Opportunities for British companies
in Burma’s Infrastructure sector
2
Opportunities for British companies in Burma’s Infrastructure sector
Opportunities for British companies in Burma’s Infrastructure sector
3
Contents
Executive summary p. 4
Company profile
p. 5
Macroeconomic and business environment in Burma
p. 6
Aviation sector
p. 14
Road p. 22
Rail
p. 31
Ports
p. 39
Industrial
p. 46
Energy
P. 54
4
Opportunities for British companies in Burma’s Infrastructure sector
Executive Summary
There are few countries in today’s
world that are changing as rapidly
as Burma. Its economy is expanding
by some of the highest rates in the
world, while politically the country
has undergone a bold transition
towards democracy in just a few
years. New businesses are opening,
and incomes are rising. The
population is young and dynamic,
and Burma is strategically located
between China, India and ASEAN,
three important centres of growth
in the 21st century. Yet there is still
much to do.
The backbone of continued progress
will be infrastructure. Burma’s
transport and energy sectors have
fallen behind, and investment is
required. There are significant plans
being developed to help the country
catch up, and opportunity abounds
for UK companies in a wide range
of Burma infrastructure-related
businesses.
Burma’s aviation market is growing
rapidly. The number of air passengers
has tripled in a decade, to 2.2 million
by 2014-15, yet services and facilities
are lagging. Three international
airports have now been built, though
they require further upgrades, while
there are 66 other airports around
the country.
Higher incomes and relaxed rules
have led to a surge in car and
motorbike ownership, with over five
million vehicles now registered. The
road network is being quickly built
up to handle the increase in vehicle
numbers, and neighbouring countries
are keen to extend international
highways through Burma to improve
regional transportation.
The domestic railway network is the
longest among the ten Southeast
Asian countries. It currently covers
most of the major population centres,
though the quality of the lines need
upgrading and there are currently
no international rail links. There are
significant plans to upgrade both
Rangoon’s commuter lines and the
longer-haul rail lines in the years
ahead.
The successor to the Irrawaddy
Flotilla Company first set up in 1865
still travels Burma’s rivers and ports.
The country has three main rivers
open to cargo and passenger transit,
and numerous smaller ones, though
areas such as navigation and river
ports need improvements. Burma
also has nine ocean ports, with the
busiest at Rangoon, though there are
plans to add new deep sea ports and
upgrade the existing facilities.
Industrial production is becoming
an important economic driver,
as Burma’s political transition
inspires renewed confidence in its
economic production. Development
of industrial zones and special
economic zones will continue to be
important as companies look for
locations for their businesses.
Powering Burma is a major challenge.
Officials have stated an aim to move
from roughly 35% electrification
at present, to 100% electrification
by 2030, which will require large
investment in energy infrastructure.
Offshore gas reserves are also
drawing significant international
interest.
Sustaining Burma’s present pace of
progress will require huge investment
in infrastructure. There are significant
plans in a host of industries, with
major projects under way and in
planning. UK companies are highly
prized in Burma for their expertise
and resources, and will be important
partners for the country as it
continues with its exciting progress
and change.
Opportunities for British companies in Burma’s Infrastructure sector
Company Profile
Frontier Myanmar Research provides
on-the-ground business research and
advisory services for companies and
organisations operating in Myanmar,
one of the world’s most exciting
economies.
We offer in-depth research into
particular sectors or issues,
helping clients better understand
their business environment, and
also publish subscription services
and reports focusing on specific
industries. Currently this includes
the Myanmar Real Estate and
Construction Monitor and the
Myanmar Energy Monitor, with our
Myanmar Transport Monitor coming
soon.
FMR was established in 2014 and
has since worked on a range of
projects for local and international
clients, in sectors such as real estate,
transport, telecoms and energy. Its
parent company is Frontier MEA Ltd,
a privately-owned UK firm established
in 2009 which specialises in business
and investment research in frontier
markets.
5
6
Opportunities for British companies in Burma’s Infrastructure sector
MACROECONOMIC AND
BUSINESS ENVIRONMENT
IN BURMA
Introduction and Background
Burma has become one of Asia’s
fastest-growing and most promising
countries nearly overnight. A
transition to civilian rule in 2011 and
subsequent wide-ranging, marketbased reforms have opened up
significant opportunities to domestic
and foreign business alike.
A more recent milestone is the
November 2015 election, which was
overwhelmingly won by the National
League for Democracy party, led by
Daw Aung San Suu Kyi. The party
subsequently took office in April
2016, with U Htin Kyaw as President
and Daw Aung San Suu Kyi as State
Counsellor.
While many challenges clearly
remain, the overall portents are
positive for Burma’s future. It has
a strategic location, bordering
two of the world’s most important
economies with India to its west
and China to the north-east. It
also touches Thailand and Laos to
the east, and Bangladesh to the
southwest. To the south is the Indian
Ocean.
It is one of the region’s least-densely
populated countries, with the long
Ayeyarwady River running north
to south through its heartland. It
begins in the Himalayas to the north,
flowing south through Mandalay city,
the former capital, then near to the
present capital of Naypyitaw before
emptying into the Indian Ocean at a
delta, of which the eastern branch
flows through the commercial capital
and largest city of Rangoon.
Burma was seen a country
with strong potential upon its
independence from the UK in 1948.
A complicated period for the country
followed, however, and the economy
stagnated under the subsequent
military regime. The 2011 transition
to civilian rule and the market-based
reforms this entailed has led to
significant growth in Burma. The
World Bank said economic growth
slowed somewhat to 7% in 2015/16
due to floods in July 2015, though
this was still one of the highest rates
in the world. Medium-term growth is
projected to average an even higher
rate of 8.2% per year. Its GDP was
pegged at $65bn the same year.
Inflation – previously a major concern
– has also slowed dramatically. Most
outside observers have a figure of
around 6% for the most recent year,
while the government has pegged
it at 5.9% in 2014-15, a far cry from
rates as high as 32% a decade earlier.
Other fundamentals are strong.
Burma has a dynamic, young
population of 54 million people,
about the same as South Korea,
Spain or South Africa. It enjoys rich
endowments of resources, notably
natural gas and hydropower potential,
but also commodities such as timber,
jade and minerals. Farmland currently
forms the backbone of employment
in Burma, though this is also shifting
as the country becomes increasingly
urbanised.
Export-oriented industry and
domestically-focused production are
both growing rapidly in tandem with
the rise of the country’s industrial
zones and special economic zones.
Nonetheless, significant hurdles
remain. The economy is not as
diversified as it could be, and is still
reliant on resource exports. An
underdeveloped financial sector
and limited government and private
sector resources have held back
growth. The legal infrastructure
has been improved but still requires
further work, while human resource
skills lag many neighbouring
countries.
Politically, too, Burma has moved
into uncertain territory. Daw Aung
San Suu Kyi’s NLD won a resounding
victory in November 2015, and
Opportunities for British companies in Burma’s Infrastructure sector
1.1 INFLATION CHART
in the country, but its economic
importance is falling as industry in
particular rises.
Avg Change in CPI (%)
35
30
25
20
15
10
5
0
2005-06 2006-07 2007-08 2008-09 2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
despite the predictions of some,
Industry, driven by an influx of
the handover to her government
Share of GDPso
from sector manufacturing, is also picking
100
far been
largely smooth. A diverse
up, though improvements to the
80
political and social landscape will
industrial zones and special economic
60 a challenge for key players
remain
zones is needed to provide business
to navigate,
and while the signs have
a location to work from. The energy
40
been20promising so far, risks remain.
situation is also challenging, though,
as in many areas, Burma is well
0
2000-01
2005-06
2006-11
2011-12
2012-13
2013-14
People arriving
to
Rangoon
for the
endowed
with the2014-15
resources it needs
Agriculture
Industry
Services
Transportation
first time will be met straight away
to generate electricity.
by the opportunities and challenges.
Macroeconomic overview, including
Central to Burma’s economic
story
Trade ($
millions)
18000
key drivers with relevance to
in the years ahead will be growth
16000
of infrastructure. Touching down at
transport and infrastructure
14000
the12000
Rangoon’s international airport
likely
means walking through a
Burma’s growth pattern has already
10000
brand-new
terminal opened in 2016,
begun to follow the path well-trodden
8000
located
by the Asian tiger economies.
6000 beside another terminal now
4000construction to meet growing
under
Many started as agrarian societies,
2000
demand. The drive in to the city
before shifting into simple and then
center0 is 1995-96
much slower
than
it
was
more
complex
manufacturing,
and
2000-01 2005-06 2010-11
2011-12
2012-13
2013-14
2014-15
several years ago, as car numbers
finally now developing the service
Export
Import
have increased much faster than the
components in their economies.
roads for them to use.
Population The trajectory in Burma is similar.
8,000,000
Agriculture is still the main employer
7,000,000
6,000,000
5,000,000
4,000,000
Garment and textile production
is already taking off in Burma,
partly due to price competitiveness
but also the lower tariffs given to
local producers exporting to more
developed economies. Eventually, the
economy is ripe for moving up the
value chain to more sophisticated
manufacturing goods, though of
course the process will not be easy.
Key infrastructure needs to be put
in place to encourage future growth.
Part of the impetus behind the
Special Economic Zones (SEZs) of
Thilawa, Dawei and Kyaukpyu covered
more extensively later in this report is
to create production nodes that can
serve as catalysts for future growth.
Similarly, transport and energy
infrastructure must be improved.
The World Bank’s 2014 first Burma
Investment Climate Assessment
surveyed the business climate. The
top four most-mentioned obstacles
for firms were access to finance,
access to land, access to electricity,
and access to skilled workers. Work
on these and a range of other issues
is underway, though access to land
and access to electricity is dealt with
directly in this report in the sections
7
Opportunities for British companies in Burma’s Infrastructure sector
Avg Change in CPI (%)
35
30
25
20
15
10
Avg Change in CPI (%)
5 35
0 30
2005-06 2006-07 2007-08 2008-09 2009-10
2010-11
25
0
802005-06 2006-07 2007-08 2008-09 2009-10 2010-11
2011-12
2012-13
2013-14
2014-15
60
40
Share of GDP from sector
20
100
080
2000-01
60
2005-06
2006-11
Agriculture
2011-12
Industry
2012-13
Services
2013-14
2014-15
Transportation
40
20
0
2000-01
18000
2005-06
1.3
16000TRADE CHART
Agriculture
Trade ($ millions)
2006-11
2011-12
Industry
2012-13
Services
2013-14
2014-15
Transportation
14000
Trade ($ millions)
12000
18000
10000
16000
14000
8000
12000
6000
10000
4000
8000
2000
6000
0
4000
2000
1995-96
2000-01
2005-06
0
1995-96
2000-01
2005-06
2010-11
8,000,000
2011-12
Export
2010-11
2011-12
Import
2012-13
2012-13
2013-14
2013-14
2014-15
2014-15
Import
Population
Population
8,000,000
7,000,000
7,000,000
The6,000,000
country
itself is divided up into
6,000,000
5,000,000
seven5,000,000
regions and seven states, along
4,000,000
with4,000,000
the
capital area of Naypyitaw.
3,000,000
The3,000,000
regions
are largely – though not
2,000,000
2,000,000
exclusively
– geographically closer
1,000,000
1,000,000
to the
center
of the country, with
0
Capital
Py
Na
y
M
M
Regions
iT
aw
y
ay
ag Sag
Tw a
M aniany ing
an th
da ary
lYa i
Sa ayng
ga on
Ta
ni N ing
nt ay
haPy
ryi T
Ya i aw
ng
on
States
Baand
go ala
rw
ad
y
flatter land and larger proportions of
Burmese people. The states tend to
be mountainous and more sparsely
populated areas on the outskirts of
Burma, with more people from the
different ethnic groups.
Ay
ey
a
0
Ka Kac
ch hin
iKn
Ka aya
ya h
hKa
Ka yin
yi M
n o
n
M Sh
on a
Ra n
Sh khi
n
Ra an e
Akyh
eyin
ae
Burma is one of the diverse countries
in Southeast Asia. While the majority
of people are ethnic Burmese, there
is a large minority of people from a
range of different ethnic groups.
2014-15
Share of GDP from sector
Export
Transport and Infrastructure
Issues, including Geography and
Demographics
2013-14
5
100
B
Trade is likely to continue to grow,
particularly as the Asean Economic
Community began at the end of
2015. It allows for significant linkages
to regional countries, including
important trading partners Thailand
and Singapore. There is also
agreement to open up the services
sector, which may help this develop in
the future.
2012-13
15
10
Trade has grown significantly,
with the 2014-15 total of $29.2bn
essentially double the value in 201011. However, imports have rapidly
outpaced exports in the last two
years. Officials have explained this
as companies importing means of
production, such as machines for
factories and tractors for farming,
though it is also obvious that there
has been a surge in demand of items
such as automobiles that previously
were difficult to obtain.
2011-12
20
1.2
GDP BY SECTOR
rw M ago
adag
yw
on Industrial and Economic Zones,
and on Energy.
Ch C
in hin
8
5
0
2005-06 2006-07 2007-08 2008-09 2009-10
Opportunities
for
British2014-15
companies in Burma’s Infrastructure sector
2011-12
2012-13
2013-14
2010-11
Share of GDP from sector
100
80
60
40
20
0
2000-01
2005-06
Agriculture
2006-11
2011-12
Industry
2012-13
Services
2013-14
2014-15
Transportation
Trade ($ millions)
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
2000-01
1995-96
1.4 POPULATION
2005-06
2010-11
2011-12
Export
2012-13
2013-14
2014-15
Import
While nearly all government
ministries are involved in
infrastructure and transportation to
a degree, a few of the key ministries
are listed below and expanded on
later in the report.
Population
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
Ministry of Transport and
Communications
1,000,000
The regions of Burma tend to have
more developed infrastructure than
the states, though this is beginning
to change. A clear goal of previous
governments was to improve
infrastructure links to the more
remote areas in an effort to foster
national unity.
Role of government in transport
and Infrastructure
Government in Burma is central to
the development of infrastructure
and transport. Its various bodies
control and approve planning and
implementation of large projects.
The recent election of the National
League for Democracy government
has led to a shift in the structure
of ministries, though the basic
functions undertaken are so far
largely unchanged.
Regions
iT
aw
Py
Na
y
o
wa
y
da
la
Sa y
ga
Ta
ni ing
nt
ha
ry
Ya i
ng
on
ag
an
M
M
y
States
Ba
g
rw
ad
Ay
ey
a
hi
n
Ka
ya
h
Ka
yi
n
M
on
Sh
Ra an
kh
in
e
Ch
Ka
c
in
0
Capital
The government is also currently
conducting wide-ranging planning
that will affect transport and
infrastructure in the years ahead.
Notably, a Transport Master Plan is
under development, though as of
July 2016 it was still in draft form.
It remains to be seen the degree to
which the plan draws on previous
studies conducted by organisations
such as JICA and KOICA.
JICA announced a Transport Master
Plan in 2014, while KOICA has
reportedly entered into agreements
to form master plans for Dala
township and Bago region in 2015,
and for the arterial road network and
expressway the same year.
Formed by the new NLD government
by combining the former Ministry
of Transport, Ministry of Railways
and Ministry of Communications
and Information Technology, it
has numerous responsibilities
in facilitating the country’s
transportation infrastructure.
Ministry of Planning and Finance
Formed in 2016 from the former
Ministry of National Planning
and Economic Development and
the former Ministry of Finance, it
oversees Burma’s budgeting process
Ministry of Electricity and Energy
The Ministry of Electricity and
Energy is the lead ministry in Burma
for power and energy. It was only
recently formed following the April
change in government, and is a
merger of the former Ministry of
Energy and the Ministry of Electric
Power.
