Poor nation should maintain a land bank of public sites to help fund up
to US$150 billion of much-needed infrastructure projects, investors say
To meet the enormous cost of funding Myanmar's infrastructure and
property development, the impoverished country should adopt Hong Kong's
land sales model. That is according to speakers at the recent Myanmar
Urban Development Conference.
In the next 20 years, Myanmar needs between US$100 billion and US$150
billion to fund infrastructure investments, plus US$40 billion to US$60
billion for property investment in Yangon, its most populous city, said
Kenneth Stevens, managing partner of Leopard Capital, an Asian firm
that invests in emerging markets.
"For the next 20 years or so, I expect Myanmar will spend 10 per cent
of its GDP or US$5 billion every year on infrastructure such as power,
ports, oil refineries and highways," Stevens predicted.
"Where will the money come from? Foreign direct investment cannot be
the only way. No city in the world is built all by foreign investment,"
he said.
The Myanmese government needs to become a developer, similar to the
Hong Kong model, said Nicholas You, chairman of the World Urban Campaign
steering committee under the United Nations. "Value generated by real
estate development is critical if Myanmar wants to play the catch-up
game," he said.
Myanmar's government should maintain a land bank of public land for
future demand, You said: "That can finance a lot of infrastructure. The
land value will rise."
Debt is not yet a viable way of financing in Myanmar, due to the lack
of a local market for government bonds, while issuing foreign bonds is
expensive, Stevens said: "Selling land is the inevitable option."
The Myanmese government should sell land on Yangon's outskirts, in
order to develop suburbs to accommodate the city's population growth, he
suggested.
Yangon's population will double from 5.14 million now to 10 million
around 2040, when it will be a mega-city, said Toe Aung, deputy head of
Yangon's city planning and land administration department.
Stevens said the state of infrastructure in Myanmar is difficult.
Myanmar has 33,000 kilometres of roads, far below Vietnam's 198,000km and Thailand's 147,000km, Stevens said.
The country's power sector has a total installed capacity of 9.4
billion kilowatt-hours, less than a tenth of Vietnam's installed
capacity of 101 billion kWh, Stevens added.
Yangon's power shortage is evident from the frequent blackouts, and
the poor state of roads means traffic jams are common. Yangon has less
than 7 per cent of Bangkok's commercial property, said Stevens.
"Yangon's property [market] is dwarfed by other Asean cities. The amount
of building that has to take place will take decades for Yangon to
catch up with Bangkok," said Stevens.
There are buildings in Yangon built under British colonial rule with
charming architecture from a bygone era, but they are mostly
dilapidated.
Most buildings in Yangon were built before 1953, said Sven Greulich,
executive director of Tilke Engineers & Architects, a German design
firm. "Most of these buildings are not properly maintained. In Yangon,
there is a lack of financial resources to maintain buildings," he said.
"We have lots of challenges in Yangon and other cities in Myanmar,
including a lack of centralised gas supply system. Drinking water
quality is deficient, as the pipes in downtown Yangon date from the
British colonial times."
source: South China Morning Post
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