The Era of the Anti Fascist Peoples' Freedom League (AFPFL) Government
By the time Myanmar regained her independence in 1948, the cultivation of poppy and production of opium, the odious legacy of the British, had taken hold and was flourishing in many parts of the Shan State. Then in 1949-50, remnant KMT troops trapped near the Myanmar-China border encroached and ensconced themselves on Myanmar territory which greatly contributed to the widespread cultivation and trafficking of opium in the Shan State.
In the first week of June 1950, Myanmar Tatmadaw authorities in Kyaing Tong gave ultimatum to the Kuomintang troops to either lay down arms and surrender or to leave the Myanmar territory to which the latter replied that they would fight back. True to their words the Kuomintang troops attacked and captured Tachileik town and stationed their troops along Kyaing Tong- Tachlleik Highway. The Myanmar Tatmadaw launched an offensive in the second week of June 1950 against the Kuomintang troops. The offensive was successful and the Tatmadaw not only secured the Kyaing Tong-Tachileik Highway but also recaptured Tachileik from the enemy troops.
The Tatmadaw launched Operation Frost and Operation Panglong against the KMT in February and November 1951 respectively. In the latter part of 1951 Lt. Gen. Lee Koh Suan replaced General Li mi, who returned to Taiwan and took command of the KMT troops. He created Airdrop Zones in Kyaing Tong rapidly and rebuilt the Kyaing Tong airfield as an Air Force Base. This airfield eventually became the operation base for regular air transports between Kuomintang headquarters in Taiwan and its troops in Mvanmar. In fact there were two regular C-46 and C-47 transport aircraft flights from Taiwan every week and each time they brought in weapons ammunitions, medicine and pharmaceutical products and on their return trip, they carried back home opium as their cargo. In January 1952, some KMT troops infiltrated into Mawchi area and made contacts with the Karen National Defense Organization (KN DO). Since then KMT and KNDO troops had regular contacts. The KMT troops, with the cooperation of the local KNDO insurgents smuggled opium and mineral ore illegally to Thailand for their military funds thereby commercializing opium trade in the region.