9
10
Opportunities for British companies in Burma’s Infrastructure sector
Ministry of Mineral Resource and
Environmental Conservation
TIBETO-BURMAN
Burman
Chin
India
Another Ministry formed in
2016 from two predecessors,
specifically the Ministry of Mines
and the Ministry of Environmental
Conservation and Forestry.
1
Kachin
China
Rakhine
Ministry of Industry
9
9
Other
1. Naga
2. Lahu
3. Akhu
8
8
BURMA and MON-KHMER
8
3
2
4
5
3
2
2
4
Laos
Overview on presence and role
of foreign companies and foreign
investment in Burma
Karen
5. Pao
6. Kayan
7. Karenni
6
KAREN and BURMAN
4
TAI
7
Shan
MON-KHMER
8. Mon
9. Wa
10. Palaung
BURMA and SHAN
SHAN and WA
Based on: Martin Smith: Burma - Insurgency and the Politics of Ethnicity
Source: The Border Consortium Programme Report, 2013
Has a number of responsibilities with
regards to work such as industrial
zones and economic zones, as well
as operating its own businesses
7
Thailand
Foreign investment into the country
has grown rapidly. Manufacturing
in particular is a popular draw, and
has accounted for the majority of
the volume of investment approvals
since the 2011 transition. However,
due to the opportunities in Burma
as well as the capital-intensive
nature of investment, oil and gas
has historically been the largest
destination for FDI flows.
Opportunities for British companies in Burma’s Infrastructure sector
Foreign Investment (by sector, %)
Foreign Investment
Sources
(by sector,
of FDI,
%)1988-present
1.5 MIC APPROVALS BY SECTOR
Sources of FDI, 1988-present
1.6 FDI BY COUNTRY
Foreign Investment (by sector,
Foreign
%)Investment (by sector,
Sources%)
of FDI, 1988-present
Sources of FDI, 1988-present
Oil and Gas
China
Oil and Gas
China
Singapore
Mining
Singapore
Transport and Communcations
Hong Kong
Hotel and Tourism
UK
Industrial Estate
South Korea
Power
Thailand
Mining
Malaysia
Agriculture
Other Services
Agriculture
Other Services
The Netherlands
Manufacturing
Manufacturing
Transport and Communcations
Hotel and Tourism
Industrial Estate
Power
Real Estate
Livestock and Fisheries
Oil and Gas
11
Oil and Gas
China
The Netherlands
South Korea
Thailand
Malaysia
India
India
Vietnam
Real Estate
France
Livestock and Fisheries
Japan
China
Hong Kong
UK
Other
Singapore
Singapore
Transport and Communcations
Transport and Communcations
Hong Kong
Hong Kong
Foreign
-
Hotel investment
and Tourism in non-resource
Hotel and Tourismoutsized investment from the UK
UK
UK
based
sectors
has grown rapidly
onEstate is due in part to companies routing
Industrial
Estate
Industrial
South Korea
South Korea
the Power
back of the Foreign Investment
investment
through
certain
of
its
Power
Thailand
Thailand
Law,Mining
which was passed in 2012.
jurisdictions, and if this is accounted
-
MiningIt
Malaysia
Malaysia
Vietnam
France
Japan
Other
Standard Chartered, which
operates a representative office
Aggreko, which has successfully
for it is likely
that UK investment
completed a 95MW fast-track
The Netherlands
The Netherlands
figures are
closer
to
the
of
European
power project
India
India
counterparts
such
as
Germany
or
Vietnam
Vietnam
France. France
- Prudential, an insurance company
France
outlined
much of the regulatory
Agriculture
Agriculture
framework
required for a successful
Other Services
Other Services
investment.
Uniquely, it is currently
Manufacturing
Manufacturing
separate
from the Myanmar
Citizens
Real Estate
Real
Estate
Livestock Law
and Fisheries
Livestock and Fisheries
Investment
which governs
Japan
Japan
investment by domestic companies.
It is also Other
important to note the Other
However, a planned combined
statistics cover only foreign
investment law called the Myanmar
investment approvals granted since
Investment Law has been drafted
1988.
with support from the International
Finance Corporation (IFC), and at the
The opportunities offered in Burma
time of writing, was expected to be
has resonated among businesses
passed shortly.
in many countries, and the UK is
no different. Some examples of UK
Foreign investment has been
businesses with Myanmar presence
strongest from regional countries
include:
such as China and Japan. The
-
Royal Dutch Shell holds interest in
seven offshore blocks, as well as
plans for LNG and existing business
in downstream products. It
expanded its local presence with its
merger with BG
- Unilever, a leading FMCG company
12
Opportunities for British companies in Burma’s Infrastructure sector
Urban Planning in Rangoon
Rangoon is Burma’s largest city, and lies at an interesting crossroads. It is
bursting at the seams, with commuters keen for more transit and residents
hoping for more housing. Yet the city has a unique heritage, with some of
the best colonial era architecture in Southeast Asia, as well as fascinating
religious sites.
Yangon City Development Committee (YCDC) is ultimately responsible
for urban planning in Rangoon, although its role overlaps with a range
of organisations including the Myanma Port Authority, the Ministry of
Construction and the Yangon Regional Government.
In 2011, YCDC set up the Department of City Planning and Land
Administration, which works in collaboration with several organisations on
a longer-term plan for Rangoon’s development.
The Rangoon 2040 report is the first comprehensive study, forecast and
urban development plan for Rangoon. It was drafted by a consortium
including the Yangon Regional Government, YCDC, Japan International
Cooperation Agency and a team consisting of representatives from Nippon
Koei, NJS Consultants, Yachiyo Engineering, International Development
Centre of Japan, Asia Air Survey and ALMEC Corporation. Provisionally
titled ‘Rangoon 2040 - A peaceful and beloved Rangoon, a city of green
and gold’, the report was submitted in March 2013 and is still pending
full approval. In planning terms, the vision for Rangoon is focused on
decentralising the current city centre.
The study estimated that by 2040, the population of Greater Rangoon
will be 11.7 million, growing at an annual rate of 2.6%. The proposed hubs
outside of the heavily congested downtown area have obvious benefits for
some developers who are already investing heavily in residential, retail,
commercial and hospitality properties there.
Whilst the characteristics of each area are yet to be determined, it is likely
that a significant amount of real estate development will be needed to
support residents and businesses.
Future outlook
Burma is only beginning a
remarkable transformation. The
government of Daw Aung San Suu
Kyi and the NLD was swept in with
a wide range of support in the
November election, though Burmese
citizens are eager for improvements.
Attitudes and rules are broadly
welcoming of foreign investment,
particularly when compared with
some regional peers, and further
deregulation is promised.
Some analysts have spoken of
a “second wave” of investment
in Burma with the change in
government, following the first
wave after the 2011 transition
to democracy. Interest will only
continue to build, and the Burmese
economy is slated to be one of the
world’s bright spots for years to
come.
Opportunities for British companies in Burma’s Infrastructure sector
13
14
Opportunities for British companies in Burma’s Infrastructure sector
AVIATION SECTOR
Introduction
Burma’s great distances,
challenging terrain and limited
ground infrastructure create fertile
conditions for a successful aviation
industry, but one which requires
significant investment to reach its
potential in the coming years.
Aviation has been one of the most
visible beneficiaries of the openingup of the country in the past five
years, and unprecedented numbers
of passengers are now taking to the
skies. The influx has been so quick
that, in some cases, infrastructure
has not kept pace. Expect this to
change in future, with rising private
and public-sector investment likely
to transform the industry in the next
decade.
Although this rapid growth has been
relatively recent, it builds on a strong
aviation heritage. Although Burma
had been a stop on the pre-World
War II air travel circuit, it was the war
itself that brought aviation into its
own. The country’s airfields became
staging grounds for Allied planes
flying to supply China during the war,
after which Rangoon’s international
airport was built. It was completed
in 1947, just months before Burma’s
independence from the UK.
Rangoon remains the country’s main
international hub, but Mandalay
and Naypyitaw have received
increasing traffic in the past few
years and there are plans to expand
and upgrade an array of regional
airports to accommodate growth.
The aviation sector’s flagship
infrastructure project, a major new
hub at Hanthawaddy, north-east of
Rangoon, is currently in planning.
• Arrivals at Rangoon airport tripled
between 2011 and 2015, reaching
1.2 million in 2015
• Air freight traffic remains small at
just 3,289 freight ton-miles in
2014-15, though is expected to
grow significantly as infrastructure
develops
• Burma currently has 11 domestic
airlines, all 100% locally-owned.
Several international airlines,
including Emirates and KLM, are
launching flights to Rangoon later
in 2016
While some projects are progressing
more quickly than others, it is clear
the industry is primed for take-off in
the coming years and can present a
range of infrastructure opportunities
for UK firms.
Overview
Opportunities for aviation
infrastructure have been underpinned
by the easing of restrictions brought
by political change in the past few
years. These have vastly improved the
market size for foreign tourists and
business people, while rising incomes
and a proliferation of airlines have
brought air travel to within reach of
more and more people.
Fast Facts
• There are 69 airports in Burma,
comprising 42 year-round facilities
and 27 fair-weather strips
Rangoon,Mandalay and Naypyitaw
are the only international airports.
• Over 2.2 million passengers flew in
2014-15, almost triple the 873,000
in 2005-6
2.1 AIR PASSENGERS
Passengers (thousands)
2500
2000
1500
1000
500
0
1995-1996
2000-2001
Private Airlines
2005-2006 2010-2011
2011-2012
Public Airlines
2012-2013
2013-2014
2014-2015
Total, private and public
Freight Traffic by Air (Freight ton-miles)
Opportunities for British companies in Burma’s Infrastructure sector
15
Passengers (thousands)
2500
2000
1500
1000
500
0
1995-1996
2000-2001
2005-2006 2010-2011
Private Airlines
Total passenger numbers have
virtually doubled in the past five
years, and although the pace of
growth slowed in 2015 due to
uncertainty around the electoral
process, there is significant potential
for future increases if infrastructure
can keep pace.
2011-2012
2012-2013
Public Airlines
2013-2014
2014-2015
Total, private and public
2.2 AIR FREIGHT
Freight Traffic by Air (Freight ton-miles)
4000
3500
3000
2500
2000
1500
1000
Burma now has 11 airlines, with a
12th approved in June 2016 by the
Myanmar Investment Commission
(MIC). The majority of these
companies have only one or two
aircraft, however, and consolidation
is expected in the coming years.
Some, notably state carrier
Myanmar National Airways,
have put considerable effort into
modernisation. MNA signed an
aircraft lease agreement with GE
Capital Aviation Services in 2014, and
is currently the largest carrier in the
market.
International airlines are also
expanding routes. Emirates will
launch a daily Dubai-Rangoon flight
in August 2016, making it the latest
long-haul carrier to service the stop,
with other overseas carriers already
present in the market including Qatar
Airways, Air China, Bangkok Airways,
Dragonair, Thai Airways, AirAsia and
ANA.
500
0
2000-2001
2005-2006
2010-2011
Private Airlines
2011-2012
Public Airlines
The number of foreign visitors
arriving by air to Burma quadrupled
from just 334,278 in 2010-11 to 1.1
million in 2014-15. Despite the surge,
these numbers remain minimal
by regional standards – Thailand
welcomes around double the
number of visitors per month than
Burma does in a year – and further
significant growth is expected.
Air freight volumes have also grown
rapidly in the past five years, albeit
from a very low base. As the overall
economy grows, and development
and investment spreads further to
outlying areas, the air cargo sector is
expected to present opportunities for
business.
Changes are also afoot in the
services business. Puma Energy
started operating a joint venture with
state-owned Myanma Petroleum
2012-2013
2013-2014
2014-2015
Total
Products Enterprise in 2015 after
winning a tender to distribute and
sell aviation fuel. Similarly, dedicated
service providers such as Myanmar
Aviation Centre have also opened in
the country to provide more options
in areas such as staff training and
catering.
GOVERNMENT BODIES, POLICIES
AND DEVELOPMENT PARTNERS
Ministry of Transport and
Communications
Formed in April 2016 by the new
government, incorporating what was
previously the Ministry of Transport
and the Ministry of Communications
and Information Technology.
Responsible for planning, developing
and regulating all aspects of the
transport sector including air, road,
rail and sea.
16
Opportunities for British companies in Burma’s Infrastructure sector
Department of Civil Aviation (DCA)
Asean Open Skies Agreement
Key Projects
Falls under the Ministry of Transport
and Communications, with a specific
remit for air traffic services and
infrastructure. The DCA is currently
drawing up new guidelines for the
industry, which are expected to
include new policies on licensing and
taxation.
The Asean Open Skies Agreement
officially came into effect on 1
January 2015. It allows airlines
from any Asean Member State
to operate passenger and cargo
services between the home country
and a point another member
state, and then carry on to a third
member state. Theoretically it
is part of a larger Asean Single
Aviation Market, though with a wide
difference between the sophisticated
air operations of some countries
and nascent stages of others, the
envisaged common aviation market
may take time to become fully
effective.
While Burma’s airport infrastructure
varies widely in terms of capacity
and quality, the next decade is
likely to see major improvement
programmes across the board.
Transport Master Plan
A new National Transport Master
Plan, set for release later this year,
is likely to set out more detailed
government plans for the aviation
sector. The Japan International
Cooperation Agency (JICA) has
previously worked on a transport
sector master plan, which estimated
aviation investment needs of Ks1.2trn
(around $1bn) from 2016 to 2020,
and Ks922bn (around $800m) from
2021 to 2030.
Private-sector involvement in
operations and upgrades at the
three main international airports has
already been cemented in recent
years, while plans have also been
announced to privatise and upgrade
the smaller and medium-sized
regional airports.
Opportunities for British companies in Burma’s Infrastructure sector
1. Yangon International
Airport upgrade
Yangon International Airport is the
main point of entry to Burma. It is
a single-runway facility located in
Mingaladon township, about 15km
north of downtown Rangoon. A total
of 1.2 million visitors arrived by air to
Rangoon in 2015, about ten times the
combined total of the country’s other
two international airports, Mandalay
and Naypyitaw.
Rangoon currently has a capacity of
2.3 million passengers per year, but
with that ceiling fast approaching,
an expansion is under way to
raise capacity to six million. Local
conglomerate Asia World, through
its subsidiary Pioneer Aerodrome
Services, won a high-profile tender
in 2013 to expand and run the airport
in conjunction with several regional
companies.
In March 2016, two floors of the
new terminal building were formally
opened, with further work ongoing
at the site over the summer.
Improvements and expansions on
other elements of the airport are
expected in the future.
Yangon International Airport upgrade
Location
Mingaladon Township, Rangoon
Key companies involved
Yangon Aerodrome, subsidiary of Asia World
Value
$660m
Summary
Extension of domestic departure and arrival buildings, $660m new terminal building
Structure
Public-Private Partnership (PPP)
Agreement signed in
January 2015
Completion date
New terminal officially opened in March 2016
17
18
Opportunities for British companies in Burma’s Infrastructure sector
2. Hanthawaddy International
Airport
The newly-expanded Yangon
International Airport will be able
to handle the influx of passengers
in the medium-term, but longerterm demand has prompted the
government to plan a major new
aviation hub, Hanthawaddy, located
around 80km north of the city.
Situated on some 9,000 acres, it will
have an initial capacity of 12 million
passengers per year, potentially
rising to 30 million in later stages.
