Trickle Town

By Aung Zaw 13 August 2014

YANGON — Back in the early 1980s, whenever fellow students told me that they lived in Yangon’s Golden Valley, I knew at once that they were from elite families. In those days, we called this high-end neighborhood “Bogyoke Ywa,” or “Generals’ Village,” because it was home to many high-ranking members of Myanmar’s military ruling class.

Now, three decades later, the area is still home to Yangon’s privileged few. These days, however, residents are more likely to be foreign officials sent by UN agencies or international aid organizations to help get Myanmar back on its feet after half a century of military misrule. Needless to say, their landlords are the same generals who grew rich even as the country descended into economic ruin.

In every country where the aid industry takes root, there is controversy about how it spends its money. A common complaint is that international staff and consultants receive the lion’s share of funding, leaving only a fraction of the total for those most in need.

In Myanmar, another major source of concern for those who worry about how aid money is used is the fact that the country’s economy is still very much in the hands of military men (both serving and retired) and their families and cronies. For instance, fully 60 percent of the property in Yangon is believed to be owned by a handful of individuals who owe their wealth to an oppressive regime that denied citizens their basic rights for decades.

One consequence of this is that rents for properties in Yangon are outrageously high. As The Irrawaddy revealed in May, the United Nations Children’s Fund (Unicef) pays more than US$1 million a year for a Golden Valley property owned by Gen. Nyunt Tin, a former minister for agriculture and irrigation under the regime that ruled until 2011. Although he was sacked in September 2004, allegedly for his involvement in a foreign exchange and import license scam worth more than $10 million, Gen. Nyunt Tin was apparently allowed to retain his ill-gotten gains, including the compound now rented by Unicef, which is currently valued by realtors at $27 million.

The irony of this is that Unicef last year issued a report urging Myanmar’s government to increase its spending on health and education, which it estimated to be less than 2 percent of the country’s GDP, despite increases since the current quasi-civilian government assumed power. “While Unicef strongly supports the current Myanmar reform process, the time for enhanced spending on children is now,” the agency’s country director Bertrand Bainvel said at the time.

While Unicef is certainly correct in its assessment of the government’s misplaced priorities, it appears that its own spending in Myanmar is not immune to the influence of an economy warped and distorted by the greed of generals and their cronies.

And Unicef is not alone. When asked by The Irrawaddy how much it was paying for its offices on Pyay Road in Mayangone Township, the World Health Organization (WHO) admitted that its rent for the property was $79,000 a month—a figure that represents more than a tenth of the agency’s annual budget in Myanmar of $9 million.

In a press release, the WHO said that the property “belongs to a landlady [named] Daw Khin Nwe Mar Tun.” But whoever holds the deed to the property, the real owner is likely to be someone with ties to the former regime.

Dividing the Spoils

Last year, one of Myanmar’s wealthiest businessmen told me that before the military junta stepped down from power, Deputy Snr.-Gen. Maung Aye, the regime’s number two, invited a group of tycoons close to him to divide Yangon among themselves.

Sitting with a map of the city open before them, the powerful general told them to take their pick of prime real estate. They wasted no time in snapping up properties that are now worth millions of dollars.

What makes this story even more galling is the fact that virtually none of the money from these transactions or subsequent rental revenues ever makes it into the national coffers. In June, an official with the Department of Internal Revenue admitted that “more than 80 percent” of property owners have been evading tax on income earned from rent for many years.

What this means is that Myanmar—a resource-rich country that is attracting massive amounts of foreign direct investment—could remain dependent on foreign aid for years to come.

As a nation that prides itself on its independence, this is a depressing thought, indeed. But for some of our “development partners,” it may be music to their ears. The aid business is an extremely lucrative one for some companies.

Take, for instance, Development Alternatives Inc. (DAI), a Washington, D.C.-based private development company that in 2010 received more than $380 million in contract funding from USAID (the US federal government agency responsible for administering civilian foreign aid) to deliver “development services” to countries around the world.

