Myanmar’s junta-owned companies maintain international economic ties despite sanctions

Myanmar’s military-owned companies are trying to evade growing international sanctions by channeling funds through affiliate firms, according to leaked documents obtained by Myanmar Now.

The firm Myawaddy Trading Limited, a subsidiary of the sanctioned entity Myanma Economic Holdings Public Company Limited (MEHL), has set up a new firm under the name Bhone Min Myat, which it has been using to import fuel and palm oil from abroad, the documents show. 

The military-owned MEHL has also attempted to receive international transfers through another affiliate company, Ever Meter. 

The MEHL, after taking over the military-owned Myanmar Five Star Shipping Line, sold a ship to a foreign company for US$1.9m. The documents obtained by Myanmar Now show that MEHL intended to funnel the proceeds of the sale through Ever Meter to enable other purchases in foreign currency. 

Ever Meter had ordered more than 800,000 costly electric power meters from Singapore, intended to supply the junta’s ministry of energy and electric power. 

The company had initially tried to import the electric meters in 2019, having won a tender to supply the Ministry of Energy and Electric Power under the ousted National League for Democracy (NLD) government. 

However, Ever Meter lost its contract to supply the ministry amid accusations of facilitating kickbacks to the military, prompting the company to file a complaint with the NLD government’s Anti-Corruption Commission. Ever Meter won the tender again after the military seized power in 2021. 

In general, enterprises in Myanmar face few barriers to establishing subsidiary firms under the military regime. The registration fee for incorporating a new company is only 150,000 kyat ($70). 

In the past, information about companies registered with the Directorate of Investment and Company Administration—under the junta’s ministry of investment and foreign economic relations—was accessible to the public for a fee on the directorate’s website. However, the military council has blocked access since September 2022, after entities and individuals linked to the junta were targeted for sanctions by the international community. 

Leaked minutes from a MEHL meeting held in June 2022 referred to the effects of Western governments’ sanctions on export businesses. Coup leader Min Aung Hlaing, who serves as Patron Chairman of the military-owned firm, was in attendance and directed MEHL to improve operations in spite of the new international restrictions on its business activities. 

Despite pressure from activists to cut all ties with the coup regime and the imposition of sanctions by foreign governments, a number of Myanmar companies—including military-owned enterprises—have conducted business with international partners with near impunity since the military seized power in February 2021. 

Financial records published by the online whistleblower group Distributed Denial of Secrets exposed transactions between Innwa bank—controlled by junta-owned Myanmar Economic Corporation (MEC)—and three foreign banks in November 2022. 

The transactions—conducted with Singapore’s United Overseas Bank, the Bank for Investment and Development of Vietnam, and the multinational Australia and New Zealand Banking Group Limited (ANZ)—all occurred after the February 2021 coup. ANZ ceased operations in Myanmar the same month its dealings with Innwa Bank were exposed. 

At the time, however, the financial transfers were legal and did not violate sanctions imposed by the countries where the foreign banks are based. Australia, where ANZ is headquartered, imposed no new sanctions on the junta until two years after the 2021 coup. 

MEC and MEHL are among the entities sanctioned by the UK, US, and EU within three months of the coup. However, the true force and effectiveness of the sanctions remains in doubt. 

Advocacy organisations Global Witness and EarthRights International published a joint report this month, titled “Missed Opportunities: The Need for a Better Approach to Myanmar Military Coup Sanctions,” documenting how junta-owned companies evade sanctions imposed by the European Union and governments of the US and UK.

The report—which catalogued the sanctions imposed by the EU, US and UK to date—found inconsistencies in the implementation of sanctions regimes and recommended closer coordination among governments to effectively hold the junta and its associates to account. 

Some 165 individuals and entities in or connected to the junta have become targets of EU, British and American sanctions since the coup. However, the report notes, this is a small number compared with more than 3,100 individuals and entities sanctioned in response to Russia’s invasion of Ukraine. 

The report emphasises that the British and American governments have yet to sanction certain businesses controlled by junta, including the Myanma Oil and Gas Enterprise (MOGE) which is the military council’s single largest source of foreign currency. Only the European Union has sanctioned MOGE in the two years since the coup. 

The US government authorised new sanctions at the end of 2022, nearly two years after the military coup. However, as such the sanctions apply only to the director and deputy director of MOGE as individuals, not to MOGE as an entity.

According to the Global Witness and Earthrights International report, strong opposition from the Thai government prevented further action against the oil and gas company. Thailand requested that MOGE not be sanctioned on the grounds that it would disrupt energy security and trade in the region. 

Some 50 percent of the Myanmar regime’s revenue is received through junta-controlled enterprises. The US and UK governments would also need to impose sanctions on the military-owned Myanma Foreign Trade Bank (MFTB) and the Myanma Investment and Commercial Bank (MICB) to impede the flow of foreign currency to the military council effectively, the report said. 

Despite sanctions against military council officials and their network of cronies and affiliated entities, the British and European Chambers of Commerce are still active in Myanmar, as reported by German news agency Deutsche Welle in January. 

The junta released a February 5 statement arguing that the international community has chosen to blame the military council for ongoing conflict in Myanmar, rather than expose resistance fighters as the real perpetrators of terrorism and violence. 

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