Myanmar junta selling bonds to insurance companies to finance its crimes

As the economy stagnates amid inflation and sanctions, while battles rage on a growing number of warfronts throughout Myanmar, the military has resorted to selling treasury bills and bonds to sustain high levels of military spending. While previous reporting has illuminated the practice of selling these securities to private, domestic banks, Myanmar Now has also seen tax and financial records showing that international insurance companies are also buying debt issued by the regime. The records show treasury bond and bill purchases totalling nearly 50 billion kyat (US $24 million) in value in September 2021 alone, seven months after the military seized control of Myanmar’s ministries in a coup. The involved companies include AIA Group Limited based in Hong Kong as well as Tokio Marine and Nippon Life Insurance based in Japan. Each of the latter two companies owns stakes in joint ventures with the Myanmar company Grand Guardian Insurance (GGI), which is owned by the chair of the Shwe Taung Group Aik Tun. Shwe Taung Group encompasses a diverse portfolio of subsidiary companies spanning various industries, including construction, real estate, cement production, shopping centres, hotels, and imports of BMWs. The Myanmar regime no longer allows public access to the Directorate of Investment and Company Administration, Myanmar’s national business registry. Due to the junta’s lack of transparency with business ownership records, the dates of acquisition and duration of these joint ventures cannot be confirmed with precision, but both are known to have been in effect after the 2021 coup. The details on current purchases are still unavailable, and the information seen by Myanmar pertains to treasury bonds purchased by the three companies eight months after the coup. However, insurance experts pointed out that the continued buying of these bonds is due to a legal requirement, as laws regulating insurance in Myanmar mandate the purchase of treasury bonds, with no other investment alternatives. The value of the purchases in question totals less than one percent of the military council’s 5.64 trillion kyat (US $2.68 billion) in military expenditures in the 2023-24 fiscal year. However, the records only document purchases from a few entities and may represent only a fraction of the debt purchases actually taking place. Assuming most or all of the 27 domestic and international insurance companies in Myanmar are also making these purchases, as required by law, the regime’s total annual revenue from these securities could easily amount to several hundred billion kyat, or several hundred million US dollars, closer to ten percent of military expenditures per year. The military council’s forces have been battling an armed resistance movement throughout Myanmar, which initially arose in response to military authorities’ lethal shooting of nonviolent demonstrators opposed to the coup in 2021. In the face of this threat, the regime’s military expenditures have dwarfed other allocations in the budget. Defence spending was almost double the amount spent on education and health services combined in fiscal year 2023-24. Insurance companies, banks, and securities firms have evidently persisted in buying the junta’s treasury bills and bonds despite appeals from anti-coup protesters and the National Unity Government (NUG)—a governing body formed and endorsed by elected leaders deposed in the coup—to stop doing business with or otherwise supporting the coup regime. As such, these investments have likely been crucial to maintaining the junta’s advantages on the battle lines and hold on power. While the official international rate approved for the Myanmar kyat on foreign exchange markets—around 2,100 kyat to the dollar—substantially overvalues the Myanmar currency, the Central Bank of Myanmar (CBM) rate of 3,543 is somewhat closer to the true value. Even using the CBM rate, the documented purchases by the three international insurance companies AIA, Nippon Life, and Tokio Marine totalled more than US $14m. This is equivalent to nearly a third of the US $44m raised by the NUG when it sold its own “Spring Revolution” treasury bonds in 2021. Myanmar’s deficits were offset in the pre-coup years by revenue from the production of crude oil, teak, jade, and other natural resources. However, financial analysts have observed that the junta now has more limited means to deal with budget shortfalls due to international sanctions and an internal conflict that routinely disrupts production throughout the country. Selling treasury bonds to financial institutions, including insurance companies, is a common practice for governments seeking to manage inflation and meet budgetary needs. However, the junta council is abusing this approach, according to Tint Lwin, a former bank official and chair of the Yangon Parliament’s Public Accounts Committee, who likened the junta’s overuse of selling securities to taking toxic overdoses of medication. “Treasury bonds and bills are sold on one side, while paper money is continuously printed on the other, fuelling hyperinflation and burdening the people with soaring prices and shortages of goods,” Tint Lwin explained. “Furthermore, the funds raised through these methods are used to finance war crimes, including the brutal killing of innocent civilians,” he added. “As a result, those who buy these bonds and bills become enablers and accomplices to war criminals.” International insurance companies in Myanmar Leading insurance companies from countries including Hong Kong, the United States, Canada, and Japan have invested in or continue to operate within Myanmar’s insurance market. The number of entities in Myanmar’s insurance sector totals 27—including