The Washington-based Center for Advanced Defense Studies (C4ADS) found that China-based companies represent 29 of the 49 foreign private security companies operating in Cambodia and Myanmar, the only two Mekong countries where official business registers provide enough information to confirm foreign ownership, C4ADS said. The second highest was Malaysia, with just four.
C4ADS data shows that these companies have been incorporated regularly since 2013, with peaks in 2019 and 2020.
Like their Western counterparts, Chinese private security companies offer a variety of security and protection services to foreign clients operating in dangerous areas, including parts of Africa and Latin America.
Ben Spevack, one of the report’s authors, said Chinese company websites often refer to security incidents that impacted Chinese investments abroad in areas perceived to be unsafe.
“It’s a big selling point for them,” he said of these security companies, which operate legally. “They are obviously selling a service.”
What’s in the report
The focus on Chinese private security companies was only part of C4ADS ’65-page report, which analyzed the growth and risks of special economic zones in the five Lower Mekong countries – Cambodia, Laos, Myanmar. , Thailand and Vietnam. C4ADS has undertaken to monitor the volume of business in the zones and the risks they represent for the governments that host them.
The zones are designed to attract foreign dollars by offering tax incentives and simplified, limited regulations to make doing business easier for investors, but experts say without proper oversight they can become breeding grounds for corruption and criminal activity. .
“It is a potential tool that can precipitate economic development, but it is not always the case,” said Spevack.
Spevack said the study is sort of a “first pass” that he hopes states will consider when deciding whether or not to form these economic zones.
“It’s not a red herring,” Spevack said. “It is not necessarily a final decision on the zones.”
Because economic data is not readily available to gauge the performance of these areas, Spevack and his co-authors analyzed data from the nightlight – the growth of lights at night observed by satellite – to measure growth. They found that economic zones generally stimulate growth, but success is “not always guaranteed”. The middle zone grew by about 10% more than the economy of its host country in the first three years after its creation, but five of the analyzed zones showed negative growth during the same period.
“Even when growth is present, negative externalities can reduce the benefits,” C4ADS found. “Without proper management, EDZs can serve as a playground for multiple types of transnational illicit activity and geopolitical machinations.”
Risk of special economic zones
Zhao has denied the allegations and says he is a legitimate investor working to make GTSEZ a major tourist destination.
Under the sanctions, all assets held by Wan in the United States will be frozen and American citizens will be prohibited from doing business with him.
CNN was unable to reach Dongmei for comment on the Treasury charges. Wan could not be reached either.
Wan unveiled his own private security company in 2018, according to the report, touting it as an operation to “protect the interests of Chinese companies” linked to the Belt and Road program.
C4ADS discovered that most private security operations, like Wan’s, are used to protect investments in risk areas. However, most are run by former members of the Chinese security forces, not former gangsters.
“Private security companies can defend Chinese economic interests while allowing China to avoid the material and reputational risks that come with putting boots on the ground,” the report said.
But the industry “also provides cover for people with ties to organized crime, like Wan, to run armed companies in a host country.”
Journalist Zixu Wang contributed to this report.