DPU Working Paper - No. 62
The Price of The Second Best: The Price of Land Regulation In Asia
23 July 1994
Authors: Michael Lee
Publication Date: 1994
This paper attempts to identify and quantify the costs of land regulation. By drawing on case studies from different parts of Asia, it quotes estimates made by researchers of the order of magnitude of the impact. The costs identified arose from: zoning practices which restrict the supply of developable land below the level of demand; from time consuming administrative requirements, which tie up capital and require specialist skills to master, or demand the time of poor people who can ill afford to spare it; from the complexity of regulations which, together with other practices, inhibit small firms from becoming developers, and thus preserve monopolistic practices; and from bribery, whether to accelerate legal processes or to evade them. In some cases, the regulations and the way they are applied can double the cost of land, or more. There is a human rights issue in that land regulation forces a large part of the population into a "legal twilight". The issue is, How do we get from bad regulation, to good management?