2015, http://www.bangkokpost.com/opinion/opinion/655372/thein-sein-in-palace-coup-to-boost-support, last accessed 19 August 2015.

109. ibid.

110. Global Witness interview with political analyst; 2015. (Global Witness interview 381).

111. Global Witness interview with Ministry of Mines official; 2015. (Global Witness interview 54-D).

112. Global Witness interview with long-time Myanmar commentator; 2015. (Global Witness interview 413).

113. DICA records for Kyaing International and Kyaing International Gems downloaded in November 2014 register Win Tin to the address 1000/A Shwe Hninsi St, Yangon. This is the same address as the one recorded for Kyaing San Shwe, Thant Zaw Shwe and Htun Naing Shwe’s wife Khin Thanda in the DICA database entry for Naing Group Syndicate and for Thant Zaw Shwe in the list of directors for Myanmar Naing Group Gems (both records retrieved October 2014): DICA record for Kyaing International Gems Co. Ltd and Kyaing International Co. Ltd retrieved from http://dica.gov.mm.x-aas.net; 3 November 2014 (these records are no longer available in full form). DICA record for Naing Group Syndicate Co. Ltd and Myanmar Naing Group Gems Co. Ltd extracted by OpenCorporates; October 2014 and analysed by the Open Knowledge Foundation; March 2015.

114. Communication from jade industry expert group; 2014. Global Witness interview with community leader; 2014. (Global Witness interview 242).

115. MGE, ‘Lone Khin Treasure Land and related blocks’ map (in use as of mid-2014); MGE, ‘Map Showing Lone Khin Treasure Land Joint Venture Jade Mining Blocks’ (in use as of mid-2014). Kachin Independence Organisation register of jade mining companies ‘Maw Sizar block’ (in use as of 2014).

116. MGE, ‘Lone Khin Treasure Land and related blocks’ map (in use as of mid-2014); MGE, ‘Map Showing Lone Khin Treasure Land Joint Venture Jade Mining Blocks’ (in use as of mid-2014).

117. MGE, ‘Lone Khin Treasure Land and related blocks’ map (in use as of mid-2014); MGE, ‘Map Showing Lone Khin Treasure Land Joint Venture Jade Mining Blocks’ (in use as of mid-2014). Kachin Independence Organisation register of jade mining companies ‘Wah Kye Maw’ (in use as of 2014).

118. MGE, ‘Map Showing Hpakant Treasure Land and related blocks’ (in use as of mid-2014).

119. MGE, ‘Hpakant Treasure Land and related blocks’ map (in use as of end of 2012). MGE, ‘Map Showing Hpakant Treasure Land Joint Venture Jade Mining Blocks’ (in use as of end of 2012).

120. MGE, ‘Map Showing Hpakant Treasure Land and related blocks’ (in use as of mid-2014). MGE, ‘Hpakant Treasure Land and related blocks’ map (in use as of end of 2012).

121. MGE, ‘Map Showing Hpakant Treasure Land and related blocks’ (in use as of mid-2014). MGE, ‘Map Showing Hpakant Treasure Land Joint Venture Jade Mining Blocks’ (in use as of end of 2012).

122. MGE, ‘Gwi Hkar Treasure Land and related blocks’ map (in use as of mid-2015).

123. MGE, ‘Map Showing Hpakant Treasure Land Joint Venture Jade Mining Blocks’ (in use as of end of 2012).

124. Myanmar Gems Emporium official sales figures; 2013 and 2014.

125. Communication from jade industry expert group; 2014. Global Witness interviews with a community leader, a jade company employee, a KIA/KIO advisor and three jade businessmen; 2014 and 2015. (Global Witness interviews 142-B, 218-B, 242, 312, 324 and 338).

126. Global Witness interviews with two jade businessmen; 2014 and 2015. (Global Witness interviews 177-B and 218-B).

127. Up until at least October 2014, DICA registry records showed that Kywe Wa Sone / Richest Gems shared a director, Tin Win, with Tet Kham Gems. By September 2015, however, Tin Win no longer appeared on the Kywe Wa Sone / Richest Gems listing. In DICA registry records for Tet Kham Gems, Aik Haw is listed under the alias Aung Hein. Aik Haw is profiled in the section of this report about companies linked to the United Wa State Army. Global Witness interview with international expert on the narcotics industry; 2015. (Global Witness interview 296-A). DICA records for Tet Kham Gems Co. Ltd, retrieved from http://dica.gov.mm.x-aas.net; 6 September 2015.

128. DICA record for Richest Gems Co. Ltd and Tet Kham Gems and Jewellery Co. Ltd extracted by OpenCorporates; October 2014 and analysed by the Open Knowledge Foundation; March 2015. DICA, ‘Company Information Report’; June 2013. U.S. Department of The Treasury, ‘SDN List by Country’, http://www.treasury.gov/ofac/downloads/ctrylst.txt, last accessed 19 August 2015. U.S. Treasury Office of Foreign Assets Control, ‘Wei Hsueh Kang United Wa State Army Financial Network’; November 2008, http://www.treasury.gov/resource-center/sanctions/Programs/Documents/wa_chart_11292008.pdf, last accessed 13 August 2015.


129. Global Witness observations and interviews with local politicians and residents; 2015. (Global Witness interviews 382, 383 and 424).

130. Global Witness interviews with a jade company consultant, a jade businessman and a humanitarian worker; 2014 and 2015. (Global Witness interviews 202-E, 236-B, 378).

131. Global Witness interview with employee of jade mining company; 2014. (Global Witness interview 72-B). Communication from KDNG, March 2015.

132. BBC, ‘Burma leader’s lavish lifestyle aired’; 2 November 2006, http://news.bbc.co.uk/2/hi/asia-pacific/6109356.stm, last accessed 12 April 2015. Benedict Rogers, ‘Than Shwe – unmasking Burma’s Tyrant’, Chapter 5, Silkworm Press; 2010.

133. Global Witness interviews with two political analysts; 2014 and 2015. (Global Witness interviews 127-B/C and197-D). Kyaw Hsu Mon / The Irrawaddy, ‘Aung Thaung Blacklisted for Links to Anti-Muslim Violence: Analysts’; 3 November 2014, http://www.irrawaddy.org/burma/aung-thaung-black-listed-links-anti-muslim-violence-analysts.html, last accessed 12 April 2015.

134. The leaked video of the wedding is available on You Tube, in a series of clips starting at https://www.youtube.com/watch?v=j8-2Ggd5Ng0 (last accessed 4 October 2015). Jonathan Watts, ‘Burmese outraged at lavish junta wedding’, The Guardian; 2 November 2006, http://www.theguard-ian.com/world/2006/nov/02/burma.jonathanwatts; last accessed 4 October 2015. Ed Cropley, ‘Lavish wedding video sparks outrage’, Reuters; 2 November 2006, http://uk.reuters.com/article/2006/11/02/tech-myanmar-wedding1-dc-idUKBKK1738220061102; last accessed 4 October 2015.

135. Global Witness interview with long-time Myanmar commentator; 2015. (Global Witness interview 413).

136. Shwe Yinn Mar Oo, Ko Ko Gyi and Thomas Kean / Myanmar Times, ‘Opposition MPs cleared of fraud’; 20 June 2011, http://www.mmtimes.com/index.php/national-news/2535-opposition-mps-cleared-of-fraud.html, last accessed 25 August 2015. Maung Aung Myoe, ‘Building the Tatmadaw: Myanmar Armed Forces Since 1948’, Institute of Southeast Asian Studies; 2009, p.231. Global Witness interview with humanitarian worker; 2014. (Global Witness interview 202-B).

137. Global Witness interviews with a KIA/KIO representative, a civil society organisation representative, a civil society organisation, a MEHL repre-sentative and four jade businessmen; 2014 and 2015. (Global Witness interviews 395-398, 185-A, 18-J, 197-B, and 14-B, 349, 6-C, 310). See also Mandy Sadan, ‘Being and Becoming Kachin’, the British Academy / Oxford University Press; 2013, p.338, footnote 19.

138. Global Witness interviews with four jade businessmen; 2014 and 2015. (Global Witness interviews 14-B, 218, 349 and 263).

139. DICA record for Myanmar Win Gate Gems and Jewellery Mining Co. Ltd retrieved from http://dica.gov.mm.x-aas.net; 3 November 2014 (this record is no longer available in full form). Myanmar Win Gate ‘Welcome to MyanmarWingate.com’, http://www.myanmarwingate.com, last accessed 2 October 2015.

140. DICA record for Myanmar Win Gate Gems and Jewellery Mining Co. Ltd retrieved from http://dica.gov.mm.x-aas.net; 3 November 2014 (this record is no longer available in full form). DICA record for Myanmar Win Gate Gems and Jewellery Mining Co. Ltd extracted by OpenCorporates; October 2014 and analysed by the Open Knowledge Foundation; March 2015. DICA, ‘Company Information Report’; June 2013. European Commission, ‘Commission Regulation (EU) No 411/2010’; 10 May 2010, http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32010R0411, last accessed 9 April 2015.

141. European Commission, ‘Commission Regulation (EU) No 411/2010’; 10 May 2010, http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32010R0411, last accessed 9 April 2015.

142. MGE, ‘Lone Khin Treasure Land and related blocks’ map (in use as of mid-2014); MGE, ‘Map Showing Lone Khin Treasure Land Joint Venture Jade Mining Blocks’ (in use as of mid-2014). KIO register of jade mining companies ‘Wah Kye Maw’ (in use as of 2014). MGE, ‘Gwi Hkar Treasure Land and related blocks’ map (in use as of mid-2015).

143. Meeting with MEHL; 2015.

144. MGE, ‘51st Myanmar Gems Emporium Sold Lot List’; 2014. The sum given here in U.S. dollars (and in all figures for June 2014) is based on the conversion rate of 1.3596 U.S. dollars to the euro which was the average daily exchange rate across the days that the 2014 Myanmar Gems Emporium took place, http://www.oanda.com/currency/converter/.

145. Myanmar Gems Emporium official sales figures 2014.

146. For an uploaded version of Minister Ohn Myint’s speech, see https://www.youtube.com/watch?v=SxH7M9H1oDw, last accessed 25 August 2015.

147. DVB, ‘Magwe demands ‘Slapper’ Ohn Myint step down; 11 February 2014, http://www.dvb.no/news/magwe-demands-slapper-ohn-myint-step-down-burma-myanmar-2/37072, last accessed 25 August 2015.

148. Larry Jagan / Asia Times, ‘Electoral test for Myanmar reforms’, 31 March 2012, http://www.atimes.com/atimes/Southeast_Asia/NC31Ae01.html, last accessed 28 August 2015. Myanmar Pyithu Hluttaw, ‘Maung Maung Thein profile’ http://www.pyithuhluttaw.gov.mm/?q=representative%2F%E1%80%A6%E1%80%B8%E1%80%B1%E1%80%99%E1%80%AC%E1%80%84%E1%80%B9%E1%80%B1%E1%80%99%E1%80%AC%E1%80%84%E1%80%B9%E1%80%9E%E1%80%AD%E1%80%99%E1%80%B9%E1%80%B8, last accessed 28 August 2015.

149. Larry Jagan / Mizzima News, ‘Splits emerge in Burma’s army over country’s roadmap’; 21 March 2008, http://archive-2.mizzima.com/edop/analysis/323-splits-emerge-in-burmas-army-over-countrys-roadmap.html, last accessed 28 August 2015. Global Witness interview with political analyst; 2015. (Global Witness interview 381). Global Witness research, interview with industry source; August 2001 / Global Witness, ‘A Conflict of Interests’, p.43; 2013, https://www.globalwitness.org/sites/default/files/import/03sep3%20Conflict%20of%20Interests%2030-59.pdf.

