By Anand Chandra (AFP) – Aug 4, 2012
YANGON — An energy magnate lauded as a rare "legitimate" tycoon in crony-dominated Myanmar has quietly lobbied for an end to Western sanctions -- except those targeting cronies who flourished under military rule.
Michael Moe Myint is part of Myanmar's "One Percent" -- a jet-setting moneyed class comprising fewer than two dozen families who have long monopolised the business landscape of the poor but resource-rich nation.
Many of them are accused of harvesting wealth by currying favour with the military junta that ruled Myanmar with an iron grip until last year when a quasi-civilian government took charge under President Thein Sein.
Some of them are under individual sanctions for propping up the military, even as Western powers in recent weeks have eased restrictions on trade and investment to reward the new regime for a raft of sweeping reforms.
But Moe Myint, who enjoyed a meteoric rise from a pizza delivery boy in West Virginia -- where he pursued a degree in Physics -- to the head of a multi-million dollar oil and gas empire, has "repeatedly declined 'offers' to enter into a typical crony relationship", according to a 2009 US embassy cable.
Although known to be former dictator Ne Win's personal pilot while working for Myanmar Airways before launching his company, "he is a legitimate businessman... who earned his success through hard work and ingenuity rather than ties to the regime," said the diplomatic note released by whistleblower website WikiLeaks.
That is no small praise in one of Asia's most corrupt nations where success for a large enterprise was considered impossible without the patronage of former military rulers endowed with arbitrary powers to issue business permits and licenses.
The kleptocratic system of governance enriched a small clique notorious for its entrenched vested interests and sometimes nefarious business practices -- while a third of the population subsists below the poverty line.
The US diplomatic cable, which praises Moe Myint for being the country's "largest single taxpayer", notes that "regime crony Tay Za, who allegedly earns more annually, pays far less in taxes, as his companies have a tax holiday".
Tay Za, of the Htoo Group, has a reputation as Myanmar's wealthiest and flashiest tycoon, with a penchant for Italian sports cars and travel by private jets.
He is accused by the United States of being an "arms dealer and financial henchman" of the military junta -- a charge he denies.
Zaw Zaw of the Max Myanmar conglomerate meanwhile is "one of several mid-level cronies that actively do the regime's bidding" to expand his commercial enterprises, which include a jade mine and a professional soccer team, according to another US diplomatic cable from 2007.
"The biggest problem" with such cronies is that they "made their money -- not by coming up with new products or finding new markets -- but simply by securing concessions against the otherwise tight restrictions on private sector activity by the previous military regime," said Sean Turnell, a Myanmar expert at Macquarie University in Sydney.
"They're 'rent seekers' rather than the entrepreneurs Myanmar needs. They were, and are, a force of resistance to reform."
And yet pressure to reform is more palpable than ever amid the threat of regulatory changes and the emergence of new competitors as the long-isolated nation opens up to foreign investment as sanctions ease.
The European Union suspended most of its sanctions on Myanmar in April and Washington recently gave the green light for US firms to invest in the country, as investors rush to tap what is widely seen as Asia's next frontier economy.
"Myanmar sits on top of vast unexploited reserves of oil and gas. To those unwilling to lift sanctions, I ask 'Do you want to be left out of the equation?'" Moe Myint told AFP in an interview in late May at his neoclassical lakeside villa in Yangon, replete with chic teakwood furniture, avant-garde artworks, and uniformed maids in attendance.
Earlier this year, in a letter to a high-level US official, Moe Myint asserted that Myanmar's institutionalised cronyism was "a direct result of sanctions".
"Sanctions did not hurt the powerful and the rich; it actually provided them with the means to further exploit the human and natural resources" of Myanmar, wrote the tycoon who heads Myint and Associates, Myanmar's largest contract oil and gas services provider, as well as another energy exploration company.
A better alternative is to "target certain individuals and institutions that have directly benefited through their close relationship to some members of the regime", he suggested, a politically-sensitive view seldom expressed within Myanmar.
Moe Myint acknowledged the letter accessed by AFP, but declined to say more about it. The US embassy in Yangon did not respond to requests for comment.
In 2008, the US slapped a visa ban on him and his family because of his link to the oil and gas sector, believed to be riddled with cronyism.
Some years ago, one of his two sons -- a petroleum engineer at Chevron in California -- was stranded in Canada and forced to shift base to Australia because his H1B visa was not renewed.
The ban was lifted just a few months ago, apparently after the embassy cable that exonerated Moe Myint of being a crony, but his son chose to return to Myanmar at the request of a high-profile neighbour: Aung San Suu Kyi.
Moe Myint's living room is festooned with photographs of his family at a private banquet with the Nobel laureate, who he says became a family friend after she was freed in 2010, alongside pictures of the family hobnobbing with Thai royalty.
Last Christmas, when the family dined with Suu Kyi, "she used her charm" and convinced his son to return home because "the country needs young men like him". Suu Kyi was elected to parliament for the first time earlier this year.
"She told me: 'I'm 66, you're 60, we're not young any more. Here's a great opportunity to do something for our country. Let's forgive and forget the past and look towards the future'," the tycoon said, referring to the reforms.
"I am willing" to forgive and forget, says Moe Myint, who has "paid a price" for resisting pressure to become a crony, according to the leaked cable.
The former regime in turn "made it difficult for the company to invest in both the onshore and offshore sectors", awarded lucrative contracts to relatives of ministers, and exerted financial pressure by delaying payments for oil purchased from his company, the memo said.
On his coffee table sat a dog-eared copy of "Why Nations Fail", a book by two US economists that stresses the importance of inclusive rather than extractive institutions that grab wealth and resources away from one part of society to benefit another.
He plans to send Thein Sein a copy.
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