The junta's exports lose their sparkle
By Amy Kazmin
Published: October 27 2007 03:00 | Last updated: October 27 2007 03:00
For centuries, Burma's gem mines have suppliedsome of the world's best rubies, jade and other gemstones coveted by couture jewellers and their wealthy customers. In recent years, these stones have also been a key source of foreign exchange for a cash-starved junta, which last year earned about $300m (€209m, £146m) from state gem auctions.
But after watching television images of Burmese soldiers attacking civilians and monks, executives at Cartier, the French luxury brand, decided it was time to take a stand. Within days, they were telling their cut-stone suppliers that they would not buy any more gems mined in Burma and would conduct random checks to ensure that the stones they did buy were not coming from there.
"While it was clear before that Burma was not a democratic regime, what we were witnessing was organised state violence. This was, in a way, an emotional response for us," says Pamela Caillens, Cartier's corporate responsibility director.
Cartier's move reflects the strong response by big western jewellers to last month's crackdown in Burma after many of them had long overlooked human-rights concerns.
Burmese rubies, prized for their rich red, are said to comprise 90 per cent of the world's supply. Burma also provides up to 98 per cent of the world's jade, giving the country what one jeweller calls a "stranglehold" on these gem sectors.
Bulgari, the Italian jeweller, has said it, too, will boycott Burmese gems. Jewelers of America, which represents large US retail chains such as Kay Jewelers, has called on Congress to close a loophole in a US ban on Burmese imports that has allowed Burmese gemstones to enter the market through third countries, where they are normally cut and polished. Tiffanyhas observed a ban on buying Burmese gems since 2002.
"We want to give our voices to those who say, 'something must change'," says Peggy Jo Donahue of Jewelers of America. "We don't want to buy products that might support a regime that hasn't yet engaged in democratic reforms."
Burma's biggest western investors, Chevron and Total , have so far rejected calls to divest their stakes in the Yadana gas field and associated pipeline, saying a sellout would only transfer their assets to other, less-scrupulous investors - and could give the regime a windfall in capital gains tax revenues.
However, other western businesses are re-evaluating their Burma links, prompted by concerns about the risk to their reputations of being seen to be aiding the military regime. In addition, the EU and the US are both considering fresh sanctions that could force many companies to cut their ties.
In the wake of the bloody crackdown on protesters, Rolls-Royce decided to stop servicing aircraft engines for the state carrier Myanmar Airways and leasing aircraft for another Burmese airline.
Rolls-Royce said it would have "no further involvement" in Burma. Myanmar Airways suspended some of its flights as a result, citing loss of insurance coverage.
Even before the recent crackdown, many image-sensitive UK clothing companies had stopped buying apparel from Burma after being targeted by consumer boycotts. In 2002, Triumph International, the lingerie business, closed a Burmese bra factory after a high-profile poster campaign called on the company to "support breasts, not dictators".
Besides gemstones and despite pressure from environmentalists, Burma has also remained an important source of teak, a hardwood valued by yacht and furniture makers.
Timbmet, the UK's largest importer and distributor of hardwoods, says it decided to wind down its sourcing from Burma several years ago after "we judged that trading with Burma was not responsible", says Mike Packer, the corporate responsibility director.
The company, which imported £3m ($6.2m, €4.3m) of Burmese teak last year, says it always tried to acquire legally logged wood, but ultimately concluded it could not verify environmental or labour conditions to its satisfaction.
Mr Packer says they had no illusions that the pullout would have any impact on the regime, though the EU's planned import ban on Burmese wood might have. "There are a lot of other companies that have picked up and are benefiting from our withdrawal," he said.
While western jewellers say they felt compelled to support the Burmese people's struggle for change, they hope their boycott will be only temporary. "It is not for ever," says Ms Caillens of Cartier. "If we change our decision, we have witnessed a difference - a change for the better. We definitely hope that something will occur, and that the jewellery industry will have played a bit of a part in it."
Copyright The Financial Times Limited 2007
Burma regime’s cronies feel sanctions
By Amy Kazmin
Published: October 26 2007 19:05 | Last updated: October 26 2007 19:05
In early September, Tay Za, a charismatic Burmese businessman accused of having close links to the military junta, was in Singapore to launch a daily service between the city state and Rangoon for his airline, Air Bagan. The three-year-old carrier, which does most of its business within Burma, had launched daily Bangkok flights and hoped to make an ambitious regional expansion.
The right to operate an airline was just the latest in a series of lucrative concessions secured by Burma’s most powerful businessman, whose extensive interests range from hotels to logging and mobile phones.
But Air Bagan on Thursday announced it had been forced to suspend its Singapore flights starting on November 4, a move that came after Tay Za, his wife, his son, and his companies were blacklisted by the US as key supporters of the military regime.
