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dissertation (Dr. Myo NA)

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dissertation (Dr. Myo NA)

  1. 1. Strategic Policy Decisions for the Development of the Port Logistics Sectors in Myanmar Supervisor: Professor Ryoo, Dong-Keun By Myo Nyein Aye A dissertation submitted to the Graduate School of Korea Maritime University in partial completion of the requirements for the degree of Doctor of Philosophy June 2013
  2. 2. i Table of Contents List of Tables .............................................................................................................. iii Lists of Figures..............................................................................................................v Acknowledgements.................................................................................................... vii Abstract....................................................................................................................... xi Chapter1: Introduction ..................................................................................................1 1.1 Research Background and Objective .............................................................2 1.2 Research Scope..............................................................................................3 1.3 Methodology and Structure ...........................................................................4 Chapter 2: Port Logistics Industry in Myanmar.............................................................6 2.1 Background Information of Myanmar ...........................................................6 2.2 Logistics Performance of Myanmar...............................................................7 2.3 Port Industry in Myanmar............................................................................10 2.3.1 Historical Background of Port Industry ...............................................11 2.4 Port Management in Myanmar ....................................................................15 2.5 Current Situation of Port Industry................................................................18 2.5.1 Yangon Port and Its Terminals ............................................................19 2.5.2 Vessels/ Cargo Throughput/ Container Handling ................................22 2.5.3 Development of the Thilawa Port Area ...............................................25 2.5.4 Extension of Yangon Port....................................................................28 2.5.5 Improving the Yangon River Access Channel.....................................29 2.5.6 Future Development of Thilawa Area..................................................31 2.5.7 Structure Reform in Port Organization ................................................32 2.5.8 National Logistics Association and Port Activities..............................33 2.6 Regional Port Cooperation ..........................................................................34 2.6.1 Cooperation as a Member of ASEAN Ports Association (APA)..........34 2.6.2 Cooperation with JICA........................................................................36 2.6.3 MOU with Japan for Transportation Sector.........................................37 2.6.4 Other Cooperation Activities ...............................................................38 Chapter 3: Literature Review ......................................................................................39 3.1 Conceptual Definition of Port Governance and Logistics............................39 3.1.1 Port Governance and Management ......................................................39 3.1.2 Port Related Logistics..........................................................................40 3.2 Application of Analytical Hierarchy Process (AHP) ...................................42 3.3 Previous Research using AHP .....................................................................46
  3. 3. ii Chapter 4: Research Methodology ..............................................................................49 4.1 Analytic Hierarchy Process (AHP)..............................................................49 4.1.1 AHP Concept.......................................................................................49 4.1.2 AHP Procedures ..................................................................................51 4.1.3 AHP Methodology...............................................................................52 4.2 Selection of Priority Factors ........................................................................56 4.2.1 Port Infrastructure................................................................................57 4.2.2 Port Regulations ..................................................................................57 4.2.3 Manpower Development in Port Sector...............................................58 4.2.4 Current Structural Reform in Myanmar Port .......................................58 4.2.5 Establishment of a National level Logistics Association (NLA)..........58 4.3 Procedure for the Pilot Survey.....................................................................59 4.4 Classification of Evaluation Factors ............................................................60 4.4.1 Factor Specification.............................................................................61 Chapter 5: Analysis.....................................................................................................66 5.1 Analytic Hierarchic Structure Model...........................................................66 5.2 Questionnaire Survey ..................................................................................66 5.3 Results of AHP Analysis .............................................................................71 5.3.1 All Respondents (All Groups) .............................................................72 5.3.2 Terminal Operators Group...................................................................73 5.3.2 Port Users Group .................................................................................75 5.3.3 Administration Staff Officers Group ...................................................77 5.3.4 Comparison among Groups on Main Criteria ......................................78 5.3.5 Comparison among Groups on Sub-criteria.........................................80 5.3.6 Synthesis of Importance of All Factors................................................86 Chapter 6: Conclusion.................................................................................................88 6.1 Conclusion...................................................................................................88 6.2 Recommendations .......................................................................................90 6.3 Future Research...........................................................................................91 References...................................................................................................................92 Appendix 1: Pilot Survey ............................................................................................96 Appendix 2: List of Participants for Pilot Survey......................................................100 Appendix 3: Survey Questionnaire............................................................................102
  4. 4. iii List of Tables Table 1: Logistics Performance Index for Myanmar and Selected Countries, 2010 ..... 8 Table 2: Wharves and Terminals at Yangon Port (including Thilawa Area) .............. 21 Table 3: Number of Vessels Calling into Yangon Port (Including Thilawa Terminals)..................................................................... 22 Table 4: Seaborne Trade of the Yangon Port (including Thilawa) ............................. 23 Table 5: Volume of Containers Handled by Yangon Port (including Thilawa).......... 24 Table 6: Current Status of Development and Usage of Terminals in Thilawa Area ... 28 Table 7: Strategic Schedule for the Development of Maritime Transport in ASEAN 35 Table 8: Examples of Research using AHP................................................................ 48 Table 9: Fundamental Scale of Absolute Numbers .................................................... 52 Table 10: Important Elements Identified from the Pilot Survey ................................. 61 Table 11: Respondents from the Terminal Operator Group ....................................... 68 Table 12: Respondents from the Port User Group...................................................... 69 Table 13: Respondents from the Administration Staff Group .................................... 70 Table 14: Survey Details of Respondents................................................................... 71 Table 15: Comparison of Group-wise Results on Main Criteria................................. 79 Table 16: Comparison of Group-wise Results on “Port Related Infrastructure”......... 81 Table 17: Comparison of Group-wise Results on “Port Regulations Related to Logistics” ..................................................... 82 Table 18: Comparison of Group-wise Results on “Human Resources Development in Port Sector” ..................................... 83 Table 19: Comparison of Group-wise Results on “Port Structural Reform” .............. 84 Table 20: Comparison of Group-wise Results on “Contribution of Port Activities in Establishment of National Level Logistics Association”........................ 85
  5. 5. iv
  6. 6. v Lists of Figures Figure 1: Research Process Onion................................................................................ 5 Figure 2: Map of the Republic of Union of Myanmar.................................................. 6 Figure 3: Correlation between LPI and Income per Capita .......................................... 9 Figure 4: Myanmar’s LPI Scores.................................................................................. 9 Figure 5: Yangon Port and Strand Road in 1878........................................................ 11 Figure 6: Yangon Port and Port tower at Port Authority main building in 1938 ........ 13 Figure 7: Organization structure of Myanma Port Authority...................................... 16 Figure 8: Ports of Myanmar ....................................................................................... 18 Figure 9: Yangon River Estuary................................................................................. 20 Figure 10: Number of Vessels Calling into Yangon Port (2001-02 to 2011-12) ........ 23 Figure 11: Seaborne Trade of the Yangon Port (including Thilawa) (2001-02 to 2011-12)................................................................................ 24 Figure 12: Volume of Containers Handled by Yangon Port (including Thilawa) (by TEU in thousands) (2000-01 to 2011-12)................................................. 25 Figure 13: Map of Yangon Port and Thilawa Port...................................................... 26 Figure 14: 37 Plots for the Thilawa Port Development Plan ...................................... 27 Figure 15: Current and Potential Port Areas at Yangon City...................................... 29 Figure 16: Yangon River Estuary............................................................................... 30 Figure 17: Draft Schedule to Improve Access along the Yangon River ..................... 31 Figure 18: Intended Organization Structure of Myanma Port Authority .................... 33 Figure 19: 47 Network Ports in ASEAN ................................................................... 36 Figure 20: Drivers of Port Reform ............................................................................. 39 Figure 21: AHP Standard Structure............................................................................ 50 Figure 22: AHP Structure for Optimizing of the Priority ........................................... 51 Figure 23: Research Structure .................................................................................... 56 Figure 24: Analytic Hierarchic Structure for the Study .............................................. 66 Figure 25: Intensity of Importance of five Main Criteria (All Respondents).............. 72 Figure 26: Performance Sensitivity Graph for Main Criteria (All Respondents)........ 73 Figure 27: Instant synthesis with Respect to the Goal (All Respondents) .................. 73 Figure 28: Intensity of Importance of five Main Criteria (Terminal Operators) ......... 74 Figure 29: Performance Sensitivity Graph for Main Criteria (Terminal Operators) ... 74
  7. 7. vi Figure 30: Instant Synthesis with Respect to the Goal (Terminal Operators) ............. 75 Figure 31: Intensity of Importance of five Main Criteria (Port Users) ....................... 76 Figure 32: Performance Sensitivity Graph for Main Criteria (Port Users) ................. 76 Figure 33: Instant Synthesis with respect to the Goal (Port Users)............................. 77 Figure 34: Intensity of Importance of five Main Criteria (Administration Staff)........ 77 Figure 35: Performance Sensitivity Graph for Main Criteria (Administration Staff).. 78 Figure 36: Instant Synthesis with respect to the Goal (Administration Staff)............. 78 Figure 37: Priorities derived from Pairwise Comparisons on Main Criteria (Normalized Value) .................................................................................. 80 Figure 38: Priorities derived from Pairwise Comparisons – Port Related Infrastructure (Normalized Value) .................................................................................. 81 Figure 39: Priorities derived from Pairwise Comparisons – Port Regulations related to Logistics (Normalized Value)................................................................... 82 Figure 40: Priorities derived from Pairwise Comparisons – Human Resources Developments in Port Sector (Normalized Value).................................... 84 Figure 41: Priorities derived from Pairwise Comparisons – Port Structural Reform (Normalized Value) .................................................................................. 85 Figure 42: Priorities derived from Pairwise Comparisons – Contribution of Port Activities in Establishment of NLA (Normalized Value) ......................... 86 Figure 43: Synthesis Importance of All Factors ......................................................... 87
  8. 8. vii Acknowledgements There are many people who have helped me in a myriad of ways to complete my PhD study in Korea Maritime University (KMU). First of all, I would like to express my deepest gratitude to my supervisor, Professor Dr. Dong-Keun Ryoo, Division of Shipping Management, who is my advisor, mentor, wise counsel and good guardian for his commitment, time, and giving me the opportunity to carry out this study with unwavering support over the past three years. I would also like to thank my examination committee members, Prof. Lee, Ki- Hwan, Prof. Chang, Myung-Hee, Prof. Kim, Tae-Goun and Prof. Kang, Hyun-Goo for their guidance and support throughout this process. I wish to take this opportunity to express my gratitude to the Ministry of Land, Transport and Maritime Affairs (MLTM), Republic of Korea for its valuable scholarship to study under the “Shipping, Port and International Logistics program”. I extend my great appreciation to Myanma Port Authority (MPA), Ministry of Transport, Republic of the Union of Myanmar which is the mother unit for my work and allowed me the chance to study for this PhD outside the country for three years. I am also grateful to Prof. Nam, Ki-Chan from the Department of Logistics who provided me with good facilities and study environment. I sincerely thank my friends and colleagues who unreservedly supported and encouraged me during my study and research years. Also big thanks to all the wonderful support in various ways of internship and for the research study, in particular, U Ko Ko Htoo (MIP), Capt. Bag (KTM), Ko Moe (AMOE), Capt. Aung (MIFFA), Dr. Tengfei (UNESCAP), Ma Mee (MKH), Ko Kyaw Lwin Oo (EFR), U Tin Oo (AWPT), Dr. Lee (KMI), Ko Tint (MPA), U Naing (HNN), Kyaw Wanna (WMU), Dr. Lin (DOT), May Oo (Ocean Crown), Young Joon (KMU), Ms. Kang (KMU), Arom (KMU), Mr. Kim (Marine Future), Dr. Park (PNU) and John Askwith. Moreover, my deepest gratitude goes to my beloved Mum whose expectations have always been a strong driving force in my tough days during the study, my wife
  9. 9. viii Puti and our wonderful two daughters, Tsu and Pyae, for their love, understanding, patience and being who they are.
