Myanmar: Economic Interests vs Human Rights Violations


    The prevalence of economic interests over civilian safety questions the supposed moral superiority of Western democracies and their implication in Myanmar’s army weapons production network. While they’ve taken a step back by withdrawing companies from the energy sector, Asia-based companies have replaced them. Hence, as long as the international community fails to implement coordinated and comprehensive sanctions against Myanmar, the local production of weapons will carry on.

    1. Current situation in Myanmar

    1.1 Human rights violations

    Since the military coup of February 1, 2021, against Aung San Suu Kyi’s government, Myanmar’s Tatmadaw has officially killed around 3000 people and arrested more than 17,200 (source). Two years on, the consistent disregard for human rights – extrajudicial executions, torture, and air strikes – calls for immediate action (source).

    ASEAN leaders agreed to a Five-Point Consensus, that Myanmar’s military officials have continuously neglected. Indeed, not only the conditions have not been met, but the situation worsened, and humanitarian aid was restricted (source).

    Moreover, Myanmar’s junta recently unlawfully extended the country’s state of emergency by another six months, blaming the “unusual circumstances” of the situation (source). This strategic announcement prevents the organisation of free elections, hence reinforcing the Tatmadaw’s power.

    1.2 Existing sanctions

    Countries such as the U.S., the U.K., the E.U., Canada, and Australia have already imposed several rounds of sanctions on Myanmar, regarding export controls, dual-use products, and weapons. Yet, the E.U. Chambers of Commerce refuse to end Myanmar’s trade privileges. It claims the negative impact it would have on vulnerable communities and workers, rather than the military (source). The U.S. and its allies recently imposed further sanctions with curbs on energy officials and junta members, among others (source)

    The weakness and inconsistency of the sanctions inevitably lead to failure. A major one is the lack of regulation on supplies that sustain Myanmar’s national arms manufacturing network (source). Hence, amid international inaction, the military has strengthened its weapon production value chain. It subsequently enabled the Directorate of Defense Industry (DDI) to gradually become self-sufficient (source).

    The current sanctions, whether old or new, mostly target Burmese companies and individuals. By doing so, it ignores Western implications in human rights violations in favour for economic interests in Myanmar (source). For instance, on November 8th, 2022, the U.S. Department of Treasury designated Sky Aviator Company Limited and its owner and director, as pursuant to operating in the defence sector of the Burmese economy (source). Kyaw Min Oo, a Burmese national and businessman with close ties to the Burmese military the owner of Sky Aviator Company Ltd. has, since the 2021 coup, facilitated arms deals and weapons purchases on the behalf of the junta (source). While this is a first step towards the facilitation of peace in Myanmar, it is not sufficient. It fails to recognize companies’ economic interests in Myanmar, and their role in the Burmese weapons production chain.

    2. Looking at the wrong place…on purpose?

    2.1 Myanmar’s local weapon production

    Analysis of video and photographic evidence and witness statements shows security forces armed with a variety of locally produced firearms. Those include sniper rifles, MA-1 semi-automatic rifles, and Uzi-replica BA-93 and BA-94 sub-machine guns (source).

    The value chain that enables the DDI’s arms manufacturing is a highly complex, multi-layered network. It consists of a very large number of material suppliers, manufacturers, and distributors. These latter include both State-owned and private companies that are domiciled in, or under the jurisdiction of, a large number of states (source). Hence, the lack of sanctions on this side of the production network allows the KaPaSa to overpass embargoes and existing sanctions (source).

    2.2 Hypocrisy of international actors and economic interests

    The inaction of the U.S. and its allies contributes to the legitimization of an unlawful and violent government (source). The U.S. is reportedly deeply concerned about Russia’s supply of military equipment to Myanmar’s junta (source). Yet, it itself contributes the weapons production network. Indeed, according to a report from the Special Advisory Council for Myanmar (SAC-M), at last thirteen countries take part – directly or indirectly – in the weapons production network of Myanmar’s military. This includes Germany, Austria, France, Israel, China, India, and the U.S. (source). For instance:

