Interview: Ang Wee Gee
In your opinion, how do construction timelines for projects in Myanmar compare to those of other countries in the region?
ANG WEE GEE: Timelines vary among developers, particularly in an emerging market where regulations are not always clear. A developer does not work on its own but, rather, in collaboration with contractors, consultants and other industry professionals. Therefore, the appointment of the right consultants and contractors is a key factor in determining the timeline of any project.
If you are not financially strong or are relying on core investors to fund the project, there is a risk that the project will not get started or may even stop halfway during construction. In developed markets such as Singapore, Hong Kong or Tokyo, the risks of implementing projects unsuccessfully are lower and are examples of how regulatory processes can be improved and levels of transparency increased. While businesses may want quick results, an incremental approach is more sustainable. Gradual progress enables you to better assess the risks ahead. With a stable government, foreign investors will be able to make decisions about the future with more ease.
What are the risks associated with investing in real estate ventures in emerging markets such as Myanmar, and to what extent is it possible for these risks to be mitigated?
ANG: Some of the notable risks in emerging markets include issues with land titles, partnerships, project implementation and poor advice from contractors or consultants. Getting the right team of people to work on a project can be particularly challenging. Therefore, establishing proper governance in the local organisation ensures that you are able to evaluate and manage potential risks. I am confident that the local authorities in Myanmar are capable of reducing the risks typically associated with emerging markets.
What measures can be taken to strengthen the property market and prevent future bubbles?
ANG: Having readily available information can be useful in ensuring there is no speculation that would cause a bubble. Once investors possess sufficient information about supply and demand in the market, they will be able to make more informed decisions. Moreover, if someone new is coming in, they will know that they will have to compete with the existing supply in the market. The government sells land through a tender process, and there is a tendency for this to contribute to a bubble situation because developers will put in a high tender in order to secure the site. Indeed, these developers are more like speculators, as they try to obtain the site first then flip it over to a real developer later.
The government should be more selective in terms of who can participate in these tenders, and there should be a pre-qualification process to determine who the best developers are. This would help create competition and find developers who will bring value to the city, while at the same time, also contribute to the growth of the country and the overall economy. It would also prevent the entry of speculators who just want to sell the land at a higher price than the purchase price.
Other than pre-qualifying bidders, the government could introduce a “two-envelope” system, where after a few developers are selected based on design, the second envelope is opened based on price. This is common in developed countries where the government is concerned about having the right design and product for a market. This will eliminate developers who wish to put a higher price on the land but may lack the expertise to design something suitable for the particular location.
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