Con­struc­tion needs clar­ity to en­joy sanc­tions

The Myanmar Times - - Front Page - Za­yarlinn@mm­times.com ZAY YAR LIN

Con­struc­tion of­fi­cials want the govern­ment to clear up un­cer­tainty that could in­ter­fere with an an­tic­i­pated boom af­ter an end to US sanc­tions.

CON­STRUC­TION and real es­tate in­dus­try of­fi­cials are an­tic­i­pat­ing ris­ing for­eign de­mand for hous­ing, of­fice space and in­vest­ment op­por­tu­ni­ties once the US sanc­tions are lifted. But an un­sta­ble pol­icy en­vi­ron­ment could pre­vent the sec­tors from tak­ing full ad­van­tage, they said.

The num­ber of for­eign in­vestors and ex­pa­tri­ate work­ers in Yan­gon has risen dra­mat­i­cally in re­cent years, push­ing up de­mand for of­fice space and hous­ing. Se­nior con­struc­tion and in­dus­try of­fi­cials think that the trend is only go­ing to con­tinue given the prospect of an end to most of the re­main­ing US sanc­tions, which the US ad­min­is­tra­tion an­nounced last week.

“There will ab­so­lutely be more for­eign work­ers here [once the sanc­tions are gone],” said U Than Oo, deputy chair of the Myan­mar Real Es­tate Ser­vices As­so­ci­a­tion. “But they need of­fice space and hous­ing.”

In­dus­try of­fi­cials are hop­ing that this pre­dicted fresh wave of de­mand will help en­liven a res­i­den­tial prop­erty mar­ket that has cooled rel­a­tive to the past two years.

U Khin Shwe, pa­tron of the Myan­mar Con­struc­tion En­trepreneurs As­so­ci­a­tion, is ex­pect­ing an in­flux of ex­pats – for em­ploy­ment and travel – once the sanc­tions are gone. “We need to build of­fices and houses for for­eign busi­ness­peo­ple,” he said.

For­eign in­vest­ment in real es­tate and con­struc­tion is also likely to in­crease, U Khin Shwe said. State Coun­selor Daw Aung San Suu Kyi has been on sev­eral in­ter­na­tional trips to meet the heads of neigh­bour­ing coun­tries, and there will be re­newed in­ter­est from re­gional as well as US in­vestors, he added.

But the con­struc­tion sec­tor is suf­fer­ing from un­cer­tainty about govern­ment pol­icy, which could pre­vent the in­dus­try from meet­ing po­ten­tial de­mand for new con­struc­tion and at­tract­ing out­side in­vest­ment, se­nior of­fi­cials said.

The govern­ment be­gan a Yan­gonwide re­view of high-rise build­ings in May, which has dragged on for months. In­struc­tions to some de­vel­op­ers with near-fin­ished pro­jects to make dras­tic changes have since been par­tially re­scinded. But the in­dus­try is spooked, and the fact that other pro­jects still in the plan­ning stages re­main un­der re­view has made de­vel­op­ers cau­tious about start­ing new pro­jects.

Ear­lier this month Yan­gon City Devel­op­ment Com­mit­tee told 55 de­vel­op­ers that had a per­mit in prin­ci­ple – based on plans sub­mit­ted to the pre­vi­ous govern­ment – to go back to the draw­ing board and make changes.

Other un­cer­tain­ties in­clude a Con­do­minium Law par­lia­ment passed in Jan­uary, which will al­low for­eign­ers the right to buy up to 40 per­cent of apart­ments in any given block. But U Khin Shwe pointed out that the by­laws for that piece of leg­is­la­tion – crit­i­cal to defin­ing the par­tic­u­lars of how for­eign own­er­ship will work – have still not ap­peared.

YCDC has also yet to re­lease new build­ing per­mit reg­u­la­tions, which will af­fect how de­vel­op­ers ap­ply for per­mis­sion for cer­tain pro­jects, he added.

A long-awaited zon­ing plan – first drafted back in 2012 – is also ex­pected to be opened for pub­lic com­ment later this year.

The net ef­fect of this pol­icy un­cer­tainty is that de­vel­op­ers are re­luc­tant to be­gin new pro­jects.

“Now is the time to build but the prob­lem is this is not hap­pen­ing be­cause pol­icy is not sta­ble,” said U Khine Shwe.

U Than Oo said al­though de­mand for ex­pen­sive apart­ments to house ex­pats is ex­pected to grow, “the lack of sta­ble reg­u­la­tion and pol­icy means con­struc­tion firms are scared to in­vest”.

“The econ­omy isn’t sta­ble ei­ther, but I sup­pose that will im­prove slowly,” he added.

The kyat has weak­ened steadily against the dol­lar in the last three months, push­ing up the price of build­ing ma­te­ri­als, the vast ma­jor­ity of which are pur­chase from abroad in US dol­lar-de­nom­i­nated con­tracts.

U Ye Min, a spokesper­son for Yan­gon Re­gional govern­ment, said that the draft zon­ing law would be pub­lished soon. Mean­while, the govern­ment is also mov­ing to fi­nalise other new rules and reg­u­la­tions, he said. The re­gional govern­ment re­cently sent new build­ing rules to YCDC for re­view, which con­cern things like park­ing re­quire­ments, fire re­sis­tance stan­dards and how much space be­tween build­ings and the road must be left by de­vel­op­ers.

“Once YCDC con­firms they will an­nounce [de­tails of the] new reg­u­la­tions,” he told The Myan­mar Times on Septem­ber 19.

‘There will ab­so­lutely be more for­eign work­ers here [once the sanc­tions are gone].’

U Than Oo Real Es­tate Ser­vices As­so­ci­a­tion

Photo: EPA

Con­struc­tion work­ers nav­i­gate scaf­fold­ing on top of a build­ing pro­ject in Yan­gon.

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