  10. 10. ix 초록 미얀마의 항만물류와 무역량은 2011 년 새로 선출된 정부의 새 정책을 반영함으로 인해 증가할 전망이다. 국가의 사회 경제적 상황 및 물류성과 향상의 핵심 목표는 해운 공급망 개발을 촉진하기 위해 항만산업을 개발하는 것이다. 항만물류는 이러한 목표를 달성하기 위해 개선되어야 할 핵심요소 중 하나이다. 본 연구의 목적은 항만 관련 산업과 물류 발전에 영향을 미치는 최적의 전략 및 정책 결정 개발 및 실현에 그 목적이 있다. 이러한 목표 달성을 위해 다음과 같은 구체적인 목표를 설정하였다. : (a) 미래 물류 개발을 위한 미얀마 항만 관리를 위한 최적의 전략 및 정책을 검토한다. (b) 미얀마 항만산업과 관련된 물류 성과를 위해 지역 및 국제물류 개발을 위한 더 나은 기회를 창출한다. (c) 미얀마 항만물류 활성화 전략 및 정책 결정시 고려해야 할 우선 순위를 산정한다. 이러한 목표를 달성하기 위해 본 연구의 목적은 미얀마에서 항만관련 분야의 물류 발전 측면에서 최적의 성과를 제공하는 요인들의 우선순위에 초점을 맞추고 있다. 본 연구에서 적용되는 주요 방법론은 계층분석의사결정법(AHP)이다. 분석 시 고려된 주요 항목은 . (a) 물류성과를 위한 항만관련 시설 (b) 물류관련 항만 법규 (c) 항만분야 인적자원 개발 (d) 현재 항만 구조 재편 (e) 국제물류협회(NLA) 창설 등이 있다. 각각의 항목은 다시 하위 기준으로 세분화 하였다. 각 항목에서 가장 중요한 세 가지 요소를 얻기 위해 15 개국 41 명을 대상으로 예비조사를 수행하였고 , 이에 따라 다섯가지 주요 기준과 다섯 가지 하위 기준은 AHP 모델의 구조로 통합하였다. 설문은 터미널 운영사, 항만 이용사, 항만관리국의 임직원을 대상으로 세 그룹으로 나누어 진행되었다. 분석 결과 모든 그룹에 대한 최적의 성과를 얻으려면, 첫째 전략 및 항만물류를 향상시키기 위한 핵심 정책으로서의 정책
  11. 11. x 결정은 구조개혁을 기반으로 항만을 조직해야 한다. 둘째 정책 결정의 초점을 국제물류협회(NLA)의 설립에 맞춰져야 하며 항만과 항만관련 산업의 내부 인적 자원 개발이 동시에 수행되어야 한다. 그 후 항만 산업은 고급 인프라가 구축되어야 하고 모든 관련 활동을 올바른 법적 프레임워크 내에서 개발해야 할 필요가 있다. 또한 항만 관련 법규 및 규정을 명확하게 명시하고 모든 당사자에 의해 쉽게 접근될 수 있어야 한다. 명시된 규정의 조합은 미얀마 항만물류 부문의 정책 결정에 있어 최적의 성과를 얻기 위해 개발 될 것이다.
  12. 12. xi Abstract Logistics related transport and trade in Myanmar will improve in the near future as the country is on a new track under the newly elected government following elections in 2011. One of the key elements necessary to improve the country’s socio- economic situation, and level of logistics performance, will be to reform the port industry to facilitate development of the maritime transport supply chain. Port related logistics is one of the core factors to be improved to achieve this goal. The objective of this research is to contribute significant information that can be useful in the development and implementation of the optimal strategic and policy decisions affecting logistics development in port related industries. To achieve this general objective, the following specific objectives were set: (a) to examine the optimal strategic and policy decisions for port governance in Myanmar for future logistics development; (b) to highlight implications of logistics related port industry activities in Myanmar in order to create better opportunities for regional and international trade development; and (c) to prioritize factors to be considered when making strategic and policy decisions that will enhance the port related logistics sectors in Myanmar. The research is focused on prioritizing the factors which will provide the optimal outcome in terms of logistics development of the port related sectors in Myanmar. The main methodology applied in this research is Analytical Hierarchy Process (AHP). Under this analysis the major criteria considered are: (a) port-related infrastructure for the logistics activities; (b) port regulations related to logistics, (c) human resource development in the port sector; (d) current port structural reform in Myanmar; and (e) contribution of port activities in establishing a National Logistics Association (NLA). Each and every element consists of many factors which have been considered as sub-criteria in this study. A pilot survey was carried out to get the three most important factors under each topic. The final five main criteria and fifteen sub- criteria have been incorporated into the structure of the AHP model. The number of respondents in the pilot survey was 41 persons from 15 different countries.
  13. 13. xii Three audience groups: terminal operators, port users and administration level officers were targeted. To get the optimal benefits for all the groups, the strategic and policy decisions should be based on port organization structural reform as a core policy to enhance the port related logistics sectors. Secondly, the policy decisions should focus on the establishment of the National Logistics Association (NLA) while internal human resources development of the port and port related industries should be carried out simultaneously. After that, the port industry has to be built up with more advanced infrastructure and all the associated activities need to be developed correctly and within a legal framework. Port-related rules and regulations should be laid down clearly and be easily accessible by all parties. The combination of the criteria will be developed to obtain the optimal policy decisions that will enhance the port-related logistics sectors in Myanmar.
  14. 14. - 1 - Chapter1: Introduction The port industry in Myanmar has radically changed over the past two decades. During the 1990s (especially in the second half of the 1990s), the first wave of modernizing Yangon port and initiating private sector involvement in the port industry in Myanmar began. Since the year 2000 there has been dramatic change to the ports with the planning of the potential deep sea ports projects, increasing the degree of private participation in port sectors, development of the port-related activities and better relationships and closer cooperation between the regional port and transport related organizations. At the beginning of 2011, the political situation in Myanmar turned in a better direction, led by a new reformed and elected government. The port sector is one of the important sectors which drives the national economy, and it needs to be structurally reformed according to the new requirements of the Republic of the Union of Myanmar. Myanmar has been one of the Least Developed Countries (LDC) for more than two and half decades (since 1987 up to now) according to the UN’s classification. Myanmar is also a member of Association of South East Asia Nations (ASEAN) and is one of the Greater Mekong Sub-region (GMS) countries. According to the trade statistics of ASEAN, Myanmar is in the lowest position for international trade and maritime trade amongst the ASEAN member countries (except Lao PDR1 ). Among the regional neighboring countries, the quality of the logistics facilities in Myanmar is comparatively low according to the Logistics Performance Index (LPI) determined by World Bank (World Bank, n.d.). According to the UN’s official projections, Myanmar is in an “excellent position” to graduate from LDC status by 2020, in part because of the country’s strategic location in a region which is driving the global economy (Myanmar Business Network, 2011). The newly elected Myanmar president launched a series of reforms after taking office in 2011 and the World Bank East Asia and Pacific Vice-President stated “All in all, we believe the country has enormous potential, provided the reforms 1 Lao PDR is the only land locked country within ASEAN member countries.
