The shady players in Myanmar’s drugs trade

Drug exports from Myanmar continue to escalate, as distinctions between the illicit trade and the ‘legal’ economy blur.

Poppy Cultivation More Than Doubled In Badakhshan
The only country in the world that produces more opium than Myanmar is Afghanistan [GALLO/GETTY]

Warnings of Myanmar’s expanding drugs trade tumble out of the offices of the UN annually, but these days rarely draw a frown. The reports have become a hackneyed reminder that for all the bravado of the government’s anti-drugs programme, the problem is as intractable as ever: cultivation of poppies has increased year-on-year since 2007, despite promises from Naypyidaw that it’ll eliminate the practice by 2014, while militias operating in the mountainous east continue to pump out millions of methamphetamine pills each year, leading some experts to warn that Myanmar could be the world’s largest narcotics state.

To date the government has largely rejected accusations that it is lax in its approach to the situation. Last month however a police officer in the drugs control department described the problem as “very dangerous now” and getting worse, a candid and unusual admission from an official that Myanmar’s much-touted “war on drugs” is a spectacular failure.

This is something observers have known for a long time. Last year, around 610 tonnes of opium were produced, with only Afghanistan recording a higher output. The amount of acreage used for growing poppies is also on a continual rise – 14 per cent between 2010 and 2011, according to the UN – suggesting that a reinvigorated campaign to rid the country of opium farming has not found its target. But opium is no longer the main problem: production of methamphetamine is so vast that Myanmar is most likely a world leader in a market that neighbouring countries have identified as fuelling one of the great regional crises.

The police officer’s statement has additional uses, however. Smothered by the international chorus of praise over Myanmar’s reform process is the government’s role in abetting and profiting from the industry. Despite its claims to the contrary, Naypyidaw has done little to tackle the scourge, and the mutually beneficial relationship the former junta enjoyed with production and trafficking rackets continues into the quasi-democratic era.

In November last year, the Thailand-based Shan Drug Watch released a report that named seven MPs in President Thein Sein’s administration known to be involved in the drugs industry. One of them, T Hkun Mya, was elected to chair the House Bill Committee in the lower house, but is said in the report to have close dealings with a racket that protects drug shipments passing through Namtu in Shan state. Legislator Kyaw Myint meanwhile had been “notorious among local people as a drug dealer in the Shan State North’s Namkham township”. Khunsai Jaiyen, an expert on Myanmar’s drugs trade, told the Democratic Voice of Burma last year that the MPs had “persuaded locals in their constituencies to vote for them by promising to allow poppy growing”.

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Another one not included in the report is Wilson Moe, also a member of the ruling Union Solidarity and Development Party (USDP), who occupies a seat in the upper house. He is thought to be a key member of a Shan group called the Nampong People’s Militia Force, led by Colonel Yishay, who is on Thailand’s most wanted list. These militia groups, who were set up by the Myanmar army to assist in their operations against rebel groups, “have become key players in the drug trade, both heroin and ATS [amphetamine-type stimulants]”, said Shan Drug Watch in June. “Yet government complicity in the tangled drug problem is being conveniently ignored by the international community as it embraces Burma’s new administration.”

Flourishing drug trade

The UN Office on Drugs and Crime (UNODC) has historically been reluctant to draw a link between rising narcotics’ production and the role of the government, given that asserting a link would jeopardise its ability to work in the country. There has, however, long been an acknowledgement among experts on the trade that at the very least it could not flourish without government complicity, while others contend that the military junta relied on it as a key economic crutch. Some even believe it was an active participant in the production process.

It’s a view shared by the US Congressional Research Service (CRS), which said in a 2008 paper [PDF] that trafficking of contraband, including narcotics, “remains a low-risk enterprise, as corruption among officials in Burma’s [former] ruling military junta, the State Peace and Development Council (SPDC), appears to facilitate trafficking and effectively provide the criminal underground immunity from law enforcement and judicial action”.

