Junta chief Min Aung Hlaing appears to be attempting to rapidly sell off state-owned businesses to private sector entities, embracing a practice once employed by former dictator Than Shwe nearly 30 years ago.
After the February 2021 coup, the military council formed a ‘privatisation commission’ and began selling land lots owned by previous governments; last August alone, this commission opened the tender process for 27 plots and buildings. Junta-appointed industry minister Dr Charlie Than said four months earlier that 55 out of 107 state-owned factories and workshops in his department had already been transferred to the private sector.
At the time of reporting it was not known how many more had been sold, but regular advertisements in junta-controlled newspapers since last December have invited expressions of interest from those willing to take over operations of state-owned business sites. Such sales are typically negotiated to include land, infrastructure, equipment—even promising retention of the labour force—and presumably creating deals below market value.
Many of the enterprises that the junta is offloading have long been operating at a loss, pursued and launched by earlier regimes without systematic planning. Among the businesses recently listed were a major glass factory in Pathein, Ayeyarwady Region; a solar workshop in Yangon operating under the Ministry of Industry; a lightbulb factory and the Man Thanpayar petroleum refinery in Magway Region; a tapioca plantation and flour plant in Daik-U, Bago; a tyre factory in Thaton, Mon State.
A Myanmar analyst in Yangon monitoring domestic and international investment in Myanmar speculated that the military may be trying to both immediately capitalise on the value of the land on which these projects are situated while also shifting potential future profits from these ventures to individuals close to the junta.
“They may have dual goals: one is to hand these businesses down to their own people and another is to control state-owned businesses from behind the scenes,” he told Myanmar Now, noting that the practice dated back to previous military regimes.
Between 1995 and 2011, Than Shwe—whose own junta ruled Myanmar for nearly 20 years—sold a total of 782 such enterprises, from factories to cinemas, below market rates and largely to the family members of army generals and the cronies who maintained close relationships with them.
The vast majority of these transactions were pushed through in the final years of Than Shwe’s military regime, which gave way to another army-dominated administration under ex-general Thein Sein after the 2010 “elections,” which were widely deemed neither free nor fair. Ahead of the so-called vote, the military attempted to sell 110 businesses simultaneously by advertising them in state-run newspapers.
Thein Sein’s own government continued the practice of privatisation, also selling a large number of factories to business tycoons with known military connections.
Many of the factories that the current military regime has also taken steps to sell were closed down due to annual financial losses by the administration of the National League for Democracy (NLD), which it ousted in the coup. They were run by multiple ministries and major military conglomerates such as the Myanmar Economic Corporation (MEC) and Myanmar Economic Holdings, Limited (MEHL).
These companies and their affiliates have become the private buyers of the ventures in question: MEHL was also known to have purchased a series of Myawaddy petrol stations in major metropolitan areas in this way during Than Shwe’s administration. It is rarely, if ever, disclosed how much these institutions pay for such assets, but they are largely reliant on the acquisition of state-owned land, factories and operations.
Among those shuttered sites now being revisited by the military are major state-owned metals processing facilities such as the Pinpet iron plant in southern Shan State, which will be jointly operated by MEC and the Russian state-owned Tyazhpromeexport.
It was learned during the NLD’s tenure that state-owned factories under the ministry of industry alone cost the country a deficit of 336b kyat in 2016 (more than US$160.2m according to today’s rates), according to data released by the Natural Resource Governance Institute four years later.
While some of the factories recently advertised for sale by the junta reportedly received multiple expressions of interest from the private sector during the NLD’s tenure, others, which the NLD unsuccessfully attempted to sell, were not seen as desirable investments. This was true even when Myanmar was perceived by some investors as being on a trajectory of economic growth during Thein Sein’s rule.
“The tenders were already risky in the past,” the Yangon-based analyst explained, noting that the rushed sale of these assets has long been a way for various regimes to cut losses.
While military and crony buyers can be persuaded with insider deals to take on unsuccessful state-owned ventures, he pointed out that unless the factories in question are priced at rock bottom rates, “… it appears that the private sector is not buying.”