  15. 15. - 2 - are sustained” (AFP, 2013). All these predictions will come true if the right choices and better implementation of the strategic and policy decisions to reform and develop every sector are made. Optimal strategic and policy decisions are fundamental requirements for the development of the country. 1.1 Research Background and Objective Maritime trade is a vital portion of the country’s trade and needless to say good policies for the maritime sector can lead to better development of the country’s maritime related activities. Among all players in the transport chains, ports are confronted with changing economic and logistics systems (Notteboom, T. 2007). Notteboom also noted that port authorities and port management teams have to re- assess their role and related governance structures to make significant improvements. The current situation of the transport players and the existing scenario for the port industry in Myanmar are the main driving forces to undertake this research. To achieve the all-round development goal of the country, each and every industry has to make its own improvements and be better integrated with other related industries. To get the right balance in the development of all industries, correct policy making is one of the fundamental needs. Actually, policy making is largely controlled by the administrative authorities of each respective industry (Meersman, Van de Voorde & Vanelslander, 2007). There is increasing concern about the relationships between private logistics strategies and public interests and policies. To get better national competitive power, National Logistics Performance (NLP) is the core of the system (Serhat, B., Harun, S., 2011). Moreover, port logistics will be a vital component. This dissertation intends to contribute useful information for the building and implementation of optimal strategic and policy decisions affecting the logistics development of port related industries. The main purposes of the study are; • To examine the optimal strategic and policy decisions for port governance in Myanmar affecting future logistics development;
  16. 16. - 3 - • To highlight the importance of logistics related activities to the port industry in Myanmar in order to create better opportunities for regional and international trade development; and • To prioritize possible factors to consider for the strategic and policy decisions to enhance the port related logistics sectors in Myanmar. 1.2 Research Scope This research is focused on prioritizing the factors which will contribute to the optimization of the logistics development of port related sectors in Myanmar. In reality, there is a broad view on logistics development of port related sectors but in this study only some aspects of port related logistics (five categories) have been analysed to contribute to a possible strategic policy. The first three categories are port related infrastructure, regulations and man power development. These factors will be extracted from current data on Yangon port, regional experiences of ports (discussed in the literature review) and potential issues related to the future development of port related logistics. Within these three categories, all possible items have to be prioritized by international port and logistics experts and officials with practical experience from the local port industry. The additional two categories relate to recent port reforms that will enhance participation of the private sector in the port industry. Myanma Port Authority (MPA) has been encouraging greater participation of the private sector to provide broader service and facilitation. This study will cover only the logistics related parts of the reform process and the structure of it. Last but not least the study will identify how the port sector can contribute to the establishment of a National Logistics Association that will meet regional development needs.
  17. 17. - 4 - 1.3 Methodology and Structure This study is divided into the following 6 parts: Chapter 1: An introduction covering the research background, purpose, methodology and structure of the study. Chapter 2: The port industry in Myanmar – historical background to the port industry in Myanmar, evolution of port management and administration, the current situation of the port industry, brief overviews of port activities and operations, current situation about privatization of the ports, recent port organization structural reform of Myanma Port Authority (MPA), current status of port activities relating to the establishment of a National Logistics Associations (NLA), and regional cooperation activities of the MPA. Chapter 3: Relevant literature reviews on port policy and strategic decisions related to logistics, the Analytic Hierarchy Process (AHP), and examples of applications and studies on policy related matter using AHP. Chapter 4: Research methodology of the Analytic Hierarchy Process (AHP) including AHP conceptual framework, and AHP procedures and techniques to prioritize relevant factors. Selection of priority factors has to be carried out as a part of the research methodology to construct an AHP model. Chapter 5: Constructing the AHP structural model using the experts selected items for each main category, the questionnaires used with the target designated audiences, the responses and subsequent analysis using AHP. Through these actions prioritize factors affecting the strategic and policy decisions to enhance the port related logistics industry in Myanmar. Chapter 6: Conclusions & Recommendations on the results of the study and suggestions for future study
  18. 18. - 5 - According to the research process onion for this study (shown in Figure 1), identifying the optimal plan for the logistics development for port related sectors in Myanmar starts from a literature review as the core technique and procedure. A pilot study will follow the literature review to scope down possible factors to be incorporated into questionnaires. Construction of the AHP model, collecting the data using questionnaires, interviews and surveys, and analysis follow. Finally, pragmatism will be drawn out from the analysis and results of the study. Figure 1: Research Process Onion
  19. 19. - 6 - Chapter 2: Port Logistics Industry in Myanmar 2.1 Background Information of Myanmar The Republic of the Union of Myanmar is situated in South East Asia and it is the largest country in the region with a total land area of 677,000 square kilometers (261,228 square miles) ranging 936 kilometers (581 miles) from east to west and 2051 kilometers (1275 miles) from north to south. Myanmar has a long coastline at her south-western part, 2,228 kilometers (1385 miles) in length. Figure 2: Map of the Republic of Union of Myanmar Source: www.un.org
  20. 20. - 7 - Regarding the inland area, there are 5 neighboring countries along the total length of the 6158 kilometers (3828.2 miles) border, namely Bangladesh, India, China, Lao PDR and Thailand. The location of Myanmar is as shown in Figure 2. Myanmar is geographically situated in the most western part of ASEAN (especially for the continental countries of ASEAN). Along the coastline of Myanmar, there are 9 ports for coastal and international maritime traffic. Among them, the Port of Yangon is the premier port of Myanmar and currently handles about 90 % of the country's normal exports and imports. Cargo throughput using Yangon port has been increasing markedly each year. Yangon port is a river port and Yangon city has been predominantly a port city since the British conquered Myanmar. The organizational structure and administration of the port management and operations have been changed from time to time. After reform of the political system and the newly elected government took power in 2011, much progress can be seen such as improved international relationships with other countries, international economic sanctions have been lifted, the banking and financial system has been reformed, and many local and international workshops and seminars about reform and development of various sectors of the economy have been held. Analysts from the Asia Development Bank (ADB) say that Myanmar’s economy can triple in size by 2030 if sufficient reforms are undertaken in the coming years2 . The newly elected government is encouraging the development of all sectors and international investors are also interested in starting their business investments in Myanmar. 2.2 Logistics Performance of Myanmar Regarding the logistics performance of the country one perspective comes from the World Bank’s logistics performance index (LPI) in which a higher value up to 5 indicates better performance. Table 1 shows the LPI index list for Myanmar and selected countries for year 2010. The LPI consists of both descriptive and objective 2 The Irrawaddy: Burma’s Economy Can Triple by 2030: ADB, BY SIMON ROUGHNEEN on August 21, 2012 retrieved from http://www.irrawaddy.org/archives/
  21. 21. - 8 - measures and has three parts: perceptions of trading partners on each country’s logistics environment, information on the logistics environment, and real time-cost performance data. Table 1: Logistics Performance Index for Myanmar and Selected Countries, 2010 Int.LPIRank Country LPI Customs Infrastructure International shipments Logistics competence Tracking& tracing Timeliness 27 China 3.49 3.16 3.54 3.31 3.49 3.55 3.91 35 Thailand 3.29 3.02 3.16 3.27 3.16 3.41 3.73 47 India 3.12 2.7 2.91 3.13 3.16 3.14 3.61 53 Vietnam 2.96 2.68 2.56 3.04 2.89 3.1 3.44 79 Bangladesh 2.74 2.33 2.49 2.99 2.44 2.64 3.46 118 Lao PDR 2.46 2.17 1.95 2.7 2.14 2.45 3.23 129 Cambodia 2.37 2.28 2.12 2.19 2.29 2.5 2.84 133 Myanmar 2.33 1.94 1.92 2.37 2.01 2.36 3.29 Source: World Bank, Logistics Performance Index, (http://www1.worldbank.org/PREM/LPI/tradesurvey/mode1b.asp) According to the index data in Table 1, China is ranked 27th and highest amongst Myanmar’s neighboring countries and Thailand is ranked 35th in the world, while Myanmar is the weakest country (with 133rd ranking), below Lao PDR and Cambodia. According to the ASEAN Strategic Transport Plan 2011-2015 (Final report), the LPI index for Myanmar (which has a low GNI per capita) is located below the curve as shown in Figure 3. The graph shows that Myanmar has lower logistics performance than others in its income group. The key issue pointed out in that report is that the trade and transport supply chain of Myanmar (Lao PDR and Cambodia as well) is only as strong as its weakest link. This situation is one of the major challenges for AMSs and they have to find out how to support these low performing countries so they can benefit from a global trading system. Accordingly Myanmar needs to make
  22. 22. - 9 - substantial improvements in logistics competence, processes, and business practices in the trade and transport industries, including the port sector. Figure 3: Correlation between LPI and Income per Capita Source: ASEAN Strategic Transport Plan 2011-2015 (Final report) Figure 4: Myanmar’s LPI Scores Source: ASEAN Strategic Transport Plan 2011-2015 (Final report)
  23. 23. - 10 - Moreover, as the ASEAN Strategic Transport Plan 2011-2015 (Final report) shows, logistics related performance indicators for Myanmar are far below ASEAN and world averages (Figure 4)3 . The report highlighted weak logistics competence, poor logistics quality, and undeveloped infrastructure as being major constraints in Myanmar. Also, the availability and quality of trade-related infrastructure seems a major constraint to the overall economic performance of Myanmar. Since 2011 Myanmar has been on a new track under the newly elected government. Improvements can be seen including better international relationships, aid from international institutions, and restructuring of the internal and external affairs of the country. Logistics related transport and trade will also improve in the near future. One of the major initiatives to improve the country’s socio-economic situation and level of logistics performance is to reform the port industry and develop the maritime transport supply chain. Moreover, logistics performance is not simply an issue of national income or development – national government policy heavily influences this issue (Mustra, M., 2011). In this regard, port related logistics is one of the core factors to be improved to increase the pace of achieving the goals. 2.3 Port Industry in Myanmar Economic development of a country partially depends on how its ports are providing their logistics services to their users and customers, because ports are playing a vital role in promoting not only external trade but also regional transport linkages for commercial and industrial activities. Thus, the ports and port related logistics sectors need to develop in tandem with the overall development of a country. As Yangon port is the major port of Myanmar, it is required to develop in line with the growth in external trade. In this study, the background history of Yangon port is the historical background of the port industry in Myanmar. Evolution of port management in Myanmar, brief views on the current situation of the port industry and regional cooperation in the port sector are discussed. 3 Source: ERIA Study Team, based on data quoted from “Logistics Performance Index 2010” Note: World average and ASEAN average were calculated as simple arithmetic averages.
