Controversial China-Backed New City is Myanmar’s Human Trafficking Hub

Myanmar, isolated from the rest of the world since last year's coup, is rapidly becoming an even bigger headache for the Southeast Asia region.

Rising incidents of human trafficking have alarmed human rights activists, with reports that the Shwe Kokko New City in southeast Myanmar's Karen State has become a people-trafficking hub. The town, which is home to numerous Chinese-owned businesses and dubs itself a Special Economic Zone, sits opposite Thailand on the banks of the Moei River and is controlled by the Karen Border Guard Force, which is affiliated with the Myanmar military.

Most victims of human trafficking in the region come from Thailand, Malaysia, Cambodia and Laos, according to The Diplomat online magazine. They are imprisoned and forced to work as online scammers for crime syndicates. A significant number of trafficked persons are Mandarin or Cantonese speakers, who have to work day and night for the sinister syndicates.

Those who disobey or under-perform face physical punishment and other forms of abuse, the Washington DC-based Diplomat magazine said.

With a democratically-elected government deposed, the economy in shambles and persecution of pro-democracy supporters going on unabated, Myanmar has become the poster child for unbridled lawlessness and chaos in Southeast Asia.

Economic conditions in Myanmar are dire. Since April, the military regime has cracked down heavily on the use of foreign currency to shore up its dwindling international reserves. Import of many goods, including cars, have been banned.

In July, the Central Bank of Myanmar ordered firms with outstanding foreign loans to suspend repayments of debts and adjust repayment schedules with foreign lenders, according to the Bangkok Post newspaper.

The World Bank in its latest report said that Myanmar's economy remains fragile as dollar shortages limit the availability of key imported products.

As a consequence, heinous crimes like human trafficking are on the rise in Myanmar.

Shwe Kokko has a strong presence of Chinese investors, workers and visitors, many drawn to the area by the presence of casinos and nightclubs. Some reports have claimed that Shwe Kokko New City is part of China's Belt and Road Initiative (BRI).

Beijing, though, has denied that and distanced itself from the US$15 billion so-called Special Economic Zone. In August 2020, China's embassy in Myanmar said on its Facebook that Shwe Kokko “is a third-country investment and has nothing to do with the Belt and Road Initiative.”

Disputing that claim, The Diplomat cited a 2017 report by China's state-run Xinhua news agency which reported that the Shwe Kokko project is an important component of the BRI. According to the Xinhua report, the state-owned enterprise China Metallurgical Group Corporation was engaged in constructing the Shwe Kokko Special Economic Zone.

The Irrawaddy has a different take on the Shwe Kokko project. It said that since last year's coup, the Myanmar Investment Commission has stopped making the Shwe Kokko investment approval list public. The Irrawaddy expressed surprise that Beijing chose to distance itself publicly from Shwe Kokko, despite it being an important BRI project.

To support its claim that China is officially involved in the Shwe Kokko project, The Irrawaddy cited the Asia-Pacific High-level Conference on BRI Cooperation held in Beijing in June 2021. At this meeting, which was attended by the junta's foreign minister U Wunna Maung Lwin, China told member countries that it would continue investing in BRI infrastructure projects despite the COVID-19 pandemic.

Many observers believe that Beijing is distancing itself from the Shwe Kokko New City because the town has become infamous for human trafficking and other crimes. The Yatai International Holding Group, which has been accused of running illegal casinos in Cambodia and the Philippines, is a key player in the project.

It seems certain, too, that China is aware of the human trafficking problem in Shwe Kokko, and has even vowed to rescue trafficked victims, some of whom are from mainland China and Hong Kong.

In August, Thai authorities arrested She Zhijiang, Shwe Kokko's boss and the head of the Yatai International Holding Group, who is the subject of an international arrest warrant for allegedly running an illegal online casino. He has also been involved in gambling ventures in Cambodia and a lottery scheme in the Philippines, according to multiple media reports. She Zhijiang is alleged to have been on the run from Chinese authorities since 2012. Thai authorities have said that the process of extraditing him to China is ongoing.

It will be interesting to see what action China takes against She Zhijiang, and how his arrest will impact Shwe Kokko's position as Southeast Asia's latest crime hub. So far, though, Shwe Kokko remains unaffected and the human traffickers continue to ply their vile trade.

Yan Naing is a pseudonym for a political analyst on Myanmar and China.