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Dry Port Research in Myanmar 01

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Dry Port Research in Myanmar 01

  1. 1. i (Final Draft before UNESCAP’s editing) Prefeasibility Study of Establishing a Dry Port in Mandalay region, the Republic of Union of Myanmar
  2. 2. - ii - (October, 2012) Constructive discussions on this Prefeasibility Study of Establishing a Dry Port research report are welcome and highly appreciated. ဤ Prefeasibility Study of Establishing a Dry Port Myo Nyein Aye Assistant General Manager Myanma Port Authority, Ministry of Transport. Tel: (95 9) 510 8613 email: myonyeinaye@gmail.com PhD candidate Shipping, Port and International Logistics Program, Shipping Management Department, Korea Maritime University,
  3. 3. i The views expressed in the project report are those of the authors and do not necessarily reflect the views of the United Nations secretariat. The opinions, figures and estimates set forth in this report are the responsibility of the authors, and should not necessarily be considered as reflecting the views or carrying the endorsement of the United Nations. The designations employed and the presentation of the material in this report do not imply the expression of any opinion whatsoever on the part of the secretariat of the United Nations concerning the legal status of any country, territory, city or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries. Mention of firm names and commercial products does not imply the endorsement of the United Nations. The report is issued without formal editing.
  4. 4. - ii -
  5. 5. iii EXECUTIVE SUMMARY Myanmar is facing many challenges for developing its economy and international trade. The economy of Myanmar has maintained steady growth over the last two decades with annual growth of approximately 10 per cent. The newly elected government encourages the development of all sectors and international investors are also interested in starting their business investment in Myanmar. International trade has dramatically increased year by year and there are many potential development projects at the feasibility stage. The Myanmar government is also ready to sign the intergovernmental agreement on dry ports which was drafted in July 2012. Myanmar has already proposed seven potential sites of international importance for dry ports in accordance with the liberalized economic policy of the newly elected government. Mandalay has been selected as the most important city for the development of a dry port in Myanmar. Mandalay is the second largest economic city of Myanmar and contributes about 7 per cent of the country‟s GDP. The location of the Mandalay is strategically favourable to become a logistics hub of upper Myanmar for both domestic and regional border trade. With the development of transport infrastructure it is expected the cargoes through Mandalay will maintain steady growth in the future. With the increasing volume of trade and transport through Mandalay, a dry port with logistics functions need to be put in place to facilitate cargo transport. This prefeasibility study report presents the essential issues of establishing a dry port in Mandalay region. Chapter I provides the general background of the prefeasibility study report. Chapters II through IV investigate the context of developing dry ports in Mandalay region including topics such as overview of socio-economic features in Myanmar and Mandalay area, policy and regulations on development of dry ports and a review of logistics and transport in Mandalay area. Chapters V through IX examine freight demand forecast, functions, locations, economic and financial analysis, social and environmental issues of development of a dry port in Mandalay region. The last Chapter X concludes the study report with some recommendations. To conduct this prefeasibility study both desk research and site visit approaches were employed by the project team. Essential information and data were collected and analyzed at the stage of desk research as well as during the site visit. During 2-6 July 2012, the project team visited related various public/private organizations and government departments in Yangon, Naypyitaw and Mandalay in Myanmar.
  6. 6. - iv - The future cargo traffic volume through dry port is projected based on time series analysis, various data and factors relating to demand for dry port. In 2016 total container volume handled in the dry port is forecasted to be 12,775 TEUs and the dry port is expected to handle 47,815 TEUs in 2035. For annual conventional cargo traffic, cargo handling volume would amount to 502,240 tons in 2016 and increase to 1,881,940tons by 2035. It is recommended that a dry port be established near Merchandise Center in Mandalay and provide logistics function such as cargo consolidation and distribution, cargo storage, customs, and intermodal transport. It would serve the trade and transport between Mandalay and overseas countries through a seaport such as Yangon port and the border trade between Mandalay, and China and India. Based on the forecast of cargo traffic in dry port it is proposed to build a dry port with an area of 8.5 hectares. The dry port project will require a total project investment of approximately 10.5 million US dollars. The financial internal rate of return (FIRR) of the dry port project is 8.31 per cent and its economic internal rate of return (EIRR) is 19.15 per cent. In comparison with weighted average cost of capital (WACC) values both FIRR and EIRR exceed the benchmark level of the WACC. This means this project is financially and economically feasible. According to the social and environmental impact assessments this project has minor negative impacts on the local community. However, there are positive impacts on national and local economy by generating income and creating an employment opportunity for local residents. The results of this prefeasibility study present that the proposed dry port is financially, economically, socially and environmentally feasible, thus it would be worthwhile to proceed to the feasibility study stage. It is recommended that the relevant ministries or departments at both central and local government levels be involved in promoting the development of a dry port in Mandalay.