The airport aims to position itself as
a regional gateway, connecting local
and domestic destinations to improve
the currently limited air connectivity
in the country.
The project has been at least two
decades in the making, but was
given recent impetus with a January
2016 agreement between the
Burma government and a JapaneseSingapore consortium. Negotiations
are continuing in areas such as
demand forecasts, financing,
government guarantees and traffic
allocation, with more progress
expected before the end of 2016.
Hanthawaddy International Airport
Location
Bago Region, 80km north of Rangoon
Key companies involved
Consortium of Yongham Holdings (25%), Changi Airport Planners and Engineers (20%)
and JGC Corporation (55%)
Value
$1.4bn
Structure
Public-Private Partnership (PPP)
Current status
2022+
Estimated completion date
Negotiations ongoing, concession agreement expected in Q3 2016
Finances
Loans from Japanese Official Development Assistance (ODA) ($706m), Japanese
International Cooperation Agency (JICA) ($517m)
Opportunities for British companies in Burma’s Infrastructure sector
3.Mandalay and Naypyitaw
Rangoon may be the country’s main
international gateway, but other
airports, notably Naypyitaw and
Mandalay, are growing in importance
and likely to see further growth.
A contract to renovate, upgrade
and operate Mandalay airport for
30 years was awarded in 2013 to
Mitsubishi, JALUX and Burma’s SPA
Project Management. Serving the
country’s second largest city, the
airport has an annual capacity of
three million passengers, although
has so far handles much lower
numbers. However the facility has
strong potential as a logistics hub
thanks to its position in the centre
of Burma, and further projects are
likely.
Naypyitaw airport opened in
December 2011 with a capacity
of five million passengers per
year. Built by local conglomerate
Asia World with assistance from
Singapore’s CPG Consultant, it
is generally regarded as being
underused and traffic remains
limited. However, FMI, one of
Burma’s newest airlines, now uses
the city as its base, and international
flights to the airport have also
begun.
Mandalay International Airport
Location
Tada-U, Mandalay Region
Main companies involved
JALUX (45.5%), Mitsubishi (45.5%), SPA (9%)
Value
N/A
Structure
Concession agreement
Current status
Commenced operation and upgrade of the airport in April 2016
19
20
Opportunities for British companies in Burma’s Infrastructure sector
4. Regional airport plans
Upgrades and improvements are also
required at the medium and smallersized airports in the country, many
of which are dilapidated and underused.
Burma has 69 airports, of which
42 are year-round and 27 are fairweather strips. They vary widely in
quality and usage, with some having
no regularly scheduled flights.
Myanmar National Airways, which
has by far the largest domestic
network, only flies regularly to 27
destinations in the country.
A tender to upgrade 30 regional
airports was announced in 2013,
but then postponed in 2015 to
allow international airports to be
prioritized. In the meantime, a
series of smaller-scale projects have
been completed, including a new
passenger terminal at Myitkyina, the
capital of Kachin State, which opened
in June 2016.
While the new government’s
transport plan and budget is not
expected to be finalized until later in
2016, officials have said that seven
regional airports will be prioritised in
the 2016-17 fiscal year:
Seven planned airport improvements for 2016-17
Location
Project
Naungmoon Airport, Kachin State
New runway
Myitkyina Airport, Kachin State
New building and asphalt runway
Sittwe Airport, Rakhine State
Expansion of buildings
Man Aung Airport, Rakhine State
Runway extension
Falam Airport, Chin State
Runway extension
Loikaw Airport, Kayah State
Runway extension
Lashio Airport, Shan State
New terminal building
Outlook and Opportunies
The rapid expansion of air travel,
fostered by rising domestic incomes
and increased international tourist
and business interest in Burma, has
breathed new life to the industry.
Significant new aviation infrastructure
will be vital in the coming years if
Burma is to achieve its ambitious
economic and tourism growth plants.
Among the challenges will include
funding gaps, with the Burma
government unable to finance largescale projects using its own resources.
Other uncertainties surround new
government policy on the aviation
sector, the capacity of state bodies to
manage multiple large-scale aviation
projects, and the ability of overseas
companies to compete with local
players in the market.
Nonetheless, Key areas of
opportunity for UK companies
include:
• Engineering, design and
consultancy opportunities on
airport infrastructure projects
• PPP opportunities, particularly
on regional airports
• Financing and investment
opportunities arising from
privatization initiatives
• Ancillary opportunities,
e.g. ground services, air
traffic control, supporting
infrastructure
• Supply of aviation equipment
and components
Opportunities for British companies in Burma’s Infrastructure sector
21
22
Opportunities for British companies in Burma’s Infrastructure sector
Road
Introduction
It would be hard to locate a country
in a better place than Burma. It is
sandwiched between two of the
most important global economies,
China and India, as well as
bordering Thailand, one of the key
Southeast Asian economies, along
with growing Bangladesh and Laos.
Officials from all sides speak
optimistically about the future
of Burma as a crossroads of
commerce. Chinese state press
have urged the rebuilding of the
Ledo Road, a now-legendary track
that linked northeast India with
southern China via Burma during
the Second World War. Similarly,
roads planned to connect India
with Thailand across Burma have
also begun, potentially opening
important trade corridors.
It is not only the large highway
projects that are planned for
Burma. The country’s internal road
network is presently insufficient
to service a country of 676,578 sq
km, particularly as demand grows
quickly. Vehicle registration has
more than tripled in a decade,
while the internal road network is
up only 50% in the same period.
Authorities are keenly aware of the
challenge, and planning to extend
the network to meet the growing
number of vehicles on the road.
• Over 300 bridges longer than
180 feet have been built since
1988. There are also 14 bridges
over the Ayeyarwaddy River,
seven over the Thanlwin, two
over the Chindwin and five
over the Sittaung
Plans are afoot to vastly improve
the country’s road network. Burma
will one-day be a linchpin on the
Asian highways, and its internal
road network is already taking
shape.
Current Trends
Fast Facts
• There are over five million
vehicles registered in Burma,
of which 4.2 million are
motorbikes
• Burma has 151,298km of
roads, though only 39,076km
is paved
• New types of public transport
are being trialled, with the
Yangon Bus Rapid Transit
(BRT) launched in February
2016
• There are five main overland
crossings with Thailand, and
one each with China and India
Once famous for some of the
quietest roads in Southeast Asia,
traffic has rapidly picked up as
Burma liberalises, driven by newlyexpanded imports of foreign cars
and motorbikes. There are about
40% more passenger cars on
the road now as compared to five
years ago, while the number of
motorbikes has more than doubled
in the same timeframe.
Opportunities for British companies in Burma’s Infrastructure sector
23
Large vehicles on the road
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
1995-96
3.1 HEAVY VEHICLE NUMBERS
2005-06
2000-01
2013-14
2012-13
2011-12
2010-11
3.2 TWO WHEEL
VEHICLES
Passenger
2014-15
Trucks
Two wheelers
Large vehicles on the road
500,000
450,000
400,000
500,000
5 million motorbikes
450,000
4.5 million motorbikes
400,000
4 million motorbikes
350,000
350,000
3.5 million motorbikes
300,000
4 million motorbikes
300,000
250,000
250,000
2.5 million motorbikes
150,000
200,000
2 million motorbikes
100,000
150,000
1.5 million motorbikes
50,000
100,000
1 million motorbikes
50,000
2014-15
0.5 million motorbikes
0
0
200,000
0
1995-96
2000-01
2005-06
2010-11
2011-12
Passenger
2012-13
2013-14
Trucks
1995-96
2000-01
2011-12
2010-11
2005-06
2012-13
2013-14
2014-15
Two wheelers
Arterial Highways (miles)
1995-96
2000-01
2005-06
2010-11
2011-12
2012-13
2013-14
2014-15
30000
25000
n
Sh
an
Ay
ey
ar
wa
dy
Ya
ng
o
on
Arterial Road by Type (KM)
0
hi
ne
M
5,000
Ra
k
M
an
da
la
y
o
w
e
Ba
g
ag
M
10,000
in
th
ar
yi
The15,000
cars are coming, though road
infrastructure projects, with their
in
20,000
ng
0
Sa
ga
i
50,000
Ta
n
100,000
n
150,000
longer lead-times, have
not kept up.
Burma needs to raise its annual
25,000
The total length of arterial highways
investment in the transport sector
has increased from20,000
22,307 miles
from 1% to 3-4% of GDP to meet
in 2010-11 to 25,21215,000
miles in 2014investment plans, an “ambitious”
15, a slight 13% increase, given
level of financing but comparable to
10,000
the number of vehicles more than
what other countries invested during
doubled in the same5,000
period from 2.3
periods of high growth.
million to 5.1 million. Put
another
way,
0
1995-96
2014-15
2013-14
2012-13
2011-12
2010-11
2000-01 2005-06
there were 64.7 vehicles for every
Burma’s road network is not small
kilometre of highway in 2010-11, and
compared to many of its Asean peers,
Arterial Road (Miles)
2014-15
2013-14
2011-12
125.92012-13
vehicles
for
every kilometre
though much of it requires significant
8,000
7,000
only five years later.
improvement. In 2012, the latest
6,000
year for which Asean has released
5,000
Authorities aim to4,000
catch up. Major
full statistics for Burma, the country
highway and road3,000
expansions and
had nearly five times the length of
2,000
improvements are1,000
underway, though
unpaved roads as paved roads.
experts are pushing0for greater
investment. The ADB has estimated
Ch
250,000
200,000
4.5 million motorbikes
While
motorbikes currently dominate
4 million motorbikes
by almost
a ten-to-margin, passenger
3.5 million
cars
aremotorbikes
increasingly popular. A
4 million
bevy
of motorbikes
well-known foreign brands
have
opened
2.5 million
motorbikesshowrooms in Burma
in the
last
five years, including
2 million
motorbikes
Mercedes-Benz,
BMW, Ford, Chrysler,
1.5 million motorbikes
Great
Wall,
Mitsubishi,
Nissan and
1 million motorbikes
Toyota.
Motorbikes are banned from
0.5 million motorbikes
Rangoon’s urban
townships, meaning
0
2000-01 2005-06
cars and buses 1995-96
predominate,
while2010-11
the first international brands are
Arterial Highways (miles)
now
opening their first dealerships
30,000
in the smaller cities, such as Ford’s
25,000
Mandalay showroom.
Ka
yi
350,000
300,000
30,000
hi
n
Ka
ya
h
450,000
400,000
5 million motorbikes
Ka
c
500,000
000
000
150,000
4 million motorbikes
24100,000
Opportunities for British companies in Burma’s Infrastructure sector
3.5 million motorbikes
50,000
000
4 million motorbikes
0
1995-96
2.5 million motorbikes
000
2 million motorbikes
000
1.5 million motorbikes
00
5 million motorbikes
00
4.5 million motorbikes
00
4 million motorbikes
00
3.5 million motorbikes
00
4 million motorbikes
00
2.5 million motorbikes
00
2 million motorbikes
00
1.5 million motorbikes
00
120,000
million motorbikes
00
0.5 million motorbikes
0.5 million motorbikes
0
1995-96
2011-12
2010-11
2005-06
2000-01
2012-13
2013-14
2013-14
2014-15
2014-15
Arterial Highways (miles)
30,000
25,000
15,000
0
0
1995-96
2012-13
2011-12
2010-11
2005-06
2000-01
3.310,000
ROAD LENGTH
Arterial Highways (miles)
5,000
30,000
0
25,000
1995-96
2014-15
2013-14
2012-13
2011-12
2010-11
2005-06
2000-01
20,000
Arterial Road (Miles)
15,000
8,000
7,000
10,000
6,000
5,000
5,000
4,000
3,000
0
1995-96
2014-15
2013-14
2012-13
2011-12
2010-11
2005-06
2000-01
2,000
1,000
rw
ad
y
an
Sh
n
ne
hi
go
Ay
ey
a
3.4 ARTERIAL ROAD BY TYPE
Ya
n
on
M
Ra
k
da
M
an
M
Ta
n
6,000
la
y
w
e
o
ag
yi
Ba
g
ar
ng
ai
Ch
Sa
g
in
th
in
n
n
Ka
ya
h
hi
7,000
Arterial Road (Miles)
0
Ka
c
8,000
5,000
4,000
Arterial Road by Type (KM)
3,000
30000
2,000
1,000
25000
an
Ay
ey
ar
wa
dy
Sh
go
n
e
in
Ya
n
on
Ra
kh
M
M
ag
w
e
M
an
da
la
y
o
Ba
g
yi
in
th
ar
g
ai
n
Ta
n
Sa
g
n
Ka
yi
Ka
c
15000
hi
n
Ka
ya
h
0
20000
in
0
1 million motorbikes
Ka
yi
000
Trucks
Two wheelers
Ch
000
Passenger
2014-15
2013-14
2012-13
2011-12
2010-11
2005-06
2000-01
000
10000
5000
30000
25000
0
Arterial Road by Type (KM)
1995-96
2000-01
2005-06
Bituminous
20000
2010-11
2011-12
Metalled
2012-13
Surface
2013-14
Earth
15000
10000
5000
0
1995-96
2000-01
2005-06
Bituminous
2010-11
Metalled
2011-12
Surface
2012-13
2013-14
Earth
2014-15
2014-15
Artery road network
Topography and demographics have
been prime determinants when
laying out Burma’s road network.
With the largest cities of Mandalay,
Naypyitaw and Rangoon lying on
a north-south axis, about 800km
apart, flanked by the Bago mountain
range on the west and the Shan
highlands to the east, roads have
traditionally tended to follow a
similar axis. A case in point is the
Rangoon-Mandalay Expressway,
now Burma’s main highway. The
north-south emphasis is gradually
changing, however, and east-west
roads are increasingly being added.
Burma is also a lynchpin on the
planned Asian and Asean Highways.
Already it is crossed by these
significant links, though in many
cases the roads require further
improvement.
Opportunities for British companies in Burma’s Infrastructure sector
With the Mandalay-Rangoon
Expressway in place, Burma is
working to expand its domestic
highway network. Part of this is
driven by the need to link up with
neighbouring countries, which is
covered below, but other highways
are directed at connecting some
of the more remote areas of the
country.
Spending on road maintenance is an
estimated two to three times below
need, with up to 60% of major roads
requiring significant maintenance.
Source: ADB July 2016 working paper, “Burma Transport Sector Policy Note:
Trunk Roads”
25
26
2 million motorbikes
000
1.5 million motorbikes
000
1 million motorbikes
000
0.5 million motorbikes
0
0
Opportunities for British companies in Burma’s Infrastructure sector
1995-96
2000-01
2011-12
2010-11
2005-06
2013-14
2012-13
2014-15
Arterial Highways (miles)
30,000
25,000
20,000
15,000
10,000
5,000
0
1995-96
2005-06
2000-01
2013-14
2012-13
2011-12
2010-11
2014-15
Rangoon is one of the few cities
where the bus network is almost
entirely run by private companies.
The different lines compete against
each other, and are often accused of
recklessness in an effort get to the
stop first and win fares. However,
Yangon Bus Public Company started
a bus service called BRT Lite, which
charges modestly higher ticket fares
but provides a comfier, safer ride for
commuters.
3.5 ROAD BY STATE AND REGION
Arterial Road (Miles)
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
n
an
Ay
ey
ar
wa
dy
Sh
go
ne
hi
Ya
n
on
Ra
k
la
y
da
an
M
M
we
o
ag
M
yi
Ba
g
ar
ng
Ta
n
in
th
in
ai
Sa
g
n
Ka
yi
Ka
c
hi
n
Ka
ya
h
0
Ch
000
The previous USDP government held 1,283 deaths in 2005. The new NLD
has pledged to cut the
numerous tenders to improveArterial
or Road bygovernment
Type (KM)
number
in
half
by 2020.
build
roads,
appearing
to
gradually
30000
move away from the government
25000
Local roads
internally constructing roads. It
20000
seems likely that the current NLD
Many of the country’s roads are
government will continue the trend,
15000
underutilised at present, but this is
though details on their policies are
10000
not true of Rangoon. Burma’s largest
only gradually becoming clear.
