Plots of industrial land are being left idle as speculators bet on rising property prices rather than building factories, according to the vice chair of the Myanmar Construction Entrepreneurs Association, who hopes a National League for Democracy government will enforce regulation.
People with connections to authority are being awarded industrial plots in advance of those engaged in real economic activity, vice chair U Ko Ko Htwe said. The existing rules around land permits and grants are being ignored, and all this contributes to rising land prices, he added. The new NLD government needs to enforce regulation in order rein in the rising land prices, he said.
“[The current system] is likely to provide opportunities to people who aren’t going to use the land,” U Ko Ko Htwe said. “I don’t mean that land should not be traded, but it ought to be traded in accordance with the law.”
If someone buys industrial land, they should build a factory, he said. If not, the land should be taken away. This would free up idle land and lower prices, U Ko Ko Htwe said.
“Right now people are speculating on farmland and buying it up,” he said. “When land in industrial zones is granted, a plot can be priced at K9 million. But these are then sold among investors, who speculate on the price, and some prime area plots are now priced at K900 million.”
Government policy dictates that construction has to start on empty plots six months after purchase, and that the land can be seized if the plot remains empty. But this is rarely enforced, said U Ko Ko Htwe, and has led to tracts of vacant land in industrial zones and towns.
In many places land has lain vacant for 20 years because of a lack of legal action from successive governments. Even land sold years ago typically has a one-year deadline for starting construction. Enforcing government policy in such situations would help lower the price of land, U Ko Ko Htwe said.
Real estate agents said that many empty plots across Myanmar’s extended townships, and the country’s 28 industrial zones, are held by speculators rather than people looking to build houses or factories.
“I haven’t heard any land being confiscated because the buyer didn’t build a house,” said Ko Win Htain of Aye Yeik San Real Estate Service. “I have seen [that regulation] written in the rules for land permits, however. If [idle plots] were confiscated you’d see prices drop for sure.”
U Than Oo, the vice chair of the Myanmar Real Estate Services Association, agrees. Government regulation already prohibits selling or transferring land leases or slips, just as government regulation already specifies a time frame for starting construction, he said. But ministerial departments in charge of land have gone years without starting construction, and this has left plots of land empty and property prices artificially high, he said.
“Only they know why [that land] has not been confiscated despite the regulation,” he said. “But if it was confiscated property prices would certainly go down.”
A group led by Vice President U Nyan Tun has held lands in industrial zones since the end of 2014, but construction work has not begun, said chair of Hlaing Tharyar industrial zone’s Management Committee U Myat Thin Aung. The committee has informed other landowners that lands will be confiscated unless construction starts, but in many cases work is still yet to begin, U Myat Thin Aung said.
“People with extra cash and those looking for larger potential property invest in real estate,” he said. “Trading land can lead to a 10-fold return on investment, while most economic projects return less than double the investment. We’ve urged [people] to build on empty plots in industrial zones. But whether it will be confiscated or not will depend on the government.”
The speculation on land prices has also spilled over into other areas. Local firms and businesspeople raised prices in order to fund purchases of land for investment. This in turn pushed up the price of the products and basic commodities they sold, U Ko Ko Htwe said.
Translation by Emoon and Kyawt Darly Linn
Quoted from mmtimes.
