News / Economy

In Burma, Foreign Investment Surges, Office Rent Sizzles

A line of vehicles drive through Shwegontai junction, one of the busiest junctions in the city, in Rangoon, July 3, 2013.
A line of vehicles drive through Shwegontai junction, one of the busiest junctions in the city, in Rangoon, July 3, 2013.
Reuters
Burma has approved more foreign direct investment in the past five months than all of last year, but companies setting up operations in the hot frontier market face a growing problem: Southeast Asia's highest office rental rates.
 
Burma has approved FDI projects worth more than $1.8 billion from the start of the fiscal year on April 1 to the end of August, compared with $1.4 billion in the whole previous fiscal year, Aung Naing Oo, a director general at the Ministry of National Planning and Economic Development, told Reuters.
 
But he said he fears potential foreign investors will be turned away by a severe shortage of office rental space.
 
The wave of investment comes as Burma's quasi-civilian government implements political and economic reforms, initiated two years ago by President Thein Sein, a former general who led the country out 49 years of military rule and global isolation.
 
The European Union agreed in April to lift all sanctions on Burma, while the United States suspended sanctions in May last year and allowed U.S. companies to invest through a general license. Some American executives have urged Washington to go further and lift sanctions entirely.
 
Most of the approved FDI came from other Asian nations, said Aung Naing Oo.
 
“Malaysia, which brought about $500 million for manufacturing Nissan cars, is the biggest investor during this fiscal [yea]) in terms of size followed by Hong Kong and South Korea, who injected funds in the garment industry,” he said.
 
Nissan Motor Co. plans to start a complete knock down production of its cars in Burma with a Malaysian partner Tan Chong Motor Holdings Bhd, the Japanese automaker said on Friday, becoming the first major global carmaker to be assembling cars in the Southeast Asian country.
 
The rising tide of foreign investment is fuelling a property boom in the commercial capital Yangon with the increasing demand for rental space feeding the highest office rental rates of any Southeast Asian city, according to real-estate firm Colliers International, which opened a branch in Yangon in July.
 
Colliers put the average rental rate in Yangon at nearly $80 per square meter, compared to about $25 in Bangkok and $30 in Hanoi. At about $70 per square meter, even the affluent city-state of Singapore doesn't match Yangon, it said.
 
Scipio Services, a Yangon-based firm that helps foreign companies establish themselves in Burma, puts prime office rental rates even higher. According to their survey, commercial spaces in the few business towers available jumped from $50 per square meter in mid-2011 to as much as $90 by May this year.
 
Skeletal Staff
 
Some companies choose to rent houses and villas in lieu of office space, said Brett Miller, Scipio Services' managing director. But residential rates have also shot up, with villas ranging in price from $4,000 per month to $25,000, he said.
 
As a result, some companies “are coming in with a small footprint,” stationing only skeleton staff in the country, he said.
 
Other companies base executives in neighboring Thailand and fly them to Yangon where they stay at hotels, said Tony Picon, Colliers' managing director in Burma. “I call them the 'half-pats', spending around half their time in Yangon,” he said.
 
Aung Naing Oo said the government is taking measures to increase the supply of rental space.
 
“To solve the problem of the shortage of hotel and office apartments, we are now encouraging investors in these sectors by approving their proposals very speedily,” he said.
 
Drastic rises in property prices are being driven partly by land speculators. Miller at Scipio Services said the government could implement a “holding tax” that would encourage landowners to either build on a property or sell it to a developer.
 
Picon, however, was skeptical the government could enforce compliance.
 
“For tax on unused land, the owner could build something small and say the land is being used,” he said. “Overall I find using tax often counterproductive especially when you have limited capacity within government to enforce laws

You May Like

As US Strikes Syria, China Sees Parallels at Home

Beijing is debating how much support to give international coalition against IS militants and trying to figure out how many Chinese nationals may have joined group overseas More

CDC: Ebola Could Infect 1.4 Million by January

US health officials say if efforts to curb the outbreak are not increased, cases will soar dramatically by early next year More

Video USAID Provides $231 Million for Girls Education in 5 Countries

US Agency for International Development partners with celebrities to call attention to importance of education for girls worldwide More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
NASA’s MAVEN Probe Enters Mars Orbiti
X
September 22, 2014 9:20 PM
NASA’s newest Mars probe, called MAVEN, has successfully entered its designated orbit around the Red Planet. Scientists will use its sophisticated instruments to try to learn what happened to the atmosphere Mars had a few billion years ago. VOA’s George Putic has more.
Video