DAI’s office in Yangon is located at 70(P) Golden Valley Avenue, an address owned by relatives of Gen. Khin Nyunt, Myanmar’s former spymaster, whose role in imprisoning and torturing dissidents earned him the epithet “the prince of evil.”

Writing in a commentary for The Irrawaddy, independent human rights consultant Mr. Jonathan Hulland asks a question that has been on the lips of many outraged by the way money intended for the victims of the former junta keeps ending up in the wrong pockets: “But rather than enriching these tyrants, doesn’t the international aid industry have an obligation to help Myanmar break from its dictatorship past?”

Tainted Trade

It isn’t just the aid industry that is raising troubling questions about who is benefiting most from Myanmar’s much-applauded opening up: The rush to invest in one of Asia’s most promising frontier markets is also rife with ethical problems that many seem happy to sweep under the rug.

This was highlighted in early June, when the Canadian government made the embarrassing mistake of allowing Steven Law, scion of a business empire founded on profits from one of Southeast Asia’s largest heroin-trafficking operations, to enter Canada as part of an official trade mission. Rather than addressing how this could have happened, officials played down the significance of the error, which said much about how poorly many foreign governments understand who they’re dealing with in Myanmar.

In an article titled “Myanmar: The ‘next economic frontier’ for Canadians,” Bryon Wilfert, Myanmar’s honorary consul to Canada, wrote that The Irrawaddy’s revelations that Mr. Law, son of notorious Kokang Chinese warlord Lo Hsing Han, had joined the Myanmar delegation under his Chinese name, Lo Ping Zhong, should not be a cause for concern.

“Certainly this was not something Canadian authorities were aware of prior to the visit and anyone who met him during his time here did not break Canadian rules if they did business with him,” Mr. Wilfert wrote on a Canadian diplomatic news website.

Indeed, if you’re serious about doing business in Myanmar, you had better get used to shaking hands with some shady characters. Even the European Union, which regularly touts its commitment to “responsible investment” to allay concerns about the impact of a growing European corporate presence in Myanmar, has found it impossible to avoid unsavory connections.

To accommodate its expanding mission in the country, the European Commission has rented office space at the Hledan Center in Yangon. The owner of the center is Asia World, a huge conglomerate run by none other than Steven Law and his Singaporean wife, Cecilia Ng.


What could be more questionable than signing a lease with a US-blacklisted businessman with known connections to the illegal drug trade? In Myanmar, the only thing more likely to provoke the anger of ordinary citizens would be to establish ties to one of the country’s former dictators. And that is precisely what the EU has managed to do with its choice of location for the new EU ambassador’s residence.

Located on May Kha (formerly Ady) Road, the new residence was upgraded to international standards last year in preparation for the arrival of newly appointed ambassador Roland Kobia, a Belgian whose last posting was in Azerbaijan. Next door is the former home of Gen. Ne Win, the late dictator who first imposed military rule on Myanmar, and whose family still owns several other properties in this once secluded area, including the one that is now home to the EU ambassador.

The EU has declined to say how much it is paying for the residence, and members of the Ne Win clan say that they are not at liberty to disclose the rental fee.

In an article I wrote for the online version of The Irrawaddy, I cited a source who said it was in the same ballpark as the Unicef office—about US$1 million a year. Rather than challenge this figure, the EU has chosen to remain silent, hoping the issue will go away.

Clearly, nothing is going to stand in the way of the quest to turn Myanmar’s resources into riches. Even a proposal to establish a European Chamber of Commerce in Myanmar with €2.7 million ($3.7 million) in EU funding—despite the fact that there is already a similar body that serves the same function—looks like little more than an effort to exploit the “Myanmar mania” that has taken hold in the EU.

Hand in hand with the push for more trade will come more and more projects that ostensibly aim to alleviate Myanmar’s profound poverty and other deficits.

While the country’s people certainly need all the help they can get after decades of neglect, the danger is that some of such efforts will only enrich those who have kept the country down for so long, and who are now undeservedly reaping the rewards of “reform.”

This article was first published as the cover story of the August 2014 print issue of The Irrawaddy magazine.