150. Global Witness interviews with two jade businessmen; 2015. (Global Witness interviews 218-B and 311). MGE, ‘Hpakant Treasure Land and related blocks’ map (in use as of mid-2014). MGE, ‘Map Showing Hpakant Treasure Land Joint Venture Jade Mining Blocks’ (in use as of end of 2012). MGE, ‘Map Showing Hpakant Treasure Land and related blocks’ (in use as of mid-2014).

151. Global Witness interview with journalist; 2015. (Global Witness interview 410).

152. DICA record for Myat Yamon Trading Co. Ltd, Myat Yamon Gems Co. Ltd and Myo Nwe Gems Co. Ltd extracted by OpenCorporates; October 2014 and analysed by the Open Knowledge Foundation; March 2015. Equivalent records downloaded from the DICA online database http://dica.gov.mm.x-aas.net/; October 2015. Communication from courier company; 2015.

153. Myanmar Pyithu Hluttaw, ‘Maung Maung Thein profile’ http://www.pyithuhluttaw.gov.mm/?q=representative%2F%E1%80%A6%E1%80%B8%E1%80%B1%E1%80%99%E1%80%AC%E1%80%84%E1%80%B9%E1%80%B1%E1%80%99%E1%80%AC%E1%80%84%E1%80%B9%E1%80%9E%E1%80%AD%E1%80%99%E1%80%B9%E1%80%B8, last accessed 17 April 2015.

154. Min Thein’s NRC number can be identified via DICA records for Thone Pwint Hsain Co. Ltd timber company, which previous Global Witness investigations have revealed he controls: Global Witness research, interview with industry source; August 2001 / Global Witness, ‘A Conflict of


Interests’; 2013, p.43, https://www.globalwitness.org/sites/default/files/import/03sep3%20Conflict%20of%20Interests%2030-59.pdf. In Global Witness’ 2003 report, the company’s name is spelled Thone Pwint Saing Co. Ltd. We believe the divergence in spelling in the DICA records relates to a difference in the system used for transcribing the Myanmar name into Roman letters. DICA record for Myo Nwe Gems & Jewellery Co. Ltd and Thone Pwint Hsain Co. Ltd, http://dica.gov.mm.x-aas.net, last accessed 27 August 2015.

155. Global Witness interview with civil society organisation; 2015. (Global Witness interview 18-J). Communication from Myanmar company; 2015.

156. Letter to Global Witness from Nay Aung; 2015.

157. Global Witness interviews with jade businessman, a civil society organisation and local resident; 2014 and 2015. (Global Witness interview 263 and 18-J).

158. Film footage provided by local resident; 2015. Footage of the same incident (which does not identify the site as a Myat Yamon mine) can also be accessed at Radio Free Asia, ‘Unbridled Jade Mining Triggers Deadly Landslides in Myanmar’, https://www.youtube.com/watch?v=rWd1PSluDe0, last accessed 5 October 2015. Global Witness interviews with jade businessman and local residents; 2015. (Global Witness interviews 404 and 128-G). Xinhua, ‘Nearly 70 missing in landslide in Myanmar’s jade mining area’; 9 April 2015, http://news.xinhuanet.com/english/2015-04/09/c_134138004.htm, last accessed 5 October 2015.


160. Communication from Ministry of Mines; 2015. MGE, ‘Map Showing Hpakant Treasure Land and related blocks’ (in use as of mid-2014). Global Witness interview with political analyst; 2015. (Global Witness interview 381). DICA record for Shwe Innwa Gems Co. Ltd retrieved from http://dica.gov.mm.x-aas.net; 30 August 2015. DICA record for Shwe Innwa Gems Co. Ltd extracted by OpenCorporates; October 2014 and analysed by the Open Knowledge Foundation; March 2015. Euro-Burma Office, ‘Political Monitor / Official Media / 25 February to 16 March 2012’, p.8-9, https://euroburmaoffice.s3.amazonaws.com/filer_public/84/e7/84e7871d-613b-41f9-b7de-d2e023b730da/pm_no_7_-_27-03-12.pdf, last accessed 11 June 2015.

161. DICA, ‘Company Information Report’; June 2013. Communication from courier company; 2015. U.S. Embassy Rangoon, ‘Burma: State-Owned Enterprise Demonstrates Military’s Hold on Economy’; 6 February 2009, https://www.wikileaks.org/plusd/cables/09RANGOON83_a.html, last accessed 31 August 2015. Mizzima News, ‘Junta-controlled firm opens shopping centre in Rangoon’; 11 October 2010, http://archive-2.mizzima.com/business/4432-junta-controlled-firm-opens-shopping-centre-in-rangoon.html, last accessed 31 August 2015.

162. Global Witness meeting with MEHL. DICA record for Myanmar Imperial Jade (Gems & Jewellery) Co. Ltd extracted by OpenCorporates; October 2014 and analysed by the Open Knowledge Foundation; March 2015.

163. Courier company report; 2015.

164. US Embassy Rangoon, ‘Update On Myanmar Economic Holdings’ Activities’; 6 February 2009, https://search.wikileaks.org/plusd/cables/09RANGOON77_a.html, last accessed 4 October 2015. DICA record for Myanmar Imperial Jade (Gems & Jewellery) Co. Ltd extracted by OpenCorporates; October 2014 and analysed by the Open Knowledge Foundation; March 2015. Global Witness meeting with MEHL; 2015.

165. Myanmar Gems Emporium official sales figures 2013 and 2014.

166. In English language publications, MEHL spells its name Myanma Economic Holdings Limited, without an ‘r’ at the end of Myanmar. By contrast, the other big army company, Myanmar Economic Corporation, spells Myanmar with an ‘r’.

167. Communication from Ministry of Mines; 2015. Global Witness interviews with representative of MEC and political analyst; 2015. (Global Witness interviews 302 and 483). Myanmar Gems Emporium official sales figures 2013 and 2014. MGE, ‘Lone Khin Treasure Land and related blocks’ map (in use as of mid-2014). MGE, ‘Map Showing Hpakant Treasure Land and related blocks’ (in use as of mid-2014). Maung Aung Myoe, ‘Building the Tatmadaw: Myanmar Armed Forces Since 1948’, Institute of Southeast Asian Studies; 2009, p.186. DICA record for Shwe Innwa Gems Co. Ltd and Northern Star Gems and Jewellery Co. Ltd retrieved from http://dica.gov.mm.x-aas.net; 30 August 2015. DICA record for Shwe Innwa Gems Co. Ltd and Northern Star Gems and Jewellery Co. Ltd extracted by OpenCorporates; October 2014 and analysed by the Open Knowledge Foundation; March 2015.

168. Global Witness interview with former MEHL employee; 2014. (Global Witness interview 484). Sean Turnell, ‘Burma’s Economy and the Struggle for Reform’ in Mikael Gravers and Flemming Ytzen (eds) ‘Burma / Myanmar – Where Now?’, NIAS Press; 2014, p. 382. International Crisis Group, ‘Myanmar: the politics of economic reform’, Asia Report N°231; July 2012, http://www.crisisgroup.org/~/media/files/asia/south-east-asia/burma-myanmar/231-myanmar-the-politics-of-economic-reform.pdf, last accessed 28 August 2015.

169. Sean Turnell, ‘Burma’s Economy and the Struggle for Reform’ in Mikael Gravers and Flemming Ytzen (eds) ‘Burma / Myanmar – Where Now?’, NIAS Press; 2014, p. 382. International Crisis Group, ‘Myanmar: the politics of economic reform’, Asia Report N°231; July 2012, http://www.crisis-group.org/~/media/files/asia/south-east-asia/burma-myanmar/231-myanmar-the-politics-of-economic-reform.pdf, last accessed 28 August 2015.

170. Global Witness interviews with political analyst and former official; 2014 and 2015. (Global Witness interviews 268 and 256-B). International Crisis Group, ‘Myanmar: the politics of economic reform’, Asia Report N°231; July 2012, http://www.crisisgroup.org/~/media/files/asia/south-east-asia/burma-myanmar/231-myanmar-the-politics-of-economic-reform.pdf, last accessed 28 August 2015. Sean Turnell, ‘Burma’s Economy and the Struggle for Reform’ in Mikael Gravers and Flemming Ytzen (eds) ‘Burma / Myanmar – Where Now?’, NIAS Press; 2014, p. 382.


172. Amnesty International, ‘Open for Business? Corporate Crime and Abuses at Myanmar Copper Mine’; February 2015, https://www.amnesty.org/en/documents/asa16/0003/2015/en, last accessed 28 August 2015. Lawyers’ Network and Justice Trust, ‘Submission of Evidence to Myanmar Government’s Letpadaung Investigation Commission’; 1 December 2012, http://www.humanrights.asia/news/press-releases/pdf/2013/AHRC-PRL-007-2013.pdf, last accessed 28 August 2015. BBC, ‘Burma confirms phosphorus used at mine protest’; 12 March, 2013, http://www.bbc.co.uk/news/world-asia-21751357, last accessed 28 August 2015.

173. Global Witness meeting with MEHL; 2015. Global Witness interviews with three jade businessmen and a jade industry consultant; 2014 and 2015. (Global Witness interviews 14-G-H, 218, 310 and 236). Mary P Callahan, ‘Making Enemies’, Cornell Press; 2003, p. 214 describes MEHL in general terms as controlling the gems industry at this time.

174. Global Witness interview with jade businessman; 2014. (Global Witness interview 14-D).

175. Global Witness interviews with a lawyer, an MEHL employee and a jade businessman; 2014 and 2015. (Global Witness interviews 360, 484 and 218-B).

176. MEHL, ‘Twelfth Annual Report of the Year 2001-2002’; 3 June 2002, reproduced in Sein Htay / Federation of Trade Unions-Burma, ‘Economic Report on Burma 2004/05’, Annex 3; 2005, http://www.burmalibrary.org/docs12/FTUB-Economic-Report-Sein_Htay2004-05-red.pdf, last accessed 28 September 2015. Global Witness asked an expert on the activities of MEHL to review this document and they believe it to be authentic. Global Witness interview with jade businessman; 2014. (Global Witness interview 14-H).

177. New Light of Myanmar, ‘Lt-Gen Tin Aye visits UMEHL jade, gem sales’; 27 January 2005. New Light of Myanmar, ‘UMEHL Gem and Jade Sales’; 15 May 2002. New Light of Myanmar, ‘13th Gems and lade Sales of UMEHL continues’, 14 July 2000.


178. New Light of Myanmar, ‘Ministry of Mines Holds Coordination Meeting’; 30 June 2001. New Light of Myanmar, ‘Commentary on Myanmar Jade Business’; 9 October 2001. New Light of Myanmar, ‘Significant Mid-Year Myanmar Gems Emporium’; 3 November 2002. Global Witness interview with jade businessman; 2015. (Global Witness interview 218-B).

179. Global Witness interviews with a humanitarian worker and two jade businessmen; 2014 and 2015. (Global Witness interviews 202, 135-C and 6-C).

180. Global Witness interview with a former official; 2014. (Global Witness interview 256-B).

181. Andrew RC Marshall and Min Zayar Oo / Reuters, ‘Myanmar’s old guard runs a jade empire’; 29 September 2013, http://graphics.thomsonreuters.com/13/09/MYANMAR-JADE.pdf, last accessed 4 October 2015.

182. Global Witness meeting with MEHL; 2015.


184. MGE, ‘Lone Khin Treasure Land and related blocks’ map (in use as of mid-2014) and a MGE map of the same name in use in late 2012. These maps designate MEHL zones as follows: San Hkar – 125 acres; Hmaw Wam area – 87 acres and Taw Maw – unspecified acreage. Assuming the Taw Maw mine is drawn roughly to scale, it would appear to cover around 80-100 acres.