  24. 24. - 11 - 2.3.1 Historical Background of Port Industry Yangon Port became famous, starting from the time when King Ahlaungpaya took over Dagon in 1755, changing its name to Yangon and morphing it into a port city. During the regime of Myanmar Kings, the mayor ruled the port, appointed the pilots and raised taxes on cargoes loaded or unloaded on board. This historical fact shows that the port has been a vital part of the country’s development throughout time. In 1852 the British seized lower Myanmar and the port administration also changed in a variety of ways. On demand of the traders, the Yangon Port Commissioner Act was passed in 1879. Yangon Port was managed in the form of an organization from 1 January 1880 till the Second World War. Under the British government, Yangon Port gradually developed over 61 years from 1880 to 1940. It successfully handled the loading and unloading of over 5 million tons of imports and exports until 1939-40 when the Second World War broke out. At that time Yangon port was renowned as the best port not only in Asia but in the Far East. When the board of Yangon Port Commissioners started running the Port administration and authority in 1880, there were Pansodan, Sule and Lattalan estuaries and 6 jetties for the trading ships to berth. Figure 5: Yangon Port and Strand Road in 1878 Source: Myanma Port Authority
  25. 25. - 12 - During the 19th Century, the number of estuaries increased to 10 for the ships to be accommodated at Yangon port. As the commercial trade sector developed the Port management extended estuaries for in-land vessels, built depots, and placed buoys to which the ships can be tied, Pilot buoys and beacons were constructed as well. Figure 5 shows a picture of Yangon port in 1878. Although extension for the sea routes was accomplished, the next plan was drawn to further extend the port at the beginning of the 20th Century due to a lack of port machinery conforming to the requirements for the commercial trade of Yangon Port. There were five main tasks for the development of the port and related activities. These were (i) extension of depots, (ii) establishment of estuaries for the trading ships to stop by, (iii) installation of hydraulic machinery and electricity, (iv) prevention of river banks from being washed away, dredging the harbor, constructing water-tight dock-yards and (v) clearing the drains that sank below the surface of the sea. After carrying out those tasks, there were estuaries with a total length of 4215 feet in 1914 when World War I started. The storage area increased to 407,000 square feet, sufficient for the commercial trade of Yangon Port. One great task, accomplished in 1914 before the war broke out, was the building of a protective wall along the watercourse of the river in Hseikkyee, on the opposite side to Yangon port across the river. That protective wall along the river watercourse had a length of 2.5 miles and it was the biggest action taken in the world to protect a river water course at that time. In 1920, after the conclusion of World War I, port development projects resumed again. The Port Authority’s main building was built in 1926. In 1928, the Thamada river retaining wall was built as a protection task at the downstream end of the Yangon river and there was continuous construction of a range of estuaries from No.1 Sule4 Wharf to No.7 wharf. Brooken5 wharf No.1 and 2 were built in 1939. 4 Nowadays, Sule Wharf No. 1 to 7 has been still as a public port under the direct management of Myanma Port Authority 5 Nowadays, the new name of the Brooken Wharf is Boaungkyaw Street Wharf (BSW) which is private property under the management of Lan Pe Marine Company.
  26. 26. - 13 - Before World War II spread to Myanmar, Sule wharves No. 1, 2 and 3 were restored to meet standards and No.4 Sule Wharf was built in 1940. Figure 6: Yangon Port and Port tower at Port Authority main building in 1938 Source: Myanma Port Authority Before the outbreak of World War II, Yangon Port alone could handle 85% of the whole country's maritime trade by sea. At that time, there were 9 wharves (2 in Brooken area and 7 in Sule area) with handling equipment of 41 cranes (1.5 tonnes to 3 tonnes capacity). In addition there was an electric crane capable of lifting cargo weighing 40 tonnes at No. 1 Brooken wharf. The main export commodity was rice, representing half the value of total exports. Rice was carried by cargo barges or barges attached to the side of a steamer and loaded on board vessels that stopped in mid-river. There were 30 buoys along the Yangon river to which the trading vessels could be moored. There were also 5 pontoon piers each 250 feet in length and 27 small pontoon piers where goods carried along the sea routes could be loaded or unloaded temporarily. The 24 jetties were not attached to pontoon bridges. The capacity for loading and unloading was about 4000 tonnes per day for imports and about 11,000 tonnes per day for export cargo. In addition 3 separate buoys were provided for fuel oil container vessels to meet the needs of local consumption.
  27. 27. - 14 - Regarding the sustainable water draft of the Yangon river for the vessels, there was one vessel to pump the mud from the river, one dredger and another V-shaped dredger. Every year, approximately 5 million tonnes of mud could be dredged by them. When World War II broke out, Yangon port was destroyed by British troops before they receded from Myanmar. During the war, the allied forces bombarded Yangon Port and it remained as one of the destroyed ports in the east of the world. The wharves and other port facilities were also destroyed, while 7 out of 10 temporary depots and all the buoys of Yangon river were damaged. After Myanmar was seized again by the allied forces, the task of rehabilitating the port was given priority. Nixon Storage Fragments (NSF), military utilities and attached P.C pontoons were immediately carried along the Yangon river and new warehouses (Godowns) were built along the port where pontoon barges were installed. After clearing the torpedoes, a new route was opened and the task of port loading and unloading was resumed. In 1950, the NSF warehouses and pontoons attached to them started to decay and they had to be replaced with more durable materials. To fulfill the needs of the port, Economic Co-operation Aid (ECA) in the form of money and materials was accepted. The materials included steel pontoons, steel spanning bridges, mobile storage, cargo-handling devices (cranes, draught-machines and trailers) and other machinery. Although ECA provided temporary support to Yangon port, port machinery remained un-repaired in 1956. In particular, Sule Wharves No.5, 6 and 7 destroyed in the war had not been restored. There were only 6 estuaries, insufficient to execute the port services. After getting a loan of US$ 14 million from the World Bank, port facilities equipment was purchased such as various cargo-handling devices, 1 dredger, 2 diesel draught-vessels, 2 buoy- dropping vessels,1 beacon, and 1 pilot vessel. In 1962, after the Revolutionary Government took power, the tasks of the port became more extensive than before. The administration of outside port cities, formerly under the control of Divisional Commissioners was handed over to the Yangon Port Authority on 20 August 1962. Privately–owned R.R.Khan's Water-tight dockyard and
  28. 28. - 15 - Bombay Burma Company owned by Antgyi Dockyard were handed over in 1964 and 1968 respectively. To speed up the loading and unloading service of ocean-liners, the stevedoring group of the ocean-liners and the group of port labourers were administrated in co-operation with Yangon Port. As the task of supplying fresh water to the trading ships that entered Yangon Port was an essential port service the Fresh Water Supply Service of Eastern Bankara (Myanmarpyi) Ltd was handed over in 1970. In 1972, the sub-department of light-houses under the Government Marine Department, and Coal Corporation under the Trade Corporation were handed over as was the Transportation Agent Corporation with control in co-operation with Yangon Port in 1997. 2.4 Port Management in Myanmar According to the ever changing history of Yangon port, the chronological order of changes to the administration body of port management has been as below: 1852 - Marine Chief Officer took charge of Yangon Port 1876 - handed over to the Committee of the River Bank 1880 - the Board of Yangon Port Commissioners took charge 1954 - handed over to Yangon Port Authority 1972 - reorganized as Port Corporation 1989 - reformed as Myanma Port Authority. Myanma Port Authority has the authority to manage all ports in Myanmar which are divided into two categories; namely Yangon Port and external ports (which are all the other coastal ports of Myanmar and called out ports as well). There are 8 departments, 4 divisions and 4 state/division external port offices in Myanma Port Authority’s organization structure as shown in Figure 7.
  29. 29. - 16 - Figure 7: Organization structure of Myanma Port Authority Source: Myanma Port Authority Each department has a principal officer (head of department) who is responsible to the Managing Director as follows; (a) Traffic Department: The main responsibility of this department is accepting imported goods from the vessels docking at the piers owned by the department, delivering goods and loading the ships. It is also responsible for leasing out buildings, shops and plots of land within the port. (b) Shipping Agency Department: This department provides services of a shipping agency instead of a ship's owner or a person in charge of a ship. (c) Marine Department: This department manages navigable channels, passage or routes in a port's area, light house and navigable lights, communications and buoys for the ships to sail safely. (d) Civil Engineering Department: This department has responsibilities for management, building and maintenance concerning civil engineering within the port's area. It is also concerned with dredging and measuring near wharves, navigable channels and other places. (e) Mechanical Engineering Department: This department controls services of MPA's mechanical and electrical engineering activities including
  30. 30. - 17 - construction and maintenance of ships vehicles, handling machinery and buoys. (f) Accounting Department: MPA's financial policies and programs are lad by the Chief Accountant through a Managing Director who advises him. (g) Personnel Department: The department operates office management, administration and supplies and the management of public service personnel. (h) Main Store Department: The department has to supply, maintain and order needed handling machinery, articles for use and supply goods from either local or foreign sources to the MPA. The 4 divisions led by managers have to take responsibility through a Managing Director. The Medical Division gives treatment to public service personnel and their families. The Progress Co-ordination Division gives advice to plan long-term and short-term projects, and convey information, facts and data collected as necessary. The Computer Division is an electronic data processing unit which calculates, analyzes, and produces port information and data concerned with the MPA. The Internal Accounting Division inspects items being used against the budget and maintains an asset list as well as other records. The eight external ports are organized by regional location. Along the coastline of Myanmar, there are 4 states/divisions as shown in Figure 8. The ports of the Sittway, Kyakphu and Thandwe are under control of the port officer of Rakhine State. Pathein port is under the port officer of Ayeyarwaddy Division and the ports of Dawei, Meik and Kyakthaung are under the port officer of Tanintharri Division respectively. Only the ports of Sittway, Pathein and Mawlamyine can be considered international ports and the others are coastal and inland ports to handle goods. Mawlamyine port has not been able to handle exports for the last 15 years. Kyakthaung Port on the other hand became an international port to handle border trade with Thailand.
