International NGOs are facing strong criticism in Myanmar not for the work they do, but for the large amounts of donor money they spend on renting offices. Recent reports have found that considerable sums are paid for office space in Yangon, where most organisations have their head offices. Adding to the controversy, some of these buildings are owned by members of the military, former generals or businessmen with close connections to the former regime.
When, on May 20, Myanmar news journal The Irrawaddy reported the high rental prices paid by Unicef in Yangon to the wife of a former general, a public outcry followed. The organisation pays an incredible US$87,000 (2.8 million baht) per month for rent. The owner of the building is the wife of former general Nyunt Tin, agricultural minister under the old regime.
The office is a large mansion located in leafy Golden Valley, an apt name for an area where houses can command such high rentals.
Unicef was quick to defend itself, saying that it had spent six months looking for suitable accommodation and this was the best it could find. “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,” Bertrand Bainvel, Unicef representative to Myanmar, wrote in a letter to The Irrawaddy.
“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,” the letter continued.
While it is well known that the prices of rental properties have gone up significantly in the past few years, that donor money is now flowing directly into the pockets of those complicit to the atrocities committed under the military regime is a reality that is difficult to justify. Though the organisation working for children is highly respected, it faced heavy criticism after the report.
Further investigation into the issue showed that not only Unicef, but also the World Health Organisation had signed a high-cost rental agreement. In the case of the WHO, the amount equals more than 10% of the annual budget allocated to Myanmar.
Both organisations used to have their offices in the former Traders Hotel, now the Sule Shangri-La, until they were asked to leave last year because of an increased demand for rooms for tourists. Tourism has been booming since the country opened up, and in the high season many tourists struggle to find somewhere to stay due to a lack of good-quality hotels.
The EU has also come under scrutiny because it rents an office in the Hledan Centre, which is owned by Asia World, a private company founded by Lo Hsing Han, a recently deceased drug lord turned business tycoon. The house of the EU ambassador is speculated to be owned by one of the children of general Than Shwe, ruler of the former regime. The EU has thus far not made any comment regarding this issue.
CONCENTRATION OF WEALTH
With an increased demand for quality properties and a limited supply, rental prices in Yangon have skyrocketed and house-owners are raking in great profits. Many of the owners of these properties, however, are associated with the former military junta.
During the decades of dictatorship, the generals and their close allies were able to acquire incredible wealth. Properties were a way to invest and, as a result, many properties in Yangon are owned by those with close connections to the generals.
Susanne Dumbleton, a former professor at Chicago’s DePaul University, wrote for the Huffington Post that 60% of available property in Yangon is owned by members of the military, retired military officials or cronies. “Prospects for benefiting from this boom seem open only for those able to carry forward the gains of unchallenged opportunity during the former regime,” she wrote.
Because of the high percentage of properties owned by people associated with the former junta, organisations find it difficult to find good office space that is not owned by them.
“It’s very hard to avoid renting from somebody with close links to the government, past or present, if you want a big property in a good location,” said a foreign consultant in the industry on condition of anonymity.
While it might be difficult to avoid renting from someone associated with the former regime, it is definitely not impossible according to Robin Aung Saw Naing, managing director of Pronto Services estate agency. “Many properties in Golden Valley are owned by former generals, but if you look outside of that area, it is possible to avoid renting from them,” he said.
Because cronies and generals are aware of the difficulty of renting out properties under their own names, it is common practice to register the building under the name of a family member or a business, which makes it harder to trace the ownership.
In Yangon there is also interest from international organisations to use old government buildings as office space. Many of these buildings stand empty and have become derelict after the generals suddenly moved the capital from Yangon to Nay Pyi Taw in 2005.
“Many foreign organisations approached us to help them to find a place for their office and are particularly interested in heritage buildings. But this is a long-term process, quite unprecedented, that requires dealing directly with the Myanmar Investment Commission and the concerned ministries,” said Laetitia Millois, a researcher with the Yangon Heritage Trust.
DISTORTING THE MARKET
The increasingly high rentals are not limited to office space and exorbitant rents have been a topic of discussion among locals and expats in Yangon for a long time. The excessive prices are forcing locals to move to the outskirts of the city, while expats are spending increasingly high sums on housing.
As for offices, demand for housing is high and not much of the supply meets the standards of most foreigners moving to Yangon. Safety, easy access to good schools and supermarkets, as well as comfort are the main expectations that most expats have when moving to Yangon.
“In order for those organisations to hire the best staff from abroad, they need to be able to offer them housing that meets international norms, in areas where their children will be happy as well. If not, why would somebody travel here to work?” said the foreign consultant.
Many homeowners in Yangon are making the most of this boom and the absence of regulations to control rental prices. It is difficult to negotiate rental agreements for less than one year and the year’s rent needs to be paid in advance. Outrageous prices are sometimes charged for apartments of low quality. “At the moment, nobody is controlling anything,” said Robin Aung Saw Naing of Pronto Services.
Robin Aung Saw Naing thinks that condominium prices will fall when house owners in Yangon start renovating their decayed properties. He said that when these house owners renovate their properties and bring them up to an international standard, the condominium prices will fall because people will be happier living in houses, as opposed to high-rises. “Now the prices are high because there are no quality properties, and the market is driven by those people who are prepared to pay a lot,” he said.
For local residents, the steep increase in rental prices has forced them to move to townships on the outskirts of the city.
Though most NGO workers do not dispute that high prices are sometimes paid for rentals by their organisations and their staff, they point out that large corporations entering Myanmar are paying prices much higher than theirs. Several brokers in Yangon confirmed that corporations are prepared to pay even higher prices, contributing to a further upsurge of rental fees. The benefits, especially for senior staff, are said to be very generous.
“Corporate expenses for rent are higher than those of NGOs, with the oil companies paying the most,” said one Yangon-based agent.
Recently, a draft condominium law has been submitted to parliament which could, in the long term, contribute to a fall in rental prices. The law, once approved, will allow foreigners to buy apartments in the city, providing an alternative to paying exorbitant rents.
Source: Bangkok Post
Learn about the Office Rental and Service Office Market in Yangon at The State of Service Office Business in Yangon