Construction firms in Yangon are struggling due to the government’s unanticipated new regulation restricting their construction work in early of 2018

4 Oct 2018

The Yangon authorities failed to consult industry players on a new regulation restricting their construction work early this year. Now, the recently imposed restriction has chomped the sector hard, causing businesses further difficulties in an industry which is already struggling.

On April 1, the Yangon Development Committee (YCDC) introduced restrictions that limit the height of the ground floor of new buildings to 12 feet, from 17ft previously. The new regulations also prohibit the building of penthouses on the top floor of buildings.

U Myo Myint, working committee member of the Myanmar Licensed Contractors Association, said the government needs to notify and consult stakeholders and the public before putting new policies and regulations in place, but there was no early notification about the April 1 regulations. As a result, construction work around the city was disrupted.

“Previously, there were regulations for the upper floors of buildings. Now, these new restrictions were imposed without any prior warning. Everything turned topsy-turvy,” he said.

U Myo Myint explained that construction of a building does not immediately start after a contract between a land owner and a builder has been signed because construction approval involves a step-by-step process of submissions of things such as designs, mapping, and land measurements to the authorities.

Submissions for a construction permit can take anywhere from six months to a year, so, if the government wants to make changes to regulations, notification should be given six months or one year ahead, said U Myo Myint.

“Even if the maximum height of the ground floors of buildings is limited next year, Yangon will not change that much,” he said, adding that he wondered if the new regulation is worth the disruption the building industry is suffering from.

The Federation of Myanmar Construction Entrepreneurs and licensed contractors will work together to arrange a meeting with Yangon’s chief minister and mayor to report the problems the construction sector faces because of the policies.

Meanwhile, people in the real estate market said the property market is in a slump, with only previously contracted buildings coming up and new projects scarce.

Myanmar Real Estate Business Development vice chair U Sai Khun Naung said, “For the market to regain momentum, the government’s grip on the market must be loosened for the time being and only when the market has returned to normal should regulations be tightened again.”

“The business is already not in good shape and with more restrictions added, we have many problems,” he said.

‘Now, these new restrictions were imposed without any prior warning. Everything turned topsy-turvy.’ - U Myo Myint, Myanmar Licensed Contractors Association

“Higher ceilings allow the incorporation of a mezzanine on the ground floors of buildings and this improves sales as well as selling for higher price as buyers can also live there while running a business. This type of floor plan has the highest demand,” said U Yan Aung, Asia Construction general manager.

“Featuring a mezzanine is better for both seller and buyer. Twelve-foot-tall ground floors won’t fetch prices as good as previously and are also less convenient for certain buyers,” said U Yan Aung.

“When there are already delays in seeking building permission and construction permits at different levels and demand is low due to the country’s economic situation, restrictions that create more hindrances to construction should not be imposed,” he said.

According to local estate agents, at present, ground floor, top floor and penthouse properties are the most in demand in the rental property market.

Those who share rented accommodation usually choose the top floors and penthouses due to the affordable rents and those who have big families and also want to run a business prefer ground floor units, said the agents.

Between 2004 and 2005, the construction of three and half- storey buildings with a total of five rooms featuring a mezzanine on the ground floor and a penthouse on top floor was allowed after negotiations between the city authorities and contractors. This resulted in projects that were beneficial to builders and property buyers.

“If the government needs to change policies, they should consult first with stakeholders, industry associations and organisations, and experts to obtain a clearer picture so that reasonable rules and regulations can be set, said U Yan Aung.

“Frequent changes in policies and regulations will ultimately affect the public in the end. So the government needs to carefully consider,” U Yan Aung went on.

“The current circumstances are hurting constructors and as they are not allowed to build according to the contract signed with property owners, the trust between owners and contractors may decline,” U Yan Aung said.

“The government needs to take considerate action during times of economic uncertainty. Not only should expert opinion be sought but also comprehensive reviews of current political, economic and social conditions should be taken before declaring policies,” U Myo Myint said.

During the bull market for construction from 2013 to 2015, many condominiums and new apartments emerged in various parts of Yangon. Similarly, construction businesses partnering with landowners to sell homes were prominent in those days.

After 2015, the apartment market slumped and selling in advance on installments became rare and bank loans became harder to obtain. As a result, some contractors were unable to finish their projects leading to abandoned projects.

 

(The Myanmar Times: https://www.mmtimes.com/news/unanticipated-regulations-hit-yangons-already-struggling-construction-firms.html )