both life insurance and general insurance businesses—according to a statement issued by the military council’s ministry of planning and finance in September of 2024. The life insurance sector is made up of five fully foreign-owned companies, three companies operating as joint ventures between Myanmar and foreign entities, and nine domestic companies. In addition, there are three general insurance companies operating as domestic-foreign joint ventures, as well as the military-controlled Myanma Insurance Company and six other domestic general insurance companies. In addition to the capital reserve requirements Myanmar imposes on financial institutions and insurance companies, the entities are also required to invest a minimum amount in the junta’s treasury securities. Life insurance firms are required to hold 6bn kyat in reserves (US $2.9m at the non-CBM, official rate), while general insurance companies are required to hold 40bn (US $19m), and companies offering both life and other insurance policies are required to hold 46bn (US $21.9m). The entities are also monitored by the Financial Regulatory Board for compliance with the requirement to invest 30 percent of this capital in treasury bonds and bills through the junta-controlled Myanma Economic Bank (MEC), as well as hold 10 percent in deposits at the MEC. Some five months before the coup in September 2020, AIA Myanmar had made treasury bond purchases totalling just over 8bn kyat in value. However, just under eight months after the coup in late September 2021, the value of its purchases had risen to over 15bn kyat, according to tax and financial records seen by Myanmar Now. First founded in Shanghai in 1919 and now headquartered in Hong Kong, AIA Myanmar’s parent entity the AIA Group is among the largest life insurance multinationals in the Asia-Pacific region, with wholly owned subsidiary entities in 16 countries. AIA Myanmar Life Insurance, a fully foreign-owned AIA Group subsidiary, has operated in Myanmar since the administration of Aung San Suu Kyi’s National League for Democracy (NLD) party. Myanmar Now contacted AIA Myanmar Life Insurance in Yangon and the AIA Group’s headquarters via email in early November to inquire about the company’s purchases of Myanmar treasury bonds and bills since the coup and its role in enabling the military council to offset budget deficits. There was no response to Myanmar Now’s inquiries. Grand Guardian, a Myanmar general insurance company headed by prominent businessman Aik Tun, holds a 65-percent stake in the joint venture GGI Tokio Marine according to the most recent available information, with the Japanese firm Tokio Marine controlling the remaining 35 percent. Tokio Marine, established in 1879, is Japan’s oldest insurance company and operates in 45 countries. Tax records show that the joint venture purchased 22bn kyat (US $10.5m) worth of treasury bonds in under nine months between the February coup and the end of September of 2021. Another GGI joint venture, Grand Guardian Nippon Life, bought a total of more than 11bn kyat (US $5.2m) worth of treasury bonds in Myanmar within the same period, according to records seen by Myanmar Now. Nippon Life, a leading life insurance company in Japan founded in 1889, owns 35 percent of the shares in Grand Guardian Nippon Life, according to the most recently available records. In early November, Myanmar Now emailed both of the Japan-based companies to ask whether they had continued to purchase of treasury bonds and bills, and inquire about their role in enabling the military council to Neither responded to Myanmar Now’s inquiries. The three involved foreign-based firms are not only among the top insurance multinationals in the region, but also dominate in Myanmar, with the largest shares in the country’s domestic insurance market. The widespread buying of junta debt Treasury bonds and bills are typically a means for governments to borrow from the public, selling certificates of debt to be repaid with interest when they reach maturity at a prespecified time. In Myanmar under the junta, the treasury department, operating within the junta’s ministry of planning and finance, issues these debt securities via the CBM, which functions as the selling agent. Treasury bills with maturities of less than one year are issued and sold biweekly, while treasury bonds with maturities of over a year are sold monthly. The total annual value of these sales can reach trillions of kyat—equivalent to billions of dollars. Financial reports from the junta-controlled CBM indicate that the direct buyers of treasury bonds and bills are both state-owned and private banks as well as securities firms. The securities firms sell them on to insurance companies among other entities and individual investors. AIA and the two GGI joint ventures are not the only international insurance firms still operating inside Myanmar since the coup. Among the others present in Yangon, according to records shown to Myanmar Now, are Prudential, based in the United States; Chubb Limited, originally founded in Bermuda but now based in Switzerland; Manulife, based in Canada; and Dai-ichi Life, based in Japan. While both the United States and Canada have introduced targeted sanctions prohibiting business with certain Myanmar entities and individuals since the 2021 coup, it is unclear whether the US- or Canada-based companies’ activities constitute violations of their respective governments’ sanctions regimes at the time. Within Myanmar, many prominent businessmen who have maintained close associations with the authorities over the years have established or acquired insurance companies, including Aung Ko Win, the former chair of Kanbawza Bank (also known as KBZ); Tay Za, the founder and chair of the Htoo Group of Companies; Zaw Zaw, the