Myanmar Gems Enterprise Sanctioned by U.S.

A gems emporium in Nay Pyi Taw under the enterprise’s auspices has concluded

By Samuel Rubenfeld and Helen Koo

Monday, April 12, 2021

The U.S. Treasury Department last Thursday sanctioned Myanma Gems Enterprise (MGE), the state-owned entity responsible for all of the country’s gemstone-related activities.

Gemstones are a key economic resource for the Myanmar military as it violently represses protests against the Feb. 1 coup and lethally attack the country’s people, including by killing children, according to the Treasury. 

MGE, a subdivision of the Myanmar Ministry of Mines, operates under the Ministry of Natural Resources and Environmental Conservation, the Treasury said. It had been named in the annex of an April 2008 U.S. executive order, but was delisted eight years later. 

The entity is responsible for gemstone permitting, licensing and regulatory enforcement, as well as participation in state joint ventures, collection of royalties and marketing, the Treasury said. MGE is also responsible for supervising and granting permits for local private individuals, as well as organizing emporiums and special sales for extracted gems, according to the Treasury. 

“By imposing targeted sanctions on this entity, we are sending a clear signal to the military that the United States will keep increasing pressure on the regime’s revenue streams until it ceases its violence, releases all those unjustly detained, lifts martial law and the nationwide state of emergency, removes telecommunications restrictions, and restores Burma to the path of democracy,” said Secretary of State Antony Blinken, using the U.S. name for Myanmar.

The Myanmar military controls vast swaths of the economy, including some of the gemstone sector, through the conglomerates Myanma Economic Holdings Limited (MEHL) and Myanmar Economic Corporation (MEC), both of which were sanctioned by the U.S. last month. MEHL and MEC were also designated by the U.K., and are listed by Canada. Myanmar Ruby Enterprise, Myanmar Imperial Jade Co., Ltd. and Cancri Gems & Jewellery Co., Ltd., subsidiaries of MEHL, were sanctioned by the U.S. in February as part of the initial U.S. response to the coup.

Military leaders were participating in a gems emporium in Nay Pyi Taw under the auspices of MGE, the U.S. State Department said when the sanctions were imposed. During the 10-day event, a total of 317 pearl lots were sold for K 1427.26 million (USD 10.1 million), while 1,955 jade lots were sold for K 31,595.79 million (USD 224.4 million) and 52 jewelry sold for K 525.8 million (about USD 373,500), the state-run Global New Light of Myanmar newspaper reported Monday. 

Gems laid out by lot ahead of the latest Myanma Gems Enterprise emporium. (Source: Myanma Gems Enterprise social media)

“It is such a successful show,” said a senior officer of MGE, according to the Global New Light of Myanmar report. A committee representing the ousted civilian government had warned gem traders against participating in the emporium, saying it would blacklist any company or trader that took part, according to a report by The Irrawaddy. 

At an emporium, gems are sold under an open tender system. The Gemological Institute of America (GIA), a Carlsbad, Calif.-based nonprofit research organization, visited one in March 2019, observing that the vast majority of the gem lots consisted of rough jadeite, a variety of jade. A limited amount of finished product was available as well, according to the GIA report.

A gem is closely examined at the March 2019 Myanma Gems Enterprise emporium. (Source: Myanma Gems Enterprise social media)

China is the largest consumer market for jadeite, and nearly 3,000 Chinese buyers attended the emporium witnessed by the GIA. “As the sole economically important source of jadeite, the emporium is the only official venue for buyers to source this material,” the GIA report said.

Myanmar has rich deposits of gemstones, precious and semi-precious stones. The country is the source of about 90 percent of the world’s supply of rubies, and the world’s largest single source of jade, according to the Extractive Industries Transparency Initiative (EITI), an international body that sets standards for openness surrounding mineral management. Myanmar was suspended from EITI following the coup, however, due to the political instability.

A jade mine in Myanmar, seen in 2018. (Source: Wikimedia Commons)

Nearly 7 million carats, or 4.9 tons, of gems were produced in the fiscal year 2017-2018, according to data provided by MGE that was cited in a March 2020 EITI report, its most recent complete sector assessment prior to the suspension. An additional 31,677.7 tons of jade were produced during that time, the EITI report said, pegging its total value at about K 118.1 billion. 

From emporium sales, 979,427.7 carats of gems worth EUR 4 billion were sold, while 5.4 kilograms of jade worth EUR 821 million were sold, according to MGE data cited by EITI.

MGE granted more than 15,000 gem and jade licenses for fiscal year 2017-2018, according to Openjadedata.org, which scraped the EITI report. Myanmar Imperial Jade Co., Ltd., the sanctioned MEHL subsidiary, held 397 mining licenses, by far the most of any company for that year, the data shows. Myanmar Ruby Enterprise and Cancri Gems & Jewellery Co., Ltd., the other two sanctioned MEHL subsidiaries, had 170 and 30 licenses, respectively. 

The U.S. has allowed imports of jade from Myanmar since 2016, following the revocation of an executive order at the time. All imports from Myanmar had been banned in the U.S. under a 2003 law, and a second law signed five years later had specifically barred imports of the stone. Myanmar jade items are marketed online by various U.S. retailers.

The sanctions on MGE also follow recent decisions by the U.S. Trade Representative to suspend engagement with Myanmar and the State Department to order non-essential diplomats to leave the country, as the post-coup crisis deepens. 

Myanmar’s own ambassador to the United Nations on Friday urged the adoption of a no-fly zone and international sanctions, Agence-France Presse reported. During a guided press tour last week, one military leader suggested that the coup government could extend its state of emergency mandate, and denied that the government takeover was a coup. 

The Myanmar military is using Chinese-made unmanned aerial vehicles (UAVs) to observe protest movements, according to an investigation by Jane’s, a defense intelligence publication. The junta has also imposed a near total shutdown of the internet as of April 2, Reuters reported last week, coming as the country’s economy is in a free fall.

A military spokesman told CNN that protesters, who he referred to as “terrorists,” were using children to make the security forces “look bad.” Dozens of children have been killed by armed forces since the coup, according to UNICEF. More than 700 people have been killed overall, according to figures published Sunday by the Assistance Association for Political Prisoners, including more than 80 on Friday after security forces fired rifle grenades at protesters. The military is charging families USD 85 to retrieve the bodies of relatives they killed, CNN reported.