  31. 31. - 18 - Figure 8: Ports of Myanmar Source: Myanma Port Authority The MPA's Managing Director manages the port polices as a Chief Executive Officer and co-ordinates, and pilots the work of respective departments. The General Manager has to help and assist him to plan long-term and short-term projects and to carry out the affairs of his subordinates. 2.5 Current Situation of Port Industry The objectives of the MPA are as follows (MPA, 2012): (a) Ships no longer need to stay at the port (b) Safe entry and exit of ships (c) Loading and discharging of the cargo within a short time (d) Import and export cargoes to be handled without damage (e) To provide a better service to port users (f) To increase performance of the port’s personnel KAWTHOUNG DAWEI MYEIK MAWLAMYINE YANGON PATHEIN THANDWE KYAUKPYU SITTWE
  32. 32. - 19 - MPA duly provides various services such as Pilotage, Container and General Cargo Handling, Tug Services, Shipping Agency Services, Fire Fighting, Port Security, Fresh Water Supply and Ship Repair Services. Before 1995, all the terminals were operated by only the management and ownership of MPA itself. MPA was solely responsible for port planning under the direction of the Ministry of Transport. In 1995, the Myanmar government started to launch the port development plan with several schemes of fund raising from the private sector as below; (a) 100% National investment (b) 100% Investment under Build, Operate and Transfer by foreign and/or local investors (c) Joint-venture basic between MPA and foreign and/or local Investors. (d) Grant aids or soft loans financed by international financial institutions Under that development plan, Thilawa port area has been developed for the new port area of Yangon port. The location of the Thilawa port is about 16 kilometers downstream from the existing Yangon port along the Yangon river. From 1997, port operations at Yangon port have no longer been the monopoly of MPA alone and both foreign and local investors became players in the operation of Yangon port. Since 2011 the newly elected government has led the country and been reforming every sector. One of the big impacts of the economic reforms of the transport sectors is to develop the port sector within a Private Public Partnership arrangement. Now MPA is more responsible for the administration (authority) rather than being a terminal operator. The organization structure of MPA will be re-structured in the near future to be in line with current national and international practices. 2.5.1 Yangon Port and Its Terminals The Port of Yangon, which is a river port and premier port of Myanmar, lies along the Yangon river on the Yangon city side and is situated at Latitude 16˚ 46’ N, Longitude 96˚ 15’ E. Thilawa port area is 16 km downstream of the Yangon port along the Yangon river as well. Figure 9 shows the Yangon river estuary and location
  33. 33. - 20 - of Yangon port and Thilawa port areas. All these port areas are situated on the bank of Yangon river. Yangon port is about 32 km inward from Elephant Point on the Gulf of Martaban where is the mouth of Yangon river and Thilawa port is just half way between Yangon port and the mouth of the Yangon river. All vessels calling to the Yangon Port, require compulsory pilotage if they are over 200 GRT (MPA, 1998). Figure 9: Yangon River Estuary Source: Myanma Port Authority Yangon river has two bottle necks with sand bars, namely Inner Bar and Outer Bar as shown in Figure 10. According to the nature of the river port, all vessels calling to the Yangon Port and Thilawa Port have generally been sailing on flood tides and crossing both the Inner Bar and Outer Bar at near high tide to assure sufficient water depths. As for the current water depth of Yangon river Yangon port officially notified accessible vessel information as 167 meter LOA, 9 meter draft and 15,000 DWT, and for the Thilawa Port area it is 200 meter LOA, 9 meter draft and 20,000 DWT.
  34. 34. - 21 - Table 2: Wharves and Terminals at Yangon Port (including Thilawa Area) N o. Name of terminal Short Name Port Operator / Investor Berth length (m) Remark Yangon Port Area 1 Htedan Oil Berth HOB MEC (Local) 88 Oil 2 Htedan Port Terminal (1) HPT1 AWPT (Local) 213 GC & Container 3 Htedan Port Terminal (2) HPT2 213 GC & Container 4 Asia World Port Terminal (1) AWPT1 198 GC & Container 5 Asia World Port Terminal (2) AWPT2 156 GC & Container 6 Asia World Port Terminal (3) AWPT3 260 GC & Container 7 Myanma Industrial Port (1) MIP1 MIP (Local) 155 GC & Container 8 Myanma Industrial Port (1) MIP1 155 GC & Container 9 Sule Pagoda Wharf (1) SPW1 MPA (Gov.) 137 GC 10 Sule Pagoda Wharf (2) SPW2 137 GC 11 Sule Pagoda Wharf (3) SPW3 137 GC 12 Sule Pagoda Wharf (4) SPW4 137 GC 13 Sule Pagoda Wharf (5) SPW5 168 GC 14 Sule Pagoda Wharf (6) SPW6 162 GC 15 Sule Pagoda Wharf (7) SPW7 162 GC 16 Boaungkyaw Street Wharf (1) BSW1 Lanpyi (Local) 137 GC & Container 17 Boaungkyaw Street Wharf (2) BSW2 137 GC & Container 18 Boaungkyaw Street Wharf (3) BSW3 183 Container N o. Name of terminal Short Name Port Operator / Investor Berth length (m) Remark Thilawa Port Area 19 Myanmar Integrated Port Limited MIPL MIPL (Foreign) 200 GC & liquid bulk 20 Myanmar Intl. Terminals, Thilawa (1) MITT1 Hutchison (Foreign) 200 GC & Container 21 Myanmar Intl. Terminals, Thilawa (2) MITT2 200 GC & Container 22 Myanmar Intl. Terminals, Thilawa (3) MITT3 200 GC & Container 23 Myanmar Intl. Terminals, Thilawa (4) MITT4 200 GC & Container 24 Myanmar Intl. Terminals, Thilawa (5) MITT5 200 GC & Container Source: Myanma Port Authority
  35. 35. - 22 - Nowadays, a total of 24 sea going vessels can use the terminals in Yangon port (including Thilawa port area) at any one time. (18 at terminals in Yangon port area and 6 at terminals in Thilawa port area). Among these 24 berths, 7 berths are owned by MPA and all the rest are owned by national and foreign investors as shown in Table 2 (all these terminals are numbered sequentially from up stream to down stream along the Yangon river). 2.5.2 Vessels/ Cargo Throughput/ Container Handling The number of vessels calling at Yangon Port (including Thilawa port area) in 2011-2012 Fiscal Year was 1833. The port handled more than 408,0430 TEU and 20.408 million Metric Tons of cargo in the same Fiscal Year. Table 3: Number of Vessels Calling into Yangon Port (Including Thilawa Terminals) No F. Year MPA MITT AWPT MIPL MIP MOGE MPE HCB LPM Total (+/-) 1 2007-2008 441 163 267 29 68 124 173 28 - 1293 12% 2 2008-2009 406 172 324 32 84 120 150 1 - 1289 -0.3% 3 2009-2010 654 214 380 43 93 108 106 - - 1598 24% 4 2010-2011 656 267 373 48 139 73 88 31 100* 1775 11% 5 2011-2012 632 241 356 38 149 74 112 89 142* 1833 2% * LPM = Lantharyar Pilot Bouy, MOGE=Ministry of Oil, Gas and Energy Source: Myanma Port Authority Table 3 shows the number of vessels calling at Yangon Port (including Thilawa terminals) for the last five financial years by name of the terminals and Figure 10 shows a graphical representation of the number of vessels over the past 11 years calling into Yangon port.
  36. 36. - 23 - Figure 10: Number of Vessels Calling into Yangon Port (2001-02 to 2011-12) Source: Myanma Port Authority Table 4 and Table 5 show details of Yangon port throughput of all cargo and containerized cargo in the past 6 years. Figures 11 and 12 show trends in the development of the cargo throughput from 2001-02 to 2011-12 at Yangon port. Table 4: Seaborne Trade of the Yangon Port (including Thilawa) (M.Ton in thousands) No Year Imports Exports Total Yearly Growth Rate% 1 2006-2007 5623 5332 10,955 7% 2 2007-2008 6240 5619 11,859 8% 3 2008-2009 6150 6166 12,316 4% 4 2009-2010 9492 6655 16,147 31% 5 2010-2011 12307 6131 18,438 14% 6 2011-2012 12590 7818 20,408 11% Source: Myanma Port Authority 0 200 400 600 800 1000 1200 1400 1600 1800 2000 1098 951 971 1087 1102 1153 1293 1289 1598 1775 1833 Number of vessels calling to the Yangon Port
  37. 37. - 24 - Figure 11: Seaborne Trade of the Yangon Port (including Thilawa) (2001-02 to 2011-12) Source: Myanma Port Authority Table 5: Volume of Containers Handled by Yangon Port (including Thilawa) No Year Import Export Total (TEU) Total (M.T in thousand) Yearly Growth Rate% 1 2006-2007 99,942 97,337 197,279 3148.324 15% 2 2007-2008 115.267 111.236 226.503 3462.489 15% 3 2008-2009 133.712 130.294 264.006 3937.131 17% 4 2009-2010 152.077 151.333 303.410 4372.025 15% 5 2010-2011 175,315 171,327 346,642 4,571.902 14% 6 2011-2012 207,540 200,503 408,043 5,594.589 18% Source: Myanma Port Authority
  38. 38. - 25 - Figure 12: Volume of Containers Handled by Yangon Port (including Thilawa) (by TEU in thousands) (2000-01 to 2011-12) Source: Myanma Port Authority All these statistics show gradual increases in cargo throughput via Yangon Port (average 15% in containerized cargo for the last 6 years). To cope with the sea borne traffic growth resulting from the economic liberalization program of the country, port development has been carried out by inviting local and foreign investment at Yangon and Thilawa Port areas. Myanma Port Authority is planning to implement the Yangon Port Improvement Project which will accommodate bigger sized vessels up to 35,000 DWT at Yangon Port and Thilawa Port. 2.5.3 Development of the Thilawa Port Area In 1988, the Myanmar government changed from having a socialist closed market economic policy to a market oriented trade policy and partially liberalized various sectors. As a consequence, the maritime sector gained some growth in maritime trade under the market oriented system that allowed foreign and local private investors to participate in the country’s economy. Cargo throughput had been increasing considerably since 1988, reaching the limit of Yangon Port’s capacity.
