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
"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."