The Htoo Company, owned by Burmese tycoon U Tay Za, has confiscated several acres of farmland in Arakan's ancient city of Mrauk U to construct a hotel, said local sources.

About 15 acres of farmland beside Abondaw Lake near Taung Pyu Dam were confiscated by the company with the help of local authorities.

"The Company told us they would pay compensation to the tune of 20,000 Kyats per acre, but this amount is very small and below the current market price of the land," a landowner said.

Farmlands in Mrauk U Township are currently selling at 500,000 Kyats per acre, with orchid farmland selling at a higher price.

"Most of the confiscated lands were for orchid cultivation. Our families' livelihood depended on the orchid. The company confiscated our land 20 days ago, and has not yet paid any compensation," the landowner said.

"The Htoo Company has confiscated lands but the company is expected to compensate the landowners at a reasonable price. If not, the company will have conflicts with the local people," an educated youth in Mrauk U said.

Mrauk U is an ancient city of Arakan where many attractions and hundreds of thousands of ancient pagodas lure tourists. In recent years, some companies have built international standard hotels and inns in the township to promote tourism.