Half Of Myanmar's Jade, Worth Billions Of Dollars Each Year, Is Smuggled To China Without Taxes

Almost half of Myanmar’s yearly production of jade trickles “unofficially” over the border to China, representing billions of dollars in lost revenue that could be used to rebuild the Southeast Asian nation in its uphill battle to make political and economic reforms.

Myanmar is the world’s primary source of high-quality jade. In the 2011/12 fiscal year, the nation produced more than 43 million kilograms (94.80 million pounds) of jade, Reuters reported on Saturday, which even valued conservatively at $100 per kg, the trade should be worth $4.3 billion. A report from the Harvard Ash Center, by contrast, put sales of Myanmar jade at about $8 billion for 2011, and for 2012 the figure should be comparable.

Yet the official exports of jade stood at only $34 million for 2012. Even factoring in domestic consumption of the stone, that figure is too low.

Almost half of all jade sales are “official” – sent over the border to China with little or no formal taxation. China’s official statistics, which group jade with imports of other precious stones and metals, recorded only $293 million in total in 2012 – too small to explain where Myanmar’s billions of dollars of jade have gone.

Myanmar’s jade industry is concentrated in Hpakant, located in the Kachin state, one of the northern regions that have long been afflicted by ethnic rebel clashes.

“Mining is one of the highest-risk enterprises in Myanmar due to unresolved ethnic conflicts in the northern and eastern peripheral ethnic states like Kachin, Shan and Karen, which are among the most resource-rich,” said Christian Lewis, Southeast Asia expert for the Eurasia Group, a leading political and economic consulting company, in an email to the International Business Times.

Since taking over leadership in 2011, the reform government has made great strides, but has thus far been unable to contain the often dangerous conflicts in these regions. Some economists have argued that the nation’s prosperity and unity could depend on claiming more revenue from the raw materials from these regions. Eight billion dollars a year account for nearly a sixth of Myanmar’s 2011 GDP and more than double its revenue from natural gas, yet very little of that amount ends up in the hand of the country.

"Practically nothing is going to the government," David Dapice, the co-author of the report from the Harvard Ash Center, told Reuters. "What you need is a modern system of public finance in which the government collects some part of the rents from mining this stuff."

Smuggling is just one of the problems riddling Myanmar’s mining industry. Jade miners in the northern states, at least 500,000 of whom are heroin addicts, have given Myanmar the highest rate of HIV infection among drug users in the world – nine out of 10 addicted workers are HIV positive. It is no wonder, with such dire conditions, that President Obama has maintained the U.S. ban on Burmese jade.