‘Godfather’ of Myanmar’s crony capitalists dies

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News Desk

Myanmar’s foremost beverage and media tycoon Thein Tun, who was once seen as a “godfather” in the old world of crony business, has died aged 85. After decades of business in the beer, banking, media, retail and property industries, the octogenarian passed away in Bangkok on April 18, local media reported.

Thein Tun and his family owned and published the now-suspended Myanmar Times newspapers and were the local partner of Danish brewer Carlsberg. His family also runs the Tun Commercial Bank.

Once an influential old-school magnate, Thein Tun’s reputation and finances in recent years, ridden with controversies, were overtaken by more reformist and modernizing tycoons.

His failing bank, troubled ownership of Myanmar Times – which he bought in 2014 – and tension with Carlsberg pointed to an aging grandee of the crony capitalist class who failed to adapt to a rapidly changing Myanmar.

“Some of Thein Tun’s business ventures struggled to succeed during the economic boom after 2012. His bank went nowhere,” said Thompson Chau, formerly a longtime editor at the Myanmar Times.

“Tension with Carlsberg on corporate governance and control led the joint venture to trail Heineken whose own joint venture partner – ironically Thein Tun’s son-in-law [alcohol beverage tycoon Aung Moe Kyaw] – interfered far less.

“Thein Tun spoke of his regret at acquiring the Myanmar Times, whose troubles showed how traditional tycoons struggled to cope with the challenge of owning a media organization in a country in ‘transition,’” said Chau, who stepped down as associate editor and chief reporter on the day of the coup.

Tun Commercial Bank, formerly the Tun Foundation Bank, has only 25 branches nationwide despite being around for decades and is dwarfed by newer banks. Kanbawza Bank, which was founded about the same time, now boasts 500 branches.

Changing the name to “Tun Commercial Bank” didn’t make the bank more commercially viable, business executives in Yangon said.

In a corporate governance report for 2020 by the Yangon-based Myanmar Centre for Responsible Business and consulting firm Yever, Tun Commercial Bank ranked in the bottom six banks – 23rd out of 29 banks. Private banks normally rank in the top 10 in comparison with state-owned banks.

Tough times at his newspaper
After the coup, Thein Tun was most famous for a controversy involving the Myanmar Times, which he bought in 2014.

Thein Tun first bought shares in Myanmar Consolidated Media from Tin Tun Oo in 2014 and became the sole owner after buying the remaining shares from Ross Dunkley, an Australian publisher, the following year.

The daily broadsheet was forced to suspend operations when staff collectively resigned in protest and consumers called out the outlet in February 2021.

According to multiple staff, Thein Tun’s management demanded the newspaper toe the military’s editorial line, at a time when the overwhelming majority of the country’s private press remained defiant and united in their editorial independence.

“While the tycoon himself was not much directly involved in the daily operations of the paper, the late chief editor effectively acted as his spokesperson,” said a former reporter who declined to be named.

“She [the editor in chief] was actively self-censoring news reporting, banning the word Rohingya and suppressing or toning down coverage that might seem to be overly critical against the Tatmadaw [military], businesses that buy advertisements and other ‘sensitive’ entities.”

The newspaper turned out to be among the very first casualties of the coup, as tycoons and their businesses were squeezed between a hostile regime and a powerful consumer movement that boycotted companies seen as sympathetic to the generals.

Born in Wakema township, Ayeyarwady Region, Thein Tun was one of the first generations of Bamar entrepreneurs, after colonial rule ended in 1948, to fill the void in the sectors of banking and real estate development, but he also expanded by working with international firms.

He was famously known in the Burmese business community as “Pepsi Thein Tun” as his company, Myanmar Golden Star (MGS), was able to bring in the American brand in 1990.

He also set up a charity under the name Tun Foundation which offered scholarships to children from underprivileged families as well as painting and literary awards.

Close ties to the military
Analysts and businesspeople doubt Thein Tun was not from the crony capitalist class, despite the tycoon claiming he wasn’t a crony. According to senior Burmese politicians, he enjoyed close ties to former lieutenant general Tun Kyi, who was commerce minister under strongman Than Shwe’s junta, styled as the State Law and Order Restoration Council.

The Tun Foundation also sponsored the publishing of a book by Soe Thein, a former head of the navy who served as President Thein Sein’s minister for the president’s office between 2011 and 2016.

The book, titled Myanmar’s transformation & U Thein Sein: An insider’s account, praised the actions of the former president. Soe Thein went on to publish another book last year which justified and supported the coup.

The tycoon was known to have two sons, Thant Zin Tun and Oo Oo Tun, and one daughter, Mar Mar Tun. Thant Zin Tun is vice-chairperson of MGS, while Oo Oo Tun manages the trading subsidiary from Singapore.

