Navigating the construction process

Dealing with construction permits is a costly and time-consuming process anywhere in the world. In the PRC, this is especially true as land use and planning is heavily regulated. According to a survey compiled by the World Bank this year, out of 183 economies China is ranked 179th for dealing with construction permits. It takes a total of 33 procedures, 311 days and 444.1% of the per capita income in costs for a domestic company to go through the construction permitting process. In the same survey, Hong Kong ranked first and the US 17th. In Hong Kong, it takes six procedures, 67 days and 17.8% of the per capita income whereas it takes 15 procedures, 26 days and 12.8% of the per capita income in the US.

Much of the difficulty stems from the inherently complex nature of the process. It involves multiple counter-parties, both governmental, like various approval agencies and non-governmental like designers, contractors, architects, engineers, supervisors and other consultants. The lack of transparency in administrative enforcement complicates matters further. For a foreign real estate investor not familiar with the process and lacking in local support, it can be a daunting experience.