founder and chair of Ayeyarwady Bank; and Khin Maung Aye, the chair of CB Bank. Insurance firms, along with financial institutions such as securities brokerages and banks, have mostly been dominated by “cronies” with close links to successive military regimes, or in some cases directly owned by the military through parent companies. For example, Aung Thitsa Oo Insurance Co., Ltd. is a general insurance provider controlled by the military-owned Myanma Economic Holdings Limited, a firm targeted with international sanctions within two months of the February 2021 coup. Aung Myint Moh Min Insurance Co., Ltd. is a life insurance company operating as a subsidiary of the other sanctioned, military-owned giant Myanmar Economic Corporation. All military personnel are required to hold policies with Aung Myint Moh Min Insurance, with premiums regularly deducted from their wages. The company collected just over 623 million kyat in insurance premiums from soldiers in the 2014-15 financial year, but this amount surged to over 23bn kyat by 2018-19, according to a master’s thesis accepted by the Yangon University of Economics in December 2019. The military-owned insurance firm has reportedly remained the top recipient of life insurance premiums in Myanmar consistently to this day. In general, military-controlled, state-owned banks and crony-owned companies have been contributing the revenues needed to finance the junta headed by coup leader Sen-Gen Min Aung Hlaing. As most ordinary citizens lack the means to invest in treasury bonds, the junta has instead pressed these companies to buy them. According to analyst Sein Htay, a member of the deposed NLD party’s economic committee, the companies appear to be buying the bonds to secure a stake in the country’s economy and privileged access to the profits it generates. “The rulers of the country are indifferent to the welfare of the people, even to the point of killing them,” Sein Htay said. “If businesses choose to ignore this reality and continue operating—whether driven by the hope of profits, even at the expense of financial loss, or due to small or large gains—they are complicit in wrongdoing.” A woman involved with the insurance industry in Yangon also argued that funding the junta’s budget while it wages a violent war against Myanmar’s people is tantamount to supporting the military’s crimes. “I must say they are acting as pillars for the regime’s forces. They are knowingly helping them for their own benefit. They are supporting injustice and the crime of killing innocent civilians,” said the source, who asked not to be named for security reasons. Insurance companies’ limited options Insurance companies, like banks, are businesses that amass capital assets. However, while banks in Myanmar have discretion in lending out and investing a portion of the deposited assets on their balance sheets, insurance companies have no investment options other than treasury securities issued by the junta. When their purchased treasury bonds and bills mature, insurance companies are obligated to buy new ones. In addition to this constraint, they are restricted from making potentially lucrative investments using the capital from clients’—in this case policyholders’—premiums. As explained by an experienced former member of the Insurance Business Regulatory Board (IBRB), they therefore typically allocate the substantial funds at their disposal to purchasing interest-yielding treasury bonds. “Not all insurance premiums are returned for claims, so they can be invested. From what I know, the central bank sells treasury bonds, and we place bids on them. We purchase based on the interest rates they offer. This is the only investment option available,” said the insurance expert, who asked to remain anonymous for security reasons. “Our money can’t be invested in the stock market or anywhere else,” he continued. “We can only earn interest at the rates offered by the central bank. It’s also risky to keep savings in private banks. This alternative is the only one available internationally.” The central bank sells treasury bills with maturities of three months, six months, and one year, and treasury bonds with maturities of between one and three or five years. The interest yield on bonds goes up to nine percent. Major life insurance companies sell policies that yield interest for policyholders. After collecting premiums, they invest the funds in treasury bonds and bills, later returning the interest from these investments to the policyholders. As a result, insurance companies function as ‘institutional investors’, effectively contributing billions of kyat that go towards financing the junta’s budgetary needs, said an employee of Myanma Insurance who asked to remain anonymous. “There is always a budget deficit. To cover it, the government can choose between domestic and external financing,” she said. “External financing involves borrowing from international institutions like the World Bank. Right now, they are relying on domestic financing, which is preferable as it draws on local resources.” She went on to explain that investments from insurance companies flowing into the national budget serve as a source of funding for critical infrastructure projects without aggravating inflation, since it obviates the need to print money. She also noted, however, that there were valid reasons for requiring that 30 percent of capital assets be invested in treasury bonds, for example ensuring the necessary funds would be available for a large payout to policyholders in the event of a natural disaster. While the junta may be seeking ways to limit its money-printing amid inflation, the efforts have not been fully successful. Between the 2021 coup and May of this year—a period of three years and three months—the NUG estimates