The corruption of Myanmar's jade trade ‘heist’

YANGON, Myanmar – Myanmar's vast jade industry is being used as a slush fund by a network of military elites, drug lords and crony companies who illegally exploit the valuable resource for tens of billions of dollars a year, according to a report released on Friday by Global Witness.

The year-long investigation, titled Jade: Myanmar's 'Big State Secret', identifies a number of key players in the industry who have obtained $31 billion worth of jade last year alone, a figure equivalent to nearly half Myanmar's entire economy.

Global Witness, the environmental corruption campaigner, estimated networks in the country have secured a total of $122.8 billion from pillaging jade over the past decade.

“Myanmar's jade industry may well be the biggest natural resource heist in modern history. The sums of money involved are almost incomprehensibly high and the level of accountability is at rock bottom,” the report stated.

The industry figures are a rare look into a secretive, off-the-books sector where no reliable data exists. They are also a far cry from previous estimates.

According to Chinese government import data, gemstone imports from Myanmar were worth $12.3 billion in 2014, while other unofficial estimates were much lower.

Like much of Myanmar's gemstone industry, a large majority of the trade is conducted illicitly through smuggling through the border with China.

As one of Myanmar's most precious resources, jade has been at the centre of one of Myanmar's longest running disputes between government forces and the rebel Kachin Independence Army/Organization (KIA/KIO) in Kachin state and the United Wa State Army in northern Shan state.

Since 1990, the KIA/KIO and the military 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.

But with land concessions over massive jade deposits largely controlled by just a small handful of military-connected businessmen, profits from the trade — coming from high demand from China — have failed to reach the areas from which they are taken, leaving many in poverty, while the mining itself has had a major environmental impact.

“The jade business is wreaking havoc on the people and environment of Kachin, where the stone is mined. Conditions around the mines are often fatally dangerous and drugs and prostitution are endemic, while those who stand in the way of the guns and machines face land grabs, intimidation and violence,” Global Witness said in a statement accompanying the report.

While there are about 100 big mining companies operating in Myanmar, they are controlled by only 10 or 15 owners, according to the report.

Among those cited as the major beneficiaries of the lucrative trade are former and current government and military officials. 

Also on the list is Wa State Army and United Wa State Party leader Pao Yu Hsiang and Wei Hsueh Kang, Myanmar's most notorious drug lord, who is wanted in the United States for drug-related offenses.

With some of the largest and best quality jade reserves in the world, Myanmar extracted 16.68 million kilograms worth of jade in 2014, with Kachin state's Hpakant home to the densest reserves with about 35,000 acres worth of deposits, according to the report.

Lamawng La Tawng, a pastor and community leader living in Hpakant, told Al Jazeera the town of 331,000 has spiralled into almost complete squalor since the mining companies moved into the area in the mid-1990s.

“Long ago, the Hpakant people were okay, but after the 1990s when some companies came and started extracting jade — it got much worse. They started digging the mountains and now there is always heavy flooding here and the people have to leave their homes because the companies are taking the land,” La Tawng said.

But the problems don't stop there.

“Even though there was a drug problem here before, it is a lot worse because the big companies have ties to the drug trade,” said La Tawng. “All the people are worrying every day. People are buying bags of drugs instead using money for food.”

According to the report, the 2014 Myanmar Gems Emporium — the primary official government jade sale, which is geared towards international buyers — featured jade sold for as much as $2.89 million per kilogram.

A single kilogramme of the highest priced jade sold at the emporium would have generated enough revenue to fund 147 health clinics in Kachin state for one year, it said.

“The biggest problem is that the people have no ownership rights. A mutual sharing agreement that benefits the people there is very important for a jade mining area. The gains are only for the cronies and the people involved in the central government,” said Tsa Ji, general secretary of the Kachin Development Networking Group, an association of Kachin civil society groups and development organisations both inside Kachin state and abroad.

With Myanmar heading to its first open general elections in 25 years on Nov. 8, analysts agree the new government will need to tackle a new ownership and revenue sharing strategy, in conjunction with the KIA/KIO and local civil society groups if the situation is to improve.

“Jade production, like much of other rich natural resources, presents an important source for the country's fiscal revenue and public investment fund,” said Cyn-Young Park, assistant chief economist at the Asian Development Bank.

“Income derived from natural resources should be managed properly and appropriately shared between the central and regional governments.”