Much of the jadeite which delighted the 19th-century Chinese Empress Dowager Cixi and still pleases her modern compatriots comes from Myanmar, whose “imperial jade” is the world’s most valuable and is highly sought-after for its near-transparent emerald-green hues. (Jadeite, which is rare, comes from Myanmar; what is thought of as Chinese jade is in fact the more common nephrite.)
But the grandeur of China’s Imperial Palace is a far cry from the mining towns in northern Myanmar. Here the ye ma say (hand-pickers) scratch a living in difficult conditions, searching for jadeite through waste dumped by mining companies on the blackened hills of the world’s largest jadeite mining region, Hpakant, in Kachin state. Whatever they find, they sell back to traders and miners.
According to a 2015 report on Myanmar’s jade trade from campaigning organisation Global Witness, most of the jadeite extracted from Hpakant is smuggled to China to avoid tariffs. Global Witness’ investigations into the undeclared value of the trade in Myanmar have suggested it may be as high as $31bn annually — half of the country’s GDP, or 46 times government spending on healthcare. At the annual jade emporium in 2014, a single boulder of it was given a reserve price of €60m, according to an unpublished report.
In June, in a case that gained international attention, a group of jade traders alleged that senior officials in previous governments had colluded with powerful business interests to appropriate $96m from a levy on the annual jade auction. The government launched a probe, which quickly found that the officials, including a former Navy commander and minister, acted within the law.
Juman Kubba, a senior campaigner with Global Witness, says the industry remains a “black box” and that “simply saying there is ‘no corruption’ is not good enough”.
Kyaw Kyaw Oo, chairman of the KIC Group, which operates jade businesses and was one of those complaining to the government, says the evidence is there if officials bother to look. “Here in front of me I have a lot of receipts detailing how the money was spent. If you check the details of how this money was spent you will see how it was misused,” he says. The Financial Times has seen translations of these receipts, which suggest politicians and industrialists took the fund’s money.
Very little of the revenue from jadeite has made its way into the local economy. According to the World Bank, the biggest producers are Chinese-owned front companies (foreign ownership is illegal) and the majority of buyers fly in from mainland China, Hong Kong and Taiwan. Until last year there were no customs duties on jade, and there are already methods for avoiding the 30 per cent levy on rough gemstone exports introduced last year. To avoid taxes, mines may register the stones, but at deflated prices, before selling the jade on to shell companies. A chaotic shadow economy, the jade business is permeated by corruption and ties to ethnic conflict and warlordism, Global Witness says. It estimates $6.2bn in mine site tax was lost in 2014.
The state regulator, the Myanmar Gems Enterprise, has announced that permits for more than 300 jade and gem blocks will expire this month and a moratorium on new permits was declared in July.
Also of concern to transparency groups is the use of so-called “other accounts” by the MGE to amass revenues with no public scrutiny. Myanmar’s first EITI report showed the MGE retained over half of the official gemstone revenues — more than $200m — in these accounts, which Mr Salomon called a “modest estimate”. The real figure amassed in its accounts, he says, is likely far in excess of $650m.
Mr Kyaw Kyaw of the KIC Group says that transparency measures have to be enforced while Chinese demand remains high. “There needs to be punishment for people who break the law. But without the army and police’s help, we cannot make this work. If they participate and support this action, then, perhaps, things will change.”
