‘They Are Helping Generals to Become Millionaires—People Are Angry at That’

By The Irrawaddy 30 May 2014

In this week’s Dateline Irrawaddy show—first aired on DVB on Wednesday—panelists discussed the public outcry over the high price paid by the United Nations’ Children’s Fund’s  to former member of Burma’s junta for the rental of its office in Rangoon.

Kyaw Zwa Moe: This week, we are going to discuss the fact that some UN agencies and international organizations are renting properties owned by ex-generals from the previous military regime for their offices. Last week, The Irrawaddy revealed that UNICEF rented the house owned by former General Nyunt Tin, who served as the Minister of Agriculture and Irrigation. We have learned that UNICEF is paying US$87,000 per month, which is equivalent to 85 million kyat, to rent the place. We are going to explore whether it is ethical for humanitarian organizations—or is it in line with their code of conduct—to pay such a high rates to rent these properties with our invited guests: Vicky Bowman, the director of the Myanmar Centre for Responsible Business (MCRB), and Ko Kyaw Lin Oo, the coordinator of Myanmar People Forum Working Group. And I am Kyaw Zwa Moe, the Editor of the English Edition of The Irrawaddy Magazine.

Vicky, can we say that these UN agencies and other international agencies in the same situation are “morally corrupt” to spend tens of thousands of dollars to rent the properties owned by former generals (and their family members) who were corrupt and oppressed their own people?

Vicky Bowman: I am very disappointed to hear this. It is very disappointing to see them paying such high prices to anyone, and especially when a former general owns the property. The problem is that the property market now doesn’t have many options like that as the market is so small. UNICEF has about 150 staff working in the office. So UN agencies and other international entities don’t have many choices. Normally, there is a list of people, from whom the UN agencies and international companies are not allowed to rent the properties. They can’t rent from people who appeared in the US and EU blacklists. I think the owners only appeared in the blacklists more than 10 years ago and not in the current lists.

KZM: Yes. But, UN and international organizations have been assisting the needs in Burma for years already and now they are renting the property from a corrupt person and paying them the hefty price of more than $1 million per year for seven years, which makes more than $7 million in total. They are supposed to use that money to support children in need. Now, instead, they are helping the corrupt generals to become millionaires—people are angry at that.

VB: Yes. People are angry. We thank The Irrawaddy for revealing this. Now we know he is earning about a million dollar a year. He is subject to income tax, which is about 20 percent in Burma. So, he should pay $200,000 to the government.

KZM: That is a matter of taxation. Ko Kyaw Lin Oo, let’s explore the root cause of this. We know that property rents in Rangoon are extremely expensive. Some people say that Rangoon is more expensive then world’s most expensive places like New York, London and San Francisco. Why do you think this has happened?

Kyaw Lin Oo: The main problem is the shortage of supplies to meet the demand, as Vicky just mentioned. When the country opened up, many organizations and companies came in. They couldn’t find enough places to setup their offices. I also heard about UNICEF problem from a UNICEF officer who was involved in searching and renting the new place. They were looking for a new place two years ago when Traders Hotel, where their previous office was located, asked them to move out. They couldn’t find a place fit for their staff and their cars. They couldn’t find anywhere else except that place. When they made the deal with the landowner;  the owner agreed to bear the additional expense to ensure the property was suitable for UNICEF’s work and provided a new side-building free of charge, if the rent is fixed for seven years. Nevertheless, the problem is that, despite the principles these organizations hold, only people linked to the military regime own big and nice properties like this. It is a hard choice for them. As far as I know, a particular family related to a former general own about 60 properties like that in Rangoon. And those properties are already leased to INGOs, international companies and organizations. When the case of UNICEF surfaced, NGOs are becoming more vigilant and considering who own the properties before they rent.