that the junta-controlled CBM printed around 30 trillion kyat. By way of comparison, before being ousted in the 2021 coup the NLD government printed less than 3.7 trillion kyat in 2019 and 2020. Financing the regime’s war machine According to budgetary data from the junta-controlled ministry of planning and finance, the budget deficit for the 2023-24 fiscal year amounted to over 7.4 trillion kyat. Data from the military council’s planning and finance ministry indicate that deficits reached over 7.4 trillion kyat for the 2023-24 fiscal year. The military council’s defence spending for the same year reached more than 5.6 trillion kyat, an increase of over 50 percent from the previous fiscal year. The junta has since ceased publishing data on its military expenditures. In the last year for which data was released, total spending on health was only a seventh of the amount spent on defence. While military spending exceeded 5.6 trillion kyat, the combined budget for both education and health was around 3 trillion kyat. One of the reasons for elevated military spending this year was the cost of conscripting and training people of eligible age into the military under the revived enforcement of a mandatory service law, deputy junta chief Vice-Sen-Gen Soe Win said during a budget meeting in early March of this year. While the junta has abandoned transparency regarding its spending on defence, it is clear that if the data were made public it would show higher expenditures than ever, a tax and finance expert said. The sale of treasury securities is currently enabling the junta to meet its spending needs, with the largest amounts allocated to defence spending and shoring up the military, he added. “It’s undeniable that this is supporting the military,” the tax and finance expert said. “In such a situation, many insurance companies opt for a country with a ‘high-risk sector’ because it offers higher profits. They turn a blind eye to the consequences because of the benefits they gain.” Knowing that the demand for insurance increases in times of greater insecurity, insurance companies are maintaining their profits by raising premiums for policies protecting risky endeavours like international trade, he explained. In the wake of the military coup, international sanctions, human rights abuses by the military, and worsening conditions have prompted many major international companies to exit Myanmar, yet foreign and multinational insurance companies continued to operate in the country. Insurance companies, as financial institutions, face difficulties entering or exiting the market. Exiting would lead to major losses, as they would have to provide deposits to the government while the company is still operational, according to insurance industry professionals. Additionally, life insurance companies can market their health insurance policies to the middle class and employees, creating another incentive to remain in the country, said a male employee of an international life insurance company. Life and health insurance policies are typically purchased by people who earn steady incomes, want to secure coverage for medical expenses in the event of illness, or intend to save for their children’s education, he said. However, he added, like other businesses, insurance companies are struggling due to the ongoing political instability. “Insurance companies are facing tough circumstances, with the political crisis having a ‘domino effect’ on the industry,” he said. Major international companies are also facing a shortage of human resources, and the ongoing conflict across the country has heightened concerns about employee safety, allowing them to run offices in only a few cities, he added. Tint Lwin, a former bank official and chair of the Yangon Parliament’s Public Accounts Committee, recognised the constraints and risks facing some businesses, but nonetheless emphasised the need for them to rethink their cooperation with the junta. While the cost of abruptly shutting down or dismantling their operations would be prohibitive, Tint Lwin said, even those businesses that feel trapped should consider the long-term consequences of operating under the authority of a regime killing its own citizens. “International companies that value their reputation on the global stage must cut ties with the junta immediately,” he said. “If they fail to do so, it will tarnish their legacy, and they should be aware that, under a future democratic Myanmar government, they could be blacklisted for their past actions.” The NUG issued a statement on June 27 asserting that, because the military council is not a legitimate government, its sale of treasury bonds and bills is illegal, adding that the NUG would not accept responsibility for these transactions or recognise them as public debt.

Myanmar junta selling bonds to insurance companies to finance its crimes

Private firms’ purchases of treasury securities have allowed the military regime to continue funding the war against its opposition, commit human rights violations, and perpetrate oppression and harm against Myanmar’s people, analysts say

Subscribe for full access

‘Be back by 7’: For Yangon’s young, a life ruled by a self-enforced curfew

Myanmar’s military is regaining ground, costing the resistance key connections

Myanmar charity worker who built a lifeline for the poor loses it all after military coup

Fear grips Mandalay as junta-backed militias and kidnappers prey on residents

Subscribe for full access

Related Articles

Myanmar junta bombs religious ceremony; kills own POWs in Chin State

ASEAN envoy ends Myanmar trip with no public Suu Kyi meeting

Myanmar junta launches arson spree in Sagaing after colonel’s killing

Myanmar junta columns suffer heavy losses in Sagaing as resistance attacks intensify