YANGON - A new English word has entered the colloquial language in Myanmar, a word that could not even be uttered in public until recently. The word is “crony,” and it describes the business elite who exploited their closeness to the country’s military rulers to amass vast wealth in the past two decades.
These well-connected elite got rich in industries such as construction, rubber and logging, as well as arms dealing and drug smuggling. Their gains have only grown during the past two years, a result of changes that have privatized many state-owned assets and enterprises — and allowed the elite to buy them up at bargain prices.
But Myanmar’s growing openness under its reformist president, Thein Sein, a former general, has also meant a loosening of restrictions on speech — allowing everyone from rickshaw drivers to farmers to complain about the cronies and their connections.
“We are just beginning to realize all the bad things about cronyism,” said politician Nay Myo Wai, the leader of a profarmers political party, sitting cross-legged on the floor of his party headquarters in the countryside on the outskirts of Yangon.
The chief resentment against the elite now centers on land: huge swaths of it confiscated by the army and given to its business allies during the darkest days of military dictatorship. Little or no compensation was offered, and farmers were so cowed at the time that they dared not complain.
But now, that is changing, as land values soar and the extent of the property takeovers is more widely understood.
Nay Myo Wai has compiled a thick dossier of land-grab cases and is helping to coordinate bitter protests around the country by farmers seeking the return of confiscated land. “This would have been totally unimaginable before the changes came,” he said. Until recently, anyone criticizing the military or its allies risked arrest, torture and years of imprisonment, and informers were everywhere.
Thant Zin, 49, is one of a group of angry farmers who have reoccupied land near his ancestral village outside Yangon, land that was confiscated by the army two decades before and given to Khin Shwe, one of this country’s business elite, to build an industrial park.
He says he was paid just 15,000 kyat, less than $20 at today’s exchange rate, for about 20 hectares, leaving him no money to pay for his children’s education. He is now demanding better compensation. “I didn’t know that I should have been angry at the time,” he said ruefully. “Fear and ignorance kept me silent.”
The growing tensions are creating a predicament for foreign investors and for opposition leaders, given how deeply the role of the elite permeates a fast-growing economy. Under U.S. sanctions that were first imposed in 1998 after the suppression of prodemocracy protests, several members of Myanmar’s business elite were targeted in a way that prevented any American company or citizen from doing business with them.
Over the past two years, after the military-backed regime allowed opposition leader Aung San Suu Kyi to contest local elections and enter Parliament last year, the U.S. has gradually lifted some sanctions and sent an ambassador to the country last year for the first time in 22 years.
Some sanctions remain in place against individual businessmen, including one who may be the richest of them all, 48-year-old Tay Za, a man the U.S. Treasury described as “an arms dealer and financial henchman of Burma’s repressive junta.” Burma is the nation’s former name.
But just last month, Washington relaxed sanctions on Myanmar’s largest banks, including two owned by Tay Za and Zaw Zaw, who maintain close ties with the regime. The action came just days ahead of a visit by a U.S. business delegation, with the Treasury arguing that increased access to Myanmar’s banking system would support the country’s “continuing social and economic development.”
These days, a tourism boom is the most obvious sign of the country’s opening to the West, with flights and hotels in Myanmar virtually fully booked. For now, however, an anticipated flood of foreign investment has yet to arrive, with most Western investors taking a “wait and see” attitude, unsure of how deep-rooted the reform process is.
Myanmar’s business elite have been investing some of their wealth by building new hotels as well as office buildings in Yangon and other cities. But outside these gleaming new buildings, cycle rickshaws still ply the streets, and there are few signs of a more general boom. Small business owners and shopkeepers say consumer demand remains tepid.
The business elite, say critics like Zaw Aung, a former political prisoner who is now a research fellow at Thailand’s Chulalongkorn University, have the power to crush potential competitors, corner the benefits of Myanmar’s reform process and prevent a new, more diverse middle class from emerging.
Faced with a lot of bad publicity, the cronies have been fighting back. Some have used the threat of legal action to try to silence their critics; Khin Shwe has threatened to attack the farmers who have occupied his land. But most have been trying to improve their images — either to make themselves more acceptable business partners in the new Myanmar, because they fear retaliation and losing their wealth, or simply because they don’t like criticism.
“It gives me so much pain, I often cannot sleep at night,” Zaw Zaw, the head of the giant Max Myanmar conglomerate, said in a rare interview last month while watching a soccer match in the former capital of Yangon.
At 46, Zaw Zaw is one of Myanmar’s richest men, having made his fortune through lucrative government contracts, helping to build the regime’s new capital, Naypyitaw, in the past decade, as well as constructing roads and extracting tolls.
He profited handsomely when state-owned assets were sold off in the largest privatization in Myanmar’s history in 2011, picking up a banking license and cement factory. He runs roadside gas stations, controls the auto import trade, owns a jade mine and rubber plantations, and is fast expanding into luxury resorts.
Zaw Zaw insists he pays taxes and creates jobs and argues that Myanmar will not prosper if everyone in the business community is vilified as being cronies. “At this time, we all have to cooperate together to build the country,” he said.