  7. 7. v CONTENTS EXECUTIVE SUMMARY........................................................................................................................................... III CONTENTS...............................................................................................................................................................V TABLES ..................................................................................................................................................................VII FIGURES .................................................................................................................................................................IX I. INTRODUCTION.................................................................................................................................................... 1 A. BACKGROUND ..................................................................................................................................................... 1 B. APPROACHES FOR UNDERTAKING PREFEASIBILITY STUDY................................................................................................. 2 C. STRUCTURE OF THE FEASIBILITY STUDY REPORT ............................................................................................................ 2 II. SOCIO-ECONOMIC FEATURES AND INTERNATIONAL TRADE OF MYANMAR AND MANDALAY AREA............ 4 A. OVERVIEW OF SOCIO-ECONOMIC FEATURES OF MYANMAR ............................................................................................ 4 B. OVERVIEW OF SOCIO-ECONOMIC FEATURES OF MANDALAY REGION ............................................................................... 12 C. TRADE AND TRANSPORT SITUATION IN MANDALAY REGION .......................................................................................... 15 D. MERCHANDIZE CENTERS AND RELATED ACTIVITIES IN MANDALAY REGION ....................................................................... 17 E. INDUSTRIAL ZONES AND SPECIAL ECONOMIC ZONES NEAR MANDALAY REGION .................................................................. 19 F. POTENTIAL PROJECTS NEAR MANDALAY REGION......................................................................................................... 20 G. SUMMARY AND CONCLUDING REMARKS .................................................................................................................. 22 III. POLICY AND INSTITUTIONAL ISSUES ON THE DEVELOPMENT OF A DRY PORT IN MYANMAR......................... 24 A. POLICY ISSUES ON DEVELOPING DRY PORTS IN MYANMAR ............................................................................................ 24 B. INSTITUTIONAL AND REGULATORY ISSUES ON DRY PORTS IN ASIA.................................................................................... 26 (1). Institutional framework .......................................................................................................................... 26 (2). Regulatory framework ............................................................................................................................ 28 (3). Investment modalities............................................................................................................................. 29 C. INSTITUTIONAL AND REGULATORY ISSUES ON DRY PORTS IN MYANMAR ........................................................................... 31 (1). Land Acquisition Law .............................................................................................................................. 32 (2). Transport Law......................................................................................................................................... 33 (3). Trade Law ............................................................................................................................................... 33 (4). Customs Law........................................................................................................................................... 34 (5). Investment Promotion Law ..................................................................................................................... 34 D. SUMMARY AND CONCLUDING REMARKS .................................................................................................................. 34 IV. DEVELOPMENT OF TRANSPORT AND LOGISTICS IN MYANMAR AND MANDALAY AREA ............................ 35 A. GENERAL SITUATION OF TRANSPORT AND LOGISTICS IN MYANMAR ................................................................................ 35 (1). Road Transport ....................................................................................................................................... 35 (2). Railway Transport................................................................................................................................... 40 (3). Inland waterways Transport ................................................................................................................... 44 (4). Air Transport........................................................................................................................................... 45 (5). Port Sector.............................................................................................................................................. 45 (6). Logistics performance ............................................................................................................................. 54 B. ROAD TRANSPORT LINKING BANGLADESH, INDIA, CHINA, LAO PDR AND THAILAND .......................................................... 56 C. REVIEW OF LOGISTICS, TRANSPORT AND TRADE FACILITIES NEAR MANDALAY REGION ......................................................... 60 D. SUMMARY AND CONCLUDING REMARKS .................................................................................................................. 62 V. FREIGHT DEMAND FORECAST OF DRY PORT IN MANDALAY ............................................................................ 64 A. RATIONALE OF DEVELOPING A DRY PORT IN MANDALAY AND THE KEY FUNCTIONS OF DRY PORT ........................................ 64 B. LOCATION AND CAPACITY OF DRY PORT ............................................................................................................... 66 C. SUMMARY AND CONCLUDING REMARKS.............................................................................................................. 69
  8. 8. - vi - VI. PHYSICAL DEVELOPMENT PLAN .......................................................................................................................71 A. PROPOSED SITE FOR DRY PORT...........................................................................................................................71 B. OVERALL LAYOUT OF DRY PORT..........................................................................................................................72 (1). Container Yard (CY) .................................................................................................................................75 (2). Container freight station (CFS).................................................................................................................77 (3). Conventional cargo area..........................................................................................................................77 (4). Customs clearance area...........................................................................................................................78 (5). Customs office .........................................................................................................................................79 (6). Operator office ........................................................................................................................................80 (7). Maintenance workshop...........................................................................................................................80 (8). Gate and fencing .....................................................................................................................................81 (9). Rail cargo buffer zone..............................................................................................................................81 (10). Parking area..........................................................................................................................................81 C. FREIGHT HANDLING EQUIPMENT AND UTILITY........................................................................................................82 (1). Freight Handling Equipment ....................................................................................................................82 (2). Water supply...........................................................................................................................................83 (3). Electricity.................................................................................................................................................84 (4). Telecommunication .................................................................................................................................84 (5). Sewage treatment...................................................................................................................................84 (6). Other utilities...........................................................................................................................................84 D. SUMMARY AND CONCLUDING REMARKS...............................................................................................................84 VII. COST ESTIMATES .............................................................................................................................................85 A. LAND ACQUISITION .........................................................................................................................................85 B. CIVIL WORK COST ESTIMATE..............................................................................................................................85 C. BUILDING WORK COST ESTIMATE........................................................................................................................86 D. ACCESS ROAD................................................................................................................................................87 E. RAILWAYS FACILITY.........................................................................................................................................88 F. CARGO HANDLING EQUIPMENT..........................................................................................................................88 D. TOTAL COST ESTIMATE.....................................................................................................................................88 VIII ECONOMIC AND FINANCIAL ANALYSIS............................................................................................................90 A. FINANCIAL ANALYSIS .......................................................................................................................................90 (1). Conditions to calculate project revenue ...................................................................................................90 (2). Implementation schedule ........................................................................................................................90 (3). Lifespan of the project.............................................................................................................................90 (4). Cash inflow and cash outflow of the project ............................................................................................90 (5). Project