Finance Ministry Seeks Approval for Low-Cost Housing Plan
By Htet Naing Zaw 26 February 2018
Naypyitaw—The Ministry of Planning and Finance sought approval from the Union Parliament on Thursday to construct almost 12,000 low-cost apartment units over the next three years with financial support from Japan.
The so-called affordable and fairly priced housing projects—405 buildings with 11,914 apartments—will be built in Yangon, Irrawaddy, Magwe and Sagaing regions from the 2017-18 to 2019-20 fiscal years, said Deputy Minister for Planning and Finance U Maung Maung Win.
“Those wishing to buy affordable apartments with mortgages must have a minimum household income of 300,000 kyats per month, and those wishing to buy fairly priced apartments must have a minimum household income of 500,000 kyats per month,” the deputy minister told the Parliament.
Buyers will have to put down 20 percent of the price of the apartment in cash, and pay the remaining 80 percent over a 10-15-year period at an interest rate of 8.5 percent.
The proposed three-year plan was met with criticism from some lawmakers for its lack of scope, prolonged development schedule and high interest rates.
Lower House MP U Aung Hlaing Win of Mingalardon Township said the project did not come close to covering the whole country’s needs, noting that according to a Yangon regional government survey there are more than 700,000 squatters in Yangon alone.
“Rental housing projects in China will benefit millions,” said the lawmaker, adding that three years was also an unnecessarily long period to build just 10,000 apartment units.
In September, China announced a pilot program in 13 major cities, including Beijing, Shanghai and Guangzhou, to build rental housing on rural land in order to provide a long-term solution to a housing supply shortage. Most of the projects are scheduled to be finished by 2021.
To support the project, Myanmar will receive an official development assistance (ODA) loan of ¥15 billion from Japan that will carry an annual interest rate of 0.01 percent, with the interest due to be paid back in the first 10 years, and the principal in the following 30 years.
The loans will be borrowed by the Ministry of Planning and Finance, with Myanma Economic Bank acting as an intermediary. Construction and Housing Development Bank will use the funding to provide mortgages to apartment buyers at an interest rate of 8.5 percent.
“The Ministry of Planning and Finance will take one percent of interest, Myanma Economic Bank and Construction and Housing Development Bank three percent each. The remaining 1.5 percent will be kept in a reserve account in Myanma Economic Bank,” said U Maung Maung Win.
Lawmakers criticized the high interest rate charged by the government bodies compared with the low interest rate being charged by Japan.
“There were previous cases of funds being borrowed at low interest rates [from foreign lenders], and then extended at high interest rates [to people]. We discussed those cases, but then could do nothing and the parliament had to approve them,” said U Aung Hlaing Win.
Members of the public also complained that the housing projects were in unattractive locations and lacked easy transport access.
“Those apartments are out of the town,” said an official with the Education Ministry in Sanchaung Township who declined to be named. “But our offices are inside the town, and it is not convenient. People will be interested in them if they are really affordable,” he said.
During State Counselor Daw Aung San Suu Kyi’s goodwill visit to Japan in November 2016, the Japanese government promised to oversee an infusion of $8 billion in funds to Myanmar including private investment.
One of the agreements reached during the visit was a Housing Finance Development Project to be developed by the Construction Ministry with ODA loans from Japan.