Warnings such as these would issue frequently from the halls of Washington prior to the US beginning a programme of engagement with the government following the 2010 elections. Now, however, despite Myanmar remaining on the US “watch list” of narco-states, the criticism is muted. Yet with Aung San Suu Kyi successfully lobbying for the removal of sanctions on Myanmar, the US finds itself in a tricky position: while ending the blockade would allow US businesses to enter Myanmar, it would also free up a number of names on Washington’s blacklist who are there because of their role in the drugs trade.

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This includes the likes of Stephen Law, son of Lo Hsing Han, who respectively manage and chair Asia World, the largest conglomerate in Myanmar, which built Naypyidaw’s new airport. Lo Hsing Han is widely believed to have set up Asia World as a front for laundering the millions he earned as one of the region’s most notorious heroin kingpins. Former prime minister Khin Nyunt had allowed Lo Hsing Han to continue in the drugs trade, even ensuring he would win lucrative business contracts that would help disguise his earnings, in return for negotiating ceasefires with powerful ethnic groups. Among these was the United Wa State Army (UWSA), one of Southeast Asia’s largest drug-producing entities which continues to manufacture methamphetamine and heroin free of pressure from the Myanmar government, helped along by a ruling in the 2008 constitution that allows it complete control over two “self-administered districts” in northeastern Shan state.

As well as drug production, the UWSA has more legitimate business interests: Aik Hauk, the son of UWSA founder Bo Yiouxang, owns Yangon Airways, one of only a handful of domestic airlines in Myanmar. The relationship exemplifies how tight the nexus between the black market operators and the “legal” economy is.


What then appears to have been forgotten amid the hype surrounding this new era in Myanmar is that many figures in the narcotics industry who once received tacit support from the military regime are alive and well, some enjoying life as MPs while others have become key players in a blossoming business arena. With the prospect of sanctions ending, they could be at the forefront of Myanmar’s drive to court western businesses. 

The government has publicised a reinvigorated anti-opium drive, even inviting journalists along to poppy eradication exercises deep in the hills of Shan state. It also holds annual drug burning ceremonies at which diplomats and UN officials are presented with supposedly hard evidence of Naypyidaw’s good intentions. Seizures are also on the increase, with July alone seeing raids that netted 1.4 million methamphetamine pills. But these are a fraction of the total amount produced, and certainly do not all make it to the yearly bonfire – where they go to from the police station is anybody’s guess.

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The reasons behind the government’s reluctance to really tackle the trade become clear when one understands the profits it has historically reaped. The CRS estimated in 2008 that “illicit narcotics reportedly generate between $1 billion and $2 billion annually in exports [from Myanmar]”. Bertil Lintner, a prominent authority on the regional trade, writes in his book, Merchants of Madness, that “black money is laundered white, playing an important role in the local economies of countries that produce or consume narcotics”. Precisely how much of that money goes to entities associated with the Myanmar government is impossible to say, but a diverse cross section of state officials will have benefitted, right from the regional army commanders who levy a tax on opium growers to more senior governmental figures who receive kickbacks from druglords in order that they can operate with impunity.

Despite the government’s drive to legitimate itself in the eyes of the international community, little seems to have changed. Indeed areas of its reform programme, namely the ceasefires signed between Naypyidaw and various armed groups known to be knee-deep in the industry, could in fact bolster the drug trade. As observers like Joshua Kurlantzick have noted, the peace deals could provide ulterior dividends to these groups, including “longer periods of time in which they can run their [drugs] operations without much government interference”. Moreover, the government’s anti-opium campaigns in the mid-1990s were perhaps the key driver of the rise of methamphetamine production, given the woeful lack of crop-substitution programmes that are integral to any drug eradication schemes.

The police officer’s statement last month could be a veiled appeal for more international funding for eradication and substitution, but it should also provide a warning to the UN that it is endemic corruption and complicity, not lack of money, that has ensured Myanmar’s continued status as world leader in the drugs industry. Eradication campaigns may be a means to divert attention from the ongoing role of the state, which requires greater urgency now as western countries apparently so aghast at the global scourge from narcotics draw closer to Myanmar.

Francis Wade is a freelance journalist and analyst covering Myanmar and Southeast Asia.

Follow him on Twitter: @Francis_Wade