186. Global Witness interviews with three jade businessmen; 2014 and 2015. (Global Witness interviews 135-C, 6-C and 14-B).

187. Global Witness meeting with MEHL; 2015. Letter from MEHL; 2015.


189. Global Witness interviews with five jade businessmen; 2014 and 2015. (Global Witness interviews 14-A, 135-C, 384-A, 472 and 473).


191. Global Witness interviews with three jade businessman and an employee of MEHL; 2014 and 2015. (Global Witness interviews 6-C, 14-A, 58 and 484).

192. Letter from MEHL; 2015.


194. MGE, ‘Lone Khin Treasure Land and related blocks’ map (in use as of late 2012).






200. Global Witness interview with two jade businessmen; 2015. (Global Witness interview 135-C and 65-F).




204. Myanmar Gems Emporium official sales figures 2014. MGJEA list of top 70 jade vendors at Myanmar’s Golden Jubilee (50th) Emporium; 2013. MGJEA, ‘List of Joint Venture companies, cooperatives & private companies’; 13 July 2013. Communication from jade business expert; May 2014. MGJEA, ‘Presentation on the Facts and Figures of the 50th Myanmar Gems Emporium’; 2013.


206. Quote from Mary P Callahan, ‘Making Enemies’, Cornell Press; 2003, p.214. Global Witness interview with KIA/KIO representatives; 2015. (Global Witness interview 395).

207. Tan Yawen 谭谭谭 Yang Zhe 谭谭 / Chinanews, ‘President Thein Sein visited Lingguangsi in Beijing’; 18 June 2014, http://www.chinanews.com/gj/2014/06-28/6329769.shtml, last accessed 11 August 2015. Jade-Juecui (a Wechat account / public blog) ‘Myanmar’s President praised the jade carving in the temple of Beijing; 29 June 2014, http://wx.paigu.com/a/695620/32074824.html, last accessed 11 August 2015. This Jade-Juecai article states that President Thein Sein considers the Buddha to represent the friendship between Chinese and Burmese, because it is carved in China, and the jade is from Myanmar. It also refers to Zhang Yingchun (the Chinese name of Ever Winner boss Aike Htwe) as the provider of the jade and includes his picture.


209. Global Witness interviews with family member of jade businessman and a jade businessman; 2015. (Global Witness interviews 379 and 380). Letter to Global Witness from Ei Ei Htwe; 2015. Record for Yadanar Pyi Phyo Aung Gems Co. Ltd from DICA online database http://dica.gov.mm.x-aas.net, retrieved 30 September 2015.

210. Global Witness interviews with a community leader and two jade businessman; 2014 and 2015. (Global Witness interviews 242, 218-B and 309).

211. DICA record for Ever Winner Gems Co. Ltd, Ever Winner Trading Co. Ltd, Lin Lett Win Yadanar Gems Co. Ltd, Pho Thar Htoo Gems Co. Ltd, Kaung Myat Thukha Co. Ltd, Than Lwin Aye Yar Gems Co. Ltd, Yadanar Sin Thiri Trading Co. Ltd, Khine Myanmar Gems, ARS International Ltd, extracted by Open Corporates; October 2014 and analysed by the Open Knowledge Foundation; March 2015. Records for same companies from DICA online database http://dica.gov.mm.x-aas.net, retrieved 19 August 2015. Communication from Ministry of Mines regarding licence allocations; 2015.

212. Communication from KBZ; 2015. Sihui Shipin / Sihui Jade Article Credit Information, Event21 December 2012, http://yqxy.sihui.gov.cn/Item/2402.aspx, last accessed 11 August 2015.


213. Gems and Jewellery Trade Association of China, ‘Leader of Gems, Jewellery Trade Association of China’, http://www.jewellery.org.cn/wz.aspx?CID=0&ClassID=285&Maticsoft=1&Ms=285, last accessed 11 August 2015. Embassy in Myanmar / Ministry of Foreign Affairs of the People’s Republic of China, ‘Chinese Ambassador to Myanmar Accepts Donation for Earthquake Disaster Area in Yunnan from Yunnan Chamber of Commerce’; 21 August 2014, http://www.fmprc.gov.cn/mfa_chn/zwbd_602255/jghd_602270/t1184446.shtml, last accessed 11 August 2015. Houlan Yang / Ministry of Foreign Affairs of the People’s Republic of China, ‘Chinese Ambassador to Myanmar Houlan Yang made a speech in supervisory committee’s inauguration ceremony’; 25 January 2014, http://www.fmprc.gov.cn/mfa_chn/dszlsjt_602260/t1122980.shtml, last accessed 11 August 2015. Myanmar Golden Phoenix, ‘People in Yunnan Chamber of Commerce to celebrate Chinese New Year’; 3 March 2014, http://www.mmgpmedia.com/business/5634-2013-12-11-09-10-07, last accessed 11 August 2015.

214. Communication from jade industry experts; 2014. Global Witness interviews with a community leader, a politician, a jade businessman and a contractor to jade companies; 2014 and 2015. (Global Witness interviews 242-B, 243-B, 218-B and 348).

215. DICA records for ARS International Co. Ltd, Ever Winner Gems Co. Ltd, Kaung Myat Thukha Co. Ltd, Khine Myanmar Gems Co. Ltd, Lin Lett Win Yadanar Gems Co. Ltd, Pho Thar Htoo Gems Co. Ltd, Than Lwin Aye Yar Gems Co. Ltd, Yadanar Pyi Phyo Aung Gems & Jewellery Co. Ltd, Yadanar Shwe Yi Win Gems Co. Ltd, Yadanar Sin Thiri Trading Co. Ltd, extracted by OpenCorporates; October 2014 and analysed by the Open Knowledge Foundation; March 2015. DICA, ‘Company Information Report’; June 2013. MGE, ‘Lone Khin Treasure Land and related blocks’ map (in use as of mid-2014); MGE, ‘Map Showing Lone Khin Treasure Land Joint Venture Jade Mining Blocks’ (in use as of mid-2014). MGE, ‘Map Showing Lone Khin Treasure Land Joint Venture Jade Mining Blocks’ (in use as of end of 2012). MGE, ‘Map Showing Hpakant Treasure Land and related blocks’ (in use as of mid-2014). MGE, ‘Hpakant Treasure Land and related blocks’ map (in use as of end of 2012). MGE, ‘Map Showing Hpakant Treasure Land Joint Venture Jade Mining Blocks’ (in use as of end of 2012). Communication from Ministry of Mines; 2015. Communication from Burma Free Rangers; 2015. Communication from jade industry expert group 2014. Global Witness interviews with a community leader, a contractor to jade companies, local residents, a consultant to jade companies, a KIA officer and two jade businessmen; 2014 and 2015. (Global Witness interviews 14-G, 218-B, 242, 236-A, 348, 345 and 346). Letter from Ei Ei Htwe; 2015.

216. Letter from Ei Ei Htwe to Global Witness; 2015.

217. Global Witness interview with jade businessman; 2015. (Global Witness interview 65-G). Eleven Media, ‘Villages, including in Hpakant Township, are worrying about floods in the monsoon seasons because the waste soil from nearby jade projects run by seven companies is being thrown into Ever Lake’; 2 May 2015.

218. Global Witness interviews with businessman and two jade businessmen; 2015. (Global Witness interviews 416, 248 and 250).

219. DICA record for Yadanar Sin Thiri Trading Co. Ltd extracted by OpenCorporates; October 2014 and analysed by the Open Knowledge Foundation; March 2015. Communication from Ministry of Mines; 2015. Yadanar Sin Thiri Gems, http://ystgems.com/index.php?option=com_contact&view=category&catid=8&Itemid=13, last accessed 15 August 2015. Global Witness interviews with jade trader and an official; 2015. (Global Witness interviews 65-E and 485). Aung Hla Htun and Jared Ferrie / Reuters, ‘Two dead, 30 missing after rockslide at Myanmar jade mine’, 7 January 2015, http://uk.reuters.com/article/2015/01/07/uk-myanmar-mine-idUKKBN0KG1GL20150107, last accessed 15 August 2015. Nyein Nyein / The Irrawaddy, ‘Death Toll Climbs to 4, Search Ongoing After Hpakant Rockslide’, 8 January 2015, http://www.irrawaddy.org/burma/death-toll-climbs-4-search-ongoing-hpakant-rockslide.html, last accessed 15 August 2015.

220. Global Witness interview with local residents; 2015. (Global Witness interviews 345 and 346).

221. Global Witness interview with international economist; 2015. (Global Witness interview 217).

222. KBZ, ‘KBZ Cards’, https://www.facebook.com/KBZCards/info?tab=page_info, last accessed 28 September 2015. Meeting with KBZ; 2015.

223. Myanmar Ministry of Finance, ‘Top 1000 Myanmar Income Tax paying companies for the year 2013-2014’.

224. Myanmar Centre for Responsible Business, ‘Pwint Thit Sa – Transparency in Myanmar Enterprises / First Report’; July 2014, p.18, http://www.myanmar-responsiblebusiness.org/pdf/2014-07-22-Pwint-Thit-Sa-First-Report.pdf, last accessed 19 August 2015. Myanmar Centre for Responsible Business, ‘Pwint Thit Sa – Transparency in Myanmar Enterprises / Second Report’; July 2015, p.13, http://www.myanmar-responsiblebusiness.org/news/second-pwint-thit-sa-time-report.html, last accessed 19 August 2015.

225. KBZ Group of Companies, ‘Code of Conduct’, 24 June 2014, http://www.kbzgroup.com.mm/sites/default/files/kbz_coc_eng.pdf, last accessed 19 August 2015.

226. KBZ Group, ‘Corporate Structure’, http://www.kbzgroup.com.mm/corporate_structure, last accessed 19 August 2015.

227. KBZ letter to Global Witness; 2015. Global Witness meeting with KBZ; 2015. Communication from KBZ; 2015.

228. KBZ letter to Global Witness; 2015. Global Witness meeting with KBZ; 2015. Global Witness interviews with two jade businessmen; 2015. (Global Witness interviews 54 and 486).

229. Communication from KBZ; 2015.

230. US Embassy Rangoon, ‘Sanctioning Private Burmese Companies under the JADE Act’; 19 November 2008, https://wikileaks.org/cable/2008/11/08RANGOON896.html, last accessed 1 October 2015.

231. KBZ Group, ‘A closer look at KBZ Group of Companies’; 2011.

232. KBZ Group, ‘A closer look at KBZ Group of Companies’; 2011.

233. Global Witness interview with industry consultant; 2014. (Global Witness interview 236).

234. Global Witness interviews with industry consultant and jade businessman; 2014 and 2015. (Global Witness interviews 218-B and 236).

235. KBZ Group of Companies, ‘Code of Conduct’, 24 June 2014, http://www.kbzgroup.com.mm/sites/default/files/kbz_coc_eng.pdf, last accessed 19 August 2015.


237. Global Witness meeting with KBZ; 2015.

238. Global Witness interview with businessman; 2015. (Global Witness interview 379).

239. KBZ letter to Global Witness; 2015. DICA record for IKBZ Co. Ltd, extracted by OpenCorporates; October 2014 and analysed by the Open Knowledge Foundation; March 2015. Record for IKBZ from DICA online database http://dica.gov.mm.x-aas.net, retrieved 19 August 2015.

240. DICA record for IKBZ Co. Ltd, extracted by OpenCorporates; October 2014 and analysed by the Open Knowledge Foundation; March 2015. Record for IKBZ from DICA online database http://dica.gov.mm.x-aas.net, retrieved 19 August 2015.