revenue........................................................................................................................................91 (6). Project cost after cost adjustment ...........................................................................................................92 (7). Calculation of project FIRR.......................................................................................................................94 B. ECONOMIC ANALYSIS ......................................................................................................................................95 (1). Introduction.............................................................................................................................................95 (2). Economic benefits....................................................................................................................................95 (3). Economic costs ........................................................................................................................................99 (4). Calculation of project EIRR.....................................................................................................................100 C. SUMMARY AND CONCLUDING REMARKS.............................................................................................................101 IX. ENVIRONMENTAL AND SOCIAL IMPACT ASSESSMENT...................................................................................103 A. ENVIRONMENTAL AND SOCIAL ANALYSIS ............................................................................................................103 B. ENVIRONMENTAL MANAGEMENT PLAN..............................................................................................................106 C. SUMMARY AND CONCLUDING REMARKS.............................................................................................................107 X. CONCLUSIONS AND RECOMMENDATIONS......................................................................................................108 A. CONCLUSIONS ON DEVELOPMENT OF DRY PORT IN MANDALAY................................................................................108 B. RECOMMENDATION FOR FULL-SCALE FEASIBILITY STUDY ........................................................................................109 C. RECOMMENDATION FOR UTILIZING THIS PREFEASIBILITY STUDY................................................................................110
  9. 9. vii TABLES Table 1: Socio-economic indicators of five GMS countries in 2010......................................................................4 Table 2: Key economic indicators and long-term trends of Myanmar................................................................6 Table 3. Structure of economy of Myanmar (% of GDP) ............................................................................................6 Table 4: Structure of economy of Myanmar (Annual growth rates of GDP, Consumption and Investment).............................................................7 Table 5: Trade Value from (2005-06 to 2011-12) ........................................................................................................7 Table 6. Direction of trade (Export) of Myanmar..........................................................................................................8 Table 7: Direction of trade (Imports) of Myanmar.......................................................................................................9 Table 8: Structure of international trade of Myanmar.............................................................................................10 Table 9: Foreign Investment of Permitted Enterprises as of (31-7-2012) ....................................................10 Table 10: Per capita GDP for each township in Mandalay .....................................................................................13 Table 11: Value of Production, Services and Trade for Mandalay Region......................................................13 Table 12: Ratio of Mandalay GDP compared with GDP of Myanmar ................................................................14 Table 13: Statement of IN/ OUT Cargo Transportation by truck (tons) .........................................................15 Table 14: Statement of IN/ OUT Cargo Transportation with truck (by vehicles).......................................16 Table 15: Export Border trade volumes with neighbouring countries............................................................16 Table 16: Import Border trade volumes with neighbouring countries ...........................................................16 Table 17: China Border trade volume as percentage of all border trade........................................................17 Table 18. the Dry Ports of International Importance in Myanmar. ...................................................................25 Table 19: Policy and regulations relevant to dry ports ...........................................................................................29 Table 20: Potential dry port investors.............................................................................................................................30 Table 21: Road infrastructure in Myanmar (June, 2012) .......................................................................................35 Table 22: Road progress in Myanmar..............................................................................................................................36 Table 23: Freight transported by railways....................................................................................................................42 Table 24: Airborne cargoes and traffic in Myanmar.................................................................................................45 Table 25: Number of vessels calling at Yangon Port (including Thilawa terminals)................................48 Table 26: Seaborne trade of the Yangon Port (including Thilawa) ...................................................................49 Table 27: Volume of containers handled in port of Yangon (including Thilawa).......................................50 Table 28: Logistics performance index for Myanmar and selected countries, 2010 ................................54 Table 29: Road infrastructure under Ministry of Construction...........................................................................61 Table 30: Forecast of annual container traffic through dry port........................................................................68 Table 31: Forecast of annual conventional cargo traffic through dry port....................................................69 Table 32: Forecast of daily container traffic through dry port............................................................................72 Table 33: Forecast of daily conventional cargo traffic through dry port........................................................73 Table 34: Summary of total area required for the dry port...................................................................................74
  10. 10. - viii - Table 35: Space required for container storage for road cargo...........................................................................75 Table 36: Space required for container storage for rail cargo..............................................................................75 Table 37: Space required for container yard for road cargo.................................................................................76 Table 38: Space required for container yard for rail cargo....................................................................................76 Table 39: Space required for CFS........................................................................................................................................77 Table 40: Space required for conventional cargo storage for road cargo.......................................................78 Table 41: Space required for conventional cargo storage for rail cargo..........................................................78 Table 42: Space required for customs clearance.........................................................................................................79 Table 43: Space required for customs office .................................................................................................................79 Table 44: Space required for operator office................................................................................................................80 Table 45: Space required for maintenance workshop..............................................................................................80 Table 46: Space required for parking area.....................................................................................................................81 Table 47: Summary of freight handling equipment at the dry port...................................................................82 Table 48: Consumption of water at the dry port.........................................................................................................83 Table 49: Cost estimate for civil work..............................................................................................................................85 Table 50: Cost estimate for the buildings .......................................................................................................................86 Table 51: Cost estimate for access road ..........................................................................................................................87 Table 52: Cost estimate for railway facility ...................................................................................................................88 Table 53: Cost estimate for the cargo handling equipment...................................................................................88 Table 54: Total cost estimate for the dry port project..............................................................................................89 Table 55: Cash inflow and cash outflow included in project FIRR .....................................................................91 Table 56: Summary of revenue for dry port..................................................................................................................91 Table 57: Summary of dry port charges..........................................................................................................................91 Table 58: Summary of dry port development cost.....................................................................................................92 Table 59: Distribution of dry port development cost ...............................................................................................92 Table 60: Cargo handling equipment cost......................................................................................................................92 Table 61: Labour cost...............................................................................................................................................................93 Table 62: Fuel cost .....................................................................................................................................................................93 Table 63: Summary of operational costs.........................................................................................................................93 Table 64: Calculation of project FIRR ...............................................................................................................................94 Table 65: Annual employment benefit.............................................................................................................................96 Table 66: Opportunity cost of vehicle and cargo through time............................................................................98 Table 67: Logistics cost savings...........................................................................................................................................99 Table 68: Summary of economic development cost...............................................................................................100 Table 69: Calculation of project EIRR............................................................................................................................100 Table 70: Project weighted average cost of capital (WACC)...............................................................................101 Table 71: Project activities and impacts identification.........................................................................................103 Table 72: Environmental and social impact assessment of the dry port project .....................................104 Table 73: Potential socio-economic impacts of the dry port project..............................................................106 Table 74: Environmental management plan for the dry port project............................................................106