5000
city and commercial capital has seen
commuting times shoot up as car
As0of 2015, most highways except
1995-96
2000-01
2010-11
2011-12
2012-13
2014-15
ownership
takes2013-14
off.
for the
main links
were2005-06
operating
Metalled
Surface
Earth
below capacity,Bituminous
meaning Burma
is
A number of organisations are
in position choose selectively which
working on the problem. JICA
roads should be prioritised. Many
released a report titled the
highways also have build-operateComprehensive Urban Transport Plan
transfer terms.
of Greater Rangoon. Its data shows
Safety is also a concern. The number the majority of people either take the
bus or walk, though car ridership is
of accidents in Burma has risen with
the growth in the number of vehicles, on the rise.
with 4,420 deaths in 2015 from
Downtown Rangoon is also off-limits
to non-official motorbikes.
The largest change made to
Rangoon’s streetscape in recent
years is the introduction of
flyovers. Intended to decongest
key intersections, they have been
controversial, and in some instances
may need to be knocked down to
make way for elevated roads.
To date, seven flyovers have
been built in Rangoon, at Hledan,
Bayintnaung, Shwegonedaing,
Myayingone, Tarmwe, 8 Mile and
Kokkine. Others have been planned,
though have encountered some
resistance and budgetary pressure,
meaning it is as yet not certain if
they will go ahead.
A traffic control system tender
was won by China Railway and
local partner Myanmar Shwe
Yin Company, which will help cut
Opportunities for British companies in Burma’s Infrastructure sector
commuting time once complete. New
effort is also being put into improved
parking capacity, as with a lack of
lots, cars are now frequently parked
on the road.
In the medium term, several elevated
highway proposals have been made
to connect with central Rangoon,
while ring roads around the city are
also on the cards.
Road Transport Administration
Department
Government Bodies, Policies, and
Development Partners
Responsibly for coordinating plans
and budgets for the Ministry of
Transportation and Communication,
as well as issuing commercial
licences, overseeing passenger and
freight logistics, and heading up
international relations
A number of bodies have authority
in Burma’s road infrastructure.
The new government has made
the first steps toward rationalising
the bureaucracy governing road
transportation in Burma, though
work still needs to be done.
Ministry of Transport and
Communications
The Ministry of Transport, Ministry
of Rail Transport and Ministry of
Communications and Information
Technology have all been merged
into one body, the Ministry of
Transport and Communications, in
April 2016. It is led by U Thant Zin
Maung, a retired railways official and
NLD politician.
Responsible for road safety, drivers
licences, vehicle registration, and
other associated activities. It is
under the Ministry of Transport and
Communications.
Transport Planning Department
Ministry of Construction
International Highways, Union
Highways and Arterial highways
are under the control of Ministry
of Construction, meaning the
ministry arranges for construction
and maintenance, forms joint
ventures, obtains land and imports
construction equipment.
Department of Highways
Responsible for planning arterial
roads, has also traditionally designed,
implemented and maintained the
roads. Some of its processes are in
need of modernisation.
Department of Bridges
Formerly part of the Department of
Public Works, in March 2015 it was
reformed into its own entity, along
with the Department of Highways
Public Private Partnerships
About 14% of roads are under
BOT schemes with Public Works
Department, or 28 companies with
64 roads totalling 3,408 miles.
Common terms for local companies
has been 40 years from the start
of operations until the end of the
transfer period, while 60 years is the
term for international companies, for
instance Italian-Thai Development in
Dawei.
Tolls must be approved by authorities
upon obtaining the Final Completion
Certificate.
Yangon City Development
Committee / Mandalay City
Development Committee
In charge of local roads as well as
urban planning
27
28
Opportunities for British companies in Burma’s Infrastructure sector
Japan International Cooperation
Agency (JICA)
JICA has been active across many
areas of transport infrastructure
in Burma, though particularly so
in Rangoon. It has formulated a
document called the Comprehensive
Urban Transport Plan of Greater
Rangoon in 2014, as well as the
National Transport Master Plan.
Asian Development Bank (ADB)
The ADB along with many
international partners began
dramatic re-engagement with the
country in 2012, working to clear
off arrears so it could again begin
lending in Burma. It has extended
some road loans, such as for an
important 66km stretch of highway
in Kayin State., a missing link on the
East-West Economic Corridor, which
is to link Rangoon with Bangkok and
then on to Vietnam.
Korea International Cooperation
Agency (KOICA)
KOICA has provided technical
assistance for a Master Plan for
Arterial Road Network Development
Key Projects
The World Bank, based on work
by JICA, has identified four road
transport corridors as appearing
critical to Burma’s medium-term
development and to unlock latent
trade:
• Rangoon-Naypyitaw-Mandalay
(AH1) / Rangoon-Pyay-Magway Mandalay;
• Mandalay-Lashio-Muse (AH14);
• Mandalay-Kalay-Tamu (AH1)
and Mandalay-Monywa-Kalay Htotla-Tiddim-Rih (two branches of
the same corridor); and
• Rangoon-Bago-Hpa’an Myawaddy (AH1)
In addition, expect significant work
to take place aimed at congestion in
Rangoon. Mooted plans so far have
included ring roads, an elevated
highway, better parking space, added
bridges across the city’s main rivers,
and even a transport management
system.
Outlook and Opportunities
There is a growing realisation that key
road links must be improved given
the rapid growth in vehicle traffic on
Burma’s roads. Experts are urging the
country to rapidly increase its budget
for transportation, taking advantage
of concessionary lending now available
from a number of institutions, as well
as making better use of public-private
partnerships.
The new government has already
moved to streamline the ministries
overseeing road transport, though
there is still more to do in this area.
Road transport has become a key
topic particularly in Rangoon, as the
influx of cars is growing congestion, as
well as closer to the China, India and
Thai borders, where businesspeople
are keen to grow trade.
There is still much to do in improving
Burma’s roads, and there are a range
of opportunities for UK companies:
• An expected increase in tenders for
both local and national-level
projects
• PPP opportunities in road
construction
• Contracts for various aspects of
road construction, including
engineering and design
• Financing
• Add-on industries, including but
not limited to parking garages,
highway rest stops, traffic
management systems
Opportunities for British companies in Burma’s Infrastructure sector
Rangoon-Naypyitaw-Mandalay (AH1) /
Rangoon-Pyay-Magway-Mandalay
Mandalay-Lashio-Muse (AH14)
The country’s main highway artery is the Rangoon-Mandalay
Expressway. Completed in 2010, it is four-lane, separated
road. It is credited with cutting the travel time between the
country’s two largest cities from 15 hours to 8 hours, as well
as passing near other main cities such as Bago, Taungoo,
Naypyitaw and Meiktila, which lay adjacent to the current
route. The corridor is by far the heaviest in terms of freight
delivery, with a World Bank estimate claiming that of the
main transport corridors, this one received over 50% of total
traffic.
The Mandalay-Lashio-Muse road connects Upper Burma’s
main city, Mandalay, with the key Muse-Ruili border crossing
to China.
Further improvement plans were announced in 2015, when
a tender was called to improve it to modern standards,
including improving safety features such as rest stops every
50km and fences on either side of the road to keep out
motorbikes or the odd cow.
China is by far Burma’s largest overland trading partner, with
an estimated 86% of Burma’s border trade taking place with
the country. The majority of that trade travels on this road.
While improved on previous conditions, the road favours
twists and turns over bridges and tunnels when travelling
through the Shan Mountains. Transport speeds often slow to
20 to 25 km/h, and repairs are often inadequate.
The exchange of traffic is limited by a municipal agreement
between Muse and Ruili, where trucks may cross only a few
kilometres to the trading posts in either country. Gradual
liberalisation of these measure will likely also increase traffic
flows.
Mandalay-Kalay-Tamu (AH1) and MandalayMonywa-Kalay-Htotla-Tiddim-Rih
Rangoon-Bago-Hpa’an-Myawaddy
The Mandalay-Tamu road is part of the Tri-lateral Highway,
a 3,200km link connecting Moreh in India with Mae Sot
in Thailand, by way of Mandalay. Although it runs largely
through Burma, the link has received significant Indian and
Thai investment, with India upgrading parts of the TamuMandalay road to an all-weather route.
Connecting Rangoon with Myawaddy on the Thai border, the
road has been much improved since 2015. It has formally
been upgraded from being a one-way road that alternated
directions on different days of the week, to a proper two-lane
road.
India under Prime Minister Narendra Modi has prioritised
closer ties with Burma. Overland trade links are small but
growing – from $15m in 2006-7 to $60m in 2014-15, according
to a World Bank report. Tamu is the main gateway, though
there is a second crossing at Rih that also serves commerce.
Tender winners were also announced in July 2016 to upgrade
a 66km stretch of the road in Kayin State, which represents
the missing link on the East-West Economic Corridor. The
upgrades are funded by a loan from the ADB.
29
30
Opportunities for British companies in Burma’s Infrastructure sector
Opportunities for British companies in Burma’s Infrastructure sector
31
RAIL
4.1 ASEAN RAIL LENGTH
The rapid build has made the
domestic railways the largest in the
region, an impressive achievement
given the relatively underdeveloped
state of Burma.
Rail Length (km)
7,000
6,000
5,000
4,000
3,000
2,000
1,000
Route mile
am
Vi
et
n
nd
or
e
ila
Th
a
ap
ng
Si
ar
m
ili
pp
in
es
Ph
al
ya
n
M
ay
si
a
o
La
M
do
n
In
bo
d
ia
es
ia
0
ei
While there has been significant
growth already, there is still much to
do. Burma’s rail network is currently
Burma’s planners previously saw rail
as more than simply a transportation
method, but as a way of connecting
the nation. While endowed with a
rail network on independence, it has
grown significantly since, adding
thousands of bridges, at least a dozen
tunnels and extending the network by
at least 70%.
• 412 locomotives, 960 stations,
1375 passenger coaches, 3384
wagons
• Track length of 5,844km in 2013,
the most in Southeast Asia
Ca
m
The priority has clearly been on
expansion of the rail network in
recent years, though this has been
expensive. With the low-hanging
fruit already plucked, much of the
recent network expansion has been
in mountainous areas such as Shan
State. Still, the network now totals
5,844km, longer than Indonesia’s at
4,861km or Thailand’s at 4,034km.
Current Trends
Fast Facts
un
Burma has the longest network of
rail line among Southeast Asia’s ten
nations. The first line, the Irrawaddy
Valley State Railway, opened in 1877
connecting Rangoon with Pyay,
some 262km to the north. The lines
gradually extended, until the country’s
three railway companies combined
into the Burma Railway Co in 1896.
Burma Railway still exists, though is
now state-owned Myanma Railways.
• Myanma Railways carried 54.8
million passengers in 2012
• 1,000 mm gauge is standard in
Burma
• Burma is to provide an important
link on the 14,080km TransAsian
Railway network
isolated inside the country, and
there are plans afoot to connect
lines to India, Thailand and China.
There are also significant domestic
improvements that need to be taken,
which is obvious to those following
the guidebook’s advice and finding
themselves chugging along the
Circle Line at less than 20km/h. The
business case facing Burma’s stateowned railways is also squeezed, as
road takes a larger share of transport,
and Myanma Railway’s revenues
do not current meet expenses. Rail
may be facing increased pressure
from road transport, but it can play
an important part of Burma’s future
transport mix.
Br
Tourist guidebooks covering Burma
often include the Circle Train as a
highlight of Rangoon. It winds its way,
as the name suggests, in a large circle
around the city, taking three hours
to complete. While the guidebooks
recommend the train as a way to see
parts of the city that may otherwise
remain hidden, it also provides a
glimpse into the opportunities of rail
transportation in Burma.
32
Opportunities for British companies in Burma’s Infrastructure sector
Rail Length (km)
7,000
6,000
5,000
4,000
3,000
2,000
1,000
Vi
et
na
m
re
Th
ai
la
nd
es
Si
ng
ap
o
ar
lip
pi
n
Ph
i
M
ya
nm
La
o
M
al
ay
si
a
es
ia
In
do
n
bo
di
a
Ca
m
Br
u
ne
i
0
Route mile
800
700
Rail Length (km)
i
ry
Ya
n
go
n
an
in
th
a
Ta
n
Sh
rw
ad
y
Ay
ey
a
am
nd
ila
Vi
et
n
Si
Th
a
ng
pp
ap
in
or
e
es
ar
m
Ph
ili
ya
n
M
In
M
do
al
La
ay
si
a
o
a
ne
si
a
di
bo
Ca
m
Br
un
ei
0
Ra
kh
in
e
Sa
ga
in
g
0
1,000
on
100
2,000
M
200
3,000
hi
n
Ka
yi
n
Ka
ya
h
M
ag
w
m
e
an
da
la
y
300
n
5,000
4,000
Ka
c
500
400
Ch
i
7,000
6,000
Ba
go
600
4.2 RAIL ROUTE MILE INSIDE BURMA
4.3 RAIL ROUTE-TON MILE
Freight ton-miles
Route mile
800,000
800
700
700,000
600
600,000
n
go
2000-01
2,000
am
Vi
et
n
nd
ila
Th
a
ng
ap
or
e
Si
pp
in
es
ili
Ph
ar
m
ya
n
M
ay
si
a
M
al
La
o
ne
si
a
In
do
di
a
bo
Ca
m
un
ei
0
2014-15
ga
Si
n
nd
la
Th
ai
po
re
es
in
pp
Ph
ili
m
ar
M
ya
n
a
ay
si
al
M
a
o
La
di
bo
Ca
m
Br
un
e
a
i
Improved
roads are providing
0
1995-96competition
2011-12
2010-11
2000-01 2005-06
significant
to rail.
Travel
between Rangoon and Naypyitaw
takes four to five hours by road,
Passenger patterns are also
Pasenger - kilometres (million)
and eight to nine by rail. Falling bus
different from other regional
18,000
prices
and
growing
car
ownership
countries. While countries such as
16,000
14,000
rates also pressure passenger
Singapore, Malaysia and Thailand
12,000
rail, while improved road logistics
have smaller networks, they have
10,000
systems and internal railway
much greater ridership levels. This is
8,000
challenges
have
slowed
freight
because of the urban transit systems
6,000
in the major cities, which funnel
delivery.
4,000
Br
2013-14
Burma’s rail passenger rates have
also taken a hit from growing
competition particularly from road
and air for longer trips. However,
Burma people are still far more
likely to take a train trip on a per
capita basis than people in its closest
economic peers, Vietnam, Laos
and Cambodia. Indonesia also has
five times the amount of people as
Burma, but its people take only three
times the amount of trips.
ne
si
100,000
2012-13
2011-12
2010-11
large quantities
of passengers on
Pasenger - kilometres (million)
a daily basis. Burma’s equivalent is
the Circle Line in Rangoon, though
it is far from the crowded urban rail
systems of Bangkok or Singapore.
In
do
High-volume goods predominate.
Timber at 35,634 tonnes,
high18,000
16,000
value petroleum products
at
14,000
23,956 tonnes, and stone
at 42,998
12,000
tonnes were among 10,000
the main
products shipped by 8,000
rail in 20146,000
15. Government orders
are also
4,000
crucial, providing a guaranteed
level
2,000
of business for Myanma Railways.
