TOKYO, 26 March 2021: Six private Japanese firms and a
Japanese state entity admit they paid rent on the Y Complex hotel and real
estate project that ultimately went to Myanmar’s defence ministry, according to
a Reuters report on Wednesday.

Commenting on the report, Justice For Myanmar spokesperson,
Yadanar Maung, described the Y Complex project as an “embarrassment for Japan,
providing income for the same office of the Myanmar army that buys bullets the
junta is using to deliberately kill people.”

The Y Complex, built on army-owned land near the Shwedagon Pagoda in Yangon, is just one of many assets and projects linked to Myanmar’s military, which has ruled the country for the majority of the last 60 years. A luxury hotel project that will be managed under the prestigious Okura brand was due to open later this year. It has been under development since 2017 and is part of the multi-purpose Y Complex real estate development in the heart of Yangon.

Reuters said it was the first time Japan has acknowledged
the project benefits Myanmar’s defence ministry, which is controlled by the
military under the country’s constitution. The payments started in 2017 are not
illegal but are potentially embarrassing for Japan, given United Nations
investigators have alleged human rights abuses by Myanmar’s military.

Known officially as the ‘Tatmadaw’, Myanmar’s military is
under investigation for genocide by the International Court of Justice over its
offensive against Rohingya Muslims in 2017. The military seized control of the
country in a 1 February coup and has since detained the country’s elected
leader and killed more than 261 protesters.

All the Japanese stakeholders in the Y Complex deal told
Reuters they thought the rent, which was paid by an intermediary, ultimately
was going to Myanmar’s government, not the military.

Ryota Nagao, an official at the international policy
division of Japan’s land ministry, which approved the state agency’s
investment, said the ministry had judged the project was not dealing with the
military “directly or indirectly” because the defence department was a
government ministry. He declined to comment on the fact that Myanmar’s defence
department is controlled by the military, under the country’s 2008
constitution, drafted during previous army rule.

Japanese construction company Fujita Corp said in a press
release in 2017 that the Yangon project, converting a former military museum
into a complex of swanky offices, shops and a five-star hotel, would cost
USD320 million.

Fujita, property manager Tokyo Tatemono Co and Japan’s state
investment firm JOIN, which is overseen by Japan’s land ministry, told Reuters
they formed a consortium that paid rent on the land the complex is built on.
The state-owned Japan Bank for International Cooperation (JBIC) said it was
taking part in financing the project in 2018.

Fujita, Tokyo Tatemono and JOIN declined to comment on how
much rent has been paid and how much ended up with the Myanmar defence

Chief Cabinet Secretary Katsunobu Kato, the Japanese
government’s most senior spokesman, acknowledged the involvement of JOIN and
JBIC in the Y Complex project through a special purpose company. In response to
Reuters questions, he said it was his understanding that neither entity had a
direct business relationship with Myanmar’s military.

Fujita initially said the project would be finished in 2020.
Construction was suspended after the coup due to concerns over worker safety,
said JOIN, which is 95% owned by the Japanese government.

Representatives of each of those parties told Reuters the
rent payments were made via its local partner Yangon Technical and Trading
(YTT), a subsidiary of privately held Myanmar conglomerate Ayeyar Hinthar which
has interests in agriculture, banking, healthcare and property.

Kyi Tha, a YTT official, said that the site is being leased
by the defence ministry and that the ultimate beneficiary is the Myanmar
government. He said no special steps had been taken to assess the Myanmar
military’s human rights record. That is not a requirement under any laws or

Last month, days after the coup, Japanese brewer Kirin axed
a beer venture with Myanmar Economic Holdings Ltd, one of two conglomerates
owned by the Myanmar military, saying it was “deeply concerned” by the
military’s recent actions, referring to the coup, which it said were against
its standards and human rights policy.

Justice for Myanmar, Human Rights Watch and other pressure
groups, have asked a United Nations’ human rights body to investigate Y
Complex’s ties to the military. A spokeswoman for the UN human rights working
group said it had received the petition but declined further comment.

Justice For Myanmar quotes newly leaked documents indicate
that the Japanese investors in Y Complex play a central role in funding and
signing off land rental payments to the office of the quartermaster general of
the Myanmar army.

Justice For Myanmar has examined a leaked land lease
agreement for Y Complex, dated December 2017. It says YTT, the local company,
has to pay land rent of USD2.163 million a year to the military.

It alleges that “although the Japanese investors are not
paying the Myanmar military directly to rent the land, they have indirect
control over these payments and appear to provide most, if not all of the

Company and Japanese government officials told Reuters that
they thought the land rent was going to the Myanmar government and not to the

But Justice For Myanmar believes these are not credible
responses because it is explicitly recognised in the lease agreement between Y
Complex and YTT that the ultimate lessor of the land is the “Office of
Commander in Chief, Army, Office of Quartermaster General.”

The lease agreement says that the land rental payments are
made to the Ministry of Defence – which is controlled by the military.

It accuses the military of being a “silent partner of the
Japanese investors in Y Complex that collects its profits in the form of land
rents rather than shareholder dividends.”

All the USD320 million in financing costs are being
shouldered by the Japanese investors and include a USD144 million bank loan, of
which US$47 million is from the state-owned Japan Bank for International

‍Justice for Myanmar calls on the “project’s investors to take immediate action to end their complicity in the Myanmar military’s crimes. At a minimum, this has to include suspending the project until democracy is restored in Myanmar with the military under civilian control.”

(Source: Reuters and Justice of Myanmar)