CHDB de­mands govt loan for af­ford­able hous­ing

The Myanmar Times - - Front Page - Za­yarlinn@mm­ ZAY YAR LINN

The state-owned Con­struc­tion and Hous­ing De­vel­op­ment Bank wants a K30 bil­lion loan from the govern­ment to help it build more low-cost apart­ments.

THE state-owned Con­struc­tion and Hous­ing De­vel­op­ment Bank (CHDB) is push­ing the govern­ment to pro­vide a K30 bil­lion loan that would al­low it to build more low-cost hous­ing. But se­nior of­fi­cials at the lender also said they would con­sider an in­dus­try pro­posal un­der which the bank pur­chases and re­sells pri­vate sec­tor-built hous­ing through its in­stal­ment sys­tem.

CHDB di­rec­tor U Tin Aung Myint said the bank, which is part of the Min­istry of Con­struc­tion, had made the loan re­quest sev­eral months ago and that the govern­ment had promised the funds would be made avail­able.

“There is a prom­ise to pro­vide the fi­nanc­ing but we’ve not re­ceived it yet,” he told The Myan­mar Times on Novem­ber 8. “It’s been three months. The govern­ment needs to make sure the money reaches the bank.”

The funds would help the bank con­struct more low-cost hous­ing, which the bank sells us­ing an in­stal­ment sys­tem, he added. Low-cost hous­ing built by the pri­vate sec­tor is not avail­able for pur­chase on in­stal­ment.

U Min Htein, di­rec­tor gen­eral of the con­struc­tion min­istry’s Depart­ment of Ur­ban Hous­ing and De­vel­op­ment (DUHD), said the K30 bil­lion would also help the lender is­sue more home loans to in­di­vid­u­als.

CHDB was set up in 2013 by the DUHD with K100 bil­lion in cap­i­tal. At a press con­fer­ence in Oc­to­ber, bank of­fi­cials said that since start­ing op­er­a­tions it had lent K90 bil­lion to around 200 con­struc­tion firms and busi­nesses, and K7 bil­lion across 500 in­di­vid­ual home loans. The sta­te­owned lender has bolstered its cap­i­tal over the years, but U Min Htein de­clined to com­ment on how much cap­i­tal CHDB cur­rently has.

Part of the bank’s re­mit is to build low-cost hous­ing, but build­ing enough to meet de­mand has proved dif­fi­cult. The lender is hop­ing to scale up con­struc­tion by rais­ing fund­ing from three main sources – the govern­ment, for­eign lenders and savers.

“Low-cost hous­ing could be con­structed across the coun­try if fi­nanc­ing came from all three,” said U Tin Aung Myint.

To help en­cour­age savers to con­trib­ute the bank has started a Hous­ing Sav­ing Ac­count pro­gram, which prom­ises cus­tomers that ac­cu­mu­late enough for a down pay­ment pri­or­ity when al­lo­cat­ing low-cost hous­ing. Peo­ple pur­chas­ing DUHD-built low-cost hous­ing have to submit a 30pc down pay­ment, and pay the re­main­ing 70pc over 10 years.

CHDB has also courted for­eign lenders in search of low-in­ter­est loans that would al­low it to re­duce in­ter­est rates for cus­tomers, although so far for­eign fund­ing has not been forth­com­ing.

Peo­ple in the con­struc­tion in­dus­try ar­gue that it would be more sen­si­ble for the govern­ment to pur­chase un­oc­cu­pied low-cost hous­ing con­structed by pri­vate firms rather than fo­cus on new govern­ment-funded projects.

U Kyaw Kyaw Soe, joint gen­eral sec­re­tary from the Myan­mar Con­struc­tion En­trepreneurs As­so­ci­a­tion, said it would ben­e­fit pub­lic and pri­vate con­struc­tion firms and the govern­ment if it adopted this sys­tem.

Govern­ment-built low-cost projects are typ­i­cally on the out­skirts of the city where trans­port links are poor, whereas pri­vate sec­tor projects are closer to the cen­tre, he said. In price terms there can be lit­tle dif­fer­ence: Apart­ments in pri­vate sec­tor de­vel­op­ments can be found for around K10 mil­lion, the same price as up­per floor apart­ments in govern­ment-built hous­ing, U Kyaw Kyaw Soe said.

The key rea­son that peo­ple pur­chase the govern­ment-built apart­ments is that they can be bought us­ing an in­stal­ment sys­tem, he said. Mort­gages are avail­able from com­mer­cial banks, but oner­ous doc­u­men­ta­tion and col­lat­eral re­quire­ments put them out of reach of the av­er­age low-cost hous­ing cus­tomer. With­out ac­cess to an in­stal­ment plan, a K10 mil­lion apart­ment is a chal­leng­ing pur­chase.

U Kyaw Kyaw Soe’s an­swer is for CHDB to buy hous­ing built by pri­vate firms and sell it to cus­tomers through its in­stal­ment sys­tem. The govern­ment would re­ceive more tax rev­enue, and cus­tomers would gain ac­cess to bet­ter-lo­cated af­ford­able hous­ing.

U Tin Aung Myint said that the bank in­tends to adopt that sys­tem, but that it would re­quire more fund­ing to make it pos­si­ble. “There are lots of [low-cost] apart­ments that pri­vate firms built and want to sell,” he said. “If we can use the in­stal­ment sys­tem that will be good for de­vel­op­ers.”

The MCEA es­ti­mates there are 150,000 un­sold apart­ments priced be­tween K10 mil­lion and K20 mil­lion, which de­vel­op­ers are strug­gling to sell be­cause the av­er­age buyer lacks ac­cess to an in­stal­ment sys­tem.

In the mean­time, the DUHD will sell 650 out of more than 2000 low-cost apart­ments in the Yuzana, Kanaung and Shwe Lin Ban de­vel­op­ments this month, ac­cord­ing to a depart­ment an­nounce­ment in Oc­to­ber. The price is set K12 mil­lion for ground floor apart­ments and just un­der K10 mil­lion for those on higher floors. – Trans­la­tion by San Layy

and Thiri Min Htun

Photo: Zarni Phyo

Traf­fic speeds past the CHDB build­ing on Bo­gyoke Aung San Road.

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