0
Reform is also needed on the
2014-15 cargo space.
2013-14
2012-13
process
of selling
200,000
2005-06
Ya
n
yi
ar
Sh
in
th
1995-96
Ta
n
ng
ai
Sa
g
hi
Ra
k
M
Ka
yi
hi
Ka
c
in
Ch
Ba
g
rw
ad
Ay
ey
a
During the period of expansion,
some lines were added that have a
less than compelling economic
Freightcase.
ton-miles
800,000
There are still important expansion
700,000
plans, though a more balanced
600,000
approach is now likely, also including
500,000
upgrades and improvements to the
400,000
300,000
existing lines.
an
0
ne
100,000
0
on
200,000
100
n
Ka
ya
h
M
ag
w
m
e
an
da
la
y
300,000
200
n
300
o
500,000
400,000
y
500
400
3,000
2,000
Opportunities for British companies in Burma’s Infrastructure sector
1,000
m
nd
Vi
et
na
ila
Th
a
Ph
Si
n
ili
pp
in
ga
po
re
es
ar
m
a
M
ya
n
o
La
In
M
al
do
n
ay
si
a
es
i
bo
di
a
Ca
m
Br
u
ne
i
0
Route mile
800
700
600
500
400
300
200
100
Sh
an
in
th
ar
yi
Ya
ng
on
Ta
n
Sa
ga
i
ng
ne
Ra
kh
i
M
on
n
Ka
ya
h
M
ag
w
m
e
an
da
la
y
Ka
yi
n
in
hi
Ch
Ka
c
Ba
go
Ay
ey
a
rw
ad
y
0
Freight ton-miles
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
1995-96
2000-01
2005-06
2013-14
2012-13
2011-12
2010-11
2014-15
initial procurement package for
international bidding on project
construction in October 2016, with
a goal of finishing the upgrades by
2020.
4.4 PASSENGER KM (ASEAN)
Pasenger - kilometres (million)
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
The number of passengers taking
Myanma Railways peaked in the 2007
fiscal year, and has since been in
decline. A July 2016 ADB policy note
said that 35% of all trips are currently
on the Rangoon-Mandalay line, while
six of the 34 total Myanma Railway
routes carry 74% of the passengers.
Burma’s train trips are cheap, but they
are also often uncomfortable, slow,
crowded, and frequently delayed.
Rail infrastructure also requires
significant improvement. Wooden
sleepers still predominate, despite
other materials being more suited
for the tropical climate. Myanma
Railway’s trains are ageing rapidly,
with about half of locomotives over 30
years old. Little of the existing track is
also twinned.
Myanma Railways officials have said
the railway targets an average of
48km/h for freight and 68km/h for
passenger trips. Achieving a modern
railway in Burma is possible, though
will require extensive upgrades.
am
Vi
et
n
nd
ila
Th
a
ap
ng
Si
in
pp
ili
Ph
or
e
es
ar
ya
n
M
al
m
a
ay
si
o
M
do
In
La
a
ne
si
a
di
bo
Ca
m
Br
un
ei
0
Central to future plans is greater
international connectivity. Burma’s
current rail network, while extensive,
is cut off from its five neighbours.
There are plans to connect directly
with at least three of these five
neighbours, namely India, Thailand
and China, though the three
routes are at different stages of
development.
There are an array of plans to improve
various lines as well as the overall
network. Japanese firms Mitsubishi
and Hitachi inked a 2.4bn yen ($20m)
contract with Myanma Railways to
supply and install signaling systems in
May 2015. The contract is covered by
grant aid from JICA, with completion
schedules for June 2017.
JICA has also discussed upgrading
Rangoon’s Circle Line. The line is
managed and operated by Burma
Railways, with 38 stations on its
46 kilometer route, with about
122 trains per day. It is planning
a tender announcement of an
Myanma Railways has a range of
other ongoing projects. It is a largescale land owner, and has an ongoing,
high-profile tender underway for
redeveloping Rangoon’s historical
main station. It also is said to be
planning to develop new dry ports,
in the Ywarthargyi area of Rangoon
Region and the Myitnge area of
Mandalay Region.
It has also not been averse to
experimenting with new services.
In 2016 the former Ministry of Rail
Transportation signed a deal with
Japan’s West Corporation to build
a tram line on Strand Road in the
downtown core. Noting that Rangoon
has previous had a tram line from
1906 to 1921, there were plans to
gradually expand on the initial 455
million yen ($3.9m) line. However,
it ultimately proved unsuccessful,
stopping in mid-2016.
Burma’s railways have a promising
start, but there is still much that
needs to be done. The quality of
domestic tracks need to be improved,
urban connections developed, and
international lines built, before Burma
can take full advantage of rail travel.
33
34
Opportunities for British companies in Burma’s Infrastructure sector
Main government agencies and
development partners
Ministry of Transport and
Communications
Railways previously had their
own Ministry, the Ministry of Rail
Transport. However, this was merged
into the Ministry of Transport and
Communications by the new National
League for Democracy government
in April 2016, shortly after taking
office. The new Ministry covers
not only the former Rail Transport
ministry, but also the former Ministry
of Transportation and Ministry of
Communications and Information
Technology. Minister U Thant Zin
Maung worked at Myanma Railways
before starting as a politician.
Myanma Railways
The only rail operator in the country,
Myanma Railways traces its history
to 1877. It operates the country’s
5,844km, 1,000 mm gauge rail
network, including the Rangoon
Circle Line. Its revenues are currently
not enough to meet operating costs.
Source: ADB 2016 report: Burma Transport Sector Policy Note: Railways
On an average day it operates 439
trains, of which 196 are inter-city,
215 are suburban and 28 are freight
trains. It has recently been a lossmaking institution. It also plans
Opportunities for British companies in Burma’s Infrastructure sector
and organizes future rail projects.
It has two major diesel locomotive
workshops, Ywataung near Mandalay
and Insein near Rangoon. The firm’s
record-keeping and ticketing services
are paper-based and outdated.
Japan International Cooperation
Agency (JICA)
In September 2014 JICA signed a
deal to provide low-interest loans to
Burma for four projects with a total
of up to 63.166 billion yen ($594m).,
including improving Burma’s most
important rail lines
Asian Infrastructure Investment
Bank (AIIB)
The possibility of the AIIB investing
in large-scale rail projects has been
discussed by senior officials on both
sides, though so far no deal has gone
ahead
Key future projects
A line from Singapore to Kunming,
in Yunnan, a province in Southern
China, has been discussed for
years, after first being proposed at
a 1995 ASEAN Summit as part of
the 14,080km Trans-Asia Railway
Network. The line is intended largely
for freight.
Broadly, there are three main
routes such a line could follow.
Each potential path has its own
advantages and disadvantages.
• West – through Burma
• Middle – north from Bangkok,
through Laos
• East – through Cambodia and
Vietnam
For Burma’s portion, there is a 153
kilometre missing link with Thailand,
commonly planned for the Three
Pagoda Pass, as well as a shorter
missing portion with China. Burma’s
tracks would also likely need
significant upgrade to assist the
route with becoming viable.
International
Singapore-Kunming Rail Line
(part of the Trans-Asia Railway
Network)
Much of the potential future rail
build in Burma fits into the context
of broader regional connections.
Kunming (China) to Kyaukpyu Rail
Line
The Kunming to Kyaukphyu line
would run for 868km largely through
Burma. It would connect inland
Kunming with the Indian Ocean at
Kyaukpyu, which is the future site of
one of Burma’s three main Special
Economic Zones. The line would
expedite Chinese inland commerce
with different countries, though it
has proven controversial.
A Memorandum of Understanding
between China and Burma was
signed in April 2011 in Naypyitaw. The
line would run for 4.2km through
China, before entering Burma at
Muse and travelling through Lashio,
Mandalay, Magwe, Minbu and
Ann before reaching Kyaukpyu, a
distance of 809km.
A joint China-Burma team conducted
a survey, geological investigation
and checked for infringement by
buildings along the proposed site,
before submitting a feasibility study
in 2012.
In 2014 Burma announced it had
annulled the agreement, but there is
still some interest in pushing forward
with previous plans.
35
36
Opportunities for British companies in Burma’s Infrastructure sector
Link with India
closed shortly after the war in 1947.
One day, there could be a direct
rail link between India and China
passing through Burma. There is
an estimated missing link of 135km
in Burmese territory for a line from
Kalay to Tamu, which is on the Indian
border. There is a further stretch
inside India that would also need to
be built.
Re-connecting Burma with Thailand
has been mooted, with the most likely
route being the Three Pagoda Pass.
A feasibility study into the route was
conducted by the Korea International
Cooperation Agency from 2005 to
2007. However, the addition of a dam
on the Thai side flooded some of the
potential path, while the route overall
is mountainous, steep, expensive
and likely to receive low freight and
passenger business, at least at first.
Both countries agreed to put it off in
2011.
A feasibility study had been
conducted for the line in 2004,
though returned with the result
that the line was not economically
viable. A decade later, though, the
plan was picked up again, with the
first meeting of the Joint Working
Group on Railways between India and
Burma being held in Naypyitaw on 16
and 17 January 2013.
Myanma Railways previously
estimated the cost at $29.6m,
though other reports have said costs
could be higher. The project period
was anticipated to end by 2020,
though its current status in unclear.
Rangoon to Mandalay
Japan has completed a feasibility
study on a proposed $1.7bn
modernisation of the crucial
Rangoon to Mandalay rail link.
Subsequently, a new line has been
proposed that would link Burma’s
planned special economic zone,
Dawei, with Kanchanaburi and the
rest of Thailand.
In May 2016, plans were revealed to
call a tender for upgrading the link by
the end of the year. The goal is to cut
travel time on the 622km line from
its current 16 hours to just eight.
Government officials had previously
said this would mean trains travelling
at up to 100km/h on some stretches.
Both sides have agreed to cooperate
in preparing a detailed report for the
line.
Domestic
Rangoon Circle Line
Bago to Dawei
Thailand
In conjunction with the proposed
Thailand to Dawei line, Burma has
discussed upgrading the 507km rail
line linking Dawei with Bago, a city
north of Rangoon.
JICA, Yangon Region and the Yangon
City Development Committee have
looked at improving Rangoon’s
commuter rail line to assist with
easing congestion in the city. Officials
have said the aim is to increase the
number of people riding rails from
3% of Rangoon’s journeys at present
to 30% over the next three decades.
There was once a rail link between
Thailand and Burma, though it was
not a happy story. The so-called
Death Railway was built by the
Empire of Japan in 1943 to support
its war aims in Burma during the
Second World War. Although it
imposed significant costs, the line
Opportunities for British companies in Burma’s Infrastructure sector
It is also likely that a spur line will
be developed to connect with the
Thilawa Special Economic Zone
located to the Southeast of Rangoon.
saving time and improving reliability.
Urban centres, particularly Rangoon,
will also benefit, as urban rail grows
as an alternative to the increasingly
busy streets.
Development on railway land
Two of Rangoon’s most prominent
proposed developments are slated
for Myanma Railways land. The
former headquarters of Myanma
Railways on Bogyoke Aung San
Street is to be restored as a fivestar hotel by a group of companies
including Peninsula Hotels, local
firms Yoma Strategic Holding and
First Myanmar Investment, the ADB,
IFC and Mitsubishi, while a modern
mixed-use development will be built
in the vicinity.
To the north, a tender contest is
ongoing to upgrade the historic
Yangon Central Railway Station and
build a mixed-use project nearby.
Outlook and Opportunities
Burma may have a large rail network
already, but there are even bigger
plans. International links are likely
to be established in the years
ahead, particularly affecting freight
shipments though also a boon to
passengers. Likewise, the domestic
network will be upgraded with newer
technology and better practices,
There are significant opportunities
in Burma’s expanding rail network.
These include, but are not limited to,
• Line expansion and improvement
• Opportunities to supply rolling
stock
• Service-based upgrades
• Consultancy, engineering, project
management and design work
• Opportunities in property
development
37
38
Opportunities for British companies in Burma’s Infrastructure sector
Opportunities for British companies in Burma’s Infrastructure sector
Ports
Introduction
Burma’s waters have historically been
important conduits for the shipment
of goods and travel of passengers.
Long before a strong road network
was established, its rivers served
as highways and its ocean border
provided connections with the world.
There are three main rivers running
general north-south through
Burma. The largest of them all is
the Ayeyarwady (Irrawaddy), one of
Southeast Asia’s great waterways.
Fed by the Himalaya snows in the
north, it winds its way 2,170km to the
sea. Along the way, it passes many
of the country’s largest population
centres, including Myitkyina, Bhamo,
Mandalay and Pakkoku before
emptying into the Andaman Sea.
The heartland area it winds its way
through has been at the centre of
Burma’s history, as it also flows by
many of the ancient capitals such as
Bagan, Inwa and Amarapura.
In the west is the Chindwin river,
which travels from near the border
with India before joining the
Ayeyarwady between Pakokku and
Mandalay. In the east is the Salween
(Thanlwin) river, which starts in
China, travels through the Shan
highlands, and eventually meets the
Andaman Sea at Mawlamyine, the
country’s fourth-biggest city.
39
40
Opportunities for British companies in Burma’s Infrastructure sector
A number of smaller rivers such as
the Sittang and Myitnge has also
traditionally played a role in the
country’s river travel.
Burma also has a long coast wedged
between Thailand and India. It runs
for 1,930km, more than Taiwan or
Portugal, but less than Germany
or Egypt. Rangoon has become a
significant port on the Andaman Sea,
part of the Indian Ocean, and plans
call for expansion or creation of a
number of other large ocean ports.
FAST FACTS
Overview
Prospects are strong to increase
volumes of goods moved by ship,
though challenges remain. Rangoon
Port is the main international
gateway to Burma, though volumes
are catching up to capacity and
expansion is on the cards.
While there are nine official ocean
ports in Burma, they generally
require significant expansion before
they will attract large volumes.
Rangoon has recently been the arrive
destination of upwards of 80% of
Burma’s sea-based trade.
5.1 BURMA PORT
Capacity of vessels arriving at Myanmar Ports
25000
20000
15000
• Burma has an estimated 1,930km
of ocean coastline
• Has three main rivers, the 2,170km
Irrawaddy, the 2,400km Salween
(Thanlwin) river, and the 1,200km
Chindwin
• Rangoon port handled 29.2 million
tonnes in 2014-15, with exports
predominating over mports
• Excluding Rangoon, Burma has
eight other ocean ports, including
Sittwe, Kyaukypyu, Thandwe,
Pathein, Mawlamyine, Dawei, Myeik
and Kawthaung. Kyaukypu and
Dawei, along with Thilawa near
Rangoon, are slated for large-scale
Special Economic Zones including
port facilities
10000
5000
0
2010-11
Yangon
2011-12
2012-13
Sittwe
2013-14
Pathein
2014-15
Mawlamyine
Other Ports
The site of Rangoon Port at the
The number of international shipping
doorstep of the city itself goes a
lines with service to Rangoon has
Cargo handled byrapidly
Yangon Port
(tons)
long way to explaining its popularity.
increased.
In 2014, Shipping
35,000,000
Rangoon is Burma’s commercial
Corporation of India announced a
30,000,000
capital and one of the main hubs in
fortnightly service connecting the
the
country’s
road
and
rail
network.
city with Colombo and Chennai. In
25,000,000
Major businesses in the country
January 2015, China Shipping began
20,000,000
generally have a Rangoon presence
a direct service connecting the city
15,000,000
if they are not based there. As
with Shanghai. However, most Burma
10,000,000
Burma’s economy takes off, it has
international shipping still comes by
shouldered
much
of
the
growing
way of Singapore and Port Klang
5,000,000
import and export burden.