241. KBZ letter to Global Witness; 2015.

242. Letter to Global Witness from Ei Ei Htwe; 2015.



245. MGE, ‘51st Myanmar Gems Emporium Sold Lot List’; 2014. The sum given here in US dollars (and in all figures for June 2014) is based on the conversion rate of 1.3596 US dollars to the euro which was the average daily exchange rate across the days that the 2014 Myanmar Gems Emporium took place, http://www.oanda.com/currency/converter/. Meeting with MEHL and Myanmar Imperial Jade; 2015.

246. Letter to Global Witness from MEHL; 2015.

247. Communication from KBZ; 2015.

248. Bertil Lintner, ‘Blood Brothers – Crime, Business and Politics in Asia’, Silkworm Books, 2003, pages 262-263, 268. US Embassy Rangoon, ‘Dropping the Hammer on Crony Steven Law, 28 December 2007, https://www.wikileaks.org/plusd/cables/07RANGOON1211_a.html, last accessed 28 September 2015. The Economist, ‘Obituary – Lo Hsing Han, heroin king and business tycoon, died on July 6th, aged about 80’; 27July 2013, http://www.economist.com/news/obituary/21582234-lo-hsing-han-heroin-king-and-business-tycoon-died-july-6th-aged-about-80-lo-hsing-han, last accessed 4 September 2015. For background Lo Hsing-Han’s career as a drugs trafficker and warlord, see Bertil Lintner – Opium and Insurgency Since 1948’, Silkworm Books; 1999, pages 230-231, 264-265, 270, 365-366; Alfred W McCoy, ‘The Politics of Heroin – CIA Complicity in the Global Drug Trade’ (Revised Edition), Lawrence Hill Books; 2003, pages 423-427, 434, 438; Martin Smith, ‘Burma-Insurgency and the Politics of Ethnicity’, Zed Books Ltd; 1999, pages 95-96, 315, 380, 427-428. US Department of The Treasury, ‘SDN List by Country’, http://www.treasury.gov/ofac/down-loads/ctrylst.txt, last accessed 4 September 2015.

249. Global Witness interviews with businessman and a MGE official; 2015. (Global Witness interviews 168 and 215). US Embassy Rangoon, ‘Dropping the Hammer on Crony Steven Law, 28 December 2007, https://www.wikileaks.org/plusd/cables/07RANGOON1211_a.html, last accessed 1 October 2015. The Irrawaddy, ‘Tracking the Tycoons’; September 2008 Volume 16 No.9, http://www2.irrawaddy.org/article.php?art_id=14151&page=2, last accessed 4 September 2015.

250. Flemming Ytzen, ‘The Myitsone Entanglement’ in Mikael Gravers and Flemming Ytzen (eds) ‘Burma / Myanmar – Where Now?’, NIAS Press; 2014, p.358. Victoria Heather / DVB ‘VP pushed out over corruption, resistance to reforms’; 24 May 2012, http://www.kdng.org/news/34-news/248--vp-pushed-out-over-corruption-resistance-to-reforms.html, last accessed 28 September 2015.


252. DICA record for Yadanar Taung Tann Gems Co. Ltd extracted by OpenCorporates; October 2014 and analysed by the Open Knowledge Foundation; March 2015. DICA, ‘Company Information Report’; June 2013. For Steven Law’s aliases, see, for example: US Embassy Rangoon, ‘Dropping the Hammer on Crony Steven Law’, 28 December 2007, https://www.wikileaks.org/plusd/cables/07RANGOON1211_a.html, last accessed 28 September 2015.

253. DICA record for Yadanar Taung Tann Gems Co. Ltd retrieved from http://dica.gov.mm.x-aas.net 4 September 2015.

254. Lin Thant and Seamus Martov / The Irrawaddy, ‘Canada Says Burma Invited Controversial Tycoon on Trade Tour’; 30 June 2014, http://www.irrawaddy.org/burma/canada-says-burma-invited-controversial-tycoon-trade-tour.html, last accessed 4 September 2015. Lin Thant and Seamus Martov / The Irrawaddy, ‘Canada Welcomes Tycoon Tied to Drugs, but Denies Visa to Kachin Activist’; 24 June 2014, http://www.irrawaddy.org/burma/canada-welcomes-tycoon-tied-drugs-denies-visa-kachin-activist.html, last accessed 4 September 2015.

255. Lin Thant and Seamus Martov / The Irrawaddy, ‘Canada Says Burma Invited Controversial Tycoon on Trade Tour’; 30 June 2014, http://www.irrawaddy.org/burma/canada-says-burma-invited-controversial-tycoon-trade-tour.html, accessed 4 September 2015. Communication from Seamus Martov; 2015.

256. MGE, ‘Hpakant Treasure Land and related blocks’ map (in use as of end of 2012). MGE, ‘Map Showing Hpakant Treasure Land Joint Venture Jade Mining Blocks’ (in use as of end of 2012). The Yadanar Taung Tann name also appears to be marked on the same Met Lin Chaung (#2) mine in the MGE, ‘Map Showing Hpakant Treasure Land Joint Venture Jade Mining Blocks’ that was in use as of end mid-2014, however the text is indistinct.

257. Global Witness interview with consultant to jade business and a businessman; 2014 and 2015. (Global Witness interview 236 and 168).


259. DICA record for Yadanar Taung Tann Gems Co. Ltd and Dagon Yadanar Gems Co. Ltd retrieved from http://dica.gov.mm.x-aas.net 4 September 2015. As of October 2014, the same two directors were also the company’s sole shareholders: DICA records for Dagon Yadanar Gems Co. Ltd extracted by OpenCorporates; October 2014 and analysed by the Open Knowledge Foundation; March 2015. MGE, ‘Gwi Hkar Treasure Land and related blocks’ map (in use as of mid-2015).



262. According to 2014 emporium sales records, the Htoo Group’s Htoo International and Htoo Apyi Pyi Saing Yar (a joint venture with MG) made sales of US$13,223,634. Htoo Group has also provided Global Witness with a breakdown of its 2014 jade sales. However, there is a discrepancy of 16 lots which are recorded in the official emporium sales records but not in the data provided to Global Witness by Htoo Group. This discrepancy may be due to buyers failing to complete sales agreed at the emporium. Global Witness has sought clarification from Htoo Group but has not received a response.

263. US Embassy Rangoon, ‘The Burmese Regime’s Number One Crony: Tay Za’, Wikileaks; 3 April 2007, https://www.wikileaks.org/plusd/cables/07RANGOON328_a.html, last accessed 24 April 2015. US Embassy Rangoon, ‘Tay Za’s Family Tell Their Side of the Story’, Wikileaks; 7 November 2007, https://www.wikileaks.org/plusd/cables/07RANGOON1093_a.html, last accessed 24 April 2015.

264. US Department of the Treasury, ‘Treasury Action Targets Financial Network of Burmese Tycoon and Regime Henchman Tay Za’; 5 February 2008, http://www.treasury.gov/press-center/press-releases/Pages/hp807.aspx, last accessed 24 April 2015.

265. US Department of the Treasury, ‘Treasury Action Targets Financial Network of Burmese Tycoon and Regime Henchman Tay Za’; 5 February 2008, http://www.treasury.gov/press-center/press-releases/Pages/hp807.aspx, last accessed 24 April 2015. Rieffel, L., ‘Myanmar/Burma: Inside Challenges, Outside Interests’, Brookings Institution Press; 4 October 2010, p.41. BBC, ‘Burma’s parliament opens new session’; 31 January 2011, http://www.bbc.co.uk/news/world-asia-pacific-12321085, last accessed 3 May 2015. Min Zin, ‘In Myanmar, a Soft Coup Ahead of an Election’, The New York Times; 11 September 2015, http://www.nytimes.com/2015/09/12/opinion/in-myanmar-a-soft-coup-ahead-of-an-election.html?_r=0, last accessed 30 September 2015.


266. Wikileaks, ‘Tay Za’s Family Tell Their Side of the Story’; 7 November 2007, https://www.wikileaks.org/plusd/cables/07RANGOON1093_a.html, last accessed 24 April 2015.

267. Global Witness interviews with jade businessman and corporate researcher focused on Myanmar; 2014 and 2015. (Global Witness interviews 109 and 218-B).

268. Global Witness meeting with Htoo Group representatives, March 2015.

269. Global Witness interview with three jade businessman and an employee of MEHL; 2014 and 2015. (Global Witness interviews 6-C, 14-A, 58 and 484).

270. Global Witness field interviews in Hpakant, including interviews with members of community affected by relocation; 2014. (Global Witness interviews 135-B and 482).

271. Htoo International Industry Company & Htoo Gems and Jewellery Company, ‘Presentation on Jade Mining Operations’, 13 March 2015. Letter from Kyauk Seinn Nagar (Gems) Co., Ltd to Global Witness dated 25 July 2015.

272. Global Witness, ‘A Conflict of Interests – The Uncertain Future of Burma’s Forests’; 2003, page 93, https://www.globalwitness.org/sites/default/files/import/03sep3%20Conflict%20of%20Interests90-127.pdf, last accessed 21 May 2015.

273. Communication from Tom Kramer; 2015. Global Witness interview with international expert on Myanmar’s narcotics industry; 2015. (Global Witness interview 296-A).

274. Global Witness interviews with a businessman, a humanitarian worker, Kachin politicians and five jade businessmen; 2014 and 2015. (Global Wit-ness interviews 187, 202-C, 8, 9, 263, 218-B, 205-B, 377-B and 135-C). The UWSA/UWSP is the largest and most well-equipped non-state armed group in Myanmar, with an estimated 20,000-30,000 regular troops and up to 50,000 reserves. Bertil Lintner / The Irrawaddy, ‘Who are the Wa?’; 2 June 2014, http://www.irrawaddy.org/magazine/wa.html, last accessed 15 September 2015. Tom Kramer, Transnational Institute, ‘Neither War nor Peace: The Future of the Ceasefire Agreements in Burma’; July 2009, p.16, http://www.tni.org/files/download/ceasefire.pdf, last accessed 16 April 2015. Burma News International, ‘Deciphering Myanmar’s Peace Process: A Reference Guide, 2014’; March 2014, http://mmpeacemonitor.org/images/pdf/deciphering_myanmar_peace_process_2014.pdf, last accessed 1 March 2015. Ashley South, ‘Ethnic Politics in Burma: States of Conflict’, Routledge Contemporary Series; 2008, Chapter 5.


276. Global Witness interviews with two jade businessmen; 2014 and 2015. (Global Witness interview 310 and 377-B). Bertil Lintner & Michael Black, ‘Merchants of Madness: The Methamphetamine Explosion in the Golden Triangle’, Silkworm Books; 2009, p.118.

277. Letter to Global Witness from Li Myint and Kyaw Kyaw Oo; 2015. DICA record for Hong Pang Mining Co. Ltd, Hong Pang Construction Co. Ltd, Hong Pang Textile Co. Ltd, Hong Pang Electronic Industry Co. Ltd, Hong Pang Livestock Co. Ltd and Hong Pang General Trading Co. Ltd, extracted by OpenCorporates; October 2014 and analysed by the Open Knowledge Foundation; March 2015. For references to US Sanctions see US Treasury, ‘Recent OFAC Actions’; 13 November 2008, http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20081113.aspx, last accessed 7 May 2015.

278. Detail of the evidence supporting these findings is set out in the accompanying background paper on UWSA/UWSP companies.

