FEW TAKERS FOR LAND IN BURMA'S NEW CAPITAL

UNCLAS SECTION 01 OF 02 RANGOON 001240 SIPDIS STATE FOR EAP/MLS TREASURY FOR OASIA:AJEWELL SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ECON PGOV BM SUBJECT: FEW TAKERS FOR LAND IN BURMA'S NEW CAPITAL REF: A) 2005 RANGOON 1421 RANGOON 00001240 001.2 OF 002 ¶1. (SBU) Summary: On August 20, the Naypyitaw City Development Committee (NCDC) announced that it will accept applications to buy residential plots and small business sites in Burma's new capital. By tightly regulating private development in the new capital, the GOB aims to provide services to the unhappy civil servants forced to live there, while at the same time keeping their new administrative center small and controllable. Our contacts indicate little interest in pursuing commercial opportunities in the new capital due to the restrictive conditions and uncertain future. End summary. Businesses Wanted -------------- ¶2. (U) On August 20, in full-page advertisements in Burmese language government newspapers, the Naypyitaw City Development Committee invited applications to buy real estate in the new capital. The NCDC offer includes 8,000 new residential plots of land, half located north of the Naypyitaw government area on the way to Taung Nyo, and half in the south beside the road to Lei Way. Other real estate options include land allocated for small businesses, a shopping complex, warehouses, car workshops and a bus terminal. The NCDC stated that actual sales prices would not be determined until the final week of August. ¶3. (SBU) The thousands of civil servants forced to move to Naypyitaw without their families this year would probably welcome the addition of any new services in the capital. Cin Suan Mang, a retail trader who travels to Naypyitaw regularly for import/export permits told us that, with few existing restaurants, teashops or other diversions, and great distances between ministries and housing areas, government workers can only chat with neighbors near their homes or drink and gamble after work. Those who can afford it take the nine-hour train ride back to Rangoon as often as possible. Caveat Emptor -------------- ¶4. (SBU) Naypyitaw land comes with many strings attached. Buyers must choose a building design pre-determined by the authorities, cannot resell for ten years, and can only open businesses on an approved list (restaurants, pharmacies, barbershops, beauty parlors, tailors, preschools, and appliance shops). Buyers must begin building within three months of settlement, and finish construction within one year. Buyers cannot lease their business, and all businesses "must operate successfully." If owners do not meet these conditions, the authorities will confiscate their property without compensation. Applicants must also: be Burmese citizens; comply with all local laws; have never violated Burma's anti-drug and money laundering laws; and have no contact with "illegal organizations" or those who break the law. The information office of the NCDC declined to explain the restrictions, but banning those with ties to "illegal organizations" would keep out of Naypyitaw those connected to political parties and organizations not part of the regime's "legal fold." ¶5. (SBU) The announcement also described the government's plan to construct community buildings in the new area, including schools, markets, fire and police stations, health clinics, sports grounds, and parks. The NCDC promised that concrete roads, stable power supplies and telephone lines, and water and drainage systems would service all new facilities. Ma Moe, a real estate agent who frequently visits Naypyitaw, told us that sales would be sluggish because most people doubt the GOB's commitment to supply modern infrastructure beyond their own compounds. RANGOON 00001240 002.2 OF 002 ¶6. (SBU) Tin Maung Win, an engineer, told us that it would be impossible to start construction within the prescribed three-month window. He also shared that a high-level GOB official close to him warned against investing in Naypyitaw because of the tight restrictions. Many traders regularly visit Naypyitaw to conduct business with the government, but few intend to establish a permanent base there. Others we contacted, including tourism sector manager Kyaw Ni Khin, hotelier Nay Zin Latt and journalist Min Naing Soe, agreed that the Naypyitaw opportunity is unattractive because of the government's unreasonable conditions and uncertainty about the new capital's future. ¶7. (SBU) Comment: The GOB's strict sales terms are intended to dissuade speculators yet facilitate the development of a controllable, compliant commercial presence in the new capital. With most civil servants forcibly relocated to the new capital, there is a captive market for shops and services. We do not expect many grand openings in the near future since most business people see the regulations and risks as still outweighing any potential rewards. End comment. VILLAROSA