Hike in property market may hamper foreign investment
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Skyrocketing of real estate price could hurt foreign investment in Myanmar, Yangon-based economists said, urging the government to review tax regime for trading in property.
Local investors poured their investment in real estate sector as they speculated that there would be high demand when foreign investors were looking for properties.
Investors who previously put their money in automobile, gold and hard currency were heading to property market, resulting in booming in this sector and price rocketing since last year, said a real estate agency.
Demand in real east market was high since last year, said Kanbawza Bank’s Vice President U Than Lwin. “It is not so reasonable for foreign investors to buy buildings or land in this country,” he said and noted some of them preferred rental ones.
However some foreign investors such as Chinese and Singaporeans involved in speculation in real estate market in Myanmar and raised the price in this sector, he said.
Foreigners are not allowed to own real estate in Myanmar but many of them hold properties through local people. They speculated that new foreign investment law would allow them to have some certain rights over land ownership.
The government taxed on purchasing of property only 15 percent of value. If the tax remained at this rate, it would be an incentive for real estate traders, the real estate agency said.
President’s adviser Dr. Nay Zin Latt said some businesspersons exploited real estate market and government’s tax system for their money laundering. The dirty money become clean as they paid 15 percent property purchasing tax to the government, he said.
The 15-percent taxation system has been extended year after year since 2007. The current period expires in early August this year. The tax regime also attributed to the price rocketing in the property market as many investors collected lands and buildings for market speculation after the revision of tax regime, he said.
Another real estate agency suggested the government to establish low price property market by setting up low price housing project in unused lands in Yangon sub-urban areas such as Dagon Seikkan, East Dagon and South Dagon townships.
To prevent market manipulation, economist U Maw Than said the government should tax property on the basis of its real value.