  39. 39. - 26 - Figure 13: Map of Yangon Port and Thilawa Port Source: Myanma Port Authority In 1991, a prefeasibility study for a port at Thilawa was prepared by BECOM, France under a contract from UNDP. That study was hosted by Myanma Port Authority (MPA), with a Third Port Project. According to their compressive report, traffic throughput increases had to be achieved by improving operational performance. There was a lack of infrastructure and equipment for the port operations at that time, berth occupancy of the existing port operation was more than 80% and the report highly recommended that a detailed feasibility study be prepared as soon as possible. According to the results of the feasibility study the Thilawa area, located some 16 km downstream of the current Yangon Port, was earmarked to expand the port. Figure 13 shows the location of the Thilawa port area on a satellite map. For development of the port, 37 plots of land at the water’s edge were allocated at the Thilawa area. Each plot of land was 15 hectares (37 acres) measured as uniform quay length of 200 m and 750 m land width. At that time, the development of a commercial port was to be completed by foreign investors through BOT and JV basic. The parties were Italian-Thai Development Company, Myanmar Integrated Port
  40. 40. - 27 - Limited (MIPL), Myanmar International Terminals Thilawa (MITT) and MPA-SMD Company. However following economic recession under the military government, only MIPL and MITT finished constructing their terminals and have been running them since 1997. Figure 14 shows the layout of the 37 plots at Thilawa area. Figure 14: 37 Plots for the Thilawa Port Development Plan Source: amended and edited from google earth In 2009, the military government tried to change the system and drafted a constitutional law to build up the country and encourage privatization of various industries including the maritime industry. As part of the privatization initiatives, the former Government offered and allowed Myanmar investors to participate in the fuel oil supply business to meet the needs and high demand of the country. 14 Plots of land at Thilawa port area were also allocated to develop tanker port/ fuel oil terminals. In addition, 4 plots of land were designated for the development of GC and Grains Terminals by Myanmar investors too. Moreover, a ship breaking yard has been constructed and commissioned on 4 plots of land. Since then 10 plots of land have been reserved to construct ports to serve maritime cargo traffic generated from/to
  41. 41. - 28 - Thilawa SEZ – these will be developed in the very near future. Thus the current status of development and usage of the original 37 plots is shown in Table 6. Table 6: Current Status of Development and Usage of Terminals in Thilawa Area No. Situation/ condition of the terminal Number of Plots 1 Already developed - MIPL (edible oil berth 1 unit ) - MITT (container and GC 5 units) - MEC (ship breaking yard 4 units) 10 plots 2 Under Construction (GC terminal) 4 plots 3 Under Construction (Tanker Berth) 11 plots 4 Under Construction (Grains Terminal) 4 plots 5 Reserved 8 plots Total 37 plots Source: Myanma Port Authority 2.5.4 Extension of Yangon Port To cope with the growth of sea borne traffic resulting from the market oriented economic reformation and liberalization program of the newly elected government since 2011, port developments have been carried out by inviting local and foreign investment at the Yangon and Thilawa Port areas for various projects under Private Public Partnership (PPP). Nowadays, the maritime cargo traffic of the Yangon port has climbed to more than 20 million tons (2011-12 financial year). The efficiency in cargo handling at the 24 wharves of Yangon Port has reached almost 70% which is the optimum capacity of the port. Therefore there is a need to develop more terminals within the area of the Yangon Port. There are two scenarios for the development at Yangon port area. The first is to call tenders for participation in a Joint venture scheme for the terminals still owned by Myanma Port Authority (MPA). Recently, Sule 1 to 4 (total 4 berths and backup area of the terminal) have been progressing tenders to have a joint venture renovate, upgrade and operate the berths. Another scenario is for some remaining river front areas of Yangon to be developed as international wharves. Figure 15 shows the
  42. 42. - 29 - existing port/terminal areas and the possible areas for development of international port/terminals. Figure 15: Current and Potential Port Areas at Yangon City Source: Myanma Port Authority According to the recent port extension plan, Yangon port will have more berths allocated and the proposed total available berths will be as follows: Total Quay Length (meters) - 2548.00 Total Backup Area (acres) - 233.31 Number of Wharves - 34 Number of Adaptable Vessels - 35 2.5.5 Improving the Yangon River Access Channel Along the Yangon river access channel approaching the Yangon port area, there are two constraints (shallow water areas) namely Inner Bar and Outer Bar as previously mentioned. These bars are major obstacles restricting the size and draft of vessels calling to Yangon and Thilawa ports. Figure 16 shows the estuary of the Yangon river and the location of these two obstacles. The available water depth at the Inner Bar below chart datum is about 4.5 m and at the Outer Bar near Elephant Point it is only about 5 m. All vessels calling at the Yangon and Thilawa ports have generally
  43. 43. - 30 - been sailing on flood tides and crossing both the Inner Bar and Outer Bar at near high tide to ensure sufficient water depth. Daily maintenance dredging has been carried out to obtain sufficient water depth at the Inner bar for safe navigation of vessels entering and re-location of navigation buoys has occasionally been undertaken on the Outer bar at the mouth of the Yangon river. To cope with the growth in seaborne cargo traffic, reduce the logistics costs associated with maritime trade, and increase the accessibility for bigger vessels to call at Yangon Port, MPA has been taking initiatives to improve the Yangon river access channel and associated port facilities. Figure 16: Yangon River Estuary Source: Myanma Port Authority
  44. 44. - 31 - Improving the Yangon river access channel will involve dredging and/or constructing river retaining structures at the appropriate areas along the river to give access for vessels up to 35,000 DWT. In parallel, it may be necessary to upgrade the existing related port facilities such as strengthening wharves, installing modern cargo handling equipment, and providing navigation aids and other related facilities to cater for 35,000 DWT vessels. Before implementing this project, a detailed feasibility study needs to be conducted on improving the Yangon river access channel and upgrading the facilities of Yangon Port for the sustainable development of our country’s economy and maritime transport as a whole. Currently MPA is discussing with foreign and local firms a pre-feasibility study and master plan for the Yangon/Thilawa ports approach channel to improve the navigation channel in the Yangon river. Figure 17 shows the time line proposed for developing a draft plan to improve shipping access along the Yangon river. Figure 17: Draft Schedule to Improve Access along the Yangon River Main Components Year 1 2 3 4 5 Study 1 Study (Phase I Project) 2 MP/FS (Phase 2 Project) . Source: Myanma Port Authority 2.5.6 Future Development of Thilawa Area Thilawa area has been established as a part of Yangon port area since 1997, but it is not achieving the targets of the feasibility study and investors’ expectations because of factors such as the lack of road and rail infrastructure approaches to the Thilawa area, difficult policy for positioning the vessels for berthing, unfavorable trade policy conditions and political problems.
  45. 45. - 32 - Nowadays, the political system has changed following election of a new government in 2011. In the first year the new government undertook political reforms and these were followed by economic reforms in the second year. Maritime sector reform, including port reform, is being done in accordance with the guidelines of the President. Many international investors are interested in becoming terminal operators and investing in other parts of the maritime sector. To cope with the needs of economic reform and growth of maritime traffic, the port area has to be extended to allow new players to enter the market as investors. The concept plan of the Thilawa port area includes a Special Economic Zone by Asia World Company Ltd. and a project for the expansion of Yangon port in Thilawa from JICA as potential developments. 2.5.7 Structure Reform in Port Organization The Myanmar government has been changing the country’s governance system, economic structure and international relationships since 2011. There have been a series of reforms in each and every sector. Under the administration of the Ministry of Transport, four public organizations have been reformed as corporations to be more responsive in the new environment. One of them is Myanma Port Authority (MPA). The existing organization structure shown as Figure 7 (in section 2.4) has eight main pillars to build up the MPA and this is the right time to re-examine the structure. Formerly, MPA exclusively owned all the terminals and wharf facilities and the organization was good enough to control, monitor and maintain them. Nowadays, about 75% of MPA’s terminals and wharf facilities have already been privatized and additional wharves have been constructed under the management of private sector participants. MPA’s role has turned to be an administrative and service oriented organization rather than terminal operator. The proposed new organization structure of the MPA is shown in Figure 18.
  46. 46. - 33 - Figure 18: Intended Organization Structure of Myanma Port Authority Source: result from the series of discussion with Myanma Port Authority An organization’s structure and hierarchical reporting relationships affect the way people in the organization work, operating procedures and information and control systems (Baltazar, R. & Brooks, M. R., 2007). The intended reformed structure seems to place more emphasis on the service of the ports to port users and terminal operators in the port industry. In addition the Information and Communication Technology (ICT) & Logistics Division will be added under the management umbrella of the Administration Department and it will work closely with the International Relations, Human Resources Development & Training (IR, HRD & Training) teams. According to the intended structure of the organization, dealing with logistics and services issues will be a significant activity of the future MPA. 2.5.8 National Logistics Association and Port Activities In the boarder view of the national logistics scene, the Myanmar government has been trying to build up a National Logistics Association (NLA) to enhance the efficiency of logistics performance. Under the management of the Ministry of Transport a “National Level Workshop on Economic Development through the Integration of Logistics Services” was held in Nay Pyi Taw on 17-18 of March 2008.
