Burma 'privatises' its skies

The vast majority of Burma’s airlines and airports will be privatised, local press has reported, but mystery surrounds the flag carrier Myanmar Airways International (MAI).

It was announced last year that the country’s busiest airport, Yangon (Rangoon) International, will be run by Pioneer Aerodrome Services on a 30-year lease thought to be worth in the region of $US6 million a year.

But the local Weekly Eleven journal reported an unnamed industry source as saying that “Although it was not officially announced, Myanmar Airways International was privatised to a local company”.

The Burmese junta has sold off swathes of state-owned property, including banks, ports, and high-end buildings, to private businesses, many of whom are believed to have close ties to the generals.

There has also been reported conflict over ownership of MAI by rival banks, Kanbawza and Co-operative Banks, since the privatisation move took place last year.

But DVB has learnt that MAI may also have been victim of a personal spat over ownership between the Burmese junta’s second-in-command, Maung Aye, and another director of MAI, Maung Maung Ohn.

Maung Maung Ohn is also director of the Co-operative Bank, which has recently been experiencing trouble with account holders withdrawing assets. It is unclear whether the two problems are linked, although the Co-operative Bank happened to be a lesser shareholder in MAI.

Business sources have told DVB that the spat grew when Tin Aung Myint Oo, who was last year promoted to First Secretary of the ruling State Peace and Development Council (SPDC), learnt that both he and Maung Aye had a shared dislike of Maung Maung Ohn. Tin Aung Myint Oo then pressured the embattled MAI director to sell his share of the company.

One theory suggests that the spat hinged on the granting of licences to operate ground services to the powerful Burmese construction company, Asia World, by Tin Aung Myint Oo, an ally of Maung Aye and a key shareholder of the Kanbawza Bank. Rumours suggest that then Minister of Co-operatives, Khin Maung Aye, was unhappy about the unconditional nature by which Asia World was acquiring lucrative contracts.

“Naypyidaw Airport is being constructed by Asia World Company. It is also said that it will handle the operation of the airport when the construction is completed,” an unnamed official was quoted as saying in Weekly Eleven.

The alleged pressure has lead to a spectacular crash in confidence in the Co-operative Bank, with depositors pulling out their holdings in a school-yard style exercise in exclusion, and logically fearing the consequences of being on the wrong side of Maung Aye, whom commentators note is unpredictable and a serious drinker.

Last year the Co-operative Bank, which was the second largest privately-owned bank in the country, became a shareholder in MAI, but was also joined by Kanbawza bank, which reportedly took an initial 80 percent in the airline.

MAI evolved out of a purely state-run concern before its current incarnation in 1993, when it became a joint venture between the state, the Singapore-based Highsonic Enterprises and Royal Brunei Airlines.

Kanbawza Bank meanwhile was started in Shan state in eastern Burma and has been dogged by accusations of money laundering for the narcotics industry. Aung Ko Win, the bank’s founder, has known Maung Aye since his days as a commander in Shan state. Burmese academic Aung Thu Nyein notes that “Aung Ko Win was seen as a go-between between Maung Aye and Khun Hsa”, who until his death was one of Burma’s most notorious drug barons, despite being allowed a comfortable retirement by the generals in Rangoon.

Aung Ko Win is thought by author and scholar Bertil Lintner to have come from a humble background, with little or no money.

The Co-operative Bank was formed in 2004 with the merging of the three co-operative banks under the guidance of former co-operatives minister, Khin Maung Aye. Little is known however of Maung Maung Ohn.

This case comes hot on the heels of another ownership and licence war over the skies of Burma when Yangon Airways, the only airline not close to the junta, had its licence mysteriously revoked.

The debacle points to a situation in which questions will be asked about Burma’s so-called emerging private sector, when personal vendettas linked to men with guns continue to rule the roost, even in core sectors like airlines and banking.

There also appears to be a blurring of lines between the military, state and private enterprise, orchestrated by the military itself, and further evidence of a deep-rooted system of patronage, with the military pulling the strings, despite the incessant claims of privatisation.

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