Myanmar Market Intelligence | October 22 2020

MYANMAR GOVT INVITES COMPETING PROPOSALS IN CHINA-INITIATED NEW YANGON CITY PROJECT

 

NEWS

 

The Myanmar government has invited investors to submit competing proposals against a Chinese company’s proposal to develop an industrial park and related infrastructure for the New Yangon City project, in a move that brings the backbone project under China’s ambitious Belt and Road Initiative (BRI) one step closer to implementation.

 

(Source: The Irrawaddy, October 16, 2020)

 

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RESEARCH VIEW | Hpone Myint Thu (Research Manager):

 

Swiss challenge has been a well-known procurement mechanism widely adopted in countries such as India, Philippines and Italy for infrastructural projects. The term “Swiss” is borrowed from the Switzerland’s neutrality during the world wars to denote a government’s impartiality in awarding contracts to private sector. The Myanmar government’s decision to implement the New Yangon City project under Swiss Challenge is expected to ensure a more competitive tender process with greater transparency and accountability. Whoever emerges out of this bidding as the final winner, the potential disclosure of all relevant information in relation to the project is likely to also allow thorough public scrutiny while ensuring the legitimacy of the process and the sustainability of the project over time. If the experiences of India and Philippines serve as a guidance, the New Yangon City project, in Colliers view, has a potential to even become a good precedent for other pending major infrastructural plans in Myanmar. It is expected to encourage investors to explore opportunities further under the Public-Private-Partnership (PPP) scheme moving forward, enabling the government to also align its development goals with both the economic and financial feasibility of the projects. The symbiosis between involving government ministries, project proponents and consultancies that will result from implementing this process may perhaps help in vetting the bids for projects of the New Yangon City scale in the future.

 

GOVT DRAFTS NEW RECOVERY, REFORM PLAN FOR MYANMAR ECONOMY

 

NEWS

  

The government is drafting a new Myanmar Economic Recovery and Reform Plan (MERRP) after a recent review of the COVID – 19 Economic Relief Plan (CERP), which was rolled out on April 27, U Thaung Tun, Minister of Investment and Economic Relations, said at during webinar organised by AusCham Myanmar last week.

 

(Source: Myanmar Times, October 18, 2020)

 

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RESEARCH VIEW | Hpone Myint Thu (Research Manager):

 

Among all the strategies outlined in the draft Myanmar Economic Recovery and Reform Plan (MERRP), one that is expected to affect the Myanmar real estate market the most is the proposed establishment of land bank. Through this, the state-owned land, properties, factories, warehouses and similar assets are anticipated to be leased or rented to private sector. The Ministry of Investment and Foreign Economic Relations (MIFER) will be responsible for implementing this strategy and the purpose of it is to assist and reinforce the job creation in various industries while empowering small- and medium-enterprises. The land bank is expected to come online by the end of FY2020-2021 and the access to land may also be improved significantly as a result. Although MIFER will be at the helm of this initiative, the coordination of other ministries and local governments, in Colliers view, will be key in ensuring the success of it. In fact, the lack of collective land registration system even for existing privately-owned lands alone remains a major hindrance hitherto in real estate sector. That has, for long, exacerbated the scarcity of grant and freehold lands whose ownership is considered more concrete, and that, in turn, has inflated grant and freehold land prices in the market. With the state-owned lands entering the market, the shortage of developable land is likely to be solved to the certain extent. Colliers recommends industrial investors and developers to keep a close eye on this initiative as this may become a boon for the real estate market post-Covid.

 

CONSTRUCTION WORK TO RESUME IN YANGON WITH NEW RULES

 

NEWS

 

Construction work in Yangon, which has been halted since the third week of September, will be allowed to resume if it follows new rules, said the Yangon Region Construction Inspection Committee. “Construction projects in Yangon Region will have to report to the committee and after inspection, they will be allowed to resume if they are in compliance with the rules,” said committee Associate Secretary U Myo Myint.

 

(Source: Myanmar Times, Oct 13, 2020)

 

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RESEARCH VIEW | Hpone Myint Thu (Research Manager):

 

Construction is one of the main economic activities that was affected by the advent of restrictions as a result of the surge in Covid-19 cases in the last few weeks. From the ongoing Dala bridge construction, that would connect the Downtown Yangon and the southern Dala Township, to a typical apartment building site in the neighborhood, the stay-at-home orders caused extensive delays and postponements inevitably across the city. Given the population of more than 5 million, the limited testing capacity has been a challenge in identifying infected cases and containing the virus for the last few months. Despite the concerns for workplace safety, it is clear that many developers cannot afford to bear the brunt of severe economic impacts that might result from prolonged restrictions. Looking closely, it is even more conspicuous that the lurking economic downturn may take a toll further on the overall growth of the economy in the months ahead.As the construction of major infrastructural projects such as Dala Bridge will be key in reviving the post-Covid economy, it cannot be deferred any longer. Now that rapid test kits are available, Colliers encourages developers to conduct viral tests for workers in consultation with local health authorities to detect potential infections early and keep the critical projects running. With the distribution of vaccine yet out of sight, adjusting strategically to fend off the virus will rather define the success of individual projects in the foreseeable future.


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HponeMyint Thu

Manager

Yangon

Hpone is an Assistant Manager in the research and advisory department at Colliers International office in Myanmar. He is responsible for conducting properties research, creating and managing databases, producing property reports, supporting valuation and advisory teams, providing site data analysis, interpretation and case studies and client-management.

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