Myanmar urged to copy Hong Kong development model
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."