BUSINESS INTERVIEW
A Developer’s Dream: Housing for All
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angon is a city abuzz with economic activity, as the world rediscovers one of the region’s most promising frontier markets after decades of isolation. With this, however, comes a growing housing crisis, as the city seeks to accommodate its rapidly expanding labor force. Government plans to build 30,000 new low-cost public housing units next year caption may bring some relief, but the real answer, argues Taw Win Family Construction Chairman U Ko Ko Htwe, is private-sector investment. In this interview with The Irrawaddy’s Kyaw Hsu Mon, one of the country’s top property developers outlines the challenges facing his industry, and discusses how the government could make it easier to turn Yangon into a city of homeowners.
What are the most pressing problems for the construction sector in Yangon right now? The biggest one is that we lack the latest technology, although that is improving. Still, we can’t compare with what foreign investors have at their disposal. Besides this, we face a shortage of human resources. In the past, a lot of technicians left the country because they could make more money overseas, and even now that the country is opening up, they’re in no hurry to come back. Because the demand for skilled workers outstrips the supply, the cost of labor is more than we can afford. The price of land is also a huge problem. Prices here are almost the same as Singapore, but very few people can afford to pay them. Building materials are also expensive here, so we can’t use the best quality. Finally, I would say that there is a great deal of inefficiency here, due to the way the economy is run. We end up wasting time, wasting money and wasting materials because of this. Interest rates are also too high—I believe Myanmar’s rates are the highest among the Asean countries. Why do you think interest rates are so high?
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TheIrrawaddy
The problem is with the thinking of key people at the Central Bank. Even though the president has made the bank independent of the Ministry of Finance, it still has the same governor. Because he doesn’t really understand the nature of business or the financial system, nothing has really changed. Local businesses have recently called on the Central Bank to reduce interest rates from their current level (13 percent) within a year. How did the bank respond? We—local businessmen—made that proposal at a meeting with the president on Feb. 22. It’s not just the construction sector that wants this to happen, it’s almost everyone. Foreign banks are starting to come to Myanmar, and they can offer loans at much lower rates, and charge smaller transaction fees. But it’s up to the Central Bank to control the country’s financial situation. Unless it does, the economy will suffer. It’s important to get the country’s capital in circulation. Unless the financial system is working properly, that won’t happen. The Central Bank also has to manage the floating exchange rate. If the bank isn’t able to do these things, and can’t make flexible interest rates for us, we don’t
dare make a move, even though the country is opening up. Yangon’s population is growing fast. How many new residential units need to be built to keep up with this growth? We won’t really know the population until the census is completed, and in terms of demand, these days we are seeing some people who are buying two or more properties. That makes it difficult to calculate how many new units we can build. Generally, the supply of condominiums and the demand are balanced. The problem April 2014