279. Global Witness interviews with a KIA/KIO representative, two international experts on Myanmar’s narcotics industry, two former jade businessmen and four jade businessmen; 2014 and 2015. (Global Witness interviews 259, 260, 296, 310, 382, 383, 481, 377-B and 14-H). Letter to Global Witness from Li Myint and Kyaw Kyaw Oo; 2015. Communication from international expert on Myanmar’s narcotics industry; 2015. DICA records for three Apho Tan San Chain Hmi / Value Standard companies: Value Standard Dairg Products Co. Ltd; Value Standard General Trading Co. Ltd and Value Standard Food Industrial Co. Ltd; also Myanmar Takaung Gems Co. Ltd, Hong Pang Mining Co. Ltd, Hong Pang Construction Co. Ltd, Hong Pang Textile Co. Ltd, Hong Pang Electronic Industry Co. Ltd, Hong Pang Livestock Co. Ltd, Hong Pang General Trading Co. Ltd, Thaw Tar Win Gems & Jewellery Co. Ltd, Thaw Tar Win Trading Co. Ltd, Thaw Tar Win Construction Co. Ltd, Moe Let Aung Construction Co. Ltd and Shwe Pyae Sone Tun Transportation Co. Ltd extracted by OpenCorporates; October 2014 and analysed by the Open Knowledge Foundation; March 2015. DICA records for three Apho Tan San Chain Hmi / Value Standard companies: Value Standard Dairg Products Co. Ltd; Value Standard General Trading Co. Ltd and Value Standard Food Industrial Co. Ltd; also Myanmar Takaung Gems Co. Ltd, Ayeyar Yadanar Gems & Jewellery Co. Ltd, Thaw Tar Win Gems & Jewellery Co. Ltd retrieved from http://dica.gov.mm.x-aas.net; 5-7 August 2015. MGE, ‘Mining Blocks Owned by Myanmar Takaung Company’. Communication from MGE; 2015. Bertil Lintner & Michael Black, ‘Merchants of Madness: The Methamphetamine Explosion in the Golden Triangle’, Silkworm Books; 2009, p.99.

280. MGE, ‘Mining Blocks Owned by Myanmar Takaung Company’. Global Witness interviews with a jade industry expert group, a jade businessmen, two Myanmar Takaung employees; 2014 and 2015. (Global Witness interviews 6-C, 43, 242 and 347). Letter to Global Witness from Li Myint and Kyaw Kyaw Oo; 2015.

281. Global Witness interviews with two international experts on Myanmar’s narcotics industry, three jade businessmen and an ethnic armed group leader; 2014 and 2015. (Global Witness interviews 296-B, 296-C, 303, 218-C, 310, 377, 473).

282. Global Witness interviews with six jade businessmen and a KIA/KIO representative; 2014 and 2015. (Global Witness interviews 6, 218-B, 135, 377-B, 487, 434 and 259).

283. Global Witness interviews with six jade businessmen; 2014 and 2015. (Global Witness interviews 65, 14-D, 117, 187, 177-B and 6-C). Communication from international expert on Myanmar’s Narcotics Industry; 2015. DICA records for Myanmar Takaung Gems Co. Ltd, Hong Pang Mining Co. Ltd, Hong Pang Construction Co. Ltd, Hong Pang Textile Co. Ltd, Hong Pang Electronic Industry Co. Ltd, Hong Pang Livestock Co. Ltd and Hong Pang General Trading Co. Ltd, extracted by OpenCorporates; October 2014 and analysed by the Open Knowledge Foundation; March 2015. DICA records for Myanmar Takaung Gems Co. Ltd, retrieved from http://dica.gov.mm.x-aas.net; 5 August 2015. MGE, ‘Mining Blocks Owned by Myanmar Takaung Company’ states that Zaw Bo Khant is a representative of Thaw Tar Win Gems and Apho Tan San Chain Hmi Gems. A written communication from MGE lists Zaw Bo Khant as responsible for Thaw Tar Win Gems’ mining blocks in Hpakant. Letter to Global Witness from Li Myint and Kyaw Kyaw Oo; 2015.

284. Communication from international expert on Myanmar’s Narcotics Industry; 2015. Global Witness meeting with Zaw Bo Khant; 2015. Bertil Lintner & Michael Black, ‘Merchants of Madness: The Methamphetamine Explosion in the Golden Triangle’, Silkworm Books; 2009, p.99. Letter to Global Witness from Li Myint and Kyaw Kyaw Oo; 2015. DICA record for Hong Pang Mining Co. Ltd, Hong Pang Construction Co. Ltd, Hong Pang Textile Co. Ltd, Hong Pang Electronic Industry Co. Ltd, Hong Pang Livestock Co. Ltd and Hong Pang General Trading Co. Ltd, extracted by Open-Corporates; October 2014 and analysed by the Open Knowledge Foundation; March 2015.

285. US Treasury, ‘Recent OFAC Actions’; 13 November 2008, http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20081113.aspx, last accessed 15 September 2015.

286. This comment was made by a Myanmar Takaung representative to a jade businessman whom Global Witness later interviewed; 2015. (Global Witness interview 250).

287. MGE, ‘Mining Blocks Owned by Myanmar Takaung Company’.


288. Global Witness interview with a political analyst, KIA/KIO officials, a jade mine worker, two jade businessman and a civil society organisation; 2014 and 2015. (Global Witness interviews 18, 24, 177-B, 197-D, 218-B and 295).

289. Global Witness interviews with a businessman, a jade company staff member and two jade businessmen; 2015. (Global Witness interviews 24, 416, 248 and 250).

290. Global Witness interview with jade businessman; 2015. (Global Witness interview 65-J).

291. Global Witness interviews with local official and a jade businessman; 2015. (Global Witness interviews 52 and 65-E). Eleven Media, ‘Many buried in jade mine landslide’; 8 March 2015. http://www.elevenmyanmar.com/local/many-buried-jade-mine-landslide, last accessed 11 May 2015. Reuters, ‘Rockslide at Burma Jade Mine Kills 9, Around 20 Missing’; 1 October 2015, http://www.irrawaddy.org/burma/rockslide-at-burma-jade-mine-kills-9-around-20-missing.html, last accessed 1 October 2015. Reuters, ‘Rockslide at Burma Jade Mine Kills 9, Around 20 Missing’; 1 April 2015, http://www.irrawaddy.org/burma/rockslide-at-burma-jade-mine-kills-9-around-20-missing.html, last accessed 1 October 2015.

292. Global Witness interview with jade businessman; 2015.


294. Global Witness interviews with three jade businessmen; 2015. (Global Witness interviews 218-C, 6-C, and 135-C).

295. Global Witness interview with a jade businessman; 2014 and 2015. (Global Witness interview 218-B).




299. Martin Smith, ‘Burma in Insurgency and the Politics of Ethnicity’, Zed Books Ltd; 1999, p.339. Tom Kramer, ‘Neither War Nor Peace: The Future of the Cease-fire Agreements in Burma’, Transnational Institute, pp.14 and 27; July 2009, https://www.tni.org/files/download/ceasefire.pdf, last accessed 1 October 2015. According to a letter from Ruby Dragon Group to Global Witness, the group began business in 1992 in the wake of the 1991 ceasefire negotiated with the Pa-O National Organisation, and following a peace agreement. According to the 2013 version of the Ruby Dragon Group’s website, by 2002, it had been awarded 71 gemstone blocks in Shan State and 66 gemstone blocks in Kachin State. The 2013 version of the website, www.rubydragongroupcompanies.com (which is referenced on Ruby Dragon Group business cards) is accessible via website archive, the Way Back Machine, at http://web.archive.org/web/20130725033738/http://www.rubydragoncompanies.com/; last accessed 14 April 2015. See also The New Light of Myanmar, ‘Secretary-1 addresses ceremony to donate over 3,000 tons Massive Jade Dyke to the State’; 26 May 2002.

300. Letter from Ruby Dragon Group to Global Witness confirming that it began mining operations in Hpakant in May 1997, and has operated in partnership with the Ministry of Mines since 2000 [translated from Myanmar language into English by Global Witness]. Global Witness interview with jade businessman; 2015. (Global Witness interview 218-B). The New Light of Myanmar, ‘Secretary-1 addresses ceremony to donate over 3,000 tons Massive Jade Dyke to the State’; 26 May 2002.

301. During the 2012-2013 and 2013-2014 tax years, Ruby Dragon Group’s gemstone and cement companies have both featured in Myanmar’s top 500 tax payer lists with Dragon Cement paying over 200 million kyat in commercial tax in 2013-2014. See Myanmar Ministry of Finance, ‘List of Top (500) Commercial Tax Payers for 2012-2013’. Myanmar Ministry of Finance, ‘Top 1000 Myanmar Business Owners paying Income Tax for the year of 2013-2014’. Myanmar Ministry of Finance, ‘Top 1000 Myanmar Business Owners/Companies Paying 2013-14 Commercial Tax’. According to Ruby Dragon Group business cards provided to Global Witness in April 2014, the Ruby Dragon Group has interests in sectors including gemstones, gold and antimony mining, cement manufacturing, hotels, agriculture, food and wine.

302. MGE official sales figures for 2013 and 2014.

303. Letter from Ruby Dragon Group to Global Witness; 2015.

304. The New Light of Myanmar, ‘Secretary-1 addresses ceremony to donate over 3,000 tons Massive Jade Dyke to the State’, 26 May 2002. The New Light of Myanmar, ‘The Union of Myanmar, Union Election Commission, Nay Pyi Taw, Notification No. 119/2010’; 8 November 2010. Letter from Ruby Dragon Group to Global Witness; 2015.

305. In the 2010 elections, San Lwin ran unopposed on behalf of the PNO for the Hopong Township (2) constituency, in the capital of the Pa-O Self-Ad-ministered Zone. He was then elected as Chairman of the Zone. The New Light of Myanmar, ‘The Union of Myanmar, Union Election Commission, Nay Pyi Taw, Notification No. 120/2010’; 8 November 2010. The New Light of Myanmar, ‘Regular sessions of first Region and State Hluttaws go on. Approval sought for nomination of Advocate-General, Auditor-General of Regions or States. Nominations of executive committee members of Leading Bodies of Self-Administered Division and Self-Administered Zone approved’, 8 February 2011. Lwin, S, Myanmar Times, ‘New self-admin-istered areas struggle to assert authority’; 17 February 2011, http://www.mmtimes.com/index.php/national-news/9589-new-self-administered-areas-struggle-to-assert-authority.html, last accessed 1 October 2015. In 2014, San Lwin and Nay Win Tun were both listed as directors of Kokar Joker Mate Thahar Tours Co., Ltd, and each had directorships of companies in the Golden Island Cottages Group. 2014 company records taken from DICA, as extracted by OpenCorporates; October 2014 and analysed by the Open Knowledge Foundation; March 2015. Khun Thein Pe business connections to Nay Win Tun: In the 2010 elections, Khun Thein Pe ran unopposed as the PNO candidate for Hopong constituency. In 2014, a Khun Thein Pe, with the same NRC number, was listed as a director of Golden Island Cottages Hotel Group Co., Ltd. A Nay Win Soe/Nay Win Htun, with a NRC number matching that listed against Nay Win Tun in the 2010 election notice is a director of the same company. For parliamentary notices, see The New Light of Myanmar, ‘The Union of Myanmar, Union Election Commission, Nay Pyi Taw, Notification No. 119/2010’; 8 November 2010. Golden Island Cottages Hotel Group Co. Ltd. directorships taken from DICA records extracted by OpenCorporates; October 2014 and analysed by the Open Knowledge Foundation; March 2015.

306. Letter from Ruby Dragon Group to Global Witness confirming that Nay Win Tun chaired the Amyotha Hluttaw natural resources committee responsible for reviewing Myanmar’s mining and gemstones for two consecutive terms in 2012 and 2013. From 18 July 2014, Nay Win Tun was a member (but not the chair) of the committee.

