Losses mount on lease of govt land, ac­tion needed

The Myanmar Times - Weekend - - Business - SEPTEM­BER 21, 2018 YEE YWAL MYINT yeeey­walmyint@mm­times.com

EVEN though the gov­ern­ment is leas­ing out land and build­ings at rates lower than then mar­ket price, no ac­tion has been taken to rene­go­ti­ate those rates and nar­row the losses in­curred by the State, ac­cord­ing to the Yan­gon Re­gion Au­di­tor Gen­eral’s re­port for 2016-17.

For ex­am­ple, the Depart­ment of Gar­den and Play­ground Parks un­der the Yan­gon City De­vel­op­ment Com­mit­tee (YCDC) is leas­ing out shops within sta­te­owned parks and around play­grounds to pri­vate busi­nesses un­der long term rates that are now be­low mar­ket price.

Ac­cord­ing to the re­port, these in­clude shops and res­tau­rants at Kan­daw­gyi, Kan Taw Min and Myaing Hay Won parks. De­spite dif­fer­ent shop sizes, the monthly rental fee for all busi­ness own­ers at the park is fixed at K1 mil­lion, or around K12 mil­lion per year. This is af­ter the fees were raised in 2017-18, re­sult­ing in im­plied an­nual losses of about K2.1 bil­lion for the YCDC against the mar­ket price. A to­tal of 1,030 shops were al­lowed to open in state-owned parks in 2016-17.

Land loss While the mar­ket price for leas­ing land is around K1,000 per sq ft in Dagon, the gov­ern­ment is ac­cept­ing rates at just K300 per sq ft, said U Kyaw Zeya, re­gional MP from Dagon town­ship. “As such, the gov­ern­ment should re-auc­tion the land at rates that are com­men­su­rate to the mar­ket,” he said, adding that dis­cus­sions will be made in par­lia­ment to en­sure trans­parency and equity in any new auc­tions or lease ne­go­ti­a­tions.

Ac­cord­ing to the Au­di­tor Gen­eral’s re­port, the gov­ern­ment racked up losses in­volv­ing un­der­val­ued land projects to­talling K14.2 bil­lion in 2016-17. The projects in­clude the Time City Project, Kan­thar­yar Tower Project, Sh­we­moekaung Lux­ury Hous­ing, 45th Street Com­plex Project and Golden Land Tower Project in Yan­gon.

The process of leas­ing out land for such projects by the Ur­ban and Land Ad­min­is­tra­tion Depart­ment lacked trans­parency even though the land is lo­cated in heav­ily pop­u­lated town­ships. The re­port also noted that lease rates were not aligned with the mar­ket price and that many ar­eas were leased out to a sin­gle in­di­vid­ual.

The gov­ern­ment re­ceived K15 mil­lion per month for the lease of 1.7 acres of land in Kan­daw­gyi, Ba­han town­ship, re­sult­ing in some K706 mil­lion lost, for ex­am­ple. It was also dis­cov­ered that one in­di­vid­ual sold 1.2 acres or 21 plots of (40ft x 60ft) land for a cheap price.

Ac­tion needed With losses mount­ing, MPS have urged the re­gional gov­ern­ment to re­quire ap­provals be­fore state-owned land in ar­eas where space is scarce is leased out or sold. Re­views must be also be con­ducted on the leas­ing out of huge land plots for the pur­pose of es­tab­lish­ing in­dus­trial zones and for land that is sold with­out trans­parency.

“The ma­jor­ity of projects over­seen by the YCDC are mak­ing losses. Over the two years since this gov­ern­ment took charge, we have been spend­ing more than we earn. This re­port also makes clear that state in­come is not be­ing ef­fi­ciently col­lected,” U Kyaw Zeya said.

He added that the Au­di­tor Gen­eral’s re­port for 201617 is six months be­hind sched­ule, as it should have been re­leased in March.

“That is ex­tremely late and all the lease agree­ments and ex­ten­sions have been signed, some for up to 10 years. So if we want to cut the gov­ern­ment’s losses then we should take ac­tion now,” U Kyaw Zeya said.

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