Thu 22 May 2014
Filed under: Aid,Opinion,United Nations
This week The Irrawaddy reported that the United Nations Children’s Fund (Unicef) is paying an exorbitant fee for its Rangoon office, which it rents from Nyunt Tin, a former general in Burma’s previous military junta.
Readers would be mistaken, however, to think that our story is just about Unicef’s heavy expenditures in Burma. The report also points to a flawed and corrupt economic system put in the place by the military.
In Burma most property and other assets are controlled by former generals, the regime’s business cronies and drug lords—a group that stands to reap huge benefits from the rapid economic opening up and influx of aid money that accompanies the country’s democratic transition.
Unicef and other UN agencies and international aid groups are now coming in droves to Burma to help the poor population and their children; they have a noble mission. Yet UN agencies and international financial institutions are unable or unwilling to take on the flawed economic system in Burma, as they have to work within the boundaries set by the quasi-civilian government.
Unicef now spends huge sums of money on renting high-quality property from ex-generals, while it advises the government to get its financial and economic priorities in order.
In a report last year Unicef, “called upon both the Myanmar executive and legislature to put children first when considering how to allocate Myanmar’s income from natural resources.
“International Monetary Fund data suggests that … the allocation on health and education is less than 2 percent of Myanmar’s Gross Domestic Product,” the report said.
“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.
It’s an open secret, however, that since the opening up of Burma, UN offices, INGOs and newly opened diplomatic missions have rented large luxury compounds for tens of thousands of dollars per month. The agencies were previously based in Traders Hotel (now renamed Sule Shangri-La) but were forced to leave last year due to rising tourist demand.
A growing number of international businesses have also contributed to a sharp rise in demand for quality office space, which is in short supply in Rangoon after decades of anemic economic growth. Some market analysts said that a lack of serviced housing is forcing expats into villas and houses where prices have also skyrocketed.
These developments have pushed up market prices and over the past two years, the rate of prime location office space has dramatically increased in Rangoon. The Wall Street Journal reported last year that, at US$106 per square foot per year, rent rates in downtown Rangoon are nearly double those in parts of Manhattan.
Because of the country’s opening up, which was carefully planned by Burma’s former military regime, commercial real estate and rental fees are booming in Rangoon and (ex-)military men and their associates are now cashing in. Current and former generals, including former strongman Than Shwe and his daughters, are known to own numerous properties in the former capital and elsewhere.
Drug lords leading armed groups in Burma’s rugged northern periphery also stand to benefit. Since the 1990s, Western governments and independent financial task forces have alleged that drug money is being laundered through Rangoon’s real estate market. The junta allowed the money to be pumped into the faltering economy in order to keep it afloat.
Currently, Burma seems to be following the example of other poor countries, such as Angola, where a quick opening up, a lack of rule of law and a wealth of natural resources have given rise to an imbalanced economic boom and a gold rush in property markets that mostly benefits the rich and powerful.
Chit Khaing, CEO and Chairman of Eden Group of Companies and Myanmar Rice Producers Association, told me there is no end in sight for the Rangoon property boom. “The price will not go down,” he said. Who owns all properties? I asked him. He chuckled and said, “You know the answer!”
Unicef set up office in October 2013 in 33,000-foot compound on Inya Myaing Road that includes a villa and several other buildings. Owned by former Gen. Nyunt Tin, minister for agriculture and irrigation under the former military regime, the property is valued at $27 million by realtors. Several sources informed us that the UN agency pays between $80,000 and $90,000 in monthly rent fees.
Following the story, we received a critical statement from Unicef that was mild in tone, though parts of it read a little oddly: “We believe that the rent we have negotiated is well under market rates. It is more than we want to pay, but a good deal nonetheless and the best we were able to find,” Unicef representative Bertrand Bainvel explained.
“Does ‘a good deal’ mean a good bargain, or is it still a lot of money?” a colleague of mine asked.
On Thursday afternoon, Unicef clarified the matter. It said it paid a “steep rental” of $87,000 per month. “However the rent is fixed for 7 years and it is a competitive commercial price in a tough market,” the agency said, adding, “Some international agencies have had to pay considerably more than our $2.9 per square foot for suitable space.”
Unicef did not reveal the identity of the landlady, but said, “Although allegations against a member of her family who was once a member of the previous military regime surfaced, the official had since left public office and was not subject to any criminal charges or international sanctions.”
With that, Unicef did away with the problem of handing over one million dollar per year to a former junta general and his family.
We can be sure that Nyunt Tin was laughing all the way to the bank. A shrewd operator during his time at the top, which ended in 2004, Nyunt Tin and his family grew extremely wealthy through corruption and abuse of power.
I’m certain Nyunt Tin’s children are driving the latest Porsches and Land Rovers, and own luxury apartments in Singapore, the island state where Burmese generals, drug lords and cronies were welcome to purchase property and enjoy rest and leisure or get medical treatment.
“He was very ambitious man,” said Chit Khaing. “Since he was very close to Than Shwe, like several other generals, he and his family made a fortune.” The family was clever at business, buying up lands and enjoying all special privileges.
These days, I think Nyunt Tin is embracing Burma’s opening up and congratulating President Thein Sein on a job well done. I imagine him saying, “I am richer than ever before. Please do bring more of your UN friends!”
Nyunt Tin was a favorite of former junta leader Than Shwe. When the regime purged Khin Nyunt and his feared spy agency in 2004, Nyunt Tin and several ministers were also “permitted to retire” and some were tried for economic crimes and corruption charges.
Asia Times Online reported in July 2005 that “The former agriculture minister, Nyunt Tin, and his son, Thar Gyi, were arrested because of the family’s involvement in a foreign exchange and import license scam which allegedly netted more than US$10 million, mainly from government ministries and economic agencies, including the Myanmar Economic Bank and the Union of Myanmar Economic Holdings Limited.”
News report suggested that authorities seized more than 30 unlicensed cars smuggled into the country and boxes of gold and jewelry in the wake of his arrest. Nyunt Tin was only briefly detained and, unlike criminals or political prisoners, he was never mistreated.
Asia Times Online said, “The former agriculture minister and his family were notorious for their involvement in corruption. Last year  the minister built a new house in a plush area in the capital [Rangoon] and his neighbors say large amounts of gold bars, rubies, pearls and precious stones were plastered into the walls.”
Could this be the villa that the Unicef is now renting for tens of thousands of dollars per month?