Losses mount on lease of govt land, action needed

Even though the government is leasing out land and buildings at rates lower than then market price, no action has been taken to renegotiate those rates and narrow the losses incurred by the State,  according to the Yangon Region Auditor General’s report for 2016-17.

For example, the Department of Garden and Playground Parks under the Yangon City Development Committee (YCDC) is leasing out shops within state-owned parks and around playgrounds to private businesses under long term rates that are now below market price.

According to the report, these include shops and restaurants at Kandawgyi, Kan Taw Min and Myaing Hay Won parks. Despite different shop sizes, the monthly rental fee for all business owners at the park is fixed at K1 million, or around K12 million per year. This is after the fees were raised in 2017-18, resulting in implied annual losses of about K2.1 billion for the YCDC against the market price. A total of 1,030 shops were allowed to open in state-owned parks in 2016-17.

Land loss

While the market price for leasing land is around K1,000 per sq ft in Dagon, the government is accepting rates at just K300 per sq ft, said U Kyaw Zeya, regional MP from Dagon township. “As such, the government should re-auction the land at rates that are commensurate to the market,” he said, adding that discussions will be made in parliament to ensure transparency and equity in any new auctions or lease negotiations.

According to the Auditor General’s report, the government racked up losses involving undervalued land projects totalling K14.2 billion in 2016-17. The projects include the Time City Project, Kantharyar Tower Project, Shwemoekaung Luxury Housing, 45th Street Complex Project and Golden Land Tower Project in Yangon.

The process of leasing out land for such projects by the Urban and Land Administration Department lacked transparency even though the land is located in heavily populated townships. The report also noted that lease rates were not aligned with the market price and that many areas were leased out to a single individual.

The government received K15 million per month for the lease of 1.7 acres of land in Kandawgyi,  Bahan township, resulting in some K706 million lost, for example. It was also discovered that one individual sold 1.2 acres or 21 plots of (40ft x 60ft) land for a cheap price.

Action needed

With losses mounting, MPs have urged the regional government to require approvals before state-owned land in areas where space is scarce is leased out or sold. Reviews must be also be conducted on the leasing out of huge land plots for the purpose of establishing industrial zones and for land that is sold without transparency.

“The majority of projects overseen by the YCDC are making losses. Over the two years since this government took charge, we have been spending more than we earn. This report also makes clear that state income is not being efficiently collected,” U Kyaw Zeya said.

He added that the Auditor General’s report for 2016-17 is six months behind schedule, as it should have been released in March.

“That is extremely late and all the lease agreements and extensions have been signed, some for up to 10 years. So if we want to cut the government’s losses then we should take action now,” U  Kyaw Zeya said.

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