  11. 11. ix FIGURES Figure 1: Organization of the study report......................................................................................................................3 Figure 2: Map of Republic of Union of Myanmar...........................................................................................................5 Figure 3: Yearly Approved Amount of Foreign Investment ..................................................................................11 Figure 4: Foreign Investment in Myanmar (by country)........................................................................................11 Figure 5: Mandalay location map.......................................................................................................................................12 Figure 6: Map of Mandalay and its region......................................................................................................................12 Figure 7: Per capita GDP of Mandalay city Vs. Mandalay division......................................................................14 Figure 8: Mandalay Highway Bus terminals and Merchandise Center (plan)..............................................18 Figure 9: Mandalay Highway Bus terminals and Merchandise Center (satellite) ......................................18 Figure 10: Construction of warehouse in Merchandise Center (4.7.2012)....................................................19 Figure 11: Industrial zones in Myanmar.........................................................................................................................20 Figure 12: Scale-model of the new city project in Mandalay Region (proposed).......................................21 Figure 13: Proposed site for river port development project..............................................................................22 Figure 14: Proposed dry ports in Myanmar..................................................................................................................26 Figure 15: Agencies involved in operation of Lat Krabang dry port, Thailand............................................28 Figure 16: Policies and regulations relevant to dry ports......................................................................................28 Figure 17: Current roads network of Myanmar..........................................................................................................37 Figure 18: Asian and ASEAN highways network........................................................................................................39 Figure 19: Economic corridor highways of GMS countries ...................................................................................40 Figure 20: Existing Rail routes of Myanmar..................................................................................................................41 Figure 21: Segment of the Trans-Asia Railway Network in Myanmar.............................................................42 Figure 22: Total inland waterways length (km) in Myanmar ..............................................................................44 Figure 23: Map of Yangon river estuary with Yangon and Thilawa port area .............................................46 Figure 24: Vessels calling at Yangon port (2001-02 to 2011-12) ......................................................................48 Figure 25: Seaborne trade of the Yangon port (including Thilawa) (2001-02 to 2011-12)..................49 Figure 26: Volume of containers handled in port of Yangon (including Thilawa) (by TEU in thousands, 2000-01 to 2011-12).................................................................................................................50 Figure 27: Map of Kyauk Phyu............................................................................................................................................51 Figure 28: Dawei deep seaport (New commercial Gateway) ...............................................................................52 Figure 29: Correlation between LPI and Income per Capita.................................................................................55
  12. 12. - x - Figure 30: Myanmar’s LPI Scores .......................................................................................................................................55 Figure 31: The main transport corridors in GMS countries...................................................................................57 Figure 32: Alternative transport routes passing through Myanmar.................................................................58 Figure 33: The Singapore–Kunming rail link network.............................................................................................59 Figure 34: Proposed road from Dawei to Bangkok....................................................................................................60 Figure 35: Distances and driving hours for major cities from Mandalay........................................................60 Figure 36: 105 mile Trade Zone (Muse)..........................................................................................................................62 Figure 37: Basic functions and cargo flows of dry port............................................................................................65 Figure 38: Location of Mandalay.........................................................................................................................................66 Figure 39: Projected annual container traffic volume through dry port.........................................................68 Figure 40: Projected annual conventional cargo traffic volume through dry port.....................................69 Figure 41: Proposed location of the dry port in Mandalay.....................................................................................71 Figure 42: Forecast of daily container traffic through dry port...........................................................................73 Figure 43: Forecast of daily conventional cargo traffic through dry port.......................................................73 Figure 44: The physical layout of the dry port.............................................................................................................75
  13. 13. Pre-feasibility Study of Dry Port in Myanmar - 1 - I. INTRODUCTION A. BACKGROUND The Republic of the Union of Myanmar1 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. Myanmar has a long coastline with 2,229 kilometers at the South-western part of the country. Myanmar is a member of ASEAN (Association of South East Asia Nations) and it is the most western part of ASEAN geographically (especially for the continental countries of ASEAN). Along the coastline of Myanmar, there are 8 ports for the coastal and international maritime traffic. Among them, the Port of Yangon is the premier port of Myanmar and handles about 90 % of the country's normal exports and imports up to now. Cargo throughput using Yangon port has been increasing markedly each year. Containerized cargo passing through the Yangon Port (including Thilawa terminals area) has been also increasing time by time. Yearly growth rate of the container handled volume in Yangon port is about 16% for the last 6 year period. On the other hand, border trade has been increasing gradually year by year. Among them, border trade volume and value with China has noticeably increased year by year. According to the 2011-2012 records, border trade value within China is more than 16% of the country‟s total trade. Nowadays in Myanmar, more than 50% of the containerized export cargoes (by weight) are agricultural products, mainly beans and pulses and most of these beans and pulses are dominantly cultivated in the middle part of Myanmar (around Mandalay region). Additionally, most of the import goods from the China border are transported to Mandalay first and then these are distributed to other regions of the country. For the regional development prospects, Mandalay is situated on the Asian Highway (AH1 and AH14) and future Trans-Asian Railway network (TAR-S1 and TAR-S2). Moreover, Mandalay is the second largest economic city and it has naturally very good access with an inland waterway by the longest river of Myanmar, the Ayeyarwaddy. All these situations favour Mandalay to be an important logistics hub in Myanmar for both domestic and international trade. This prefeasibility study report, as its name suggests, covers the essential issues of establishing a dry port in Mandalay region. In the meantime, the vicinity of Mandalay has 1 In this prefeasibility study report, the Republic of the Union of Myanmar is referred to as Myanmar
  14. 14. Pre-feasibility Study of Dry Port in Myanmar - 2 - already been selected as a planned or potential dry port in Myanmar for a prefeasibility study by Ministry of Rail Transport, Myanmar. B. APPROACHES FOR UNDERTAKING PREFEASIBILITY STUDY Both desk research and site visit approaches were employed by the project team. Essential information and data were collected and analyzed at the stage of desk research. During 2-6 July 2012, the project team comprising the UNESCAP secretariat staff, an external- project team activities consultant and the focal point from Myanmar visited related various Public/ Private organizations and government departments in Yangon, Naypyitaw and Mandalay in Myanmar. The project team held discussions with relevant stakeholders including government officials, customs officers, transport operators, and regional authorities to gather information for the prefeasibility study during the site visit. Comprehensive analysis was conducted after the site visit, which led to this prefeasibility study report. C. STRUCTURE OF THE FEASIBILITY STUDY REPORT The study report comprises four components, as illustrated in Figure 1. The first component (chapter I) provides the general background of the prefeasibility study report. The second component (chapters II through IV) investigates the context of developing dry ports in Mandalay region including topics such as overview of socio-economic features in Myanmar and Mandalay area, policy and regulations on development of dry ports and a review of logistics and transport in Mandalay area. The third component of this study report (chapters V through IX) examines the functions, locations, economic and financial analysis, social and environmental issues of development of a dry port in Mandalay region. The last component (chapter X) concludes the study report with some recommendations.
