Dec 24, 2011

Myanmar Tycoons Embrace Change

As Myanmar feels its way toward political and economic opening, one of the clearest signs of change is the rush among some of its tycoons to recast themselves as enthusiastic supporters of overhauls.

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Mr. Zaw Zaw, left, with Ms. Suu Kyi at a soccer match in September.
.Construction and mining magnate Zaw Zaw—who is specifically targeted by Western sanctions—is among several business leaders here who have met with opposition politicians and dissident groups recently, including Nobel laureate Aung San Suu Kyi. In a rare interview with Western media a few weeks ago, Mr. Zaw Zaw said his goal is to strengthen the country's economy and support the political shifts that led to Hillary Clinton becoming the first U.S. secretary of state to visit in more than 50 years.

Ultimately, the 44-year-old Mr. Zaw Zaw says he hopes the changes under way could lead the U.S. and European Union to drop sanctions and allow Myanmar to compete in the global economy instead of relying on China for support.

"We all have a role to play, and some people need to push while others need to pull," said Mr. Zaw Zaw, who dresses in Myanmar's traditional wraparound sarongs and is one of several tycoons singled out for sanctions by the U.S. and the EU. The U.S. sanctions freeze the businessmen's assets in the U.S. and prohibit financial transactions between them and U.S. citizens.

Officials at Ms. Suu Kyi's political organization, the National League for Democracy, confirm the pro-democracy icon is talking with business leaders here, including figures such as Mr. Zaw Zaw. Analysts and political insiders say it is part of a new strategy to embrace and possibly accelerate recent plans for overhauls here, which are expected to lead to Ms. Suu Kyi herself running for parliament some day.

"There's a lot to talk about, such as how to introduce more competition and poverty-alleviation strategies," said Han Tha Myint, a member of the NLD's central committee.

Myanmar, also called Burma, is still widely ostracized for its poor human-rights record, and U.S. officials say that despite recent changes there, they don't intend to ease sanctions anytime soon.

The country also has a reputation for reserving its best business opportunities, including lucrative contracts in jade mining, timber, and tourism, for well-connected businessmen whose backing helped strengthen the military regime that took power in 1962. U.S. officials say those businessmen also include Tay Za, who has invested in timber and hotels and runs a domestic airline, as well as Steven Law, whose Asia World conglomerate played a key role in many infrastructure projects in recent years.

Economists have said Myanmar will have to break that cycle—and introduce more competition—to be fully on the path to change.

Myanmar's new nominally civilian government, which took the reins in March, has moved in that direction, including breaking up import cartels, holding talks with dissidents such as Ms. Suu Kyi, and even risking the ire of China by blocking a $3.6 billion Beijing-backed hydropower project that also would have benefited Myanmar businessmen.

"The old cronies have a decision to make," says Sean Turnell, a professor at Australia's Macquarie University. "Much of their wealth has come from operating in a restricted environment and learning how to get concessions from the government," he said. "If they are smart, they will recognize the winds are changing and that they will be better off adapting to a more liberal environment instead of depending on the capriciousness of the state."

Mr. Zaw Zaw, for one, is trying to reposition himself. In September, he sat side by side with Ms. Suu Kyi at a local soccer match, raising eyebrows among local residents. Ms. Suu Kyi hasn't commented publicly on the encounter, but some of her supporters privately say they fear she was being played by Mr. Zaw Zaw to improve his reputation.Born in Myanmar's rice-growing delta, Mr. Zaw Zaw studied mathematics in Yangon before leaving the country in 1989. He worked on a Singapore-based shipping line and traveled widely before landing a job in Japan exporting second-hand cars while working nights in local restaurants. Mr. Zaw Zaw and other people who know him and his business say he made a small fortune there.

Not so, says Mr. Zaw Zaw, who is chief of Myanmar's soccer federation. "We talked about fair play and having a level playing field as well as youth development," he said. "Whoever is the leader, whether in politics or business, you must listen to other people and share ideas."

In 1994, Mr. Zaw Zaw returned to Myanmar, where he began importing cars from Japan, before moving into construction and mining, among other businesses. Today, his Max Myanmar group of companies has around $500 million in annual revenue, he said. The firm built many of the buildings and infrastructure at Myanmar's new capital, Naypyitaw, and operates a major jade mine. Last year, Mr. Zaw Zaw secured a license to open a new bank.

In 2009, Mr. Zaw Zaw, found himself on an expanded list of U.S. and European sanctions. U.S. diplomatic cables released on the WikiLeaks website reveal that U.S. sources believed Mr. Zaw Zaw actively sought to gain contracts and permits from the Myanmar government by volunteering to work on the regime's marquee projects.

Mr. Zaw Zaw denies being a crony of the old military regime, as do other high-profile, sanctioned businesspeople such as Mr. Tay Za. "If you become a millionaire in this country, lots of people complain," Mr. Zaw Zaw said.Instead, he said he views Myanmar's changes as a fresh opportunity for him to expand businesses and is already looking to link up with foreign partners.

"Everybody in the world is looking for something new, like Vasco da Gama," Mr. Zaw Zaw said. "And right now they are looking at Myanmar."

Some analysts suggest that Mr. Zaw Zaw's advocacy for reform is a barely-concealed effort to help remove sanctions while also protecting his assets in the longer term. Mr. Zaw Zaw said that isn't the case and that he has never broken the law. Economic overhauls, he said, will help the whole country if sanctions are lifted, not just his businesses.

"I don't feel like I'm a crony, Mr. Zaw Zaw said. "I'm not doing this for myself."

Source: Wall Street Journal


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