While the world’s attention is fixed on the protracted Russia-Ukraine war and the ongoing Israel-Gaza conflict, in East Asia, there is another prolonged conflict that has received comparatively less notice. Since the 2021 coup, Myanmar has endured over two years of oppressive military rule marked by violence. Sanctions have played a central role in the responses of both the United States and European countries.
In response to international sanctions, the junta government has reported increasing natural resource exports to support its regime. Despite countries such as the U.S., Canada, the European Union, Switzerland, and the United Kingdom imposing sanctions on Myanmar’s military-controlled enterprises in the forestry, mining, and oil and gas sectors, the effectiveness of these sanctions is being questioned.
According to a Forest Trend’s study, the exports of Myanmar’s forest products have persisted since February 1, 2021, and are estimated to be worth over half a billion US dollars. Countries that imposed sanctions are said to have imported approximately 17% (equivalent to US$91 million) of this trade, while half of it is directed to China and an additional fifth is reportedly going to India.
The recent report of the Environmental Investigation Agency also pointed out that sanctions cannot stop Myanmar’s timber from entering regimes that imposed sanctions on Myanmar’s forestry. According to the report, U.S. timber traders imported over 3,000 metric tons of Myanmar teak in the past two years, which are used for high-end furniture, flooring, and fitting-out luxury yachts. The report also listed the top 12 U.S.-based companies that have imported Myanmar teak since the 2021 coup and urged the U.S. Department of Justice to investigate companies that are involved in the trade.
Corporates, in particularly the manufacturing sector, should maintain a keen awareness of the latest developments on sanctions of Myanmar and continuously evaluate their supply chain management. Given the inherent lack of transparency and the intricacies of supply chain operations, businesses may face significant challenges in ensuring compliance with sanctions.
Staying well-informed and practising effective supply chain governance is imperative for companies to protect their brand reputations in a constantly evolving regulatory environment.
I-OnAsia has consistently monitored the ongoing developments in Myanmar and remains updated on international sanctions. With its deep-rooted presence in Asia, I-OnAsia boasts a remarkable track record in delivering tailor-made risk management solutions to corporate entities. Our wide array of services encompasses supply chain tracking, due diligence, risk analysis, and customized investigations, all designed to support clients in effectively mitigating operational risks within the region.
More about I-OnAsia: https://www.ionasia.com.hk
Contact our Investigation Specialist: info@ionasia.com.hk