  47. 47. - 34 - Participants included government officials from transport related ministries/departments, entrepreneurs from the private sector and economic experts (MOT, 2013). As a result of the national level workshop, five Consultative Committees have been formed with concerned Ministries, a National Logistics Development Committee has been formed and establishing the National Logistics Association was initiated. The latter will have the objectives of formulating the policy, time-frame and action plan in accordance with relevant sectors. The five consultative committees are: (i) Infrastructure development committee, (ii) Transport services development committee, (iii) Laws, rules and regulations committee, (iv) Human resources development committee, and (v) Information and Communication Technology (ICT) development committee. A national logistics policy and roadmap will be adopted later, based on the committees’ recommendations. Action is also being taken to form a National Logistics Association (NLA) of Myanmar in the near future. For the successful establishment of the NLA, port and port related logistics activities will be an important component. In line with that view the “Plan to Establish the NLA” will be put as one of the criteria in this AHP study to enhance the port related logistics industry in Myanmar. 2.6 Regional Port Cooperation 2.6.1 Cooperation as a Member of ASEAN Ports Association (APA) As a member of ASEAN, Myanmar has been continuously and actively participating in all the activities and cooperation tasks of ASEAN. The ASEAN Community is comprised of three pillars, namely the ASEAN Political-Security Community (APSC), ASEAN Economic Community (AEC) and ASEAN Socio- Cultural Community (ASCC). Each pillar has its own blueprint, and the AEC blueprint was adopted by the ASEAN Leaders at the 13th ASEAN Summit on 20 November 2007 in Singapore to serve as a coherent master plan guiding the establishment of the ASEAN Economic Community through to 2015 (ASEAN, 2007). In the AEC blueprint, one of the actions relating to the maritime sector is to implement a “Roadmap towards an Integrated and Competitive Maritime Transport System” in
  48. 48. - 35 - ASEAN. This approach should promote and strengthen the intra-ASEAN maritime transport market and services. The strategic schedule of activities is shown in Table 7. Table 7: Strategic Schedule for the Development of Maritime Transport in ASEAN 2008-2009 2010-2011 2012-2013 2014-2015 Develop strategies for an ASEAN single shipping market Implement the Maritime Transport Roadmap Implement the Maritime Transport Roadmap Review the Maritime Transport Roadmap for the next 3-5 years Source: AEC Blueprint (p. 50) To implement the actions and to achieve the objectives of the roadmap, policies need to be developed that recognize the special character of shipping and port industries as international activities. In the roadmap the policy agenda for all the ASEAN member states has been noted clearly as follows (ASEAN, 2007): a) Foster competition in all shipping markets; b) Adhere to the principle of free competition on a commercial basis for cargo movements to, from or between ASEAN member countries; c) Promote a set of guidelines for the regulation of liner shipping markets; d) Prevent or minimize the imposition of unjustifiable fees, surcharges or imposts by shipping lines or associations of shipping lines with a dominant position in any trade to, from or within ASEAN; e) Ensure that any international shipping operations retained under Government- ownership are corporatized and operated in accordance with commercial principles; f) Refrain from providing preferential access to routes, cargoes or contracts to Government-owned lines, and to adopt a timetable for the removal of such preferences where they currently exist; g) Work collectively and progressively towards the development of a single integrated ASEAN shipping market; and h) Develop guiding-principles for the pricing of port services based on the cost of service and infrastructure provisions.
  49. 49. - 36 - The ASEAN region consists of vital sea lanes, destinations and transit points for world trade carried by ships. ASEAN has a total of 47 ports (Figure 19) according to the various study reports and minutes of meetings held by the ASEAN Maritime Transport Working Group (MTWG). The prosperity of ports of ASEAN member countries greatly depends on the efficiency, viability and safety of the shipping, port facilities and maritime trade routes. Figure 19: 47 Network Ports in ASEAN Source: ASEAN Myanma Port Authority has been contributing to all the cooperation activities from ASEAN Ports Association (APA). The last meeting, the 33rd Meeting of the ASEAN Ports Association Working Group held in Da Nang, Vietnam on August 24- 25, 2012 was an important meeting for APA members to discuss members’ potential as well as other sustainable development projects. 2.6.2 Cooperation with JICA One of the recent development plans is the expansion of Yangon Port in Thilawa by Japan International Cooperation Agency (JICA). After a series of meetings
  50. 50. - 37 - and discussion between responsible officials in Myanma Port Authority (MPA), Ministry of Transport and Japan International Cooperation Agency (JICA) from 28th May to 1st June, 2012 JICA submitted minutes of the meeting on scope of work regarding “the Preparatory Study on the Project for Expansion of Yangon Port in Thilawa Area in Myanmar”. The objectives of the study are: a) To develop Principal Development Plan of Yangon Port in both Yangon City and Thilawa Area. b) To conduct the feasibility study on expansion of the port in Thilawa area and port related facilities to secure safety of navigation. The tentative schedule of study will be carried out within 11 months (July 2012 to May 2013). MPA and JICA signed and concluded the minutes of meeting on scope of works regarding “the Preparatory Study on the Project for Expansion of Yangon Port in Thilawa Area in Myanmar” on 21 September 2012. Recently, a JICA team had a meeting with officials from Ministry of Transport and MPA, and the discussion issues were: a) JICA’s guidelines for environmental and social considerations b) Possibility of mobilizing grant assistance from Japan c) Financial issues d) Procedure to apply for an ODA loan Regarding cooperation with JICA, according to the current situation, development in Thilawa area for port and related functions has to be carried out as a national interest activity. One of the development plans will be implemented in due time. 2.6.3 MOU with Japan for Transportation Sector With the aim of promoting mutual cooperation in the field of transportation, a Memorandum of Understanding (MOU) was signed between the Ministry of Transport,
  51. 51. - 38 - the Republic of the Union of Myanmar and the Ministry of Land, Infrastructure, Transport and Tourism, Japan on 19 November 2012. The scope of cooperation under that MOU mentions the development, management and operation of infrastructure related to water transportation including Thilawa port and other transport modes. Forms of cooperation under the MOU are various exchanges of views and information by both sides; exchange, education and training of experts, researchers and technicians, including joint studies; and other forms of cooperation. According to the MOU, better cooperation between Japan and Myanmar regarding port development is expected. 2.6.4 Other Cooperation Activities Nowadays, there are several activities concerned with Public–Private Partnership (PPP) schemes in the port industry of Myanmar. One concrete event was the tendering of the existing port area for the modernization and upgrading of the terminals and operating them. Both local and foreign companies have been entering the tenders to have a Joint Venture (JV) or Build-Operate-Transfer (BOT) systems with MPA. Because of the better political weather of the country, Government to Government (G to G) support from various countries has been carried out to develop the port industry in Myanmar. In the near future, a better picture of the port industry in Myanmar will emerge to facilitate broader cooperation with regional and other countries.
  52. 52. - 39 - Chapter 3: Literature Review 3.1 Conceptual Definition of Port Governance and Logistics 3.1.1 Port Governance and Management The relationship between Yangon port and city governing was close when Yangon port city was first established. At that time, in the 18th century, the mayor ruled the port. Since that time, the governance structure of the port has changed profoundly, and port management and operations have also changed in line with government policies such as devolution, regulatory reform and newly imposed governance models (Brooks & Cullinane, 2007). Brooks and Cullinane analysed the impact of the policies on port strategies and port performance as shown in Figure 20. Figure 20: Drivers of Port Reform Source: Brooks & Cullinane, (2007) World Bank (2013) defined governance as the “rule of the rulers, typically within a given set of rules. One might conclude that governance is the process – by which authority is conferred on rulers, by which they make the rules, and by which those rules are enforced and modified.” The Bank also pointed out that governance requires identification of both the rulers and the rules, as well as the various processes
  53. 53. - 40 - by which they are selected, defined, and linked together and with society generally. Sternberg (1998) provides a quick definition about the corporate governance which constitutes the way corporate actions, assets and agents for the achievement of corporate objectives established by the corporation’s shareholders are managed and carried out. Brooks and Cullinane (2007) pointed out two aspects of governance that exercise an influence over transportation as being: a) within each corporation, the management is free to deliver the strategic vision of the entity in a manner deemed best to deliver the strategic intent of the organization, within the governance guidelines established by applicable laws b) governance rules and processes exist to ensure that the Board meets its fiduciary responsibilities, and is both responsible and accountable to the appropriate party On one hand, port governance has been the wider scope and management umbrella of the port authority. On the other hand, governance models do not fully represent the roles, responsibilities and strategic developments of port authorities (Dooms, Van der & Parola, 2012). They pointed out that port authorities have to develop the strategic intent for increased competition, more autonomy and increased accountability for economic performance, but port authorities have to continue as hybrid organizations, incorporating public characteristics and public goals. Nowadays, ports are threatened with changing economic and logistics systems which creates a high degree of uncertainty and places port management teams with the question of how to respond effectively to market dynamics (Notteboom, 2007). Cheon (2007) also noted that “while internal port functions have become more complex than ever, the roles of ports can be differently viewed based on the larger socioeconomic contexts and ideologies faced by the port”. 3.1.2 Port Related Logistics Viewing the whole transport logistics system, a port plays a decisive role as an important node of urban development connecting port users, cargo owners, shipping
  54. 54. - 41 - and local inland transport companies, and involves freight forwarding, transportation companies, government, banks and many other enterprises (Mi & Hanbin, 2010). The combined activity of these parties has a strong pull effect on local economic growth. They also noted that finding suitable logistics development models for ports has become a critical concern that is closely related to how to develop the port logistics better and faster. Moreover, ports play a vital role in the management and co-ordination of materials and information flows, as transport is an integral part of the entire supply chain (Carbone & Martino, 2003). World Bank (2007) pointed about that ports are now perceived to be the remaining controllable component in improving the efficiency of ocean transport logistics. Wei, Lijuan & Lijuan (2007) discussed how port logistics competitiveness has many different angles and latitudes. They highlighted five aspects of port logistics, namely logistics operation conditions, logistics development environment, logistics infrastructure, logistics service level and logistics potential. Gengyong, Ynuqi & Wangyi (2011) also followed the former categories of a port logistics’ aspects and extended their research into the internal and external factors that affect the logistics competitiveness of a port, They identified a practical descriptive model to evaluate port logistics competitiveness on the basis of their definition and the analysis of evaluation incentives. Regarding the existing situation of the port and transport industry in Myanmar, the logistics sector plays a vital role not only in the nation but also in the wider region. Programs for the development of logistics services in ASEAN, GMS and BIMSTEC are being undertaken. According to the regional association ASEAN, logistics is one of the 12 priority sectors for integration in order to establish the ASEAN Economic Community (AEC) in 2015. Limitations in the sector will be liberalized completely in 2013. Serhat & Harun, (2011) noted that there is increasing concern about the relationships between private logistics strategies and public interests and policies. This widening of logistics goes to every aspect of the various industries and ports are a key
  55. 55. - 42 - element in other related transport logistics systems. Optimal strategic and policy decisions are a fundamental need for the enhancement of the port related logistics sectors and industries. Port related logistics is a basic mechanism that can drive the national logistics system and performance as well. 3.2 Application of Analytical Hierarchy Process (AHP) When formulating public policy, decisions are complicated because of at least two reasons; they involve competing different objectives impacting on multiple economic sectors and occasionally overlapping jurisdictions occur as well. Forman & Gass, (2001) strongly agreed that the structure provided by AHP allows competing constituencies with different objectives to better understand each other and to develop ‘win – win’ solutions. This is necessary in developing policies acceptable to more than one constituency. The nature of strategic planning also has many facets, several of which can be facilitated using AHP. Heizer & Render, (1993) described the strategy development process as follows: “In order to develop an effective strategy, organizations first seek to identify opportunities in the economic system. Then we define the organization’s mission or purpose in society -- what it will contribute to society. This purpose is the organization’s reason for being, that is, its mission. Once an organization’s mission has been decided, each functional area within the firm determines its supporting mission...” and “We achieve missions via strategies. A strategy is a plan designed to achieve a mission…A mission should be established in light of the threats and opportunities in the environment and the strengths and weakness of the organization.” AHP can assist a team or organization select among alternative missions and objectives, select from alternative strategies, and in allocating available and possible potential resources to implement the chosen optimum strategy. Another way of looking at it is strategic planning involves a ‘forward process’ and a ‘backward process’ which means the projecting forward the likely or logical future and prioritizing for the desired future. Using the backward process, planners identify both opportunities and obstacles and eventually select effective policies with the priority
  56. 56. - 43 - orders/ sequences to facilitate reaching the desired future (Forman & Gass, 2001). AHP has been used to choose the optimal strategy and priority of different criteria by numerous researchers. Forman & Gass concluded that AHP can be effectively used to prioritize applications involving determining the relative merit of a set of alternatives as opposed to selecting one alternative. AHP is a decision-making procedure originally developed by Saaty (1970s) to establish priorities in multi-criteria decision making. AHP imitates the way humans think about decision making and provides a simplified structure of a decision process. That process allows using both quantitative and qualitative attributes/criteria for decision making purposes. Moreover, the consistency in the judgment can be checked for better and reliable approaches of the respondents’ opinions. Using the pair-wise comparison allows the decision maker to determine the trade-offs among criteria. Thus AHP is a simple and easy decision making tool (Haas & Meixner, 2009). In a range of research areas, academic areas, different societies and many industries, AHP has been effectively used for decision making purposes. Some concrete example of AHP applications include “Deciding how best to reduce the impact of global climate change” by Fondazione Eni Enrico Mattei, “Quantifying the overall quality of software systems” by Microsoft Corporation, “Selecting university faculty” in Bloomsburg University of Pennsylvania, “Deciding where to locate offshore manufacturing plants” for University of Cambridge, “Assessing risk in operating cross-country petroleum pipelines” with American Society of Civil Engineers, and “Deciding how best to manage U.S. watersheds” for U.S. Department of Agriculture. AHP has been used in various settings by public agencies to make decisions and Saaty, (2008) recorded some of many applications in public administration in his paper “Decision making with the analytic hierarchy process”, International Journal of Services Sciences, Vol. 1, No. 1, 2008. including (a) The state of North Carolina used it to develop evaluation criteria and assign ratings to vendors, leading to the selection of a best-value vendor acceptable to the decision makers.
