Global firms leave Myanmar office block with military ties

Shangri-La Asia

11/05/2021 17:20

May 11 (Reuters) - A number of tenants of a high-end office
block in Myanmar that the United Nations said is built on
military-owned land have moved out or are reviewing their
leases, including McKinsey, Coca-Cola and Reuters, the companies
said.
    Activist group Justice for Myanmar last month called on
commercial tenants of the Sule Square complex of offices and
shops in the heart of Myanmar's commercial hub of Yangon to stop
indirectly supporting the army.
    "Sule Square has big-name tenants that continue to lease
office space in the building, indirectly supporting the army,"
Justice for Myanmar said in a report in which it identified 18
of the tenants.
    Reuters approached all of the companies named in the report.
Of the six that said they had moved or were reviewing office
plans, only one cited the military link. Others cited various
reasons including business prospects.
    Business has collapsed in the Southeast Asian country since
a Feb. 1 coup that prompted widespread protests and strikes,
during which the army has killed hundreds of civilians and
arrested thousands.
    Opened in 2017 near the historic Sule Pagoda, Sule Square
was developed by a local affiliate of Hong Kong listed
Shangri-La Asia  0069.HK , which also manages the building and
an adjacent hotel.
    The site was leased from the military, according to a 2019
fact-finding mission established by the United Nations to
investigate the army's economic interests, media and human
rights groups.
    As the basis for its conclusion that the land is owned by
the military, the mission in its report cited what it called
digital records. One of the authors of the report, human rights
consultant Chris Sidoti, said the material had been archived and
was not immediately available.
    On Tuesday, Reuters made a request to the United Nations to
get access to the records.
    Shangri-La, which said in 2017 it had invested $125 million
in the development, declined to comment on Reuters' questions
about land ownership. 
    A spokesman for Myanmar's junta did not answer calls seeking
comment. Reuters could not independently verify details of the
land lease deal.
    Myanmar's military, which directly ruled for almost 50 years
after taking power in a 1962 coup, owns large tracts of land and
controls conglomerates that span everything from mining to
banking.
    McKinsey & Company terminated its lease of serviced office
space in Sule Square in early 2021, said Melissa Yeo, director
of reputation and communications, Southeast Asia, at the
consultancy, without elaborating.
    In an emailed statement, Coca-Cola  KO.N  said it would not
be renewing its lease when it ends in mid-June citing "changing
business requirements".
    When contacted for comment, a spokesperson for Reuters
 TRI.TO , which was not one of the companies named in the
report, said it is not currently using its Sule Square office
and was reviewing its tenancy. The spokesperson did not comment
on the building's possible military ties.
        
    BUSINESS IMPACT
    Singapore-based private equity firm Emerging Markets
Investment Advisors said it had moved out of Sule Square after
its lease ended in March, while Norwegian fertiliser firm Yara
said it had started looking for alternative office space.
    Of the companies that said they had moved or were reviewing
office space, only Yara  YAR.OL  cited the military ownership.
    "We have only recently been made aware that the landlord is
owned by a company who pays land lease to the military," said
Josiane Kremer, director, external relations at Yara.
    She did not elaborate on how Yara became aware of the
ownership details.
    Norwegian state-owned telecoms firm Telenor  TEL.OL  said it
had been aware of the military-owned land under Sule Square
before it moved in but it had picked the location due to factors
such as safety. 
    Telenor did not comment on its future office plans nor did
it elaborate on how it became aware of the ownership.
    The World Bank, which also has an office in Sule Square,
said it was "assessing the situation in Myanmar, according to
internal policies and procedures". It did not elaborate on its
plans.
    French container shipping firm CMA CGM said it was
"conducting further investigations" and Canadian realtor
Colliers International Group Inc  CIGI.TO  said its Myanmar
business was run by an independent franchisee and declined to
comment further.
    Japan's Sony Corp  6758.T  said it previously had a
representative in Myanmar but its office had closed "due to the
local situation" and it now sold only through distributors.
    Several other groups named in Justice for Myanmar's report,
including the American Chamber of Commerce in Myanmar and
British insurer Prudential either did not respond to a request
for comment or declined to comment.
    The University of Reading and Mastercard were named in the
Justice for Myanmar report but told Reuters they did not rent
offices in Sule Square. Reuters could not independently confirm
that.

 (Reporting by John Geddie in London, Victoria Klesty in Oslo,
Nivedita Balu in Bangalore, Gus Trompiz in Paris, Andrea Shalal
in Washington DC, Tim Kelly in Tokyo; Editing by Matthew
Tostevin and Robert Birsel)
 ((John.Geddie@thomsonreuters.com; +65 6403 5578;))