The move in the Pyithu Hluttaw to cancel a
controversial deal to build a private hospital on government land was in the
public interest but will have alarmed investors.
On May
12, the Lower House approved without objection a proposal to cancel a
controversial US$70 million project to build a private hospital on
government-owned land in downtown Yangon.
A consortium
headed by Singapore-based Parkway Pantai, a subsidiary of Malaysian healthcare
provider, IHH Healthcare, had begun work on the 250-bed Parkway Yangon Hospital
on a 4.3 acre site at the corner of Bogyoke Aung San and Pyay roads in late
January.
The move
against the hospital in the Pyithu Hluttaw was launched on May 4 by National
League for Democracy MP Dr San Shwe Win (Yegyi, Ayeryarwady) who had called for
the long-term lease granted to the consortium for the build-operate-transfer
project to be withdrawn.
This is
the first time the NLD-dominated parliament has moved against a project
approved during the previous U Thein Sein government. This week I would like to
discuss how it happened, the likely impact on foreign investment, and how
similar controversies might be handled in future.
In his
proposal tabled in the Pyithu Hluttaw, San Shwe Win asked why a long-term lease
for a private hospital had been granted for the 4.3-acre plot when the land was
expected to be used for the future expansion of Yangon General Hospital.
He said
the decision had exposed weaknesses in the transparency of the Myanmar
Investment Commission and the former Union government, and urged the
cancellation of the lease on the grounds that the project was not in the public
interest.
The
proposal was debated by seven MPs, including two from the unelected military
bloc. They implicitly objected to San Shwe Win’s proposal, with
Lieutenant-Colonel Soe Myint saying that private hospitals were needed to
provide a level of care unavailable at government facilities. The military MPs
said millions of dollars were being spent each year by citizens going abroad to
receive medical treatment.
The other
five MPs said the plot’s location in the Yangon General Hospital compound and
near the University of Medicine and the University of Nursing made it suitable
for either a training hospital or the expansion of the crowded YGH. They
strongly opposed the decision to grant the consortium a lease for 50 years,
with the option of two 10-year extensions.
The
Health Minister, Dr Myint Htwe, said the proposal to build the hospital had
gone to the ministry on September 24 last year. The proposal, initially for 150
beds but increased to 250 beds, was supported by the ministry and it allotted
the 4.3 acre site for the project.
At the
ministry’s urging, the previous government accelerated the approval process and
the agreement to build the hospital was signed on January 29. According to the
agreement, the project developers sent $2.58 million to the account of the
Ministry of Health through Singapore’s OCBC Bank, amounting to 30 percent of
the land use premium.
The NLD
government has to implement the proposal to withdraw the lease because it was
approved without objection by the five NLD MPs and by the Minister of Health.
This is the first time the NLD government has decided to cancel an agreement
made by the previous administration.
Whether
the government will cancel other projects approved by the Thein Sein
administration remains to be seen. The decision by the Pyithu Hluttaw to cancel
the hospital project was reasonable and in the public interest but it may
create concern among international investors.
The NLD
government would damage its image were it to repeatedly cancel business
agreements. In its consideration of agreements made by the previous
administration, the government needs to act with great care.
Sithu
Aung Myint
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