Development of Major Projects in Myanmar: and capturing the real value of land

March 4, 2016

Lex Rieffel from the Brookings Institute explores the Dawei SEZ project and how different views of land ownership might bring better outcomes. 
 

 

Land ownership is a relatively new concept. Before this the prevailing concept was land control based on tax and enslavement. Before land control there was just land, land that was not made by man, land that had existed for eons and had given rise to animal and human life. 
 

This is a good starting point for thinking about land.
 

Land ownership took some things away from human life and added others. 
 

It took away the sense of our common heritage beyond nationhood.
 

At the same time land ownership was at the heart of the transition from medieval to modern societies. It introduced a powerful incentive for people to make improvements to their land and to their lives confident of being able to keep the benefits, the profit. 
 

In the 1800s, however, abuses by large and powerful landowners in Europe sparked a counter move to adopt constitutions making the state the owner of all land.
 

As institutions supporting land ownership spread around the world, scholars and politicians also began looking for ways to “socialize” the increase in the value of privately-held land that accompanies publicly funded infrastructure improvements like highways.
 

In a study presented at an academic conference in Hong Kong in December 2015, I examined global experience with a variety of these “land value capture” tools and considered how they might be used in the development of major projects in Myanmar such as the Dawei Special Economic Zone. Here are five “lessons” from this study:
 

1.The incoming NLD-led government has the option of planning the development of the Dawei SEZ (and other major projects) from a clean slate—as the Thein Sein government did in 2013.

2. The most compelling vision for the Dawei SEZ would be a “new city”—accepting that Myanmar is likely to urbanize rapidly over the next 20-30 years and recognizing that building new cities from scratch has advantages over modernizing old cities like Yangon and Mandalay.

3. Successfully developing the Dawei SEZ is likely to depend greatly on its governance structure. The existing “management committee” structure is backward looking. A forward-looking structure could usefully draw on the features of “reform zones” as described by the economist Paul Romer. China’s Shenzhen epitomizes the potential of such an approach. 

4. The current approach to the development of the Dawei SEZ and other SEZ is likely to yield windfall profits to a small group of lead investors. By adopting some of the “land value capture” tools used successfully elsewhere in the world, the Myanmar population as a whole can benefit much more from private sector-led investment in these places.

5. Much of the opposition to the Dawei SEZ and similar projects derives from the way land is taken away from historic users with no recourse and paltry compensation. One way to ensure a fair deal for these users is to provide them with long-term equity in the project.

Pic:NM

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