The move was evidence that the international response to the military’s violent crackdown on peaceful protesters last month is beginning to pinch the Burmese businessmen who until now have profited from their association with the generals who control the economy.
“They must be starting to feel a little bit encircled,” said Sean Turnell, an Australian economist who edits the journal Burma Economic Watch. “These things hurt them because they want to be seen as legitimate.”
Also named by the US have been Htay Myint, chairman of the Yuzana Company, which runs supermarkets, hotels, property-related enterprises and agribusinesses, and Khin Shwe, chairman of the Kay Gabar Group. Identified as key regime cronies, all face the prospect of their assets in US banks, or their overseas subsidiaries, being seized.
The same entrepreneurs – along with another 27 Burmese businessmen and relatives deemed to be beneficiaries of the regime’s economic policies – have also been hit by Australian financial sanctions.
Analysts say the sanctions may not have much of an obvious direct impact, as the businessmen are not thought to keep their assets in US banks or subsidiaries of US banks and no one knows how much Burmese money may be parked in Australia.
Yet Mr Turnell said that blacklisting businessmen as key cronies of a pariah regime “could be more effective than they appear to be on paper” as it was likely to make other non-financial companies wary of the risks of dealing with them.
Air Bagan officials in Singapore said they did not know why the Singapore-Rangoon route had been suspended, and calls to the head office in Rangoon went unanswered. But The Irrawaddy, a Thai-based news organisation dedicated to Burma, reported the company was facing difficulties with its Singapore-based bank.
Copyright The Financial Times Limited 2007
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Tourists on a boat take photographs of the Singapore waterfront skyline |
Several firms on US Myanmar blacklist linked to Singapore
SINGAPORE (AFP) — Three companies with strong links to Singapore are among seven firms blacklisted by the United States under fresh sanctions against Myanmar after its deadly suppression of pro-democracy protests.
According to President George W. Bush's order the companies which are either based in or linked to Singapore are: Pavo Trading Pte Ltd, Air Bagan Holdings Pte Ltd and Htoo Wood Products Pte Ltd, which is also listed as being from Myanmar's main city, Yangon.
The sanctions were announced Friday and are designed to target organisations with ties to Myanmar's ruling junta in the hope it will pile more pressure on the regime.
"It's about time the US did something like this," said Dave Mathieson, a consultant on Myanmar to Human Rights Watch in Bangkok.
He said the sanctions "actually go after the money" of the junta, adding they also served as a "wake-up call" for Singapore.
Also named is Air Bagan Ltd of Myanmar, which last month made Singapore its second international destination. The airline's chairman, Tay Za, arrived on the first flight.
Tay Za has "very, very strong links to the junta," said Sean Turnell, an economics professor who specialises in Myanmar at Australia's Macquarie University.
Tay Za is not among 11 individuals named by Bush as senior regime officials in Myanmar who are also subject to the fresh sanctions.
The directory at a building in Singapore's central business district lists Air Bagan Holdings and the two other blacklisted Singapore-linked firms as operating from a suite on the 24th floor.
But the suite carries no sign and workers in neighbouring offices said they knew nothing about what type of company operates from there, although they have seen people coming and going on weekdays.
An opaque blue sticker covered the door and obscured the interior. Phone and email messages to Pavo Trading were not immediately returned.
"We can't really comment right now," said Zaw Nay Oo, Air Bagan's corporate affairs manager, who works from the airline's sales office in a city shopping plaza.
Government spokespersons in Singapore also could not be immediately reached for comment.
The website for Pavo Trading says it is a sister company of Htoo Group of Companies and was established in 1999.
"The company's main interest lies in export of timber and timber products from Myanmar," says the website.
It says the group's flagship company, Htoo Trading Co Ltd, is a logging firm established 17 years ago.
"Htoo Trading is run by Tay Za," said Debbie Stothard of the Alternative ASEAN Network on Burma, a human rights group.
Bush's executive order cuts off the designated officials and organisations -- and those acting on their behalf -- from the US financial system, the US Treasury Department said.
It means that "any assets these individuals and entities may have that are within US jurisdiction must be frozen, and US persons are prohibited from transacting or doing business with them," the department said.
Singapore is chair of the Association of Southeast Asian Nations (ASEAN) and has led regional criticism of the junta's crackdown last month, which killed at least 13 people. More than 3,000 were detained.
Observers say Singapore's tough words against the junta must be matched by economic action given the city-state's extensive links with the regime.
Human rights activists and other experts allege -- without providing direct evidence -- that junta funds have flowed into, or at least through Singapore, a regional financial centre.
Singapore strongly denies allegations that it allows banks based here to keep illicit funds on behalf of Myanmar's secretive generals.
Prime Minister Lee Hsien Loong told CNN television recently that the country does not take "dirty money" and does not condone money laundering.
The city-state was among the regional countries Bush praised Friday for their response to Myanmar's upheaval.
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