Burmese business tycoon U Zaw Zaw watches a soccer match in Rangoon. Zaw Zaw, who is head of the country's soccer federation, built a business empire during the military rule but is now trying to cast himself as a philanthropist and supporter of democratic reforms. (Simon Denyer/The Washington Post)

A new English word has entered colloquial Burmese, a word that could not even be uttered in public until recently. The word is “crony,” and it describes the business elite who exploited their closeness to the country’s military rulers to amass vast wealth in the past two decades.

These well-connected elite made their money in industries such as construction, rubber and logging, as well as in arms dealing and drug smuggling. Their gains have only increased in the past two years, a result of changes that have privatized many state-owned assets and enterprises — and allowed the rich to buy them up at bargain prices.

But Burma’s growing openness under President Thein Sein, a former general, has also meant a loosening of restrictions on free speech — allowing rickshaw drivers, farmers and others to complain about the cronies and their connections.

“We are just beginning to realize all the bad things about cronyism,” said Nay Myo Wai, the leader of a pro-
farmers political party, sitting on the floor of his party headquarters in the countryside on the outskirts of Rangoon.

The chief resentment against the elite centers on land: Huge swaths of it were confiscated by the army and given to its business allies during the darkest days of the country’s military dictatorship. Little or no compensation was offered, and farmers were so cowed that they dared not complain.

But that is changing as land values soar and the extent of the property takeovers is more widely understood.

Nay Myo Wai has compiled a thick dossier of land-grab cases and is helping to coordinate nationwide protests by farmers seeking the return of confiscated land. “This would have been totally unimaginable before the changes came,” he said. Until recently, anyone criticizing the military or its allies risked arrest, torture and years of imprisonment, and informers were everywhere.

Thant Zin, 49, is one of a group of angry farmers who have reoccupied land near his ancestral village outside Rangoon, land that was confiscated by the army two decades before and given to Khin Shwe, one of the business elite, to build an industrial park.

Thant Zin says he was paid just 15,000 kyat, less than $20 at today’s exchange rate, for 50 acres, leaving him no money to pay for his children’s education. He is demanding better compensation. “I didn’t know that I should have been angry at the time,” he said ruefully. “Fear and ignorance kept me silent.”

Loosening of sanctions

The growing tensions are creating a predicament for foreign investors and for opposition leaders, given how deeply the role of the elite permeates a fast-growing economy. Under U.S. sanctions imposed in 1998 after the suppression of pro-
democracy demonstrations, several members of Burma’s business elite were targeted in a way that prevented any American company or citizen from working with them.

Over the past two years, as the new military-­backed government allowed opposition leader Aung San Suu Kyi to contest local elections and enter parliament, the United States has gradually lifted some sanctions. It sent an ambassador to Burma, also known as Myanmar, last year for the first time in 22 years.

Some sanctions remain in place against individual businessmen, including one who may be the richest of them all, 48-year-old Tay Za, a man the U.S. Treasury Department described as “an arms dealer and financial henchman of Burma’s repressive junta.”

But last month, Washington relaxed sanctions on Burma’s largest banks, including two owned by Tay Za and Zaw Zaw, who maintain close ties with the country’s senior military leaders. The action came just days before a visit by a U.S. business delegation, with the Treasury arguing that increased access to Burma’s banking system would support the country’s “continuing social and economic development.”

Cronies try to boost image

These days, a tourism boom is the most obvious sign of the country’s opening to the West, with flights and hotels virtually fully booked. However, an anticipated flood of foreign investment has yet to arrive, with most Western investors adopting a “wait and see” stance, unsure of how deep-rooted the reform process is.

Burma’s business elite have been investing some of their wealth by erecting hotels and office buildings in Rangoon and other cities. But outside these gleaming new buildings, cycle rickshaws still ply the streets, and there are few signs of a more general boom. Small-
business owners and shopkeepers say consumer demand remains tepid.

The business elite, say critics such as Zaw Aung, a former political prisoner who is a research fellow at Thailand’s Chulalongkorn University, have the power to crush potential competitors, corner the benefits of Burma’s reform process and prevent a new, more diverse middle class from emerging.

Faced with a lot of bad publicity, the cronies have been fighting back. Some have warned of legal action to try to silence critics; Khin Shwe has threatened to attack the farmers who have occupied his land. But most have been trying to improve their images — to make themselves more acceptable business partners in the new Burma, because they fear retaliation and losing their wealth, or simply because they don’t like criticism.

“It gives me so much pain, I often cannot sleep at night,” Zaw Zaw, the head of the giant Max Myanmar conglomerate, said in a rare interview last month while watching a soccer match in Rangoon, the former capital, also known as Yangon.

At 46, Zaw Zaw is one of Burma’s richest men, having made his fortune through lucrative government contracts, helping to build the country’s new capital, Naypyidaw, in the past decade, and constructing roads and extracting tolls.

He profited handsomely when state-owned assets were sold off in 2011 in the largest privatization push in Burma’s history, picking up a banking license and cement factory. He runs roadside gas stations, controls the auto import trade, owns a jade mine and rubber plantations, and is fast expanding into luxury resorts.

Zaw Zaw insists that he pays taxes and creates jobs, and he says Burma will not prosper if everyone in the business community is vilified as being cronies. “At this time, we all have to cooperate together to build the country,” he said.