  15. 15. Pre-feasibility Study of Dry Port in Myanmar - 3 - Component 1: the general background of the prefeasibility study report Ch I. Introduction Component 2: Social and economic context of developing a dry port in Mandalay region area Ch II. Socio-economic features and international trade of Myanmar and Mandalay area Ch III. Policy and institutional issues of development of dry port in Myanmar Ch IV. Development of transport and logistics in Myanmar and Mandalay area Component 3: Functions, locations, economic and financial analysis, social and environmental issues of development of a dry port in Mandalay region. Ch V. Freight demand forecast of dry port in Myanmar and Mandalay area Ch VI. Physical development plan Ch VII. Cost estimates Ch VIII. Economic and financial analysis Ch IX. Environmental and social impact assessment Component 4: Conclusion Ch X. Conclusions and recommendations Figure 1: Organization of the study report
  16. 16. Pre-feasibility Study of Dry Port in Myanmar - 4 - II. SOCIO-ECONOMIC FEATURES AND INTERNATIONAL TRADE OF MYANMAR AND MANDALAY AREA A. OVERVIEW OF SOCIO-ECONOMIC FEATURES OF MYANMAR According to the classification by the United Nations, Myanmar is one of the least developed countries (LDC)2 similar to Lao PDR and Cambodia within ASEAN countries. Figure 2 shows the geographic location of Myanmar on a UN official map. Myanmar shares borders with 5 neighbouring countries. They are Bangladesh with the length of 194 kilometers, India with the length of 1,463 kilometers, China with the length of 2,185 kilometers, Laos with the length of 235 kilometers and Thailand with the length of 1,800 kilometers. The total length of the border is about 5,900 kilometers. Myanmar is a member of the United Nations (UN), Association of Southeast Asian Nations (ASEAN), Bay of Bengal Initiative for Multi Sectoral Technical and Economic Cooperation (BIMST-EC) and the Greater Mekong Sub-region (GMS) - including Cambodia, Yunnan Province and Guangxi Zhuang Autonomous Region in China, Lao PDR, Myanmar, Thailand, and Viet Nam. The selected key socio-economic indicators of five GMS countries in Table 1 show that GMS countries vary from each other in terms of population, GDP, GNI per capita and area. Thailand has the largest economy measured by GDP; Lao PDR is the smallest in terms of population and GDP; Myanmar is the largest according to the area of the country, while Viet Nam has the largest population. Table 1: Socio-economic indicators of five GMS countries in 2010 Country Population (million) GDP (US$ billions) GNI per capita (USD) Rural Pop (% total) Area (sq. km.) Cambodia 14.3 11.2 750 80 176,500 Lao PDR 6.23 7.3 1,050 68 230,800 Myanmar 59.8 54.416* 379.6** 67 677,000 Thailand 67.3 318.5 4,150 65 510,900 Vietnam 86.5 106.4 1,160 70 310,100 Source: World Bank (http://devdata.worldbank.org/AAG/mmr_aag.pdf), „JICA-IDCJ studies‟, *(http://www.gfmag.com/gdp-data-country-report) and ** (http:// http://data.un.org/CountryProfile ) 2 UNCTAD(2011), “THE LEAST DEVELOPED COUNTRIES REPORT 2011”, United Nations
  17. 17. Pre-feasibility Study of Dry Port in Myanmar - 5 - Source: www.un.org Figure 2: Map of Republic of Union of Myanmar
  18. 18. Pre-feasibility Study of Dry Port in Myanmar - 6 - The key economic indicators and long-term trends of Myanmar in Table 2 reveal that the economy of Myanmar has maintained steady growth over the last two decades with annual growth of approximately 10 per cent. Table 2: Key economic indicators and long-term trends of Myanmar 1990 2000 2009 2010 GDP (US$ billions) Gross capital formation/GDP 13.4 12.4 18.9 22.7 Exports of goods and services/GDP 1.9 0.5 0.1 0.1 Gross domestic savings/GDP 11.7 12.3 18.9 22.7 Gross international savings/GDP - - - - (average annual growth) 1990-00 2000-10 2009 2010 2010-14 GDP 7.0 12.3 10.6 10.4 - GDP per capita 5.6 11.7 9.8 9.6 - Exports of goods and services 8.8 2.4 -2.0 16.1 - Source: World Bank (http://devdata.worldbank.org/AAG/mmr_aag.pdf) Tables 3 and 4 show the main pillars for the economy in Myanmar. Agriculture has been the vital role for the economy of Myanmar. However, its relative importance has declined over time because of increases of the other sectors. But no sectors have had rapid growth. Table 3: Structure of economy of Myanmar (% of GDP) 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 (% of GDP) I. GOODS 64.20 63.16 63.73 62.94 62.64 62.36 Agriculture 38.40 36.01 35.34 31.59 29.36 27.55 Livestock and Fishery 7.66 7.38 7.57 8.28 8.34 8.42 Manufacturing 12.80 13.99 14.89 16.82 18.10 19.52 Construction 3.76 3.87 3.83 4.23 4.48 4.54 II. SERVICES 14.09 15.77 15.21 15.94 17.03 17.80 Transportation 10.44 10.97 10.86 11.89 12.62 12.95 III. TRADE 21.71 21.07 21.06 21.12 20.32 19.84 Source: Compile data from Central Statistics Organization (CSO), Ministry of National Planning and Economic Development
