February 22, 2013 00:00 By Tinnakorn Chaowachuen The Nat
Uncertainty over ownership a risk factor for Thai firms, former council chief says
Thai businesses were warned yesterday to exercise extreme caution before buying or renting property in Myanmar, as land disputes are intensifying.
Many state authorities are in conflict with local residents, farmers and landowners over the utilisation of land for new investment.
Constantly increasing prices of land in Myanmar have made land ownership a serious problem for foreign investors who find it difficult to check the real owner. The Myanmar government does not have an effective IT system to check against overlapping land deeds, an expert in investment in Myanmar said. Land disputes have escalated into legal battles between local residents and state authorities.
Farmers have sued officials from a chemical plant in Sagaing region for allegedly appropriating more land for their plant than they were legally entitled to.
There are similar cases in many economic areas near the former capital Yangon.
Thanit Sorat, a former secretary-general of the Thai-Myanmar Economic Council, said the uncertainty over land ownership would definitely put a brake on investments by Thais in Myanmar.
The first thing that Thai investors would have to do is buy or lease a site to build a hotel or factory. However, they could not be assured of correct ownership so they might still be reluctant to invest in Myanmar.
“The Myanmar government did not seize the private sector’s land,” Thanit said. “We must understand that Myanmar’s Lands Department is also in charge of city planning. They don’t have an IT system like us so they could issue overlapping title deeds.”
Nearly all land was owned by the Myanmar government and some plots have been sold to private firms. Thai investors would have to consider which government agencies issued the deeds and if they want to buy land outside Yangon or Pegu, they must consider whether the central government allowed the deeds to be issued or not.
If Thai businesses want to buy land from the private sector, they would have to consider how the Myanmar firms had obtained the deeds. “They don’t want to cheat us but they have obtained the documents illegally from the beginning. A plot may have several ownership documents issued on it. The high prices of land prompted each holder of documents for the same plot to sell the same plot of land, assuming they are holding the right documents,” Thanit said.
The Myanmar government was now zoning land to try to rein in speculation after land prices shot up steeply.
“Now, land in Yangon is selling for Bt20,000 per square foot, which is very high, so the government wants to divide areas to be like Silom or Phahurat zones,” he said.
When the Myanmar government was putting the land confusion in order, it found that some private firms had illegally obtained documents.
Thai businesses should lease or buy land in industrial zones in the south or west, which are major industrial zones. Land ownership in the industrial zones is possible, especially if the land is bought directly from the existing industrial firms.
If Thai businesses bought land in downtown areas or cities, they could end up buying land with overlapping documents.
Thai businesses could rent land in the industrial zones with more confidence than outside the zones. They should check whether the land documents were issued by the Lands Department, he added.
Jaral Detprathoom, chairman of Wispact Co, said Wispact plans to lease a site in the Dawei Industrial Zone for 75 years. This would not entail the risk associated with renting land outside the industrial zone.
The Myanmar government declared zones as industrial zones and many factories have been built on them, so it would be difficult for the government to expropriate land in the industrial zones, he added.
Tan Passakornatee, CEO of Ichitan Group, which has invested with Japan’s Shimokawa Group in real estate in Myanmar, said the land disputes mostly date back to the time of the previous regime.
The problem surfaced when power was transferred from the military, which owned a lot of land, to the private sector.