(Malaysia).
0
1995-96
2000-01
2005-06
2010-11
2011-12
2012-13
2013-14
2014-15
Opportunities for British companies in Burma’s Infrastructure sector
Burma had a fleet of 109 seagoing
vessels as of December 2015, defined
as merchant vessels of 100 gross
tonnes or larger, according to a
report by Nederland Maritiem Land.
The fleet was composed of 45 bulk
carriers, 12 container ships, 11 ferries,
five tankers and 36 seagoing tugs,
with an average of 27.6 years and
average size of 3176 gross tonnes.
It is expected to expand further
with the additions to the container
fleet, though is still small at the 74th
largest in the world.
Rangoon may predominate, but
given its location on a river, it cannot
be developed into a deepwater port.
Nonetheless, plans are in place to
add substantial capacity to other
ports. Dawei and Kyaukpyu are two
of the most exciting prospective
locations, give the large-scale Special
Economic Zones they are to connect
with. Authorities have discussed
expanding other ocean ports as well.
River Transport
Away from the ocean, Burma’s
rivers have historically played an
import part in transportation, and
continue to do so. After road, the
rivers carry the highest volumes of
freight among different forms of
transportation.
41
Capacity of vessels arriving at Myanmar Ports
Rangoon
Port
25000
20000
The
main port is on the Rangoon River, the eastern-most branch of the
Ayeyarwady
River as divides into a delta and enters Andaman Sea. The port
15000
itself is about 32km from the ocean. Rangoon River is generally shallow,
10000 ships to around 10,000 to 12,000 deadweight tonnes. The berths
limiting
themselves are located along the southern edge of Rangoon at Strand (Kanna)
5000
Road,
in Bo Aung Gyaw, Myanmar Industrial Port and Asia World Port.
0
2010-11
2012-13
2013-14
In addition,
a new port 2011-12
has been established
at Thilawa
SEZ, about2014-15
16km
downstream
from
Rangoon.
Thilawa
is
a
joint
government
and
private
sector
Yangon
Sittwe
Pathein
Mawlamyine
Other Ports
project with Japanese and Burmese owners, while the port itself is developed
and operated by Hong Kong’s Hutchinson Port Holdings.
Cargo handled by Yangon Port (tons)
35,000,000
30,000,000
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
0
1995-96
2000-01
2005-06
2010-11
2011-12
2012-13
2013-14
2014-15
Use of Rangoon Port has increased rapidly on the back of economic growth.
However, imports have recently outpaced exports, which has resulted in
logistical changes at the ports themselves.
River transport is ideal for moving
bulky, non-time sensitive goods
from Burma’s heartland out to the
sea. A number of private operators
compete with the state-owned
services of the Ministry of Transport
and Communications on Burma’s
inland rivers.
The Ayeyarwady is the main avenue
for river transport, though is a
challenging river to navigate and
in need of engineering support,
specifically to build and maintain a
channel for traffic. Running northsouth, it is broadly parallel to main
road and rail links. The Chindwin is
another often-used river, functioning
as the main mode of transport along
42
Opportunities for British companies in Burma’s Infrastructure sector
some of its stretch. The Salween
on the other hand is not navigable
for much of its length, only in
general use for a stretch north of
Mawlamyine, where it meets the
ocean.
Department of Marine
Administration
Inland Water Transport (IWT)
Department
Responsible for marine safety,
internally send externally. Oversees
maritime legislation and rules.
Key to improving water transport
is the improvement of river
port facilities, such as terminals
for passengers and cargo and
warehouses, improvements to the
river, and also links to other forms
of transport such as road and rail.
Rivers, particularly the Ayeyarwady,
must have navigation depths
improved and modern aids added.
Myanmar Port Authority
A direct successor to the Irrawaddy
Flotilla Company set up in 1865,
which was nationalised shortly after
independence. The department has
gone through several name changes
before adopting its current name in
1989.
Government Bodies, Policies, and
Development Partners
Myanma Shipyards is a stateowned enterprise. It has built a few
vessels for export, though most
are used domestically. In January
2015 the firm signed a joint venture
agreement with Dong A Shipbuilding
Industry Joint Stock Company,
claiming $175.4 million will be
invested. Myanma Shipyards is to
hold 51%, it was reported. It has
a dockyard in Kamayut township,
Rangoon, to the northest of the main
port area. IWT also has dockyards
for small vessels.
Ministry of Transport and
Communications
Formed in April 2016 by the new
government, incorporating what was
previously the Ministry of Transport,
Ministry of Railways, and the Ministry
of Communications and Information
Technology. Responsible for planning,
developing and regulating all aspects
of the transport sector including air,
road, rail and sea.
Responsible for administering nine
of Burma’s publicly-owned coastal
ports, including Rangoon. It also
must regularly dredge the Rangoon
river, and is responsible for issuing
permits.
Myanma Shipyards
It operates a fleet of 339 vessels,
including passenger vessels, barges
and pusher tugs, while transporting
about 15 million passengers and 2
million tonnes of cargo annually.
Much of its fleet is in need of
upgrading.
This fleet operates in competition
with private operators. Statistics
show IWT has about 10% of the total
number of licensed inland ships, and
has declined in standing since 2011.
It also now largely concentrating on
freight, and carries few long-distance
river passengers.
Opportunities for British companies in Burma’s Infrastructure sector
Myanma Five Star Line
KEY PROJECTS
The state flag carrier of Burma,
founded as a state-owned enterprise
under the Ministry of Transport
in 1972, though has since been
privatised. It owns a terminal in
Rangoon’s Thaketa township, and
connects different parts of Burma
as well Singapore, as well as owning
several ferries.
Directorate of Water Resources
and Improvement of River Systems
Responsible for improving navigation
channels in Burma’s rivers as well
as stabilising inland river ports and
preventing bank erosion. Operates
under the Ministry of Transport and
Communications.
World Bank / International Finance
Corporation
In April 2016 the International
Finance Corporation, an arm of the
World Bank, announced a $40m
load to Myanmar Industrial Port. The
$40m in mezzanine financing was
the first phase of a planned $200m
financing packing, which is also to
include $160m in long-term loans
provided by IFC and other foreign
lenders
Expanded capacity for watertransport is urgently required.
There are several plans in place and
underway to improve ocean port
facilities, both in Rangoon and in
other parts of the country.
Thilawa SEZ is expanding, and deep
sea projects in Dawei and Kyaukpyu
are planned. They are covered in the
Special Economic Zone section of
this report.
Other port projects are also at
various stages of planning and
development.
1. Kaladan Multi-Modal Transport
Project
In 2008, Burma and India signed
a Memorandum of Understanding
to develop the Kaladan Multimodal
Transit Transport Project. It would
create a new logistics transit way.
Beginning in Kolkutta, goods would
be shipped by sea to Sittwe port
in Rakhine State, then either up
the Kaladan River or by road to
landlocked Northeast India. However,
work on this project has been slow.
2.Offshore supply base for oil
and gas
Burma has an extensive offshore gas
industry, though the lone domestic
facility is inadequate and often the
offshore facilities are supplied from
bases in other countries.
In mid-2015, Myanma Oil and Gas
Enterprise held consultations with 52
companies to discuss building a base
in Burma. While it appears a project
is still planned, it is unclear when or
where it will go ahead.
3.Development of ocean ports
While there are plans for Dawei and
Kyaukypu, and Rangoon is seeing
significant improvements, progress
has been slower at Burma’s smaller
ports. It remains unclear how they
will eventually be developed, though
private companies have expressed
interest in expanding some of the
ports, such as improving Pathein as
an agricultural centre or Mawlamyine
partly due to its connections with the
Salween. Other options are specialist
terminals, such as for petroleumbased products.
43
44
Opportunities for British companies in Burma’s Infrastructure sector
Other deep sea ports have been
mooted including Kalagauk near
Mawlamyine in Mon State, or
Ngayoke Bay in Ayeyarwady Region.
However, they are still at the proposal
stage. MoUs for both projects were
signed in 2013, though both are at
the feasibility study stage.
4.Development of inland ports
Improving inland river ports is
feasible, and increasingly likely as
commerce improves. Many are
simply now convenient stretches of
river bank, but proper facilities would
make river transit more attractive.
For instance, a JICA plan from 2014
proposed 2 x 90 m jetties with a
quay depth of 2 m for Mandalay, the
country’s second largest city.
Potential improvements are
extensive. There is a need to develop
Mandalay’s port facilities, as well
as introduce machine-based cargo
handling and improve maintenance
offerings. The route between
Mandalay and Rangoon also requires
improving the navigation channel
before it can reach its full potential.
5.Dredging and improvements
of the Ayeyarwady and Chindwin
rivers
Burma’s rivers may be generally slow
moving, but navigation is presently
difficult. Rivers need to be dredged
and deepened, and navigation aids
improved, which will be particularly
helpful during the dry season.
OUTLOOK AND OPPORTUNITIES
Rangoon Port, including nearby
Thilawa, has shouldered the vast
majority of Burma’s shipping burden.
It will continue to play an essential
role in the years to come, though
capacity is quickly being squeezed,
given constraints such as small areas
for containers and a location along
the Rangoon river.
Development of ports outside of
Rangoon are a clear opportunity.
Dawei and Kyaukpyu are slated
to receive large-scale SEZs with
attached ports, but there are also
a number of other current and
potential oceans ports that have the
potential to develop into regionally
important trading centres.
Inland waterways are also ripe for
expansion. Industry is currently
clustered mainly around Rangoon,
though successive governments
would clearly like to see more
business outside of the city. As
commerce expands, particularly
along the Ayeyarwady river to places
such as Mandalay, the need for bulk
transport will also grow.
Some potential opportunities for
Burma ports include:
•
•
•
•
•
•
•
Terminal building, including
warehousing
Inland transport, improving
ship building and design
Ships for tourism, search and
rescue, supply, harbour tugs
Port and stevedoring
capacity
Other transport
infrastructure links, such as
roads and rail
Improved navigation of
waterways, including
nighttime transport
Human resources for oceangoing vessels
Opportunities for British companies in Burma’s Infrastructure sector
45
46
Opportunities for British companies in Burma’s Infrastructure sector
INDUSTRIAL
Introduction
Burma has traditionally relied on
exports of natural resources, though
the pendulum is beginning to swing
to manufactured products. A rapidly
growing, large, young population
provides an ample potential labour
forcev for business to tap in to.
Moreover, strong connections with
more developed neighbours such
as Thailand and Singapore through
the ASEAN Economic Community
have helped to ease trade and
sourcing linkages. Burma also enjoy
preferential trade terms with many
of the world’s largest economies,
including the European Union.
The World Bank’s 2014 survey on
Burma’s business climate found
that access to land is the secondlargest constraint reported by local
companies. It is more likely to affect
smaller firms, but has the potential
to disrupt growth. The country’s
industrial and economic zones are an
effort to tackle this constraint.
There are a range of choices for
locating businesses to best take
advantage of the company’s
advantages. About 20 industrial
zones dot the country, with many
clustered around the commercial
capital of Rangoon, but others located
in places with specific opportunities.
They also tend to be private-sector
driven, and at least five more are
planned.
An alternative to the industrial
zones are the three large Special
Economic Zones planned for the
country. Thilawa SEZ is about 16
kilometres from Rangoon and has
already opened, while two even more
ambitious projects are planned,
including Dawei SEZ in the southern
Tanintharyi Region near Bangkok,
and the Kyaukpyu SEZ in western
Rakhine State. Locating business at
these SEZs comes with significant
incentives in the form of tax breaks
and cut red tape.
•
Thilawa, Kyaukpyu and Dawei
A total of 20 industrial zones
operating in the country, with five
more planned and numerous
others proposed
OVERVIEW
Burma has recently stood out
among regional countries for its
economic reliance on export of
natural resources, notably natural
gas, jade and timber. This may
be due partly to a large domestic
resource endowment, but decision
leaders would clearly prefer a more
diversified economy.
FAST FACTS
Development of industry was slowed
by the sanctions formerly imposed
on Burma, but in the five years of
the country’s democratic transition,
nearly all have been removed, setting
the stage for Burma industry to
flourish once again.
•
•
•
Burma is increasingly showing up
on the international scene, as world
industry looks beyond China to set
up export-oriented manufacturing
industries, while businesses area also
keen on tapping the large domestic
market of 54 million people. As shown
in the chart below, manufacturing
approvals skyrocketed as the
economy opened following the 2011
reforms.
These projects are already underway
or operating, but it is likely there will
be many more industrial projects as
Burma continues to grow.
Exports in 2014-15 were more than
three times larger than a decade
earlier, at $12.5 billion, while imports
have also grown to $16.6 billion
Manufactured goods are
increasingly large share of Burma’s
export mix, with garments alone
worth $1.02 billion in 2014-15, from
$379 million a decade earlier
Three main Special Economic
Zones in Burma, including at
Opportunities for British companies in Burma’s Infrastructure sector
Many industrial zones, such as Shwe
Pyi Thar, Mingalardon Industrial Park
and Hlaing Thar Yar, have received
significant investment, while others
are only getting started.
6.1 MANUFACTURING FDI APPROVALS
Value of Approved Manufacturing FDI (US$m)
2,000
1,500
1,000
500
0
-500
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
The country’s industrial zones are a
diverse bunch. They allow businesses
to locate in specially-designed
sites with transportation and
infrastructure links ready-made for
business, while easing the difficulties
of setting up shop.
The first industrial zones started
in Burma in the 1990s, meaning
procedures and methods in many
are already established. Not all
are created equal however, and
important facilities such as transport
links, power and water supply vary
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
among different zones. In many, land
parcels have also been acquired ,
though various bodies are attempting
to put idle land to work.
Environmental and social concerns
around industrial zones have arisen in
the past, though Burma is improving
in these areas. Many of the industrial
zones around Rangoon are now
receiving dedicated worker housing,
and a central committee under Vice
President Henry Van Thio is looking
in to land ownership issues.
Existing industrial zones tend to
be located near the major cities,
notably Rangoon and Mandalay but
also smaller regional cities like Pyay
and Shwebo. Some of the proposed
zones are further away from urban
centres, but located on important
trade routes and near international
crossings.
There is also opportunity for foreign
companies to take part in setting
up industrial zones. Japanese
conglomerate Mitsui & Co partnered
with a department of the Ministry
of Construction when setting up the
Mingalardon Industrial Park in 1998.
Local companies have also played
crucial rules in setting up most of the
other industrial parks in the country.
47
48
Opportunities for British companies in Burma’s Infrastructure sector
Source: Burma Industries Association website
Opportunities for British companies in Burma’s Infrastructure sector
Annex 1: Industrial Zones and Special Economic Zones
Population
0
Existing
Industrial Zones
0
Mandalay Region (3)
- Mandalay
- Meiktila
- Myingyan
Person
2.5
Per
25
Square
130
1
Person
10
Per
50
200
Square Kilometer
Mile
520
Planned
Industrial Zones
Sagaing Region (3)
- Monywa
- Shwebo
- Kalay
Nantoon
(Shan State)
Yadanapone
(Mandalay Region)
Shan State (1)
- Taung Gyi
Magway Region (2)
- Yananchaung
- Pakokku
Nay Pyi Taw
(Nay Pyi Taw Region)
Ponnakyun
(Rhakhine State)
Bago Region (1)
- Pyay
Phaan
(Kayin State)
Ayeyawady Region (3)
- Hinthada
- Myaungmya
- Pathein
Maywaddy
(Tanintharyi Region)
Yangon Region (4)
- Eastern Township
- Western Township
- Northern Township
- Southern Township
Phayar Thone Zu
(Mon State)
Mon State (1)
- Mawlamyaing
Taninthayi Region (1)
- Myeik
Special Economic
Zones in Development
Kyaukpyu
(Rahkine State)
Thilawa
(Yangon State)
Dawei
(Tanintharyi State)
Source:
Chapter (3),
Myanmar Investment Guide,
Directorate of Investment and
Company Administration,
Ministry of National Planing and
Economic Development of Myanmar
Source: UNESCAP, A policy framework for Burma’s SME,
No.142, February, 2014
Special Economic Zones meanwhile
take the concept of industrial zones
even further. They became possible
with the passage of the 2014 Special
Economic Zone Law, and can
provide an opportunity to promote
manufacturing capacity by lowering
trade costs.