307. The New Light of Myanmar, ‘Secretary-1 addresses ceremony to donate over 3,000 tonnes Massive Jade Dyke to the State’, 26 May 2002.

308. See 2013 version of the website, www.rubydragongroupcompanies.com (which is referenced on Ruby Dragon Group business cards), accessible via website archive, the Way Back Machine, at http://web.archive.org/web/20130725033738/http://www.rubydragoncompanies.com/; last accessed 1 October 2015.

309. The New Light of Myanmar, ‘Secretary-1 addresses ceremony to donate over 3,000 tons Massive Jade Dyke to the State’, 26 May 2002. Letter from Ruby Dragon Chairman to Global Witness; 2015.

310. The New Light of Myanmar, ‘Secretary-1 addresses ceremony to donate over 3,000 tons Massive Jade Dyke to the State’, 26 May 2002.

311. Communication from US Campaign on Burma; 2015. Global Witness meeting with Coca-Cola; 2015.


312. Global Witness meeting with Daw Shwe Cynn and U Chaow; 2015. DICA record for Xie Family Co. Ltd retrieved from http://dica.gov.mm.x-aas.net; 8 December 2014 (this DICA record, which has a breakdown of shareholdings, is no longer available online). Coca-Cola letter to Global Witness; August 2015.


314. Global Witness interviews with industry association representative and a jade businessman; 2015. (Global Witness interviews 488 and 489). The Founder / Sina Daily, ‘Jade Smuggling in Burma’; 23 September 2012, http://style.sina.com.cn/news/b/2012-09-23/0942105939.shtml, last ac-cessed 14 August 2015. Pingzhou Jade, ‘Holding of grand Chinese jewellery industry Summit Forum’; 18 May 2013, http://www.pzyq.org/Consult-ing_list.asp?id=746, last accessed 14 August 2015. Ting Zhang / Chinese Jade, ‘Customs increased quoted price, caused thousands of tonnes of Pingzhou Jade to be stranded at Hong Kong port’; 1 November 2010, http://feicui168.com/feicuixinwen/news62243.html, last accessed 14 August 2015. Pingzhou Jade, ‘Pingzhou Jade and Jewellery Association holding half year work reporting along with the election of all the board of directors, board of supervisory members and representatives’; 29 August 2011, http://www.pzyq.org/Association/news_list.asp?id=335, last accessed 14 August 2015. Judicial Opinions of China, ‘Written sentence of second instance for Liupei, Ye, Zhikang, Liu and Liao, Chen’s crime of smuggling goods and articles’; 4 June 2015, http://www.court.gov.cn/zgcpwsw/gd/xs/201506/t20150604_8418713.htm, last accessed 14 August 2015.

315. US Treasury, ‘SDN List by Country’, http://www.treasury.gov/ofac/downloads/ctrylst.txt, last accessed 14 August 2015.

316. Global Witness meeting with Daw Shwe Cynn and U Chaow; 2015.

317. MEHL, ‘Twelfth Annual Report of the Year 2001-2002’; 3 June 2002, reproduced in Sein Htay/Federation of Trade Unions-Burma, ‘Economic Report on Burma 2004/05’, Annex 3; 2005, http://www.burmalibrary.org/docs12/FTUB-Economic-Report-Sein_Htay2004-05-red.pdf, last accessed 28 September 2015.

318. MEHL, ‘Twelfth Annual Report of the Year 2001-2002’; 3 June 2002, reproduced in Sein Htay / Federation of Trade Unions-Burma, ‘Economic Report on Burma 2004/05’, Annex 3; 2005, http://www.burmalibrary.org/docs12/FTUB-Economic-Report-Sein_Htay2004-05-red.pdf, last accessed 28 September 2015. Global Witness has asked an expert on the activities of MEHL to review this document and they have stated they believe it to be authentic.

319. MEHL, ‘Financial Year 2007-2008 Annual Report’, cited in US Embassy Rangoon, ‘Burma: State-owned Enterprise Demonstrates Military’s Hold on Economy’; 6 February 2009, https://www.wikileaks.org/plusd/cables/09RANGOON83_a.html, last accessed 20 April 2015.

320. Global Witness meeting with MEHL; 2015. Global Witness meeting with Daw Shwe Cynn and U Chaow; 2015.

321. Myanmar Gems Emporium official sales figures 2014.

322. MGE, ‘Map Showing Lone Khin Treasure Land Joint Venture Jade Mining Blocks’ (in use as of mid-2014). MGE, ‘Map Showing Lone Khin Treasure Land Joint Venture Jade Mining Blocks’ (in use as of end of 2012).

323. Global Witness meeting with Daw Shwe Cynn and U Chaow; 2015.

324. Coca-Cola letter to Global Witness; August 2015. The Coca-Cola Company Myanmar, ‘Responsible Investment in Myanmar 2015 Update’; 30 June 2015, p.14, http://photos.state.gov/libraries/burma/895/pdf/20150630TCCCMyanmarDueDiligenceReport.pdf, last accessed 9 July 2015.

325. Coca-Cola letter to Global Witness; August 2015.

326. Coca-Cola letter to Global Witness; August 2015.

327. Global Witness meeting with Daw Shwe Cynn and U Chaow; 2015. DICA record for Xie Family Co. Ltd retrieved from http://dica.gov.mm.x-aas.net; 8 December 2014 (this DICA record, which has a breakdown of shareholdings, is no longer available online).

328. Melanie Keyte / Democratic Voice of Burma, ‘Burma: Coca-Cola Hits Back At Military Link Claims’; 3 July 2015.

329. Coca-Cola, ‘A History of Coca-Cola Advertising Slogans’; 1 January 2012, http://www.coca-colacompany.com/stories/coke-lore-slogans, last accessed 9 July 2015.

330. MSP CAT Company Overview, http://www.mspcat.com.mm/2012-10-29-04-46-47/1company-overview.html, last accessed 14 August 2015. DICA records for Myan Shwe Pyi Mining Co. Ltd and Myan Shwe Pyi Tractors Co. Ltd extracted by OpenCorporates; October 2014 and analysed by the Open Knowledge Foundation; March 2015.

331. Zaw Bo Khant, ‘Family and Relationships: Family Members’, Facebook. Aung Thu Ko, ‘Work and Education: Work’, Facebook; https://www.face-book.com/aung.t.ko.5/about?section=education&pnref=about, last accessed 14 August 2015.

332. Zaw Bo Khant, ‘Album: Austrial Trip [sic] (25.09.11-01.10.11’, Facebook; 2 October 2011, https://www.facebook.com/photo.php?fbid=122023644568234&set=a.122018287902103.18257.100002817985172&type=3&theater, last accessed 14 August 2015.

333. Zaw Bo Khant, ‘Wheel loader 992, caterpillar at demo, spain’, Facebook; 13 September 2013, https://www.facebook.com/photo.php?fbid=417467618357167&set=a.334142283356368.65483.100002817985172&type=3&theater, last accessed 14 August 2015.

334. Zaw Bo Khant, ‘At articulated truck demo ground, peterlie, Newcastle, England’, Facebook, 9 September 2013; https://www.facebook.com/photo.php?fbid=416346311802631&set=a.334142283356368.65483.100002817985172&type=3&theater, last accessed 14 August 2015.

335. Zaw Bo Khant, ‘cat office, Germany’, Facebook; 11 September 2013, https://www.facebook.com/photo.php?fbid=416783348425594&set=a.334142283356368.65483.100002817985172&type=3&theater, last accessed 14 August 2015.

336. Zaw Bo Khant, ‘Caterpillar’, Facebook; 16 September 2013 https://www.facebook.com/photo.php?fbid=418522828251646&set=a.334142283356368.65483.100002817985172&type=3&permPage=1, last accessed 14 August 2015.

337. Zaw Bo Khant, ‘Album: Austrial Trip [sic] (25.09.11-01.10.11’, Facebook; 2 October 2011, https://www.facebook.com/photo.php?fbid=122021834568415&set=a.122018287902103.18257.100002817985172&type=3&permPage=1, last accessed 14 August 2015. Zaw Bo Khant, ‘golf’, Facebook, 14 September 2013, https://www.facebook.com/photo.php?fbid=417719048332024&set=a.334142283356368.65483.100002817985172&type=3&permPage=1, last accessed 14 August 2005. Zaw Bo Khant, ‘Eiffel Tower .,, champagne …’, Facebook; 19 September 2013, https://www.facebook.com/photo.php?fbid=419400904830505&set=a.334142283356368.65483.100002817985172&type=3&permPage=1, last accessed 14 August 2015. Zaw Bo Khant, ‘ … Rolex … euro 39050’, Facebook; 19 September 2013, https://www.facebook.com/photo.php?fbid=419400904830505&set=a.334142283356368.65483.100002817985172&type=3&permPage=1, last accessed 14 August 2015.

338. Letter from Caterpillar Inc. to Global Witness dated 17 July 2015. Caterpillar Inc.’s Code of Conduct is available at http://s7d2.scene7.com/is/con-tent/Caterpillar/C10398712.

339. Letter from Caterpillar Inc. to Global Witness dated 17 July 2015.




342. See for example Bertil Lintner & Michael Black, ‘Merchants of Madness: The Methamphetamine Explosion in the Golden Triangle’, Silkworm Books; 2009, p.99.

343. As the US Administration eased sanctions on Myanmar, it put in place new reporting requirements for US companies investing US$500,000 or more in the country. Under these rules, which took effect in 2013, US companies that fall into this category are required to report annually on their Myanmar operations, providing details including an overview of their business activities, information on their anti-corruption and human rights policies, and any corruption or human rights risks identified together with actions taken to address these risks. For further details, see: Embassy of the United States in Rangoon, Burma, ‘Reporting Requirements’; http://burma.usembassy.gov/reporting-requirements.html, last accessed 1 July 2015. At the time of writing, Caterpillar Inc. has not filed a report for 2013, 2014 or 2015. In May 2015, a group of institutional investors wrote a joint letter to non-complying companies, including Caterpillar Inc., urging them to submit timely and comprehensive reports in line with the US rules. Conflict Risk Network, ‘Investors call for robust corporate reporting on Burma/Myanmar’, 24 June 2015; https://www.linkedin.com/company/zevin-asset-management-zam-, last accessed 5 July 2015.

344. Global Witness telephone conversation with Caterpillar Inc. on 14 July 2015.

345. Letter to Global Witness from Caterpillar Inc. dated 17 July 2015.

346. For full copy of letter to President Thein Sein dated 2 October 2014, please see https://www.globalwitness.org/campaigns/myanmar/.

347. Communication from KDNG; 2015.

348. Global Witness interview with Kachin businessman; 2014. (Global Witness interview 135-A).

349. Global Witness interviews with church leader, a KIA/KIO representative and a jade businessman; 2014 and 2015. (Global Witness interviews 286, 130-B, and 139-B).

350. Global Witness interview with Kachin church leader; 2014. (Global Witness interview 139-B).

351. KDNG interview with former jade trader; 2015. (KDNG interview 31).

352. Global Witness interviews with Kachin community leaders and KDNG interviews with residents of Hpakant; 2014. (Global Witness interviews 243-C and 239-A, KDNG interview 18-E).

353. Over the past 20 years, the government has passed a series of regulations which restrict rights to holding, selling or transporting jade, with the result that the possession of jade by Kachins is, in most cases, a criminal act. These regulations include: Ministry of Mines Order 11/97, ‘List of border towns where the trade in gemstones is banned’, 4 December 1997; Ministry of Mines Order 19/2000, ‘Designation of specific routes for transport of raw jade stones’, 9 March 2000; ‘Kachin State Peace and Development Council Local Order No.1/2000’, 25 March 2000; Ministry of Mines, ‘Regulations on transporting of raw jade stones’, 9 March 2003; Ministry of Mines, ‘Designation of areas where raw jade stones can be legally carried’, 7 October 2007’; Ministry of Mines, ‘Designation of areas where raw jade stones can be legally carried’, 22 May 2012.


