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

South Korea Divided on Response to North’s Cyber Attack

In past five years, officials in Seoul have accused Pyongyang of hacking into banks, government websites, causing chaos and inflicting millions of dollars in damages More

Video Calm Amid Fear in Daily Life in S. Sudan’s Bentiu

Residents have been trying to regain some sense of normalcy, but planning for the future remains uncertain as fear of attacks looms More

2015 Could Be Watershed for Syria Conflict

Republican control of US Senate in January could lead to more aggressive policy against IS militants in Syria - and against regime of Bashar al-Assad More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Ugandan Doctors Aid Victims of Sudan's Civil Wari
X
Adam Bailes
December 22, 2014 3:45 PM
In Sudan's state of South Kordofan, the number of amputees as result of civil war is in the thousands, but few have access to sufficient medical help. Adam Bailes recently visited the area and says a small team of Ugandan doctors has been providing remote help, producing new prosthetic limbs for those in need.
Video

Video Ugandan Doctors Aid Victims of Sudan's Civil War

In Sudan's state of South Kordofan, the number of amputees as result of civil war is in the thousands, but few have access to sufficient medical help. Adam Bailes recently visited the area and says a small team of Ugandan doctors has been providing remote help, producing new prosthetic limbs for those in need.
Video

Video Jane Monheit Christmas Special

Chanteuse Jane Monheit sings the holiday classic “Have Yourself a Merry Little Christmas,” and explains why it’s her favorite song of the season.
Video

Video Calm Amid Fear in Daily Life in S. Sudan’s Town of Bentiu

Six months ago, Bentiu was a ghost town. The capital of northern Unity State, near South Sudan’s important oil fields, had changed hands several times in fighting between government forces and rebels. Calm returned in November and since then, residents of Bentiu have been trying to regain some sense of normalcy. Bentiu’s market has reopened there are plans to start school again. But fears of new attacks hang heavy, as Benno Muchler reports from Bentiu.
Video

Video US Business Groups Press for Greater Access to Cuba

President Barack Obama's decision to do all he can to ease restrictions on U.S. trade, travel and financial activities with Cuba has drawn criticism from some conservatives and Republicans. People who bring tourists to the island and farmers who want to sell more food to Cuba, however, think they can do a lot more business with Cuba. VOA's Jim Randle reports.
Video

Video Three Cities Bid for Future Obama Presidential Library

President Barack Obama still has two years left in his term in office, but the effort to establish his post-presidential library is already underway. The bid for the Obama Presidential Library is down to four locations in three states -- New York, Hawaii, and Illinois. As VOA’s Kane Farabaugh reports, each of them played an important part in the president’s life before he reached the White House.
Video

Video Fears of More Political Gridlock in 2015

2014 proved to be a difficult year politically for President Barack Obama and a very good year for the U.S. Republican Party. Republican gains in the November midterm elections gave them control of the Senate and House of Representatives for the next two years -- setting the stage for more confrontation and gridlock in the final two years of the Obama presidency. VOA National Correspondent Jim Malone has a preview from Washington.
Video

Video Sudan School Becomes Target of Aerial Attacks

The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video VOA Reporter Tours Devastated Peshawar School

Islamist militants wearing military uniforms and strapped with explosives attacked a military run school Tuesday in the northwestern Pakistani city of Peshawar. At least 141 people were killed in the horrific attack, most of them young students. VOA reporter Ayaz Gul visited the devastated school and attended the funeral of the principal who courageously tried to save her students from the deadly attack.

All About America

AppleAndroid

World Currencies

EUR
USD
0.8143
JPY
USD
119.23
GBP
USD
0.6390
CAD
USD
1.1596
INR
USD
63.304

Rates may not be current.