  57. 57. - 44 - (b) The Nuclear Regulatory Commission (NRC) of the USA with so many competing requirements for their information technology projects used it to allocate all of a $100 million portfolio. NRC’s challenge had been difficulty with prioritizing so many competing requirements for IT work effort as well as getting their 35 member decision-making group to achieve consensus. Using AHP not only helped allocate NRC’s IT resources, but also reduced the amount of decision time from up to 20 meetings down to just a few. (c) The Federal Financial Institutions Examination Council (FFIEC) is a governing body in the USA composed of the Federal Reserve Board (FRB), the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of Currency (OCC). They used AHP to prioritize strategic enhancements for an activity all the bodies needed to have, Call Data Reporting. They prioritized their objectives across competing requirements in a limited resource environment and were able to complete this in a one-day session. (d) The Boys and Girls Clubs of Greater Washington (BGCGW) is the largest affiliate of Boys and Girls Clubs in the USA. As part of their strategic planning process, the BGCGW needed to define ‘at-risk’ youth and used AHP to set relative priorities based on the factors. The group reached consensus and has set the standards they now use in the BGCGW strategic plan. (e) The Department of Defence in the USA uses it frequently and extensively to allocate their resources to their diverse activities. (f) The General Services Administration (GSA) of the USA used AHP to support their annual Information Technology Council (ITC) and Council of Controllers (COC) meeting to prioritize their major information technology initiatives. They used the process to refine their analytical framework, prioritize their criteria and then rate each IT initiative against them. The result was the first-ever GSA-wide prioritization of major IT
  58. 58. - 45 - initiatives, which included a benefit-cost analysis and a benefit-risk analysis. (g) In (2001), AHP was used to determine the best relocation site for the earthquake devastated Turkish city Adapazari. (h) British Airways used AHP in 1998 to choose the entertainment system vendor for its entire fleet of airplanes. (i) A company used it in 1987 to choose the best type of platform to build when drilling for oil in the North Atlantic. A platform costs around 3 billion dollars to build, but the demolition cost was an even more significant factor in the final decision. (j) AHP was applied to the US versus China conflict in the intellectual property rights battle of 1995 over Chinese individuals copying music, video and software tapes and CD’s. An AHP analysis involving three hierarchies for benefits, costs and risks showed that it was much better for the US not to sanction China. (k) Xerox Corporation has used AHP to allocate close to a billion dollars to its research projects. (l) In 1999, the Ford Motor Company used AHP to establish priorities for criteria that improve customer satisfaction. Ford gave Expert Choice Inc, an award for excellence for helping them achieve greater success with its clients. (m) In 1986 the Institute of Strategic Studies in Pretoria, a South African government-backed organisation, used AHP to analyse the conflict in South Africa and recommended actions ranging from the release of Nelson Mandela to the removal of apartheid and the granting of full citizenship and equal rights to the black majority. All of these recommended actions were quickly implemented. (n) AHP has been used in student admissions, military personnel promotions and hiring decisions. (o) In USA sport, AHP was used in 1995 to predict which football team would go to the Superbowl and win (correct outcome, Dallas won over
  59. 59. - 46 - Pittsburgh). AHP was applied in baseball to analyse which Padres players should be retained. (p) IBM used the process in 1991 when designing its successful mid-range AS 400 computer. IBM won the prestigious Malcolm Baldrige award for excellence for that effort. 3.3 Previous Research using AHP There are several research titles identifying applications of the Analytic Hierarchy Process (AHP) on strategy formulation, decision making, prioritizing the policy factors, judgments in uncertain environments, and selection of multifaceted approaches. Some concrete examples of successful research using AHP methods are: Hauser & Tadikamalla, (1996) used AHP in an uncertain environment with a simulation approach. In their research, they pointed out that the problems associated with traditional methods of bringing ambiguous judgments to a single point estimate by decision makers. Dolan, (2008) also carried out shared decision-making – transferring research in practice by using AHP with the objective of illustrating how it can be used to promotes decision-making and enhance clinician–patient communication. According to his result, AHP promotes shared decision-making by creating a framework that is used to define the decision, summarize the information available, prioritize information needs, elicit preferences and values, and foster meaningful communication among decision stakeholders. He concluded AHP and related methods have the potential for improving the quality of decisions and overcoming current barriers to implementing shared decision-making in a complex environment. Regarding decision making, Matthew & Robert, (2008) accomplished research related to medical and health care systems using AHP and Lin, Wen & Tsai, (2010) applied AHP analysis as a decision-making tool to national e-waste recycling policy. Matthew & Robert conducted a literature review of applications of AHP to important problems in medical and health care decision making, classified by year of publication, health care category, journal, method of analyzing alternatives,
  60. 60. - 47 - participants, and application type. They found 50 examples of research, noting very few articles were published prior to 1988 but the level of activity has increased to about three articles per year since 1997. Within the 50 examples, 21 related to patient care and 29 were in management and administration. As policy making is in essence a process of discussion, Lin, Wen, & Tsai also applied AHP in their research to evaluate the possibilities and determine the priority for a new mandatory recycled waste policy for the promotion of the country’s performance in recycling. Researchers from Yonsei University Wonju College of Medicine and other researchers worked together on the research “The comparative evaluation of expanded national immunization policies in Korea using an analytic hierarchy process” with the purpose to propose new evaluation criteria. An AHP model was used to assess the expanded national immunization programs (ENIPs) and to evaluate two alternative health care policies (Shin, Kim, et. al., 2009). In promising nuclear technology areas, in order to create export opportunities of technology in a global nuclear market, the Korean government had planned to increase strategically focused R&D investment. With the purpose of presenting a decision support process for selecting promising nuclear technology with the perspective of exportability, Lee & Hwang, (2010) carried out research for decision support by using AHP based on extensive data gathered from nuclear experts in Korea. Nakagawa, Nasu, Saito & Yamaguchi, (2010) used an AHP based statistical method for the design of a comprehensive policy alternative based policy design method (AHPo) for solving societal problems that require a multifaceted approach. In the AHPo method, criteria relevant to the goal or focus are structured in a similar way to conventional AHP. Additional examples of research using AHP for decision making, choosing resources policy and management, and evaluation of alternative policies are provided in Table 8.
  61. 61. - 48 - Table 8: Examples of Research using AHP Author Research Title X. Mei, R. Rosso, G. L. Huang & G. S. Nie. (1989) Application of analytical hierarchy process to water resources policy and management in Beijing, China R. Ramanathan (2001) A note on the use of the analytic hierarchy process for environmental impact assessment M. F. Merritt (2006) Planning and Evaluation with the Analytic Hierarchy Process Audrey M. A. B. & Dundar F. K. (2007) Analytic Hierarchy Process for Technology Policy: Case Study the Costa Rican Digital Divide M. Berrittella, A. Certa, M. Enea and P. Zito (2007) An Analytic Hierarchy Process for The Evaluation of Transport Policies to Reduce Climate Change Impacts Kim, A. J., Lee, K. D., Cho, G. I. & Ryoo D. K. (2009) The motivation of the Strategic Alliance between Ports Using AHP M. Mortazavi, L. Ghanbari, M. Rajabbeigi & H. Mokhtari (2009) Prioritizing agricultural research projects with emphasis on analytic hierarchy process (AHP) Irfan, S. & Hwang J. S. (2009) The Application of AHP to Evaluate Information Security Policy Decision Making Irfan, S. & Hwang J. S. (2009) The Application of AHP Model to Guide Decision Makers: A Case Study of E-Banking Security Source: organized from various research papers

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