Locating on an SEZ comes with
numerous advantages under the
2014 Law. Commercial holidays
are granted for five or seven years,
with 50% reductions continuing
for another five years, and further
extensions are possible.
One Stop Service Centers are also
to be established at SEZ, with one
already in place for Thilawa. These
are aimed at reducing the number
of bureaucrats with whom investors
must engage. The SEZs have also
committed to specific turnaround
times such as investment approvals
and company incorporation, and have
the ability to grant long-term land
leases of 50 years plus a possible 25year extension, as well as guarding
against expropriation.
The SEZs were championed by
the previous Union Solidarity and
Development Party government.
Officials from the new National
League for Democracy government
have been quoted in the local press
49
50
Opportunities for British companies in Burma’s Infrastructure sector
as particularly supporting Thilawa,
the most-developed, while wanting
to take a closer look at Dawei and
Kyaukpyu.
Thilawa has been open since 2015,
and has attracted a long list of
investors already, including at least
73 companies. Japanese companies
are the largest source of investment
so far, perhaps no surprise given
49% of the SEZ is owned by
Japanese companies and the Japan
International Cooperation Agency.
The other two SEZs, Dawei and
Kyaukpyu, are not as advanced,
though they are likely to play an
important role in future development.
While Thilawa is geared toward light
manufacturing wanting to be located
near Rangoon, Dawei and Kyaukpyu
target different sets of industries.
Government Bodies, Policies and
Development Partners
Special Economic Zone Law
The Special Economic Zone law
was enacted in 2014, with the
implementing rules published a year
later in 2015. The law has paved the
way for Burma’s SEZs, establishing
the administrative and supervisory
oversight necessary for SEZs to
move forward.
The law requires the government
set up a central body. The central
body requires approval from the
government to establish an SEZ,
and also must set up management
committees for SEZs. The
management committees are to
provide services including investment
permits, registering companies, tax
collection and visa and work permits.
The SEZs themselves are set up by
private developers, with developers,
whether local or foreign, selected
through a tendering process.
Ministry of Planning and Finance
Formed in 2016 by merging the
previous Ministry of National
Planning and Economic Development,
and the Ministry of Finance. It is led
by U Kyaw Win.
Directorate of Investment and
Company Administration
The Directorate of Investment and
Company Administration (DICA)
handles registrations for local
and foreign business under the
Companies Act, as well as serving
as the secretary for the Myanmar
Investment Commission. It was
formed under the Ministry of National
Planning and Economic Development
in October 1993.
Burma Investment Commission
Responsible body for investment
applications, it is made up primarily
of serving and former government
officials, plus one private sector
representative at present
Special Economic Zone
Department
Ministry of Industry
Formed in 2011 by merging together
the Ministry of Industry (1) and
Ministry of Industry (2). It focuses
on industrial production, and owns a
number of its own facilities in goods
such as vehicles, rubber, ceramics,
paper, pharmaceuticals, to name a
few. It is led by U Khin Maung Cho.
Located under the Directorate
of Investment and Corporate
Administration, the Special Economic
Zone department forms the Central
Work Group of Burma’s SEZs
KEY PROJECTS
Thilawa
The Thilawa project had been
discussed for at least a decade before
Opportunities for British companies in Burma’s Infrastructure sector
construction began in 2013. It is
currently Burma’s most successful
Special Economic Zone, becoming
operational in September 2015.
It is located about 16 kilometres from
Rangoon city and about 25km from
the airport. A significant advantage
derives from its proximity to Burma’s
commercial capital and most
populous city, as a ready market,
transport node and labour force is
nearby.
Thilawa has drawn about $760m
in investment since the spring of
2014, equal to about 30% of what
manufacturers invested in Burma
during the 2014-15 period, according
to press reports.
The project is a Burma-Japan
joint venture. Burma owns 51%,
of which 41% is owned by Burma
Thilawa SEZ Holdings, a public
company that is traded on the
Rangoon Stock Exchange but has
significant investments from some
large local companies. Japan owns
49%, including 10% by JICA and
39% by a consortium including
Sumitomo, Marubeni and Mitsubishi
Corporations.
The site is adjacent to the Myanmar
International Terminals Thilawa
(MITT) port, a multi-purpose
container port on the Rangoon River.
Thilawa management has focused
on attracting foreign and local
investors. A number of well-known
international companies such as
Suzuki and Ball Corporation have
set up on the zone, along with many
distribution and labour-intensive
industries.
One strength of Thilawa is the
range of infrastructure available
for investors. Electricity, telecoms
and water are easily connected,
while waste management services
is available. The number of local
businesses on the SEZ also make
logistics easier. Moreover, the
management committee has
established a One Stop Service
Center, the idea being to cut
government red-tape. It also pledges
specific turnaround times for some
requests.
A number of incentives are
also available. Investors receive
corporate tax exemptions for the
first seven or five years, following
which they get another five years
at 50%, with one more extension
possible, under the 2014 Burma
Special Economic Zone law.
Locating at Thilawa also means an
exemption from customs duties and
other taxes for import of capital
goods. Exports are also exempt from
customs duties and commercial tax
for imports of raw materials as well.
Kyaukhyu
Kyaukphyu is a large SEZ planned for
Rakhine State. A long-running tender
was decided in December 2015 when
the Burmese parliament gave the goahead to the first phase of Kyaukpyu
SEZ, awarded to a consortium of
largely Chinese companies including
CITIC group.
The zone has been estimated at over
$10bn in its entirety. It is located
near the existing oil and gas pipelines
that have been completed in the past
few years. The gas pipeline connects
with Shwe Gas, one of Burma’s four
offshore sites, while the oil pipeline is
intended for tankers to offload crude
from the Middle East and Africa to be
pumped to western China, removing
the necessity to travel by tanker
south around Singapore and the
Straits of Malacca.
Much of the Kyaukphyu project is
expected to be driven by China.
Officials from the Kyaukphyu
bid evaluation committee have
said in the local press that they
expect Burma will invite the Asian
Infrastructure Investment Bank to
build 800km of roads connecting the
SEZ with the Chinese border.
51
52
Opportunities for British companies in Burma’s Infrastructure sector
It is eventually to sit on 4,289 acres
some 12km south of Kyaukphyu town
itself. The project is to eventually
include a deep water port, residential
housing and an industrial zone once
it is built.
It offers significant opportunity in
chemical and gas production, export
oriented industries and local logistics,
among other areas.
Dawei
Dawei is another large SEZ project
that could have a potentially
transformative impact. Its potential
has long been eyed, partly due to its
proximity to Bangkok. A deep sea
port and road and rail connections
through the Bangkok could remove
the need for Thai products to ship
around Singapore to reach the Indian
Ocean.
plants, a two-lane road to Thailand,
an LNG terminal, an initial township, a
telecom land and a smaller industrial
estate. Work on much of this is
already ongoing, or in the case of
the small port and some of the other
infrastructure, now complete.
track to grow into significant centres
of commerce in Southeast Asia.
The benefits of Thilawa are already
being felt as over 70 companies have
received permission to set up, while
plans for the other two zones are well
underway.
Eventually, backers hope it will be one
of the world’s major SEZs. Initially
it will focus on labour-intensive
industries such as garments and
food processing, its long-term plan
includes more higher-value industries
such as automotive, steel, electronics,
agricultural processing and other
industrial production.
The country’s smaller regional
industrial zones are also popular
locations for locating business.
While a handful located in Rangoon’s
periphery are the most popular at
present, increasingly businesses
are looking at other areas for the
opportunities they provide.
The full site is a large 48,432 acres,
located about 30km north of Dawei
town in Tanintharyi Region. Japan has
signalled its intention to participate,
signing on in December 2015.
Outlook and opportunities
In August 2015, the Burma
government’s Dawei Special
Economic Zone Management
Committee, and a consortium of
companies including Italian-Thai
Development Public Company,
Rojana Industrial Park and LNG Plus
International signed a concession
agreement regarding the initial phase.
Burma is fast becoming the next hub
for export-oriented manufacturing
industries, while its sizeable and
growing domestic market is drawing
increased interest. The flood of
interest has strained existing capacity,
and government and private-sector
actors are keen to expand offerings.
The initial phase is to include the
development of a small port, power
The three Special Economic Zones of
Thilawa, Kyaukpyu and Dawei are on
Burma’s industrial potential is set
to grow along with its industrial
potential. Key future opportunities on
Burma’s industrial zones and SEZs
include:
• Location for industry, particularly
labour-intensive, as well as
distribution, logistics, service and
transport companies
• Construction and maintenance
on the zones, including transport,
energy and water infrastructure
• Design, engineering, architecture
solutions
• Human resources
Opportunities for British companies in Burma’s Infrastructure sector
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53
54
Opportunities for British companies in Burma’s Infrastructure sector
ENERGY
Introduction
Burma is starting from a low base for
electricity generation, but it has set
ambitious targets. It has announced
plans to move from roughly 35%
electrification at present, to 100%
in 2030 – less than 15 years away.
The challenge is compounded by
the rapid growth expected for
consumption on a per capita basis,
which means generation capacity
must grow that much more quickly.
Fortunately, Burma is rich in the
necessary resources. It has identified
extensive hydropower potential,
and has had growing success
with its offshore natural gas sites.
Burma has three major rivers, the
Ayeyarwady, Chindwin and Thanlwin,
along with dozens of medium-sized
rivers suitable for hydropower.
In all, some estimates say total
hydropower capacity potential is
over 100,000MW.
Proven reserves of natural gas now
total 11.8 trillion cubic feet, with
significant potential for further
discovery. Gas exports, to Thailand
and China, have been the country’s
most significant export in recent
years.
Changes have also arrived on the
policy front. The government’s
approach to energy development
has shifted recently, along with
its approach to the sector’s
administration.
The new fifteen years will
undoubtedly be exciting for energy
and electricity, which has the
potential to completely change how
people live. The days of generating
electricity off biomass such as
timber or diesel generators are
nearly over, and a new experience
will soon begin.
Fast Fact
• About 3.7 million households,
or 34% of the country’s total,
have grid connections
• Current installed electricity
capacity is 5,235MW, though
to achieve 100% electrification by
2030 Burma will need 23,594MW
• Some 189,000 households per
year are currently being
connected to the grid, but the rate
will need to double to 440,000
per year to meet the 2030 goal
• Burma has four offshore gas fields
in production – Yadanar, Yetagun,
Shwe Gas and Zawtika – which
produce about 1.8mmcfd of gas
along with 5,500 bopd
Government Agencies, Policies
and Development Partners
The Ministry of Electricity and
Energy
The Ministry of Electricity and
Energy is the lead ministry in
Burma for power and energy. It
was only recently formed following
the April change in government,
and is a merger of the former
Ministry of Energy and the Ministry
of Electric Power. The Ministry
of Electric Power itself was two
separate ministries before a 2012
rationalisation of government
ministries.
Opportunities for British companies in Burma’s Infrastructure sector
Coal production may be the purview
of the ministry’s companies, though
in practice tends to happen under
licence by private companies.
7.6 LAYOUT OF ENERGY MINISTERIES
Ministry of
Electricity
and Energy
Ministry of Education
Electricity
Energy
Myanma
Petroleum
Products
Enterprise
Myanma
Oil and Gas
Enterprise
(drilling,
production,
CNG)
Myanma
Petrochemical
Enterprice
(refineries,
LPG)
Dept of
Electric
Power
Planning
Dept of
Electric
Dept of
Power
Transmission Hydropower
and System
Control
Electric
Power
Generation
Enterprise
The Ministry of Electricity and Energy
is specifically responsible for oil and
gas production, as well as electricity.
Under the energy side of the Ministry
of Electricity and Energy, there are
three important state-owned entities:
• Myanma Petrochemical Enterprise
(MPE), which operates refineries,
five fertilizer plans, three liquefied
petroleum gas plants and a
methanol plant
• Myanma Petroleum Products
Enterprise (MPPE), which is
responsible for the marketing
and distribution of petroleum
products
Yangon
Electricity
Supply
Corporation
Electricity
Supply
Enterprice
(distribution
outside of
Yangon,
Mandalay
Mandalay
Electricity
Supply
Corporation
• Myanma Oil and Gas Enterprise
(MOGE), which oversees
production and transportation of
oil and natural gas
Ministry of Mineral Resource and
Environmental Conservation
Another ministry formed in 2016
from two predecessors, specifically
the Ministry of Mines and the Ministry
of Environmental Conservation and
Forestry. It is currently responsible
for coal production as well as having
input into renewable rules, including
hydropower, solar, wind, biomass and
biofuels.
While having some input into
renewables, it also has a hand in
civilian nuclear energy. Burma has
no nuclear energy at present, and is
years from adding any, though has
formed working groups and signed
initial agreements with countries such
as Russia on nuclear power.
Ministry of Agriculture, Livestock
and Irrigation
Responsible for biofuels and smallscale hydro used for irrigation
Asian Development Bank
The first loan the ADB gave after
re-engaging in Burma was in 2013 for
electricity, totalling some $60m to
help connect 480,000 people in four
regions. The ADB has also conducted
study into the power sector
55
56
Opportunities for British companies in Burma’s Infrastructure sector
CURRENT TRENDS IN OIL AND GAS
Upstream
Burma has a long history in upstream
production. The British envoys sent
in the 19th century from India to treat
with the last Burma kings in Mandalay
were required to traverse the
Ayeyarwady river, bringing them past
the oil production centre at what is
now Yenangyaung in Magwe Region.
Though Burma may first have made
its name in energy production
with crude oil, it is now natural gas
that predominates. Reserves are
estimated at 11.8 trillion cubic feet,
with more potentially waiting to be
discovered. This is enough to put
Burma in 34th position globally,
though is a much more important
player regionally, with production
that World Energy Council puts at
10.2 million tonnes of oil equivalent
per year. Burma’s official data shows
12.64 million tonnes of gas exports
worth $5.18bn in 2014-15.
Reflecting declining domestic output,
however, Burma is a net importer of oil.
Oil and gas has had a tumultuous
history over the past fifty years.
The industry was nationalized in the
wake of the 1962 coup, with the state
energy company undergoing several
name changes before emerging
as Myanma Oil and Gas Enterprise
(MOGE). It had the exclusive rights to
explore, develop and produce until
1989, when other related agencies
were established and foreign bids for
offshore rights began. A number of
well-known foreign companies have
entered, including Total, Petronas,
PTTEP and CNOOC.
Burma’s 2011 opening ushered in
another wave of foreign investment
into the energy sector. Gas is now
Burma’s largest source of export
earnings, with four major offshore
sites, including Yadana, Yetagun,
Shwe and Zawtika.
