ASEAN Beat | Economy | Southeast Asia

Myanmar Financial Holdings and U.S.-Singapore Contention

Given its financial ties to Myanmar, Singapore’s cooperation is vital if the world is to choke off the military junta’s revenue streams.

Myanmar Financial Holdings and U.S.-Singapore Contention

A view of Singapore’s financial district by night.

Credit: Flickr/Andrew

On February 3, U.S. Department of State Counselor Derek Chollet spoke at a virtual event hosted by the Center for Strategic and International Studies (CSIS) Southeast Asia Program to mark one year since the military coup in Myanmar. During the event, Chollet announced that the United States had sanctioned 65 individuals and 26 businesses with “close regime ties” to the military junta.

The same day, the Straits Times – Singapore’s most-read newspaper – printed an op-ed written by Chollet in which he spoke of Washington’s commitment to “ratcheting up pressure on the regime through targeted sanctions and by limiting the regime’s access to arms.” Although the article does not explicitly reference Singapore, its placement in the Straits Times was a clear message to Singapore’s foreign policy establishment.

This is not the first time Chollet has requested that the Singaporean government help restrict the Myanmar junta’s access to foreign funds. Last October, Chollet, along with senior officials from the State Department and the U.S. Agency for International Development, met with Singaporean counterparts to stress the critical role Singapore’s “significant financial leverage” could play in pressuring the junta to make “better decisions on behalf of the Burmese people.”

Since the military, or Tatmadaw, launched a coup against the democratically elected government of Myanmar on February 1, 2021, there has been bipartisan support from Congress and the Biden administration to cut off remaining revenue streams, financial flows, and other assets to the Tatmadaw, in addition to enforcing sanctions. This included freezing nearly $1 billion in Myanmar government funds held in the United States and targeting holding companies linked to coup leader Min Aung Hlaing and other top generals. However, the military still has access to funds in other countries, most notably in Singapore.

Singapore became a financial hub for the Asia-Pacific by providing security and anonymity to clients. Under section 47 of Singapore’s Banking Act, banks and wealth management funds located in Singapore cannot disclose their clients’ personal information without their express consent. Like Switzerland, the opacity of its banking institutions makes Singapore an attractive investment destination for those seeking to avoid scrutiny.

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Over the past decade, Singapore and Myanmar’s economic ties have flourished. In 2019, Singapore surpassed China as Myanmar’s biggest investor, bringing in an estimated $24 billion of capital through real estate, banking, shipping, and construction. Firms located in Myanmar often have offices in Singapore and will place their financial holdings in Singaporean banks, including companies with direct ties to the Tatmadaw. Owners of these companies include the son of air force chief Maung Maung Kyaw  – a key member of the junta – and U Tun Hlaing, whose firm STE Global Trading was linked by a U.N. Panel of Experts to weapons procurement between Myanmar and North Korea. These companies give Singapore more influence in Myanmar than most of its ASEAN neighbors. The degree of cooperation from the Singaporean banking system will have a considerable impact on the effectiveness of international sanctions on the Myanmar junta.

In previous statements, the Monetary Authority of Singapore has told financial firms to be “vigilant to any suspicious transactions… between the city-state and Myanmar.” But the authority has also said it has not found “significant funds from Myanmar companies and individuals in banks in Singapore.” The Singaporean Stock Exchange, meanwhile, opened investigations into listed firms with close ties to the Tatmadaw. And Singaporean business leaders such as Razer co-founder Lim Kaling have pulled out of investments in Myanmar. But firms with links to the junta, including some which procured arms for the Tatmadaw in the years before the coup, continue to operate in Singapore.

While the U.S. government is likely to continue pressing the city-state to embrace international sanctions on Myanmar, Singapore will remain cautious, preferring that sanctions come either from the United Nations or through consensus within ASEAN. But Singapore’s attempt to balance calls for further pressure on the Tatmadaw with engagement in the name of ASEAN’s efforts to mediate the conflict will become more tenuous as the junta refuses to change course.

This article was originally published on New Perspectives on Asia from the Center for Strategic and International Studies and is reprinted with permission.