Published on Thursday, 18 September 2014
Foreign investors are disappointed that only domestic construction firms are being granted contracts to build government housing projects as surging land prices continue to make them wary of investing in housing, panellists said at the second day of the Myanmar Global Investment Forum.
Cyrus Pun, executive director of Yoma Strategic Holdings, said surging land prices were causing foreign investors to exit Myanmar’s housing sector. “They are not leaving because they are uninterested in this sector but because land prices are skyrocketing. The major cause of land prices skyrocketing is price manipulation,” he said.
He also said the tender process for housing projects was “disappointing” foreign investors. “The tender process is one of the disappointing problems facing foreign investors. The reason is that only local companies have get the green-light for the projects,” Cyrus Pun said.
The executive also called on the government to use taxation to prevent manipulation of prices in the property market. “The problem is that the government has failed to collect taxes from those who buy land to manipulate the real-estate market. This causes prices to go up,” he said.
“Offices, housings, hotels and services apartments are in high demand because land utilisation is high thanks to the massive inflow of foreign investment into the country,” he added.
Foreign investors say prices of land, hotel fees and apartment rents are higher in other countries in the region, like Thailand and Vietnam. The government should adopt a legal framework for investors in the housing sector, they say, adding that it takes too long to get a construction permit.
Yangon is experiencing increasing demand for housing and needs to build affordable and low-cost housing projects to meet this demand, as well as serviced apartments and hotels to accommodate the massive inflow of tourists.
Domestic entrepreneurs have been granted the lion’s share of contracts to build government housing projects.
Minister for National Planning and Economic Development Dr Kan Zaw said the government is making higher living standards for citizens its priority.
The emergence of a national housing policy and agencies that can deliver housing are essential for ensuring a sufficient supply of affordable housing, he said. Developing financing mechanisms is also crucial, he said. “The government will be able to roll out housing projects only when these components have been put in place,” Kan Zaw said. The government also needs to promote the development of construction companies, he said. “To meet this goal, we are creating different kinds of housings for those who have different income levels,” he added.
Putu Kamayanau, former head of the Asian Development Bank in Myanmar, said the development of the power-supply sector and sewage treatment, as well as the availability of clean water were crucial for Myanmar’s infrastructural development. “As a key policy, the ADB is providing necessary assistance for these projects. Another point is it needs to develop cities like Mandalay in addition to Yangon,” said Kamayanau, who is now an adviser to New Star Light Construction.
The massive inflow of money derived from criminal activities, such as the narcotics trade, into the real-estate sector is also fuelling land price manipulation, which creates another hurdle for foreign investors, executives said.
The tender process the construction ministry uses needs to be more transparent, executives said.
ElevenMyanmar