• Yadana is Burma’s largest offshore
area and is operated by Total. It
began production in 1998
• Yetagun is operated by Petronas
and came online in 2000. Yetagun,
Yadana and Zawtika are all in the
Moattma offshore area south of
Rangoon and Ayeyarwady Region
• Shwe Gas is operated by Daewoo
and began operations in 2013. It is
in the Rakhine offshore area
further west from the other three
• Zawtika is Burma’s newest
offshore area and is operated
by PTTEP
In total there are 51 offshore blocks
and 53 onshore blocks. Of the latter,
28 have been awarded.
The most recent bidding round was
launched in 2013, with 20 blocks
awarded to some of the biggest
names in energy, including Statoil,
Chevron, Total, Royal Dutch Shell
and ConocoPhillips in 2014. Further
bidding rounds are to be launched,
and were previously slated to take
place in 2016.
Oil and gas is also by far the largest
source of approved foreign investment
in Burma. As of June 2016, 40% of
total approved investment since 1988,
worth a total of $21.5bn, have been in
oil and gas. Next is power at 26% or
$13.7bn, followed by manufacturing at
$5.3bn or 10%.
Offshore success has spawned
interest in servicing these industries.
An improved offshore supply base
has been discussed to bring more
of the services to Burma, while local
people are increasingly taking part in
offshore work.
Opportunities for British companies in Burma’s Infrastructure sector
Downstream
The last two decades have seen
major growth in Burma’s downstream
industry, though there is still much
to do. Thailand is still the main
destination for Burma’s natural
gas production, with Yadana,
Yetagun and Zawtika all oriented
east. Production from Shwe Gas,
meanwhile, is largely shipped north
to China.
The export orientation for Burmese
natural gas is beginning to change,
however. In June 2010, MOGE
completed a new pipeline from the
Yadana field to Rangoon, aiming to
help ease power shortages to meet
government pledges to supply a
significant quantity of gas to Burma
power plants.
Burma has three refineries at
present, all of which require upgrade.
The Ministry of Energy announced
it would hold a new tender for
refurbishing and upgrading the No 1
Refinery at Thanlyin near Rangoon,
in September last year. Progress on
other refineries has also been mixed.
57
Opportunities for British companies in Burma’s Infrastructure sector
A number of large-scale refineries
have been proposed as well. A
Chinese-led consortium won
permission for a $2.6bn refinery
project in Dawei in southern China
in April 2016. Burma also has five
fertiliser factories.
Progress is also being made in other
downstream projects, though the
specific speed varies significant.
The government has also previously
supported extensive use of
compressed natural gas, which is still
a common sight, with many Rangoon
taxis having a cylinder of the fuel in
their trunk. Until 2011 an estimated
50 CNG stations were built, with
thousands of taxis and buses
converted to the fuel. The future of
the scheme appears to be in doubt,
however.
MPPE has also discussed re-entered
the petrol station market with a joint
venture partner. It largely left the
market in 2010 when 261 of its 273
stations were privatised. Shortly
later, in 2012, the price of fuel was
liberalised. However, MPPE has said
it would seek a foreign JV partner to
re-enter the distribution market.
Burma currently has 5,239MW
capacity, though by 2030 it will
need 23,594MW to meet its goal
of 100% electrification. This will
require not only a significant
increase in generation, but also vast
improvements to transmission and
distribution. Currently, about 189,000
households are added to the grid a
year, but over the next fifteen years
more than twice that many will need
to be added to meet the goal.
Current Trends in The Power
Sector
Burma has abundant energy
resources, though the challenge is
how the potential can be developed
and then connected to peoples’
homes.
Demand is growing rapidly. World
Bank statistics show per capita
consumption is now four times what
it was in 1991.
7.1 ELECTRICITY CONSUMPTION
Per Capita Electricity Consumption (KWh)
180
160
140
120
100
80
60
40
20
Power customers are also changing.
While
100 currently residential
consumption
dominates at over
80
60
40
20
0
2013
2011
2012
2010
2009
2007
2008
2005
2006
2003
2004
2001
2002
1999
2000
1997
1998
1995
1996
1993
1994
0
1991
More successful is Puma Energy,
a Singapore-based company
which won the rights to form a
joint venture with MPPE in 2015 to
distribute jet fuel. The company,
National Energy Puma Aviation
Services is 51% MPPE and 49%
Puma. It started with Yangon
International Airport and is slated
to expand to other airports in the
country.
1992
58
60% of the total, by 2030 it is likely
to be closer to 40% as industrial
power demand surges.
Opportunities for British companies in Burma’s Infrastructure sector
59
Per Capita Electricity Consumption (KWh)
180
160
140
120
100
80
60
40
20
2013
2011
2012
2010
2009
2007
2008
2005
2006
2003
2004
2001
2002
1999
2000
1997
1998
1995
1996
1993
1994
1991
1992
0
Per Capita Electricity Consumption (KWh)
180
160
100
140
80
120
100
60
80
40
60
20
40
0
2012 (consumption)
20
Residential
2030 (projection)
Transport
Comercial
Agriculture
Other
2013
2011
2012
2010
2009
2007
2008
2005
7.2 ELECTRICITY DEMAND MIX
2006
2003
2004
2001
2002
1999
2000
1997
1998
1995
1996
1993
1994
1991
1992
0
Industrial
7.4 ENERGY BY LOCATION
Electricity Consumption by Location (GWh)
100
6,000
5,000
80
4,000
60
3,000
40
2,000
20
1,000
0
Industrial
Transport
Comercial
Agriculture
go
an n
Na dala
y
y
Py
iT
aw
M
ag
w
Sa e
ga
Ay
i
ey ng
ar
wa
dy
Ba
go
Sh
an
S
M
on
Ba
go
W
Sh
an
N
Ka
yi
n
Sh
an
Ta
E
ni
nt
ha
ry
i
Ra
kh
in
e
Ch
in
Residential
2030 (projection)
Ya
n
2012 (consumption)
Other
M
0
Source: http://www.adb.org/sites/default/files/publication/175801/ewp-460.pdf
Electricity Consumption by Location (GWh)
6,000
the latest publicly available figures.
16,000
At the other end is Kayin State,
14,000
where the electrification rate is as
12,000
low as 6%. On an absolute basis,
10,000
Chin State uses the least
amount of
electricity, at about 5 8,000
GWh, or 0.1%
6,000
of Rangoon’s usage, according
to
4,000
ADB statistics.
Power shortages were the thirdmost cited constraint to doing
4,000
business in the World Bank’s 2014
3,000
2,000survey. It is a particular problem
1,000for larger companies, though every
0business faces power outages,
particularly during the hot, dry
summer months. To deal with the
problem, many companies have
backup diesel generation, though
this is less than an ideal situation.
M
Ya
ng
o
an n
Na dala
y
y
Py
iT
aw
M
ag
w
Sa e
ga
Ay
in
g
ey
ar
wa
dy
Ba
go
Sh
an
S
M
on
Ba
go
W
Sh
an
N
Ka
yi
n
Sh
an
Ta
E
ni
nt
ha
ry
i
Ra
kh
in
e
Ch
in
5,000
Energy
Capacity by
The mix of
energy
isSource
also changing.
Hydro has recently been the
dominant form of energy, though
gas is growing quickly. The future
role of coal is also a matter of debate
at present, while renewables such as
wind, biomass and solar have lots of
potential in Burma.
2,000
0
1995-96
2000-01
Thermal
2005-06
Diesel
Present generation mix:
There are also significant local
Energy Capacity by Source
16,000
Number of Plants (MW)
differences on electrification from a
14,000
consumer standpoint. Roughly 50%
Hydro
26
of Burma’s power consumption takes
12,000
place in Rangoon Region. This is also
Gas + Steam
27
10,000
where
electrification
rates
are
the
8,000
Coal
1
highest, nearing 80% according to
6,000
4,000
2,000
0
1995-96
2000-01
Thermal
2005-06
Diesel
2010-11
2011-12
Hydro
2012-13
Gas
2013-14
Total
2014-15
2010-11
2011-12
Hydro
2012-13
Gas
Total (MW)
3219
1829
120
2013-14
Total
2014-15
60
Opportunities for British companies in Burma’s Infrastructure sector
100
80
60
40
20
0
2012 (consumption)
Residential
Industrial
2030 (projection)
Transport
Comercial
Agriculture
Other
Electricity Consumption by Location (GWh)
6,000
5,000
4,000
3,000
2,000
1,000
M
Ya
n
go
an n
Na dala
y
y
Py
iT
aw
M
ag
w
Sa e
ga
Ay
in
g
ey
ar
wa
dy
Ba
go
Sh
an
S
M
on
Ba
go
W
Sh
an
N
Ka
yi
n
Sh
an
Ta
E
ni
nt
ha
ry
i
Ra
kh
in
e
Ch
in
0
the work being done is upgrading
existing plants and adding new
ones, the government has also
added extensive fast-track power
from companies such as Aggreko,
VPower and APR Energy. Gas is also
envisioned to play a key role in future
base load demand, particularly as
hydro can be a challenge during the
dry season.
7.4 ENERGY MIX
Energy Capacity by Source
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
Hydro
0
1995-96
2000-01
Thermal
2005-06
Diesel
2010-11
Hydro
Biomass
While hydro is the main source of
on-grid electricity, most people in
Burma still receive their electricity
the traditional way, through biomass.
An estimated two-thirds of energy in
the country comes from fuels such
as wood, agricultural and animal
waste, and charcoal, though wood
predominates.
Wood may shrink as a fuel source in
the future. There are other potential
sources for biomass, such as risk
husks and animal waste, which are
produced every year and simply are
discarded. This provides a potential
area of opportunity for the country.
Coal
The role of coal is currently
hotly debated in Burma. Some
2011-12
2012-13
Gas
2013-14
2014-15
Total
planners see an extensive role for
the fuel, though others point to
environmental and social concerns
and oppose the fuel. Burma
currently has one coal-fired plant
at Tigyit in Shan State, producing
120MW. Whether further coal
capacity will be added remains to be
seen, though a number of MoUs and
MoAs have been signed to generate
using the fuel.
Gas
Gas formerly made up nearly 50%
of the generation mix two decades
ago. With the growth of hydropower,
gas has played a smaller role,
though recently the government
has again pushed natural gas as a
fuel, particularly as the two more
recent offshore gas areas came
online in since 2013. While much of
The potential is enormous
for Burma’s hydropower. The
Ayeyarwady, Chindwin and
Thanlwin rivers present significant
opportunities. The government
previously identified over 200
locations suitable for hydropower,
with a combined potential capacity
of 40,000MW. Further possible sites
could be added to bring the total past
100,000MW.
The country’s first hydro plant was
Baluchaung 2, which was commission
in 1960 with a capacity of 84MW.
Solar
Several MoUs have been signed for
solar power in Burma. The extensive
dry zone in the centre of the country
is ideal, and it is likely projects will
move forward in the future.
Opportunities for British companies in Burma’s Infrastructure sector
Wind
Wind energy is in a similar place
to solar. Much of the country,
particularly the coastal areas in the
west, have high potential. However, a
lack of data currently limits potential,
along with other logistical challenges.
Transmission and Distribution
Generating the necessary power is
hard enough, but it is also needs to
be connected to those who need
it. Burma currently has around 2.3
million residential connections, or
about 30% of the population. The
present rate of adding 189,000
connections a year is not enough
to meet the government’s target of
100% electrification by 2030.
While there is scope for off-grid
solutions, in practical terms, must of
the new capacity will be grid based,
and the rate of new connections
must be raised to about 450,000 per
year to meet target.
The goalposts are also moving. Some
estimates say demand will have
increased by a factor of five by 2030,
largely as industry picks up and
residential and other consumers can
afford to use more power.
Current transmission and distribution
meets high loses, though they are
declining.
Further reductions in losses are an
obvious area of improvement to
meet demand, as authorities must
currently rely on load shedding on
occasion. Relic voltages need to be
phased out and new lines extended.
Another step that has been
discussed is raising tariffs to meet
the cost of production. Currently
electricity starts at 35 kyats for KWh
for general use and 75 kyats per
KWh otherwise, while generation
costs at gas plants are above 130
kyats per KWh.
Key Projects
300MW fast-track power project
Adding to the grid will be easiest
in urban areas such as Rangoon
and Mandalay, as well as areas
with ample power supply. Other
corners of the country will be much
more difficult to reach, requiring a
concerted effort.
Burma has worked to meet an
immediate power shortage by
launching several fast-track power
generation projects. In July 2016,
the government announced its most
recent tender for a fast-track project,
slated at 300MW for the Rangoon
Region. As of writing this report a
winner had not been announced.
Solar power in central Burma
A number of MoUs have been signed
for large-scale solar projects in
Burma, largely located in central
Burma’s dry zone. While none have
yet come to fruition, Ministry of
Electricity and Energy officials were
quoted as saying in July 2016 that an
800-MW project was carrying out a
feasibility study in the area, one of
the larger potentially on the cards.
Myitsone Dam
The Myitsone hydropower dam is a
large-scale project at the confluence
of the Ayeyarwady river in Kachin
State. The project, which is majorityowned by China Power Investment
Corporation, along with minority
stakes owned by the Ministry of
Electricity and Energy and local
conglomerate Asia World, was frozen
following popular opposition early in
2011. It remains to be seen whether
the $8bn project will be allowed to
go forward.
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Opportunities for British companies in Burma’s Infrastructure sector
Outlook and Opportunities
Burma has seen significant interest
in both energy and electricity. On the
energy front, the last two bidding
rounds for oil and gas blocks have
been well-attended by major oil
companies. Further rounds are
likely in the future, while exploration
activities at the latest blocks are now
well underway.
The downstream market is also
growing and changing. Opportunities
continue to arise, whether to partner
with government entities or to set
out independently.
On electricity, the goal of 100%
electrification is clear. However,
reaching it by 2030 is not set to
be simple. A range of hydro, gas
and coal projects have progressed,
while renewables also have strong
potential in Burma. New projects
emerge constantly. In July 2016,
a new tender for a 300MW
power project near Rangoon was
announced, for instance.
Transmission and distribution
improvements and expansions are
also necessary, which are prime
projects for international concession
lenders to participate in.
Some specific opportunities for UK
companies include:
• Technical expertise for capacity
and planning improvements, for
both government and
non-government projects
• Specialist oil and gas services
for onshore and offshore blocks
• Construction of transmission and distribution networks
• Building, maintaining and
supplying power plants
• Renewable energy
• Improving refinery capacity and
various downstream industries,
such as fertilizer and in the future
petrochemicals
• Micro and community-based work
with off-grid solutions in Burma’s
smaller communities
Opportunities for British companies in Burma’s Infrastructure sector
Useful websites
and further reading
To explore potential trade and investment opportunities in Burma
please contact DIT Burma in Rangoon: [email protected]
Doing Business in Burma: Burma trade and export guide
www.gov.uk/government/publications/exporting-to-burma/exporting-to-burma
Asian Development Bank: Myanmar Transport Sector Policy Note
www.adb.org/publications/myanmar-transport-sector-policy-note-summary-decision-makers
British Chamber of Commerce Myanmar
www.britishchambermyanmar.com
Frontier Myanmar
www.frontiermyanmar.com/
The Oxford Business Group: The Report: Myanmar 2016
www.oxfordbusinessgroup.com/myanmar-2016
The Myanmar Centre for Responsible Business
www.myanmar-responsiblebusiness.org/
The Union of Myanmar Federation of Chambers of Commerce and Industry
www.umfcci.com.mm/
63
gov.uk/dit
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mentioned.
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Published September 2016
by the Department for International Trade”
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