KZM: The market situation is indeed a problem. However, non-business entities like UN agencies and other development organizations, who are using money from taxpayers from other countries, should have enough conscience to know whether they should or should not rent such places. Although we are talking about UNICEF now, other organizations are in the same situation, like the WHO, which is also paying almost the same amount as UNICEF for their office. Some diplomats are renting the houses of ex-generals, including those owned by the late General Ne Win. What I wonder is: While the EU and the US are blacklisting these generals, do the diplomats coming from there not know what they are doing? Or they are just not aware? That is the main question here. It is not a breach of law or a felony, but it is about how aware and sensitive they are in cases like that.

VB: Normally, the EU and the US are very cautious. However, Ne Win’s family has never been on the blacklist. Another thing to consider is that places are quite rare. If they don’t live in May Kha Street, should they live in Hlaing Thar Yar? There are some changes in the market though. New condominiums are going up. People are more cautious because of the news. I always advise companies to check whether there is land grabbing involved, or who the actual owners of the land are. Some corporations, including Coca-Cola, are investigating the background thoroughly. But some Western and Asian companies are not doing that. That will hurt their reputations.

KZM: What makes the matter worse is that this country is just coming out of military rule. When I talk to some real estate agents, they told me that when the ex-generals or their cronies ask their tenants for high prices, they pay. That is affecting the property prices and hurting the ordinary people as well.

KLO: Yes. When the news comes out that properties of such and such standard are getting that amount of rental fees that becomes the de-facto standard price for properties at that level. That is a pulling factor for the properties prices.

KZM: The income tax thing that Vicky just mentioned is important. A landowner who is getting $1 million a year must pay about US$200,000 as income tax. Do you know that they pay the tax and if there is transparency in the case? Do the tax officials know? What do you think?

VB: As you know Ko Kyaw Zwa Moe, when people make contracts for renting properties, they sometimes make two different contracts. One is with the fake rates and one is with the real rates. That is the problem there. But I know that UNICEF is not doing like that. I am not sure if the Internal Revenue Department knows about these cases. If they had a hotline to receive complaints, people could inform them. In other countries, they have hotlines that people can inform about tax evasion. They should have it here. The Internal Revenue Department has some policies for tax evasions, but these are only focused on companies, not individuals. They should change that too.

KZM: This is not a small problem. As Vicky just said, other countries that are opening up like Burma are also facing the same problems. How can the government help in such situations? When the government moved to Naypyidaw, a lot of government-owned buildings were left unoccupied in Rangoon. If they renovate and rent them to UN agencies, both parties will benefit. How do you think?

VB: That too can help solve the problem a lot. There are many unused old buildings. Ko Thant Myint-U set up the Yangon Heritage Trust to protect the buildings and there are some companies and embassies who want to get them renovated and use them. But there is a lot of red tape in the way, and the market situation is also a problem. Some departments want to charge a lot. So far, not many buildings are rented out. That would be a better plan.

KZM: Ko Kyaw Lin Oo, how do you think the government can get involved?

KLO: I think organizations like UN should apply the land from the government and build an office building for UN agencies. In Bangkok, there is a building like UN ESCAP. While Burma was under the military rule, UN’s functions were quite limited. Now, the functions are increased, as well as the numbers of staff and the budget. They should have already started building like that by now. In a large plot of land, they should build big buildings and let their organizations occupy there. That is good for them in the long run and the government can also earn from that. Now only individuals like General Nyunt Tin get the money. Even if he is paying income tax like Vicky said, they government will only get 20 percent. The rent might not be as expensive as the current one. Not only for UN agencies, the government should also consider about local NGOs, I think, because the rent is also a headache for local NGOs like ours. Because the market is unstable and the prices are going up year after year; like 800,000 kyat this year, 1,200,000 kyat next year and 1,500,000 kyat after that. We have to adjust our budget accordingly. That is very hard.

KZM: Thanks for joining us for this discussion Vicky and Ko Kyaw Lin Oo. We can conclude from this discussion that while the government should intervene to solve the problem, those who are renting the properties owned by the corrupt former military officials should also think and act responsibly about renting them. Thank you all for watching.