Myanmar housing bank hoping for international loans to fund lending
THE Construction and Housing Development Bank is hoping to secure low-interest loans from Japanese and Korean banks, which will allow it to offer its own low-interest financing schemes for Myanmar homebuyers.
Managing Director of Construction and Housing Development Bank (CHDB) U Win Zaw told The Myanmar Times yesterday that talks were under way.
“There remain a lot of procedures to deal with. Both our bank and the [construction] ministry are trying to get loans. For the bank to obtain international loans, we need the endorsement from the ministry,” he said. “For the time being, we are discussing with Japan and Korea.”
The Ministry of Construction is a shareholder in CHDB, which was set up to provide affordable home loans.
As for which banks would be involved with any such deal, U Win Zaw remains tight-lipped. “We can’t yet say from which bank we would borrow,” he said.
U Win Zaw added that the bank and the ministry were discussing the possibility of government-to-government overseas development assistance loans being directed to CHDB. “If agreed, we will continue to extend loans to the public on a long-term basis,” he said.
There are many proposals up for discussion that would see loans provided by international banks – particularly in order to service the housing and construction sector, he said.
CHDB director U Tin Aung Myint told The Myanmar Times earlier this month that the bank is pushing the government to provide a K30 billion loan that would help fund low-cost housing construction and home loans.
CHDB is currently working to facilitate construction and sales of affordable housing, including financing options such as long-term instalment plans and soft loans from state banks and international banks. The bank hopes to attract investors to construction and infrastructure projects.
“We are trying to extend long-term loans. The policy has already been submitted to the state counsellor,” said CHDB vice chair U Tha Htay. “We cannot extend 30-year loans based on taking deposits. But international housing banks are now willing to extend soft loans. Our bank will faithfully bring those soft loans to the people. Interest rate won’t be high. We are considering taking service charges only,” he said.
CHDB is currently selling affordable apartments built by the Urban and Housing Development Department to the public. This involves signing on for a plan of 30 percent initial payment and 70pc on instalment over the next 10 years. Buyers must submit evidence of earnings in excess of K400,000 per month.
With the monthly average instalment at K120,000, low-income families still find it difficult to buy affordable housing.
“To solve that problem, we need government assistance and support for long-term mortgage loans which we can extend up to 20 to 30 years. If we can get it, monthly payment amounts will be largely reduced,” U Tha Htay said.
– Translation by Zaw Nyunt
Construction and Housing Development Bank managing director U Win Zaw sits in his Yangon office