‘Peace Permit’ Bonanza Puts Ethnic Groups on Defensive

By Reform, Saw Yan Naing 20 December 2013

In efforts to end decades of ethnic conflict in Burma, car import permits appear to be among the factors driving the peace process forward, with recipients defending the granting of the licenses by the government, while others see the “peace gifts” as little more than bribery.

The gifts, which took physical form as papers with the signature of the government’s key peace negotiator, Minister Aung Min, came in envelopes and were given to different ethnic groups on Feb. 12 during a ceremony marking the 66th anniversary of Union Day in Naypyidaw, Burma’s capital. Aung Min passed the envelopes to the rebel groups himself, ethnic leaders say.

Ethnic armed groups large and small have received hundreds of car import permits, which can serve as big moneymakers, at a time when the government is endeavoring to achieve a long-sought “nationwide ceasefire agreement” with the rebel groups. Luxury car permits can be sold for as much at US$100,000.

The largest of the ethnic rebel factions, such as the United Wa State Army (UWSA), Karen Nation Union (KNU) and the New Mon State Party (NMSP), reportedly each received 120 car permits or more, according to sources familiar with the situation.

At least 100 car permits were also granted to ethnic Kokang rebels from the National Democratic Alliance Army (NDAA). Smaller ethnic groups, such as the Shan State Army-North, the Democratic Karen Benevolent Army (DKBA) and the All Burma Students’ Democratic Front (ABSDF), each received 60 car permits.

Saw Kwe Htoo Win, general secretary of the KNU, confirmed that his organization received some 120 vehicle import licenses, saying the car permits would be used for organizational needs, not its leaders’ personal use. He said the car permits were sold in order to convert the government gift into cash for investment in the organization.

The KNU also draws revenue from its Moe Ko San Travel and Tour Company Limited, a recently opened tourism and transportation business. The KNU also runs an import-export venture.

Several well-informed sources from ethnic armed groups’ circles and car dealers that The Irrawaddy spoke with said the ethnic leaders had sold almost all their car permits with the aim of using the money for business investment in the Thai-Burma border regions.Other ethnic leaders like the Shan, however, have used the permits to register unlicensed cars already imported in Burma.

“Many car dealers are happy to buy car permits for luxury cars because they earn lots of benefits as it is tax-free cars,” said one source from an ethnic group in Shan State. “And almost all ethnic groups sell the car permits. They prefer cash for business investments.”

“Car permits include luxury cars such as Mercedes, BMW and the bullet-proof Hummer series. Businessmen largely profit off the luxury car permits,” he added.

The ethnic rebels received tax-free and reduced tax rate with 60 per cent tax. The tax-free cars are given to ethnic leaders and permits to import cars at a 60 percent tax rate were given to junior officials from the rebel organizations. Imports mainly come from across the border in Thailand.

When asked by The Irrawaddy, both ethnic leaders and the Myanmar Peace Center (MPC), a government-affiliated organization facilitating peace negotiations, said the car permits were granted for the rebel organizations’ individual needs.

In September, Aung Min told media during a briefing at the MPC office in Rangoon that he had even put his own money toward the peace process.

“I want peace very much and that’s why I have sold houses and cars. If you want to know which houses I sold, you can look them up. I will give you the addresses of them,” he reportedly said.

Some observers, however, have condemned ethnic leaders’ decision to accept the car permits, saying the licenses might sow divisions within the rebel groups.

The ethnic armed groups maintain that they have taken the gift permits for the purpose of meeting organizational needs.

The ABSDF, which signed a ceasefire agreement with the Burmese government in August, said it will use its vehicle import permits for future works.

“Funding is needed to implement our political programs in the future. That’s why we accepted the government’s offer,” Myo Win, the ABSDF’s vice-chairman, told The Irrawaddy.

“We didn’t take it for the welfare of individual members or the organization as a whole. With this funding, we will only implement political programs that support the current reform process,” he added.

Some observers, however, say the cars for peace program amounts to a pay-to-play tactic by the government.

“It’s pure bribery, nothing else,” said veteran Swedish Bertil Lintner, who follows Burma and has published several books on the country and its ethnic insurgencies.

