A/HRC/42/CRP.3 58. According to Deputy Defence Minister Major General Myint Nwe, the MEHL conglomerate was valued at Ks 161 billion (USD 119.4 million) in 2017.127 While it is difficult to verify this estimate, due to lack of transparency and other factors, MEC, MEHL and their subsidiaries make sizable tax payments. MEC was the eleventh largest tax payer in Myanmar in 2017-2018, MEHL was the third largest and MEHL subsidiary, Myawaddy Bank, the second largest.128 Even so, research suggests that their contribution to Myanmar’s tax base is deficient and surpassed by the resources they contribute to the Tatmadaw. 129 This indicates that much of the revenue generated by military businesses in Myanmar is not captured by the State and is consequently available to subsidize military operations, many of which the Mission has documented as resulting in gross violations of international human rights law and serious violations of international humanitarian law. 130 4. Contribution to the Tatmadaw 59. The degree to which business revenues fund Tatmadaw institutions, military operations or enrich its leadership, is not disclosed. However, credible analysis indicates that the Tatmadaw and its officials have a vested interest in armed conflict and violence as a way of maintaining their ability to capitalize on the conflict driven resource economy. 131 According to a U.S. Embassy diplomatic cable, MEHL and MEC function as “key components of the elaborate system of patronage the [Tatmadaw] uses to maintain power”. 132 60. The Tatmadaw’s ability to supplement its budget with alternative sources of revenue, outside the official military budget, is a clear vehicle for bypassing civilian oversight. The Tatmadaw’s official budget, which is subject to legislative approval and contributes to Tatmadaw salaries and procurement133, has been gradually reduced since 2015.134 While the amount of revenue that the Tatmadaw accrues from its economic activities remains unclear, it is indisputable that its holding companies and their subsidiaries and its relationships with State-owned enterprises and private businesses contribute to funding the Tatmadaw’s leadership and operations. Examples examined in this report, such as company donations to Tatmadaw operations, illustrate the ability of the Tatmadaw to generate funds outside the official budget, thereby evading legislative approval and control.135 127 128 129 130 131 132 133 134 135 22 Htet Naing Zaw, “Deputy Defense Minister: Perks Over for Military Businesses,” The Irrawaddy, 3 May 2017 (https//www.irrawaddy.com/news/burma/deputy-defense-minister-perks-militarybusinesses.html). Digital record 2005. Digital record 2005. In spite of their outsized importance to the Myanmar economy, the Myanmar Internal Revenue Department reports that out of the nation’s top 1,017 local taxpayers, MEC is ranked only 22 nd for commercial tax and 13th for income tax, while MEHL is ranked slightly higher at 13th for commercial tax; 5th for income tax. Cited in Gerard McCarthy, “Military Capitalism in Myanmar: Examining the Origins, Continuities and Evolution of “Khaki Capital”, Yusof Ishak Institute of Southeast Asian Studies (ISEAS) Trends Series, 2019. Kevin M. Woods, “The Conflict Resource Economy and Pathways to Peace in Burma,” USIP, November 2018. “Update on Myanmar Economic Holdings’ Activities”, US State Department US Embassy in Rangoon, 6 February 2009, cited in “Myanmar: The Military-Commercial Complex,” Financial Times, 2 February 2017 (https://www.ft.com/content/c6fe7dce-d26a-11e6-b06b-680c49b4b4c0) Gerard McCarthy, “Military Capitalism in Myanmar: Examining the Origins, Continuities and Evolution of “Khaki Capital”, Yusof Ishak Institute of Southeast Asian Studies (ISEAS) Trends Series, 2019, p. 23. SIPRI Military expenditure by country as percentage of gross domestic product, 1988-2018. Myanmar’s military expenditure in 2015 was 4.1% of GDP, in 2016 3.7% of GDP, in 2017 3.2% of GDP, and in 2018 2.9% of GDP. See paragraphs 115-127.