BY KYAW YE LYNN | FRONTIER
YANGON – The Office of the Quartermaster-General in Yangon has cancelled the lease agreement for a US$500 million mixed-use project in Yangon, because it said developer Zaykabar had breached the terms of the deal, including by signing a joint venture agreement with a Chinese company.
The company owned by construction tycoon U Khin Shwe intended to build 12 high-rise towers on 13 acres (five hectares) of military-owned land, on a prime hill-top site in Yangon’s Bahan Township.
The project has been on hold since early this year due to objections from residents. The height of the buildings (ranging from 382 to 412 feet) would have been within zoning guidelines, but residents complained it would obscure their view of Shwedagon Pagoda and said that it threatened historic buildings, including the former Mayor’s Residence and Mayor’s Guest House. There were also fears that it would damage the adjoining Kokkine reservoir, which distributes water to eight townships.
Members of the Yangon Cantonment Board which manages military-owned land in Yangon held a press conference Wednesday, announcing the termination of the lease agreement for the project.
The board’s secretary U Moe Min Win said the agreement was cancelled was because the company did not follow the terms of a memorandum of agreement signed on January 16, 2014. “Under the memorandum of agreement the company had to pay $41.328 million for the land lease in five payments within two years. The company has made just two payments, worth $16.552 million, and the balance is outstanding,” he said.
He said the company had demolished two buildings included on the Yangon City Heritage List, even though the agreement stipulated that Zaykabar could do no more than conduct soil testing. “We therefore sent notice to the company on May 10, 2018 to stop construction work,” he said, adding that his office had also notified Yangon City Development Committee that the project would not proceed.
On May 21, Khin Shwe appealed to Thura U Shwe Mann, his powerful relative by marriage, who is close to State Counsellor Daw Aung San Suu Kyi and who heads a high-level commission. That month, Khin Shwe told Frontier that under the terms of the lease, Zaykabar was not allowed to form a joint venture.
The military’s move came days after Khin Shwe announced that his company would develop the project in cooperation with China State Construction Engineering Corporation under the name of Yangon New World. Hunan province Vice Governor He Baoxiang and party reportedly visited the site area the same day.
“CCEC is developing the Yangon New World project in cooperation with Zaykabar Company. 40 percent of the investment is from Zaykabar while 60 percent is from the Chinese company,” U Khin Shwe was quoted as saying by state-run Global New Light of Myanmar on September 23.
U Moe Min Win said this constituted a breach of the agreement. “Therefore the Cantonment Board is working with the relevant departments to terminate it,” he said. Frontier was unable to immediately reach Khin Shwe for comment.