“And it’s not going do anything to solve Burma’s ethnic problems. It will just make them worse because this kind of corruption creates splits within those ethnic groups, between rivaling leaders and between the leaders and disgruntled followers,” Lintner added.

When asked by The Irrawaddy, a KNU leader declined to comment on the issue, saying the group’s senior leadership was divided over whether to take the permits.

“I don’t want to talk about this car stuff. Because of these car permits, we have been arguing for a while now,” said the KNU leader.

Karen sources close to the KNU said the group had sold all its car permits and put the money into Moe Ko San, the tourism company.

Sources close to the ABSDF said that there are also disagreements among ABSDF leaders regarding the car permits. Some ABSDF supporters from overseas who firmly have been supporting the ABSDF are not happy with the organization’s leaders for accepting the gift.

A well-connected source from an armed group in Shan State said there was confusion among some small ethnic rebel groups in Shan State after as some received real car permits while others received fake licenses.

“There were cases of car dealers coming back to us and saying that our car licenses were fake. We don’t know where these fake documents came from. At first, they [car dealers] wanted to sue us for selling fake car permits. But after they realized that it was better not to disclose this publicly, they asked us to give them back some cars that we bought from them just to cover the loss,” said the source.

Sources familiar with the fraudulent permits said the documents appeared to be copied and signed with forged signatures.

Hla Maung Shwe of the MPC, insisted that the car permits were not a form of bribery, and said the offer was first extended because some Karen groups, which he declined to identify, told the government that they wanted to register their unlicensed cars in order to use them legally.

Many vehicles in Burma, especially in the country’s border territories, are unlicensed, having been imported illegally from China and Thailand.

The government granted the Karen groups’ request, but later extended the offer to other ethnic armed groups out of fairness, according to Hla Maung Shwe. Small rebels received only a few permits while big armed groups received a proportionately larger allotment, he added.

“As I understand it, the car amounts are very few. For example, the ALP [Arakan Liberation Party], they only got five tax-free cars for their leaders. Some big groups got 20 to 25 cars. As far as I know, there are not more than 270 tax-free cars,” said Hla Maung Shwe.

However, reports earlier suggested that under Burma’s Ministry of Rail Transportation, about 3,000 vehicles were cleared for import by ethnic rebels. The total sale of the 3,000 cars would potentially be worth US$100 million to $300 million. Out of 3,000 cars, some 1,000 of them have been imported while the status of the 2,000 remaining permits is unclear.

Since the peace process began in Burma in late 2011, funding has been flooding into the government-backed MPC, which is seen as a central contact point for international donors to channel financial support reconciliation efforts with ethnic rebels that have been fighting for autonomy against the central government for more than 60 years.

International donors including Norway and the European Union have provided significant funding to the cause through the Peace Donor Support Group.

In early November, Jose Manuel Barroso, the EU Commission president, said at a ceremony held at the MPC in Rangoon that the European Union would provide nearly $40 million for peace-making efforts by year’s end.

Despite large sum of financial supports flood in the peace program, information on how the money is spent remains elusive, and the revelations of car permit deals amid ceasefire negotiations have left lingering questions about the transparency of the process.

“I think there is no history or awareness within Myanmar of how to conduct business transparently and as the country opens up it will be a learning process for companies and groups that used to enjoy monopolies,” said a Burma watcher working with an international consultancy firm.

Nai Hong Sar, general secretary of the United Nationalities Federal Council (UNFC), said he wouldn’t discourage the acceptance of car permits, but warned ethnic groups not to let the government gifts affect their stance in ongoing peace negotiations.

“Due to their respective financial difficulties, the ethnic armed groups should accept the car permits. Funding is necessary for our work. We should take the opportunity when we are offered. But, our beliefs and commitments should not be bought. We all should not be naive,” said Nai Hong Sar, adding that his mother organization, the NMSP, had also accepted the car permits.

Mahn Nyein Maung, a senior member of the KNU, also defended the ethnic armed groups’ decision to take the import licenses.

“We have been criticized for exchanging peace for car permits, but these comments are overblown to create misunderstandings about our peace deals,” he said. “Actually, the KNU accepted them because we have difficulties with our organization’s survival.”

Additional reporting by Zarni Mann.