    • The Austrian supplier GFM Steyr supposedly provides high-precision machines used to manufacture gun barrels currently used by the junta (source).
    • Key components, such as fuses and electric detonators, have been tracked from companies based in Russia and India (source).
    • Puma Energy is a global energy company incorporated in Singapore, largely based in Switzerland, and beneficially owned by global commodity giant Trafigura. Alongside other companies such as Chevron, ExxonMobil, PetroChina and Thai Oil, it took part in the supply chain. It inevitably links them to the Myanmar military, which is responsible for strikes amounting to war crimes (source). However, they have progressively announced their withdrawal from Myanmar in recent months (source).
    • The French company Dassault Systèmes developed the software used to program the machines. Those machines themselves originated from Germany, Japan, Ukraine, and the U.S.(source). KaPaSa factories used this 3D simulation software to draw, design and test sound suppressors for the MA-3 rifle and conduct performance analysis of the Yagi-Uda antenna for UAV control systems (source). They used this software for the design of rifles used against the Rohingya minority in the Inn Din massacre (source).
    • Chinese State-owned company NORINCO plays an important role in the DDI’s imports of raw materials for KaPaSa production. Similarly, the local manufacturer of the BMP amphibious tracked infantry fighting vehicle uses Chinese-origin mission system architecture, turrets and engines. The DDI reportedly purchased all of those from NORINCO (source).
    • In 2022, the DDI purchased fuses for 84 mm recoilless rifles through a Myanmar-registered civilian front company (Creative Exploration Ltd.) from India-based company Sandeep Metalcraft. Sandeep Metalcraft is registered as an official vendor of India’s Ministry of Defense (source).

    2.3 Alternative trade hubs

    Similarly, to bypass sanctions imposed by individual countries, products and materials are shipped to Taiwan and Singapore, as they haven’t imposed sanctions on Myanmar. Singapore functions as an offshore trade hub. Singaporean companies operate as go-betweens for Myanmar’s military buyers and external suppliers. Likewise, Taiwan became a transit point for the DDI’s CNC machines – imported from European manufacturers. The DDI has previously received direct support from Israeli engineers in the maintenance of CNC machines in exchange of oil and gas contracts (source).

    3. Selfish opportunists and economic interests

    Likewise, between the February 2021 coup and October 20th, 2022, Myanmar’s energy sector attracted 3.8 billion USD. This represents 68% of all foreign investment over the same period (source). The accuracy of these numbers can be questioned, as it was provided by the junta’s Directorate of Investment and Company Administration (DICA). However, U.S. investment remains a substantial – and essential – cash input for the junta.

    Despite the departure of companies such as Chevron, Mitsubishi, and Total, regional actors continue to operate in Myanmar. Companies like Thailand’s PTTEP, South Korea’s POSCO, India-based ONGC, China-owned CNPC, and Nippon Oil of Japan have become the major players in the energy sector (source).

    Much of the investment received by the junta in 2022 involved fuel, including for aircraft and electricity production. It propped up the regime with foreign investments and resources (source). Moreover, as the Junta Deputy Information Minister Maj. Gen. Zaw Min Tun acknowledged in May 2022, the energy sector production had seen a “pause” as the result of foreign investment withdrawals. Nevertheless, Russia was expected to make up the difference with investments of its own “in the near future.” (source).

    Since the February 2021 coup, China has been the top investor. Myanmar also received $516.4 million from a Japanese firm, a combined $442.2 million from four Singaporean investments, $75.5 million from two Thai ventures and $66.1 million from five South Korean businesses (source).

    Myanmar’s neighbours’ selfish behaviours considerably restrict the efficiency of the international community. By prioritising national and economic interests over human rights, it prevents the implementation of effective sanctions. Many of Myanmar’s foreign partners chose to quietly work with the junta, fully recognising Myanmar’s economic potential (source).

    4. Summary

    In the absence of global action against Myanmar, non-Myanmar-based firms involved – directly or not – in the Tatmadaw’s weapon production system have no economic interest in withdrawing from Myanmar. The West has taken the first step by withdrawing important companies from the energy sector. However, they have been replaced by Asian-based companies, which prioritise economic benefits over human rights. Hence, as long as the international community fails to adopt comprehensive and coordinated sanctions against the junta, arms production in Myanmar will not stop.

    Zélie Petit
    Zélie Petit
    Junior Intelligence Analyst

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