355. Global Witness interviews with four jade businessmen; 2014. (Global Witness interviews 135, 136, 240 and 377).

356. Global Witness interview with Kachin community leader; 2014. (Global Witness interview 239-C).

357. Global Witness interview with jade businessman; 2015. (Global Witness interview 135-E).

358. Global Witness interview with Kachin community leader; 2014. (Global Witness interview 239-C).

359. Global Witness interviews with two jade businessmen; 2015. (Global Witness interviews 6-C and 65).

360. Kachin State is home to a range of ethnic groups, notably ethnic Kachins who make up an estimated 38.1% of the 1.7 million population; as well as Bamar and Shan who account for, respectively, an estimated 29.3% and 24.2%; as well as many other smaller groups. UNDP, ‘The State of Local Governance: Trends in Kachin’; 2015; http://www.mm.undp.org/content/dam/myanmar/docs/Publications/PovRedu/Local%20Gover-nance%20Mapping/UNDP_MM_State_of_Local_Governance_Kachin_ENG.pdf, last accessed 15 August 2015.

361. Global Witness with jade businessman; 2014. (Global Witness interview 332).

362. Global Witness interview with local resident who worked in the jade business until a decade ago; 2014. (Global Witness interview 243-C).

363. Global Witness and KDNG interviews with current and former jade businessmen; 2014 and 2015. (Global Witness interviews 8, 9, 332, 239-C and 136-E. KDNG interview 35). The Irrawaddy, ‘Floods Displace Over 1,000 People in Hpakant’; 25 August 2015, http://www.irrawaddy.org/burma/floods-displace-1000-people-hpakant.html, last accessed 5 October 2015. Eleven Media, ‘Jade firms blamed for floods in Hpakant region’; 18 August 2014, http://www.euro-burma.eu/news/show/1524/, last accessed 5 October 2014. Aung Hein Min / Eleven Media, ‘Local residents of Hpakant town and surrounding villages worried about flooding in the rainy season due to soil dumping into Ever Lake by jade companies’ seven tracts’; 2 May 2015 [translated from Myanmar language to English by Global Witness].

364. KDNG interview with local resident; 2015. (KDNG interview 46).

365. Film footage provided by local resident; 2015. Footage of the same incident (which does not identify the site as a Myat Yamon mine) can also be accessed at Radio Free Asia, ‘Unbridled Jade Mining Triggers Deadly Landslides in Myanmar’, https://www.youtube.com/watch?v=rWd1PSluDe0, last accessed 5 October 2015. Global Witness interviews with jade businessman and local residents; 2015. (Global Witness interviews 404 and 128-G). Xinhua, ‘Nearly 70 missing in landslide in Myanmar’s jade mining area’; 9 April 2015, http://news.xinhuanet.com/english/2015-04/09/c_134138004.htm, last accessed 5 October 2015.

366. Global Witness interviews with local residents; 2015. (Global Witness interviews collectively referenced as 128-G).

367. KDNG interviews with accident victims, victims’ families and with local residents; 2015. (KDNG interviews referenced collectively as 18-M). KDNG interviews with the families of accident victims, victims’ families and with local residents, together with photographs of incidents; 2015. (KDNG interviews collectively referenced as 18-J).

368. Global Witness interview with local resident; 2015. (Global Witness interview 33). KDNG interview with local resident; 2015. (KDNG interview 35).

369. KDNG interview with church leader; 2015. (KDNG interview 38).

370. KDNG interviews with local residents and with jade businessman; 2015 (KDNG interview 35, 39, 40, 41, 50 and 53).


371. KDNG interview with local resident; 2014. (KDNG interview 53).

372. Global Witness interviews with jade company employee and with Kachin church leader; 2014. (Global Witness interviews 72 and 139-B). Andrew RC Marshall and Min Zayar Oo / Reuters, ‘Myanmar’s old guard runs a jade empire’; 29 September 2013, http://graphics.thomsonreuters.com/13/09/MYANMAR-JADE.pdf, last accessed 4 October 2015. Dan Levin / The New York Times, ‘Searching for Burmese Jade, and Finding Misery’, 1 December 2014, http://www.nytimes.com/2014/12/02/world/searching-for-burmese-jade-and-finding-misery.html?_r=0, last accessed 4 October 2015.

373. Global Witness interviews with community leader and local resident; 2015. (Global Witness interviews 322 and 428). Global Witness interview with journalist; 2015. (Global Witness interview 410).

374. Global Witness interview with ethnic Rakhine miners who said they now numbered 150,000 in Hpakant and interviews with local residents, a KIA/KIO representative and a jade miner; 2014. (Global Witness interviews 259, 492, 63 and 68).

375. Global Witness interview with yemase collector; 2014. (Global Witness interview 336). The other quotes and comments in this box come from the same source unless indicated otherwise.

376. Lawi Weng, Irrawaddy, ‘Villagers to protest over grisly death of Kachin jade picker’; 18 November 2014, http://www.irrawaddy.org/burma/villag-ers-protest-grisly-death-kachin-jade-picker.html, last accessed 2 October 2015. Eleven Media Group, ‘Kachin protesters demand slice of mining wealth’; 22 November 2014, http://www.kdng.org/news/34-news/430-kachin-protesters-demand-slice-of-mining-wealth.html, last accessed 2 October 2015.

377. KDNG interviews with local community and Global Witness interview with Kachin community leader; 2014. (KDNG interviews collectively refer-enced as 19-D and Global Witness interview 243-C).

378. Eleven Media Group, ‘Kachin protesters demand slice of mining wealth’; 22 November 2014, http://www.kdng.org/news/34-news/430-kachin-protesters-demand-slice-of-mining-wealth.html, last accessed 2 October 2015.

379. Global Witness interview with small-scale jade businessman, 2014. (Global Witness interview 135-F).

380. Quoted in Transnational Institute / Burma Centrum Nederland, ‘The Kachin Crisis: Peace Must Prevail’; March 2013, p.13, http://www.tni.org/sites/www.tni.org/files/download/bpb10.pdf, last downloaded 4 October 2015, and on a range of blog sites, e.g. https://www.xing.com/communi-ties/posts/oliver-massmann-myanmar-news-and-regulations-1004093807 and http://blog.sina.com.cn/s/blog_63ec24f50102ek1r.html, both last accessed 4 October 2015. The original news article in which this comment was first reported appears no longer to be available online.

381. Global Witness interviews with humanitarian worker and a journalist; 2014. (Global Witness interviews 202-B and 89-B). Yun Sun / Stimson Cen-ter, ‘China, the United States and the Kachin Conflict’; 2014, p.4, http://www.stimson.org/images/uploads/research-pdfs/Myanmar_Issue_Brief_No_2_Jan_2014_WEB_3.pdf, last accessed 4 October 2015.

382. Human Rights Watch, ‘Untold Miseries: Wartime Abuses and Forced Displacement in Burma’s Kachin State’, Chapter 2; March, 2012, http://www.hrw.org/sites/default/files/reports/burma0312ForUpload_1.pdf, last accessed 9 August 2015.

383. Fortify Rights, ‘I thought they would kill me’, Chapters II, III and IV; June 2014, www.fortifyrights.org, last accessed 9 August 2015.

384. See for example Jenny Hedström, ‘Gender and Myanmar’s Kachin conflict’, New Mandala; 27 July 2015, http://asiapacific.anu.edu.au/newman-dala/2015/07/27/gender-and-myanmars-kachin-conflict, last accessed 9 August 2015. Women’s League of Burma (WLB), ‘Same Impunity, Same Patterns – Sexual Abuses by the Burma Army Will Not Stop Until There Is a Genuine Civilian Government’, pp.14-15; January 2014, http://wom-enofburma.org/same-impunity-same-pattern-report-of-systematic-sexual-violence-in-burmas-ethnic-areas, last accessed 4 October 2015.

385. Global Witness interview with humanitarian worker; 2015. (Global Witness interview 202). Report on security situation in Hpakant from a confidential source; 2015.

386. Mandy Sadan, ‘Being and Becoming Kachin’, the British Academy / Oxford University Press, 2013, Chapters 6 and 7. Carine Jaquet, ‘The Kachin Conflict – Testing the Limits of the Political Transition in Myanmar’, IRASEC; 2015, pp. 22-25 and Chapter 2, http://www.ifre.fr/c/35429, last accessed 1 September 2015.

387. Global Witness interview with local official and with Kachin politicians; 2014 and 2015. (Global Witness interviews 8, 9 and 45). Letter from the KIA/KIO to Global Witness; 2015. Kevin Woods, ‘Ceasefire capitalism: military–private partnerships, resource concessions and military–state building in the Burma–China borderlands’, Journal of Peasant Studies, 38:4; 2011, p. 750. Thant Myint-U, ‘Where China Meets India – Burma and the New Crossroads of Asia’; 2011, Farrar Strauss and Giroux, p. 96. Bertil Lintner, ‘Land of Jade’, Orchid Press; 2011 (first published 1989), p. 164. Global Witness, ‘A Conflict of Interests – The Uncertain Future of Burma’s Forests’; 2003, p. 93, https://www.globalwitness.org/sites/default/files/import/03sep3%20Conflict%20of%20Interests90-127.pdf, last accessed 2 September 2015.

388. Global Witness interview with Kachin politician and KIA/KIO representatives; 2015. (Global Witness interviews 474 and 474). Communication from Bertil Lintner; 2015. Global Witness, ‘A Conflict of Interests – The Uncertain Future of Burma’s Forests’; 2003, p. 93, https://www.globalwitness.org/sites/default/files/import/03sep3%20Conflict%20of%20Interests90-127.pdf, last accessed 2 September 2015.

389. Global Witness interviews with Kachin politician and KIA/KIO staff; 2015. (Global Witness interviews 387 and 388). Communication from Bertil Lintner; 2015.

390. Global Witness interview with church leader; 2014. (Global Witness interview 139-B). Tom Kramer, ‘The United Wa State Party: Narco-Army or Ethnic Nationalist Party?’, Institute for Southeast Asian Studies; 2007, p. 43. Global Witness, ‘A Conflict of Interests – The Uncertain Future of Burma’s Forests’; 2003, p. 93, https://www.globalwitness.org/sites/default/files/import/03sep3%20Conflict%20of%20Interests90-127.pdf, last accessed 31 August 2015.

391. Global Witness interviews with civil society representative and a jade businessman; 2014 and 2015. (Global Witness interviews 185 and 54). Kevin Woods, ‘Ceasefire capitalism: military–private partnerships, resource concessions and military–state building in the Burma–China borderlands’, Journal of Peasant Studies, 38:4; 2011, pp. 756-757. Global Witness, ‘A Choice for China – Ending the Destruction of Burma’s Northern Frontier Forests’; 2005, p. 57, https://www.globalwitness.org/archive/choice-china-ending-destruction-burmas-frontier-forests, last accessed 31 August 2015.

392. Global Witness interviews with church leader, a civic leader, a civil society representative and a political analyst; 2014 (Global Witness interviews 139-B, 10-B, 145-A and 197-B). Global Witness, ‘A Choice for China – Ending the Destruction of Burma’s Northern Frontier Forests’; 2005, p. 8, https://www.globalwitness.org/archive/choice-china-ending-destruction-burmas-frontier-forests, last accessed 31 August 2015. International Crisis Group, ‘A Tentative Peace in Myanmar’s Kachin Conflict’; June 2013, p. 5, http://www.crisisgroup.org/~/media/Files/asia/south-east-asia/burma-myanmar/b140-a-tentative-peace-in-myanmars-kachin-conflict.pdf, last accessed 4 October 2015.