Mar Mar Tun works with her husband, Aung Moe Kyaw of IBTC Group, a beverage firm known for its local whiskey. Thein Tun’s two sons as well as all three grandchildren were educated in the west.

The grandchildren in their mid-20s work as junior executives at the family’s businesses – Elizabeth Tun at the bank, Daniel Tun at Carlsberg Myanmar and Fiona Tun at Myanmar Times. They also launched the Hard Rock cafe in Yangon, which wasn’t successful and wound up in 2019.

Hands-on in business
Thein Tun’s children told Forbes in 2018 that their grandfather was hands-on in his businesses and financial details. That makes him the complete opposite of other business tycoons who have passed the reins to the next generation such as Serge Pun & Associate, led by Serge Pun, and Shwe Taung, led by Aik Htun.

A corporate executive in Yangon who had extensive dealings with the magnate said Thein Tun was “an old school crony” who gained riches but did not know how to grow his businesses.

“I didn’t see any real value add he brought to companies. He amassed assets but didn’t do much to move things forward. He seemed stuck in the 1990s. U Thein Tun was a tier-one crony in ’90s and 2000s. By the 2010s it was clear he had fallen to second tier,” he told Asia Times.

Thein Tun’s most famous success story was bringing Pepsi into the Myanmar market. US beverage giant PepsiCo entered a joint venture with MGS, with the latter owning 60%, to set up a bottling plant with a 10-year-license to bottle and distribute products under Pepsi including Pepsi Cola, 7 Up and Miranda soft drinks.

In 1997, PepsiCo decided to sell its 40% stake to MGS and leave the country after sanctions by the US government on the Burmese junta.

The exit of Pepsi left Thein Tun the franchise and $15 million which would lead to the launch of his own soft drinks brands such as Star Cola, Quench and Crusher, affordable to regular Myanmar consumers who no longer could afford international drinks which had to be imported.

“His businesses weren’t innovative or even really aware of the changes in society. Stuck in the 1990s – just looking to amass land banks and push around customers, he didn’t realize in banking they could just go elsewhere, buy other drinks or fast-moving consumer goods, etc,” the Yangon executive added, pointing out the fact that after the Pepsi success story, his other businesses did not seem to catch up with Myanmar’s changing times.

Pocketing Pepsi’s money
In 2014, Thein Tun sold a 70% stake in his MGS company to South Korea’s Lotte Chilsung Beverage, forming joint venture Lotte-MGS Beverages, which has bottled Pepsi locally since it ceased production in 1997.

Pepsi returned in 2012 and partnered with Mandalay-based Burmese-Chinese conglomerate Capital Diamond Star Group, giving it the exclusive rights to import the American soft drink.

Pepsi didn’t choose Thein Tun when they came back because Pepsi, upon exiting in 1997, gave Thein Tun millions in US dollars for local vendors. But Thein Tun took all the money and did not pass it on to the poor vendors, a move that angered the American beverage giant, according to an influential Burmese businessman.

Another major investment of Thein Tun’s was for MGS to partner with Danish brewery giant Carlsberg in 2013, with Carlsberg holding a 51% stake.

“We know MGS from before and there is a good relationship,” said Jorgen Buhl Rasmussen, then Carlsberg’s CEO during the event to unveil the partnership in Yangon on February 1, 2013.

Rasmussen’s optimism turned out to be completely off the mark. It was well known in Myanmar’s business community that the joint venture had been affected by an internal rivalry between the Carlsberg faction and Thein Tun’s loyalists. The two sides did not get on well, said multiple industry sources.

Asia Times understands from multiple industry sources familiar with the matter that Daniel Tun, Thein Tun’s grandson, was removed in 2020 as Carlsberg Myanmar’s deputy managing director because of “repeated and serious misconduct.” Carlsberg could not be reached for comment by press time.

The tycoon also had commercial interests in hotels, real estate, agriculture, construction and banking. Despite these ventures, his businesses were not as popular as those of his competitors, as the tycoon failed to catch up to the changing times.

Industry insiders echoed the sentiment that Thein Tun’s style of running companies was “very old school.”

Tun Commercial Bank boasts of serving 40,000 customers, but the figure is tiny compared with other competitors such as Yoma Bank, which has 690,000 clients, 17 times more.

A former senior Burmese editor at Myanmar Times observed that Thein Tun never understood why journalists were important to the daily operations of the newsroom as well as the commercial model of the newspaper.

“He failed to invest and his people didn’t manage the newsroom properly either. Thein Tun just wanted to run it like his other businesses,” the former Burmese-language edition editor said.

“As Myanmar has been isolated for decades, old cronies fail to comprehend how different the world has changed every day from the time they first became rich. They only know about property and cash.”

“Amid Myanmar’s crisis, Burmese media proprietors must prioritize the ethics and independence of news reporting and defend the safety of their own journalists. Myanmar needs independent and professional journalism now more than ever,” said activist Thinzar Shunlei Yi.

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