Burmese Gem Smuggling is Part of Border Life

MAE SOT, Thailand – The futility of stopping smuggled goods coming into Thailand hits you like the proverbial two-by-four in the face when you look across the Moi River into Myanmar

The Friendship Bridge has a constant stream of pedestrian traffic, and at least as many people are crossing the river on inner tubes or in small boats. And in the dry season the two months both sides of New Years many just wade through the knee-deep water.

The Thai military keeps an eye on the movement but makes no effort to stop the traffic. The Thai immigration net starts with a check point nearly 10 kilometers (six miles) inside the country. And at that point they are more concerned with people entering illegally than the movement of goods.

And the crossing into Mae Sot is only one spot along the 2,107-kilometer
(1,309.8-mile) border.

Thai law requires import duty on precious stones, and police have on occasion arrested people for breaking the law. But it’s rare and when people are charged it is usually in Bangkok.

The laws are old – Sections 27 of the Customs Act of 1926, and Sections 16 and
17 of the Customs Act of 1939 – and pre-date Thailand becoming a global cutting and polish center for colored stones. Now most stones are imported for value-added work then exported again, so Thailand makes money from the business and the duty charge doesn’t help encourage bringing stones to Thailand. For some time when Thailand produced its own rough from mines near Cambodia and Myanmar, they didn’t need the imported goods. Now though, with their own mines dried up, the rough has to come from outside Thailand.

In America it is legal to import loose stones and not pay duty, as long as you declare their value. Even stones illegally taken from their country of origin can be imported without duties to the United States.

But, Thailand has not changed their laws to accommodate their gems and jewelry industry; so the duty charges remain. And duties add cost, and smuggling is easy and cheap, but adds one more obstacle in an arduous and risky business.
That is the smuggling on the Thai side, in Myanmar it’s more difficult.

An indication of how spread out the industry is in Thailand, it was in Chanthaburi in the east of the country near Cambodia, that a man who smuggled colored stones out of Myanmar explained part of the game.

He said the trickiest part is in Myanmar itself where the over-bearing military government wants their take and imposes an export tax on all stones. The generals have made efforts to increase gem sales within the country so more of the money stays in Myanmar.

On September 29, 1995, they enacted the Myanmar Gems Law to foster a free market for gems. The law allowed dealers to sell the stones mined, cut and polished in Myanmar on the open market in Myanmar.

But the seller in Chanthaburi said vast amounts of stones continue to be smuggled out of Myanmar, with a lot of people involved carrying small amounts.
Some deliver to buyers at the border, and others bring the stones to market in Thailand themselves.

It’s hard to get details of how things are moved within Myanmar, with most smugglers seeing little benefit in telling, and suspicious when people ask too many questions.

But, as some say in Mae Sot, stones travel by all means. Even the soldiers smuggle stones. And some of the ethnic armies that have signed peace deals with the Yangon generals are involved, too. In fact smuggling occurs at virtually every level.

Those who don’t want to smuggle the goods themselves can find people who will.

The route from the mines at Mogok and Mong Hsu for colored stones, and Hpakan for jade is by far more dangerous and difficult in Myanmar. It is generally a two-day journey to Mae Sot, often much of it on foot, and there are a host of potential dangers passing through areas controlled by various groups and fees paid along the way.

But, the smuggling routes are decades, even centuries, old so well established with their own accepted rules. They are so entrenched that many consider it carrying goods along a trade route not smuggling.

Once in Thailand, moving stones in small amounts is pretty easy and requires few precautions. But if someone wants to move a lot of valuable stones it is wise to make arrangements. And it can be cheaper to pay the right people a small sum of a few thousand baht (a hundred or so dollars) before moving the stones, than having to pay them a lot after being discovered with them.

Stones sometimes piggyback with other goods coming into Thailand from Myanmar.
The Myanmar vegetables and perishable produce go little further than the border towns, but teak goods, old and antique furniture and ornaments from a desperately poor country selling its heritage to survive, are pretty common.
And then there are the drugs.

The movement of metamphetamine the Thais call “ya ba” (crazy drug) started changing the border dynamics about 2000 when the drug started being manufactured in large quantities along the border regions.

Crackdowns on the drug seen as destroying the fabric of Thai life were severe and common. More than 2,500 drug dealers were killed in 2002 during the government’s effort to ride Thailand of the drug. Government authorities were quick to point out most of the killing was between drug dealers.

The result for the gem trade was the more thorough searches for drugs could also turn up stones, which would drive the price up with the carrier having to pay a “fine” to continue with their wares. But, the authorities look for big shipments of drugs, so the impact on caring small amounts of stones has been minimal.

Still, the drug trade is widespread along the border regions, and sometimes linked to the gem trade. The United Wa State Army (UWSA), one of Myanmar’s numerous ethnic armies, is one group involved in the drug trade, and using the gem trade to hide their drug dealings, according to Thai government sources.

The military government in Yangon signed a deal with the UWSA in June 2001, which included the condition they stopped dealing in drugs and turn to gems.
But according to Thai government sources, the UWSA decided the two businesses were better than one. And they reportedly used the bi-annual gem auctions hosted by the Myanmar Gems Enterprise to launder drug money. At past auctions, Wa traders bid on their own gems paying more than the original costs to launder the money.