  19. 19. Pre-feasibility Study of Dry Port in Myanmar - 7 - Table 4: Structure of economy of Myanmar (Annual growth rates of GDP, Consumption and Investment) 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 (annual growth, Percent) I. GOODS 13.8 12.5 11.3 9.5 9.6 9.7 Agriculture 10.7 9.2 7.5 4.8 4.2 4.1 Livestock and Fishery 18.8 12.2 10.9 10.1 12.3 7.5 Manufacturing 21.9 22.1 21.2 18.3 19.0 20.3 Construction 11.0 15.2 17.2 18.1 13.8 12.5 II. SERVICES 15.2 16.2 15.6 14.5 15.3 13.2 Transportation 16.2 16.0 14.4 16.7 15.9 13.9 III. TRADE 12.1 12.9 11.6 9.6 9.9 10.3 Source: Central Statistics Organization (CSO), Ministry of National Planning and Economic Development Table 5 indicates the foreign trade value of Myanmar. It shows normal trade and border trade separately. Border trade is mainly with China and Thailand. In the last year, the trade imbalance amounted to less than 1% of the total trade. Table 5: Trade Value from (2005-06 to 2011-12) (USD million) No. Item 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 1 Export (total) 3,557.21 5,232.68 6,401.71 6,778.85 7,586.94 8,861.01 9,135.60 (a) Normal Trade 3127.73 4585.47 5655.03 6121.55 6922.59 7746.66 7107.21 (b) Border Trade 429.48 647.21 746.68 657.3 664.35 1114.35 2028.39 2 Import (total) 1,984.41 2,936.73 3,353.42 4,543.45 4,181.40 6,412.73 9,035.06 (a) Normal Trade 1692.78 2491.33 2770.57 3852.27 3462.07 5396.89 7695.46 (b) Border Trade 291.63 445.4 582.85 691.18 719.33 1015.84 1339.60 3 Total Trade Value 5,541.62 8,169.41 9,755.13 11,322.30 11,768.34 15,273.74 18,170.6 6 4 Trade imbalance 1,572.80 2,295.95 3,048.29 2,235.40 3,405.54 2,448.28 100.54 Source: CSO and DOBT Table 6 & 7 show the main trading partners of Myanmar. Measured by value of export, the main trading countries/groups of Myanmar include ASEAN countries (within ASEAN countries, Thailand took the largest portion of it), EU countries (within EU countries, Germany
  20. 20. Pre-feasibility Study of Dry Port in Myanmar - 8 - has the biggest amount but it is comparatively less than neighbouring countries), China, Republic of Korea, Japan, United States, India, Bangladesh and others. Table 6 is for export trading partner countries and table 7 is for import trading partner countries. Table 6: Direction of trade (Export) of Myanmar (USD million) No Countries/ Groups 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 1 Major trading partners 5040.79 6161.281 6466.58 7193.711 8534.615 8745.024 a ASEAN countries 2836.197 3504.957 3853.41 4141.03 3930.84 4676.692 Brunei 1.04 1.22 0.98 0.75 0.37 1.33 Cambodia 0 0 0.04 0.36 Indonesia 88.23 86.58 28.45 37.43 41.11 40.94 Lao PDR 0.01 0.07 0.04 0.02 0.03 Malaysia 88.47 119.03 311.69 152.61 437.8 152.04 Philippine 10.28 7.66 8.99 27.21 22.3 34.32 Singapore 182.59 400.56 832.75 670.41 456.99 542.75 Thailand 2407.347 2809.647 2630.93 3197.87 2905.18 3823.832 Vietnam 58.23 80.19 39.58 54.75 67.03 81.09 b EU Countries 210.27 200.06 159.9 132.05 120.88 131.52 c China 972.847 1345.574 1291.15 1582.668 3098.25 2255.768 d Republic of Korea 61.54 73.82 63.22 75.58 148.39 214.82 e Japan 166 185.86 183.5 177.35 237.43 320.2 f United States 3.46 2.24 0.82 2.56 2.21 29.45 g India 733.91 727.25 803.82 1013.137 871.591 1045.989 h Bangladesh 56.566 121.52 110.76 69.336 125.024 70.585 2 Others 191.89 240.43 312.27 393.23 326.39 390.58 Total (Export) 5232.68 6401.711 6778.85 7586.941 8861.005 9135.604 Source: CSO + DOBT
  21. 21. Pre-feasibility Study of Dry Port in Myanmar - 9 - Table 7: Direction of trade (Imports) of Myanmar No Countries/ Groups 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 1 Major trading partners 2840.873 3218.005 3971.56 3994.095 6006.663 8627.61 a ASEAN countries 1566.34 1556.9 2042.75 1922.137 2840.6 4020.57 Brunei 0 0.03 0.02 Cambodia 0.06 0.03 0.06 0.18 1.36 1.11 Indonesia 94.06 206.68 210.35 140.07 275.49 431.82 Lao PDR 0.4 0 Malaysia 110.41 115.51 350.48 159.52 145.32 303.41 Philippine 9.77 12.25 16.44 14.16 16.97 14.64 Singapore 1034.66 821.52 1050.28 1202.19 1645.32 2516.13 Thailand 304.51 383.44 395.09 378.677 709.09 691.15 Vietnam 12.87 17.47 19.65 27.31 47.05 62.29 b EU Countries 71.76 92.19 99.45 96.34 161.98 253.17 c China 754.153 1016.015 1240.89 1268.971 2176.962 2796.55 d Republic of Korea 84.9 107.54 189.4 224.06 304.23 451.93 e Japan 156.54 243.3 166.05 259.11 256.35 502.17 f United States 43.15 22.03 79.93 18.52 59.47 263.62 g India 159.95 173.51 146.38 193.515 195.46 325.38 h Bangladesh 4.08 6.52 6.71 11.442 11.611 14.22 2 Others 95.86 135.41 571.89 187.3 406.07 407.453 Total (Import) 2936.733 3353.415 4543.45 4181.395 6412.733 9035.063 Source: CSO + DOBT
  22. 22. Pre-feasibility Study of Dry Port in Myanmar - 10 - Table 8: Structure of international trade of Myanmar (USD million) 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 1 Export 5232.68 6401.71 6778.85 7586.94 8861.006 9135.604 (a) Agriculture 931.13 1221.22 1403.17 1678.36 1800.391 2372.983 (b) Animal product 10.3 13.07 10.16 24.15 93.773 92.896 (c) Marine product 491.58 554.5 464.9 466.9 498.608 705.931 (d) Mining 499.36 741.99 708.13 1017.57 2274.066 897.06 (e) Forestry 620.43 640.02 516.65 561.52 644.701 643.845 (f) Manufacturing 2329.46 2826.07 2686.18 3238.9 2907.954 4007.805 (g) Others 350.42 404.84 989.66 599.54 641.513 415.084 2 Import 2936.727 3353.424 4543.45 4181.400 6412.733 9035.063 (a) Capital goods 839.767 1146.930 1824.400 1530.530 2480.684 3843.306 (b) Raw materials 1377.800 1254.890 1597.380 1635.980 2628.972 3451.053 (c) Others goods 719.160 951.604 1121.670 1014.890 1303.077 1740.704 3 Total trade 8169.407 9755.134 11322.300 11768.340 15273.740 18170.670 Source: CSO + DOBT According to the statistics of foreign investment, Table 9 shows the sector-wise volume of Foreign Investment in Myanmar. Table 9: Foreign Investment of Permitted Enterprises as of (31-7-2012) (USD Million). Sr. No Particulars Permitted Enterprises % No. Approved Amount 1 Power 5 19067.498 46.41 2 Oil and Gas 113 14181.972 34.52 3 Mining 66 2814.360 6.85 4 Manufacturing 176 1826.282 4.44 5 Hotel and Tourism 45 1064.811 2.59 6 Real Estate 19 1056.453 2.57 7 Livestock & Fisheries 25 324.358 0.79 8 Transport & Communication 16 313.906 0.76 9 Industrial Estate 3 193.113 0.47 10 Agriculture 9 182.751 0.44 11 Construction 2 37.767 0.09 12 Other Services 6 23.686 0.06 Total 485 41086.957 100.00 Source: http://www.dica.gov.mm/dicagraph.htm