Video NASA’s MAVEN Probe Enters Mars Orbit

NASA’s newest Mars probe, called MAVEN, has successfully entered its designated orbit around the Red Planet. Scientists will use its sophisticated instruments to try to learn what happened to the atmosphere Mars had a few billion years ago. VOA’s George Putic has more.
Video

Video For West Ukraine City, Conflict Far Away Yet Near

The western Ukrainian city of Lviv prides itself on being both physically and culturally close to Western Europe. The Russian-backed separatists in the eastern part of the country are 1,200 kilometers away, and seemingly even farther away in their world view. Still, as VOA’s Al Pessin reports, the war is having an impact in Lviv.
Video

Video Saving Global Fish Stocks Starts in the Kitchen

With an estimated 90 percent of the world’s larger fish populations having already vanished, a growing number of people in the seafood industry are embracing the concept of sustainable fishing and farming practices. One American marine biologist turned restaurateur in Thailand is spreading the word among fellow chefs and customers. VOA Correspondent Steve Herman reports from Bangkok.
Video

Video Chinese Admiral Key in China’s Promotion of Sea Links

China’s President last week wrapped up landmark visits to India, Sri Lanka and Maldives, part of a broader campaign to promote a new “Maritime Silk Road” in Asia. The Chinese government’s promotion efforts rely heavily on the country’s best-known sailor, a 15th century eunuch named Zheng He. VOA's Bill Ide reports from the sailor’s hometown in Yunnan on the effort to promote China’s future by recalling its past.
Video

Video Experts Fear Ebola Outbreak ‘Beyond Our Capability to Contain’

Each day brings with it new warnings about the deadly Ebola outbreak already blamed for killing more than 2,600 people across West Africa. And while countries and international organizations like the United Nations are starting to come through on promises of help for those most affected, the unprecedented speed with which the virus has spread is raising questions about the international response. VOA's Jeff Seldin has more from Washington.
Video

Video Natural Gas Export Plan Divides Maryland Town

A U.S. power company that has been importing natural gas now wants to export it. If approved, its plant in Lusby, Maryland, would likely be the first terminal on the United States East Coast to export liquefied natural gas from American pipelines. While some residents welcome the move because it will create jobs, others oppose it, saying the expansion could be a safety and environmental hazard. VOA’s Deborah Block examines the controversy.
Video

Video Difficult Tactical Battle Ahead Against IS Militants in Syria

The U.S. president has ordered the military to intensify its fight against the Islamic State, including in Syria. But how does the military conduct air strikes in a country that is not a U.S. ally? VOA correspondent Carla Babb reports from the Pentagon.
Video

Video Iran, World Powers Seek Progress in Nuclear Talks

Iran and the five permanent members of the U.N. Security Council plus Germany, known as the P5 + 1, have started a new round of talks on Iran's nuclear program. VOA State Department correspondent Pam Dockins reports that as the negotiations take place in New York, a U.S. envoy is questioning Iran's commitment to peaceful nuclear activity.
Video

Video Migrants Caught in No-Man's Land Called Calais

The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching Europe. And for those forunate enough to reach a place like Calais, France, only find that their problems aren't over. Lisa Bryant has the story.
Video

Video Westgate Siege Anniversary Brings Back Painful Memories

One year after it happened, the survivors of the terror attack on Nairobi's Westgate Shopping Mall still cannot shake the images of that tragic incident. For VOA, Mohammed Yusuf tells the story of victims still waiting for the answer to the question 'how could this happen?'
Video

Video Whaling Summit Votes to Uphold Ban on Japan Whale Hunt

The International Whaling Commission, meeting in Slovenia, has voted to uphold a court ruling banning Japan from hunting whales in the Antarctic Ocean. Conservationists hailed the ruling as a victory, but Tokyo says it will submit revised plans for a whale hunt in 2015. Henry Ridgwell reports from London.
Video

Video A Dinosaur Fit for Land and Water

Residents and tourists in Washington D.C. can now examine a life-size replica of an unusual dinosaur that lived almost a hundred million years ago in northern Africa. Scientists say studying the behemoth named Spinosaurus helps them better understand how some prehistoric animals adapted to life on land and in water. The Spinosaurus replica is on display at the National Geographic museum. VOA’s George Putic has more.
Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.

AppleAndroid

World Currencies

EUR
USD
0.7768
JPY
USD
108.84
GBP
USD
0.6124
CAD
USD
1.0999
INR
USD
61.042

Rates may not be current.