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19 July 2016
The wealth of Burma
Burma’s vast jade industry is among the murkiest in the world. In the top echelons of this sector, corruption is high and accountability low. The exact amount of wealth generated by Burmese jade was for a long time unknown. However, research by Global Witness indicated that the value of the trade could have been as much as US$31 billion in 2014 alone. To put this into perspective, that equates to 48 per cent of Myanmar’s official GDP and 46 times government expenditure on health. Clearly this amount of wealth could be beneficial, not just to the people of Kachin state (home to Burma’s most sought after Jade), but to Burma as a whole. The catch is that this money rarely sees public government coffers, let alone the general population. With so much wealth and so many private actors invested in this industry, it is easy to see how the trade has played such a large part in one of Burma’s most protracted internal conflicts. Since 1990, the Kachin Independence Organisation/Army (KIO/KIA) and the Burma Army have formed and broken ceasefire agreements resulting in the displacement of more than 100,000 people, as land grabs and warfare have forced locals from their homes. The money pilfered from Kachin jade extraction has fuelled both sides of this war, and has forced many locals to the periphery of the industry resulting in unending cycles of poverty and drug use. In Hpakant, Kachin State – where the mining is most prevalent – the link between the drug trade and mining becomes clear. Among those cited as the major beneficiaries of the lucrative trade are former and current government and military officials, as well as Wei Hsueh Kang, Myanmar’s most notorious drug lord, who is wanted in the United States for drug-related offenses. With such high level actors benefitting directly from Burma’s jade and weak enforcement of laws surrounding ownership of land and resources, the jade mined in Burma is open to those with the most power and those with the means to intimidate and control.
Burma: Open for business
With the landmark victory in November 2015 of Aung San Suu Kyi’s NLD party, officially headed by Htin Kyaw, the investor outlook is expected to shift from a wait-and-see attitude to Foreign Direct Investment (FDI) returning to or even exceeding pre-election levels. This could see a significant increase of economic activity for Burma, potentially seeing FDI rise to $8 billion. With these levels of investment, there should be stringent checks in place to ensure the stability and lawfulness of one of Burma’s most profitable industries. One way in which Burma has taken steps to improve its standing in this field is the submittal of the country’s first Extractive Industries Transparency Initiative (EITI) report. Many transparency groups consider this publication a small step forward for Burma. Indeed, a report of its kind would have been virtually impossible just five years ago under the military-ruled government. But the country’s swift compliance with EITI’s standard reporting protocol went off largely without a hitch. This first step does signal an attempt by the new Burmese government to commit serious industry reforms. However, much more remains to be seen and there were many shortfalls in the reporting of financial accountability within Burma. Significant action must be taken on transparency within Burma’s jade industry. The use of ‘other accounts’ shields the true beneficiaries of revenue gained from jade extraction, many of which are no doubt involved in illicit activities. Groups such as Global Witness and the Natural Resource Governance Institute (NRGI) say that the revenues published in the EITI report grossly undervalue the size of the jade business. For example, the report reveals approximately $380 million in gemstone revenues, but independent estimates from watchdog groups value the jade industry alone between $8 billion and $32 billion annually.
The Damaging Nature of Secrecy
The secrecy in which Burma’s jade kingpins have been allowed to operate has severely damaged the well-being of the people in Kachin state. The ravaged terrain and squalid settlements give the impression that the mining remains an unregulated free-for-all. This is far from the case. To secure benefits from the hugely profitable jade industry the Burmese military regime has consolidated control over the mines since the mid-1990s. As large companies have moved in, large swathes of land in Hpakant that used to be fair game for local miners have become off limit. This has put many in a precarious position, in which they are forced to collect scraps of jade to survive, and drug use permeates every level of the mining industry. The majority of those addicted to heroin in Hpakant are the young yemase (stone foragers), who live a hand-to-mouth existence toiling day and night amongst steep mountains of rubble. Research by the Burma Campaign group has shown links between the Chinese mining groups in Kachin, the police and the military within Hpakant’s drug trade. Drug dealers pay huge sums to the police and military authorities to ensure a monopoly on drug distribution throughout the jade mining area. For example, all opium sold in Hpakant is distributed by only two Chinese companies who are also involved in mining and are able to smuggle drugs into Hpakant using their mining vehicles. The kickbacks the Burmese police and army receive from this trade, give them little incentive to stop it.
Hundreds of small independent companies used to operate in Hpakant but now only about 30 companies are licensed to carry out joint mining ventures with the regime. Today only those working for authorised companies can dig for jade and armed guards ensure that no intruders trespass on the concession areas. This has left many who used to be able to profit from the land they owned, alienated and forced into poverty and drug use. Whilst it is in the interests of those benefitting directly from this industry to keep the damaging reality secret, Burma’s ruling party should do more to scale back the corruption and signal a new era of transparency.
Disclaimer: This blog is a space for discussion and personal reflection. Any opinions expressed within the blog are those of the author and are not necessarily held by HART. Individual authors are responsible for the accuracy of statements made within the blog.