Burma's drug-fuelled economic boom

Visitors flying into this buzzing tropical metropolis step into a modern glass-and-steel airport that symbolizes both Myanmar's aspirations to rejoin the wider world after years of isolation and the country's troubled past.

The company that built the terminal, Asia World, was started by one of the country's premier drug kingpins, a warlord whose militia peddled heroin extracted from the opium fields of the mountainous hinterlands. It is nearly impossible to visit Myanmar today and not encounter the company's other projects: roads, hydroelectric dams, the country's biggest ports and one of its most luxurious hotels, the Sule Shangri-La in downtown Yangon.

There is no evidence to suggest the company has any current ties to drug trafficking, but as Myanmar strives to modernize after decades of dictatorial rule, Asia World's role in that effort provides a prominent example of how the drug trade is inextricably intertwined with the country's new economy and lies at the root of many of its efforts to rebuild.

“The seed capital of the Burmese economy is heroin,” said Ronald Findlay, an economist at Columbia University who was born in colonial Burma, which the military government renamed Myanmar in 1989. “If that's an exaggeration, it's not a huge one.”

According to interviews with real estate brokers, economists, and current and former law enforcement agents, illicit drug profits have been a major source of investment in rebuilding the country, and companies linked to the drug trade are building new roads and bridges and reshaping the skyline of the biggest city, Yangon.

The drug trade, analysts say, reinforces corruption, bolsters the power of the military and threatens to return Myanmar to a pariah state instead of the democratic ally the administration hopes for.

Since Myanmar began opening up to the world four years ago, heroin trafficking has surged. The United Nations estimates that opium poppy cultivation has nearly tripled over the last six years. Myanmar has become the world's second-largest producer of heroin, as well as the region's leading supplier of methamphetamine.

Sean Turnell, an Australian scholar and one of the leading experts on the country's economy, estimates that Myanmar's drug tycoons have annual revenues of around $2 billion.

The government says it is trying to crack down on the drug trade and money laundering, but officials say law enforcement is hampered by the legacy of a dictatorship under which the educational system was destroyed, millions of Myanmar's most talented citizens fled the country, and the economy and banking system were rendered dysfunctional.

Although regulations exist on paper to trace ill-gotten money, real estate agents say the government's unofficial policy appears to be don't ask, don't tell.