But a lot of gem dealers say the drug connection is overblown. They point out that it’s too risky to transport gems with drugs. Carrying them alone is safer and there are many willing to do so.

Finding “mules” to carry stones is easy enough with much of Myanmar in dire economic straights. Migrants come to Thailand in the hundreds of thousands looking for work. An Amnesty International report released in June (2005) states migrants from Myanmar take the dangerous, dirty jobs that Thais don’t want.

The report says they are “paid well below the Thai minimum wage, work long hours in unhealthy conditions and are at risk of arbitrary arrest and deportation.”

Some add it’s a long border and gem rough can be carried in small amounts. Some Bangkok gem dealers, in fact, say many stones are “smuggled” into Thailand in coat pockets.

The gems are getting in, have been for centuries, and will continue to do so.

In Mae Sot the number of gem dealers hawking stones during the daily street market has increased in recent years. Now Prasatwithi Road is often crowded between 11 am and 2 pm. And you’re as likely to hear Burmese spoken as Thai.

The stones are from everywhere, including Africa, but most are from Myanmar. But some of them go from Myanmar to Chanthaburi, then back to Mae Sot. Cutting and polishing is much better in Chanthaburi, it’s pretty mediocre in Mae Sot, many say.

Jade has become more abundant, but the more precious stones generate more interest, and rubies remain the biggest draw.

But buyers say more sellers does not necessarily mean more sales. Noi said she had 20 years in the business in Mae Sot, and the quantity of stones is not much more than before, there are just more people selling smaller amounts.

The American embargo of everything from Myanmar had little impact on gems because it didn’t have time to. And now rough from the pariah state is legal again. That might be a good thing considering the futility of a world ruby market without rough from Myanmar, where most dealers estimate about 80 per cent of the original content coming from. And, it’s the better of the lot in the world, too.

During the time when even rough was considered banned from Myanmar, high quality rubies started appearing from Vietnam, Sri Lanka and elsewhere. Now with rough from Myanmar legal – as long as it is significantly improved else where – those same stones are back to being from Myanmar.

American customs agents would be hard pressed to know a Mogok ruby from a Vietnam ruby, anyway, so enforcing the ban would have proven difficult at best.
And those same customs officials have more pressing items to search for such as weapons and drugs.

But its not just rubies and other colored stones that were getting around the embargo. Garment factories reportedly sew on labels that say made in Thailand, China other another country, and through middlemen there sell the clothing in the U.S. and EU countries.

Embargoes are difficult to sustain, and it the case of something as valuable and easily transportable as colored stones, next to impossible.

American companies stopped buying rubies and everything else from Myanmar in
2003 when the United States banned imports of all Myanmar products with the Burmese Freedom and Democracy act enacted on August 28. The ban was in protest of the ruling generals’ human rights abuses.

Then in December 2004 the US Customs department changed the rule on colored stones. The new rules stated that gems mined in Myanmar, but cut and polished in other countries, are not classified as from Myanmar. So rubies and other stones were effectively exempted from the ban.

Most colored stones from Myanmar are cut and polished in Canthaburi, a global center for heat treatment. Even stones already cut and polished in Myanmar, are often done so again because the skill level there is inferior to Thai workmanship.

Still, some American companies have stuck with the ban, reportedly including Tiffany & Co, which in March 2005 said it would not buy stones from Myanmar.
Chairman and CEO Michael Kowalski said in a state: “We support democratic reforms and an end to human rights abuses in that country and we believe our customers would agree with that position.”

Aung Din, a Burmese co-founder of the US Campaign for Burma called it a good policy.

“Mining in Burma (Myanmar) supports the ruling dictator while bleeding the Burmese people, which is why no one should buy these ‘blood gems’,” he told Thai-based Irrawaddy magazine.

Gems are currently a main source of income for the military government.
According to Myanmar government figures, they earned $22 million at the second of the two official auctions in 2004, an event held twice a year since 1992.

The Myanmar Gems Emporium as it is called dates back to 1964 when it was an informal gathering. Then in 1992 in an effort to earn more from the gems, the generals had the Myanmar Gems Enterprise, under the Ministry of Mines, hold two a year.

But, that was for official sales. The Myanmar government gets nothing from stones smuggled into Thailand.

“There are two ways to get stones from Burma. One is to deal with the Burmese government at their auctions. The other is to deal with people who smuggle it across the border into Thailand. What they are smuggling the government in Burma doesn’t get anything,” a Bangkok gem dealer said.

Jade is another matter. A lot comes into Thailand, but more is going straight to China, with a growing market for the stone in the expanding economy there.

And the jade mines in northern Myanmar are conveniently close to the 2,204-kilometer (1,370-mile) border between the two countries.

It doesn’t seem how tight the generals in Yangon tighten the net; colored stones will continue to travel their well plod routes out of the country and into the world market.

For more information on these can be found here, Burmese gemstones [http://gemdreamz.com] & jewelry [http://jewelry].

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