To help the construction and real estate sectors expand and stay profitable, government support in the form of tax and loan policy reforms is necessary, developers said.
Currently, developers must pay taxes of up to 10 percent on the sale of condominium units priced between K100 million to K500 million. Meanwhile, buyers must pay a stamp duty of 5pc on units between K100 million to K500 million, and 10pc for units priced over K500 million, according to the Internal Revenue Department.
In addition, some buyers must pay an additional 30pc tax for condominium property, said U Myo Myint, chair of MKT Construction. The Myanmar Times understands that only buyers who cannot provide proof of income are subject to this tax.
The average price for condominium units in Yangon is K700 million.
Currently, foreigners are not allowed to buy local property.
“As the Condominium Law has yet to be enacted, we are currently selling condos to citizens only. But even if foreigners are allowed to participate in the condo market, we will need to consider if they are keen to buy because the stamp duties and taxes involved are relatively higher than other countries,” U Myo Myint said.
Facilitating construction
For the construction sector, the main factor holding back expansion is high borrowing rates and stringent bank collateral requirements.
“Working capital is needed for small and medium enterprises (SMEs) in the construction sector to operate effectively. And if the borrowing rates are high when demand is on the downside, it is hard to imagine development,” U Myo Myint said.
“We would welcome foreign banks giving direct loans to business owners as their interest rates are low and also there are no collaterals demanded. We also need the domestic banks to consider providing loans without collaterals but the domestic banks disagree with the provision of direct loans as it would increase inflation,” he added.
In addition, the Yangon City Development Committee (YCDC) must be more efficient and effective in approving building permits and other necessary procedures.
“When making plans for development and construction, it takes a long time to get permission from YCDC. It would be most helpful to have a one-stop service where YCDC is directly connected with the related Ministries in terms of approvals and permits,” he said.
Regulatory efficiency
U Tha Aye, vice chair of Myanmar Construction Entrepreneurs Association with 40-year-experience in construction sector, told The Myanmar Times that government efficiency and clarity in enacting appropriate regulations for the sector is needed for construction businesses to grow.
“If new regulations are not appropriate or relevant, don’t approve it. But for those which are appropriate, government approval should take place as soon as possible without delays, which are not convenient for constructors,” he said.
The government should also to provide assistance to foreign construction companies that wish to invest in the country, U Tha Aye added.
To this end, Yangon Chief Minister U Phyo Min Thein said recently that he is ready to help developers with any difficulties arising during the course of construction.
“I would like to urge all businessmen working in various sectors to work for economic development. I want to tell you that we will help in all-round sectors. Our regional government is ready to provide assistance if there is any difficulty in construction works in Yangon. We will try to assist in line with laws and regulations,” he said.
“We are happy that U Phyo Min Thein has said he would help construction businesses build necessary infrastructure for national development. The next step is for the government to follow up with action,” U Tha Aye said
As the Yangon Chief Minister is fully responsible for the development of Yangon, he should immediately make changes to confusing and redundant policies, he added.
Source: Myanmar Times
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