  23. 23. Pre-feasibility Study of Dry Port in Myanmar - 11 - The total investment amount from foreign investors reached about $41 billion till end of July, 2012. That foreign direct investment amount is highly dependent upon the investment policy and political weather of the country. Figure 3: shows the formation of the foreign investment in Myanmar from 1989-90 to 2011-12. (USD million) Source: see footnote3 Figure 3: Yearly Approved Amount of Foreign Investment Additionally, Figure 4 shows the top 15 countries which have invested in Myanmar up to the end of July, 2012. (USD million) Source: extract data from http://www.dica.gov.mm/dicagraph1.htm Figure 4: Foreign Investment in Myanmar (by country) 3 Trade & Investment Environment in Myanmar, presented by Capt. Aung Khin Myint (Chairman, MIFFA) on 11 May 2012. 449 280 30 100 400 1400 700 2800 800 40 58.150 217.688 19.002 86.948 91.170 158.283 6065.675 719.702 205.720 984.764 329.580 19998.965 4369.481
  24. 24. Pre-feasibility Study of Dry Port in Myanmar - 12 - B. OVERVIEW OF SOCIO-ECONOMIC FEATURES OF MANDALAY REGION Mandalay is the second-largest city and the last royal capital of Myanmar. It is located about 380 miles (600 km) – along the new express road access - north of Yangon on the east bank of the Ayeyarwaddy River and is the capital of Mandalay region. Administratively, Mandalay region consists of seven townships, namely Mandalay, Pyin Oo Lwin, Kyauk Se, Meik Hti Lar, Myinghan, Yamethin and Nyaung Oo. Mandalay is the economic hub of upper part of Myanmar in terms of location, commerce, road, rail and inland waterway access. Mandalay is also considered as the distribution center of the trade from China passing through the border with China. Figure 5 shows the location of Mandalay on the Myanmar map and Figure 6 shows the map of Mandalay region. Figure 6: Map of Mandalay and its region Per capita GDP data of Mandalay region is as shown in Table 10. Mandalay township itself is twice the average of the whole region. Figure 5: Mandalay location map
  25. 25. Pre-feasibility Study of Dry Port in Myanmar - 13 - Table 10: Per capita GDP for each township in Mandalay (USD) No. Township 2006-07 2007-08 2008-09 2009-10 2010-11 1 Mandalay 416.24 571.10 690.49 938.13 1,358.06 2 Pyin Oo Lwin 159.21 218.30 273.61 351.11 500.08 3 Kyauk Se 288.56 375.73 417.25 498.53 724.10 4 Meik Hti Lar 223.76 311.04 354.78 457.27 661.88 5 Myinghan 164.42 227.82 254.02 319.65 453.03 6 Yamethin 150.43 210.55 236.36 286.54 399.06 7 Nyaung Oo 143.96 199.16 229.65 278.78 400.10 Mandalay Division 222.97 304.11 354.20 453.98 655.60 Source: Planning department4 The value of production, services and trade for Mandalay region are as shown in Table 11. Under production there are 8 sub-categories, namely agriculture, livestock and fishery, forestry products, energy, minerals, mechanical and construction. Among them, agriculture product value is about 50% of the total product value. Under services, there are five sub- categories, namely transportation, communication, monetary, social and management, and others. Among them transportation is about 80 % of the total services value. Table 11: Value of Production, Services and Trade for Mandalay Region Year (in Million Kyats) Est. USD (million) Est. Exchange rateProduction Services Trade Total 04-05 296,124.10 83,905.80 105,459.70 485,489.60 693.56 700.00 05-06 902,949.80 306,844.20 308,585.20 1,518,379.20 1,265.32 1,200.0006-07 1,007,994.60 369,808.20 340,410.50 1,718,213.30 1,431.84 07-08 1,095,698.10 434,101.60 369,818.90 1,899,618.60 1,583.02 08-09 1,201,857.40 477,883.10 404,881.50 2,084,622.00 1,667.70 1,250.00 09-10 1,293,655.70 562,397.60 433,628.10 2,289,681.40 2,081.53 1,100.00 10-11 1,415,305.80 640,121.60 472,402.30 2,527,829.70 2,407.46 1,050.00 Source: Planning department Table 12 shows the ratio of Mandalay GDP compared with GDP of Myanmar for the past several years. 4 This per capita GDP was expressed in local currency (Kyats) and the exchange rate calculation on the related table is dependent on market exchange rate records and estimates
  26. 26. Pre-feasibility Study of Dry Port in Myanmar - 14 - Table 12: Ratio of Mandalay GDP compared with GDP of Myanmar Year GDP in Kyat % Mandalay Myanmar 2004-05 485,489.60 9078928.5 5.3% 2005-06 1,518,379.20 12286765.4 12.4% 2006-07 1,718,213.30 16852757.8 10.2% 2007-08 1,899,618.60 23336112.7 8.1% 2008-09 2,084,622.00 29233288.0 7.1% 2009-10 2,289,681.40 33905665.6 6.8% 2010-11 2,527,829.70 40507942.0 6.2% Source: Compile data from CSO and planning dept. From financial year 2006-2007, Naypyitaw (Pyinmana township) became a separate division and it became the new government capital of Myanmar. According to this affect, the percentage contribution of the Mandalay GDP as part of national GDP has been gradually decreasing. But per capita GDP of the Mandalay division and Mandalay city itself has been increasing year by year as shown in Figure 7. (USD) Figure 7: Per capita GDP of Mandalay city Vs. Mandalay division 0 200 400 600 800 1000 1200 1400 1600 2006-07 2007-08 2008-09 2009-10 2010-11 Mandalay city Mandalay Division