393. Yun Sun / Stimson Center, ‘China, the United States and the Kachin Conflict’; 2014, p.4, http://www.stimson.org/images/uploads/research-pdfs/Myanmar_Issue_Brief_No_2_Jan_2014_WEB_3.pdf, last accessed 4 October 2015. International Crisis Group, ‘A Tentative Peace in Myanmar’s Kachin Conflict’; June 2013, pp. 6-7, http://www.crisisgroup.org/~/media/Files/asia/south-east-asia/burma-myanmar/b140-a-tentative-peace-in-myanmars-kachin-conflict.pdf, last accessed 4 October 2015. Transnational Institute / Burma Centrum Nederland, ‘The Kachin Crisis: Peace Must Prevail’; March 2013, p.5, http://www.tni.org/sites/www.tni.org/files/download/bpb10.pdf, last accessed 4 October 2015.


394. Global Witness interviews with political analyst and a KIA/KIO official; 2014. (Global Witness interview 197 and 130-B). International Crisis Group, ‘A Tentative Peace in Myanmar’s Kachin Conflict’; June 2013, pp. 5-7, http://www.crisisgroup.org/~/media/Files/asia/south-east-asia/burma-myanmar/b140-a-tentative-peace-in-myanmars-kachin-conflict.pdf, last accessed 4 October 2015.

395. Global Witness interview with jade businessman; 2014. (Global Witness interview 14-E).

396. References for points in this paragraph are set out in Chapter 2.

397. Global Witness interview with KIA/KIO officials; 2015. (Global Witness interview 395-398) International Crisis Group, ‘Myanmar: the politics of economic reform’,

398. Asia Report N°231; July 2012, pp. 11 and 12, http://www.crisisgroup.org/~/media/files/asia/south-east-asia/burma-myanmar/231-myanmar-the-politics-of-economic-reform.pdf, last accessed 4 October 2015.

399. Global Witness interviews with former official and four jade businessmen; 2014 and 2015. (Global Witness interviews 256-B, 14, 135-B, 6-A and 218-B).

400. Global Witness interviews with two jade businessmen, three KIA/KIO officials, a journalist and one local researcher; 2014 and 2015. (Global Witness interviews 130-B, 261, 313, 337-E, 404, 475 and 476).


402. Global Witness interviews with seven jade businessmen, local residents and a community leader; 2014 and 2015. (Global Witness interviews 48, 49, 51, 65, 67, 68, 176, 218, 377-C).

403. Global Witness interviews with two jade businessmen; 2015. (Global Witness interviews 218-B and 377-B).

404. Global Witness interviews with a Tatmadaw officer, a KIA/KIO representative, a civil society representative, a local politician, a church representative, a group of jade businessmen and four individual jade businessmen; 2014 and 2015. (Global Witness interviews 14, 140, 218-B, 234, 243, 259, 350, 353, 377, 479 and 490).

405. The data in this map is based on interviews with seven jade businessmen and one civil society representative; 2014 and 2015. (Global Witness interviews 47, 101, 142, 234, 350, 352, 353 and 377).

406. Global Witness interview with a Tatmadaw officer and three jade businessmen; 2014. (Global Witness interviews, 479, 14-B, 263, 142-C).

407. Global Witness interview with jade businessman, a humanitarian worker and a civil society representative; 2014 and 2015. (Global Witness interviews 234, 142-B and 202-B).

408. Global Witness interviews with two jade businessmen; 2014. (Global Witness interview 142-C and 377-A).

409. Global Witness interview with humanitarian worker; 2014. (Global Witness interview 202-C).

410. Global Witness interview with civil society representative; 2014. (Global Witness interview 234).

411. Global Witness interview with humanitarian worker; 2014. (Global Witness interview 202-B).

412. Global Witness interview with jade businessman; 2015. (Global Witness interview, 404).

413. Global Witness interviews with KIA/KIO officials; 2014. (Global Witness interview 66).

414. Global Witness interviews with two jade businessmen; 2014. (Global Witness interviews 65 and 67).


416. Global Witness interview with KIA/KIO official; 2002.

417. Letter from the KIA/KIO; 2015.

418. Global Witness interviews with KIA/KIO officials and a community leader; 2014 and 2015. (Global Witness interviews 52 and 66).

419. Global Witness interview with a jade businessman who gave the specific figures; 2014. (Global Witness interview 2). Supporting information on the taxation by the KIA/KIO: Letter from the KIA/KIO; 2015 and Global Witness interviews with KIA/KIO officials and a local politician; 2014. (Global Witness interviews 66 and 239-C).

420. Global Witness interview with political analyst who gave the specific figure and a humanitarian worker who provided more general information on the very large sums involved; 2014. (Global Witness interviews 197-C and 202).

421. Global Witness interviews with a political analyst and a civic leader; 2014 and 2015. (Global Witness interviews 197 and 134).

422. Global Witness interviews with KIA/KIO officials, a civic leader and a humanitarian worker; 2014 and 2015. (Global Witness interviews 134, 202 and 395).

423. Global Witness interviews with KIA/KIO official and a jade businessman; 2014. (Global Witness interviews 135 and 260).

424. ibid.

425. Letter from KIA/KIO; 2015.

426. Global Witness interview with KIA/KIO officials; 2015. (Global Witness interview 395).

427. Global Witness interviews with two jade businessman; 2015. (Global Witness interviews 187 and 117).

428. Letter from KIA/KIO; 2015.

429. Global Witness interviews with two civic leaders, three jade businessman and local residents; 2014 and 2015. (Global Witness interviews 6-C 10, 67, 68, 134-B and 176).

430. Global Witness interview with a group of jade businessmen, a church representative and a KIA/KIO representative; 2014 and 2015. (Global Witness interviews 45, 130 and 250).

431. Global Witness interviews with jade businessman and a political analyst; 2014. (Global Witness interviews 142-C and 197-B). Communication from KDNG; 2014.


432. Global Witness interview with jade businessman; 2014. (Global Witness interview 350). Letter from KIA/KIO; 2015. Communication from KDNG; 2014.

433. Global Witness interviews with former jade businessman and a researcher; 2014. (Global Witness interview 491 and 232). Dan Levin / The New York Times, ‘Searching for Burmese Jade, and Finding Misery’, 1 December 2014, http://www.nytimes.com/2014/12/02/world/searching-for-burmese-jade-and-finding-misery.html?_r=0, last accessed 4 October 2015.

434. Global Witness interviews with a jade businessman, a former jade industry expert and a jade industry expert; 2014 and 2015. (Global Witness interviews 11, 176 and 491).


436. Global Witness interview with former KIO official; 2014. (Global Witness interview 181).

437. ibid.

438. Global Witness obtained two data sets on historic annual production, one government-produced data-set and a second industry-produced data set. The latter was more comprehensive, including both weight of sales and valuations of sales, and we have therefore used this data set for the purposes of our calculations.

439. Ash Center for Democratic Governance and Innovation, Harvard Kennedy School/Proximity Designs/Rajawali Foundation Institute for Asia, ‘Creating a Future: Using Natural Resources for New Federalism and Unity’; July 2013, http://ash.harvard.edu/links/creating-future-using-natural-re-sources-new-federalism-and-unity, last accessed 1 August 2015.

440. A very few lines of data from the 2014 Emporium sales breakdown have been excluded because they are incomplete. They represent only a small fraction of the total sales, and we assume that their exclusion does not have a significant impact on our calculations.

441. Industry records of the weights and values of jade emporium sales since 2005.

442. ibid.

443. Government of Myanmar, ‘Statistical Yearbook 2011’, p.237. Central Statistical Organization, ‘Production of Precious Minerals and Pearls’, 2012-2015 data, www.csostat.gov/s2.5MA02.htm, last accessed 22 September 2015.

444. Jade businessmen, traders and a KIA/KIO official interviewed by Global Witness in Myanmar and China gave consistent accounts of companies selling some jade at the official emporium whilst smuggling the rest directly to China. Three jade businessmen estimated that ‘big companies smuggle at least 50% of the good jade they produce’. A prominent jade owner estimated that 60-70% goes straight to the border’, another that ‘80% of jade from Hpakant is smuggled’, an experienced jade businessman and trader that since 2011 50% of jade is typically smuggled. One Chinese jade trader suggested that ‘80% of production is smuggled’ whilst another said that ‘outside trade is more than 5-10 times legal trade’. A KIA/KIO official stated that 80% of jade is smuggled out and sold on the black market. Only one interviewee gave an estimate of less than half, but he went to explain that the majority of legal sales are subject to price manipulation and tax evasion (Global Witness interviews 175/243/263-B, 5A-AG, 6-C, 135-G, 384-A, 218, 259-260 and 411). See also Eleven, ‘Timber, jade account for more than half of smuggled goods seized’; 22 October 2014, http://www.elevenmyanmar.com/index.php?option%3Dcom_content%26view%3Darticle%26id%3D7909:timber-jade-account-for-more-than-half-of-smuggled-goods-seized%26catid%3D44:national%26Itemid%3D384, last accessed 2 June 2015.

445. There were actually two domestic fairs in 2014. However, there is no weight data publicly available for the January 2014 sale and it was far smaller than the October 2014 fair.

446. These recalculations are based on data on the weight and sales revenue data on the October 2014 local fair provided by the Myanmar Gems and Jewellery Entrepreneurs Association. The January 2014 fair was a smaller event, and Global Witness has not been provided with weight and sales revenue for this fair. We have not therefore taken account of it in our calculations.

447. Myanmar Gems Emporium official sales figures 2014. MGJEA, ‘50th Myanmar Gems Emporium Report’, Appendix E: Number and Weight of Jade Lots from 2006 June/July Special Exhibition to 50th Myanmar Gems Emporium, undated.

448. Myanmar Gems Emporium official sales figures 2014. Ministry of Mines, Myanmar Gems Emporium Central Committee, ‘Myanmar Gems Emporium Sales (1964 to 2013)’, undated. Sales data in euros converted to U.S. dollars at exchange rate for the relevant period.

449. Global Witness interviews with jade traders, two jade businessmen and the employee of a jade company; 2015. (Global Witness interviews 124, 54-AG, 14-G and 427).

450. Chinese trade data taken from UN Comtrade Database (http://comtrade.un.org/) using HS codes: 710310 (Precious stones – rough); 710399 (Precious stones); and 722620 (Articles of precious stones). These values may include other items beside jade, but a number of Myanmar’s other gems exports are covered by other HS codes. Diamonds are explicitly excluded from HS 710399, whilst rubies emeralds and sapphires fall within another code (HS 710391). Given the dominance of jade in Myanmar’s production, it is likely that the vast majority of given figures for HS 710399 reflect the trade in jade. Note that missing figures indicate that Chinese customs data did not report quantity of imports from 2012 onwards for HS 710299, likely because different measures were used in the collection of data. Sub-codes are not available through the UN Comtrade database and it is therefore not possible to determine the exact weight per kilogram. However, export values are still reported. For 2014, Chinese import data records were used as an additional source of trade data with Myanmar (for the same codes).

451. Global Witness interviews with MGE and with MGJEA; 2014 and 2015.

452. Letter from MGE to Global Witness.

453. It should be noted that for a very small number of lots, information was incomplete, so it is not clear whether or not they were a kyo thu. For these lots, we have assumed that the ratio is the same as for the vast majority of the lots on which we have complete data.


CREDIT: Minzayar


CREDIT: Minzayar

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Economy & Finance

CHINA IN MYANMAR(BURMA) FOR ARMS-LOGGING-DAM-COPPER-JADE etcs-PART ONE