  27. 27. Pre-feasibility Study of Dry Port in Myanmar - 15 - The local government of Mandalay region mainly has been promoting the following areas (related with transport and trade) for development: 1). Transit service at the border from China; 2). Merchandizing of the agricultural products, mainly beans and pulses; 3). Training of the Ayeyarwaddy river to use the transit cargo from China; 4). Establishing the inland water ports along the Ayeyarwaddy river; and 5). Establishing industrial zones; C. TRADE AND TRANSPORT SITUATION IN MANDALAY REGION The location of Mandalay, favours it becoming a logistics hub for trade in the middle part of Myanmar, both domestic trade and border trade. Mandalay is also known as a base of manufacturing facilities with rich cultural tradition and modern agricultural equipment. From the industrial zones of the Mandalay region, the consumer products and capital goods have been distributed to the surrounding regions. Mandalay is about 445 miles (716 km)5 far from Yangon which is the major port for international trade. Whenever the cargoes have to be exported, these cargoes have to be moved to Yangon or the Yangon region first where all the documentation procedures are completed. This is the reason for the dense traffic of cargo trucks between Yangon and Mandalay being significantly high. According to the truck traffic data collection from the Truck Supervising Committee of Yangon Division, the average percentage of the cargo trucks to/from Mandalay region is about 25% to 30% of all the 16 regions (including Yangon internal region) in Myanmar. Table 13 & 14 show cargo volumes transported in and out of Yangon region. Table 13: Statement of IN/ OUT Cargo Transportation by truck (tons) Period Yangon with Mandalay region Yangon with all the regions % In Out Total In Out Total Jul~Dec, 2010 443185 399217 842402 1534639 1045926 2580565 30.97% Jan~Jun, 2011 243728 324884 568612 1066330 1037514 2103844 27.03% Jul~Dec, 2011 191068 230993 422061 793182 660684 1453866 29.03% Jan~Jun, 2012 163722 161374 325096 673349 530376 1203725 27.01% Source: Truck Supervising Committee (Yangon Division) 5 That distance is along the old route from Mandalay to Yangon. Even when the first expressway between Mandalay and Yangon has been opened in 2012, the cargo trucks and container trucks are not allowed to use that express route that is only 365 miles in length.
  28. 28. Pre-feasibility Study of Dry Port in Myanmar - 16 - Table 14: Statement of IN/ OUT Cargo Transportation with truck (by vehicles) Period with Mandalay region with all the regions % In Out Total In Out Total Jul~Dec, 2010 17397 17262 34659 77269 50031 127300 27.23% Jan~Jun, 2011 17979 17724 35703 82657 56122 138779 25.73% Jul~Dec, 2011 16558 12701 29259 70367 42545 112912 25.91% Jan~Jun, 2012 15989 11947 27936 72174 44708 116882 23.90% Source: Truck Supervising Committee (Yangon Division) From another point of view, Mandalay is situated as the hub of the distribution center of cargo arising from border trade with India and China. The volume of the China border trade makes up a high portion of the whole border trade as shown in Table 15 (export) and 16 (import). Table 15: Export Border trade volumes with neighbouring countries (USD million) Country 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Thailand 157.60 148.96 137.86 139.22 151.62 175.16 China 453.12 555.48 490.85 500.16 937.83 1821.90 India 11.02 10.91 5.48 7.79 8.28 8.87 Lao 0.01 0.07 0.04 - 0.02 0.03 Bangladesh 6 25.46 31.26 23.07 17.18 16.60 22.43 Total (export) 647.21 746.68 657.3 664.35 1114.35 2028.39 Source: Calculation data from Ministry of Commerce Table 16: Import Border trade volumes with neighbouring countries (USD million) Country 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Thailand 142.63 155.78 189.49 135.43 147.36 168.14 China 296.64 421.95 495.75 576.65 862.45 1163.52 India 4.75 3.92 4.40 5.95 4.52 6.54 Lao - - 0.40 - - - Bangladesh 5* 1.38 1.20 1.14 1.30 1.51 1.40 Total (import) 445.40 582.85 691.18 719.33 1015.84 1339.69 Source: Calculation data from Ministry of Commerce 6 Border trade with Bangladesh (import/export) figures is an estimated calculation whereby the total volume was reduced by subtotals of China, Thailand, India and Lao PDR.
  29. 29. Pre-feasibility Study of Dry Port in Myanmar - 17 - Table 17 shows the percentage of the China border trade of the total border trade volume has been increasing gradually year by year. Most of the cargo from the China border trade is carried to Mandalay first and then has to be distributed to the rest of the regions. The percentage of the China border trade is more than 80% of the total border trade value and it has been increasing noticeably year by year. Table 17: China Border trade volume as percentage of all border trade (USD million) Year China border trade Total border trade % of TotalExport Import Total 2006-07 453.12 296.64 749.76 1092.61 68.62% 2007-08 555.48 421.95 977.43 1329.53 73.52% 2008-09 490.85 495.75 986.6 1348.48 73.16% 2009-10 500.159 576.652 1076.811 1383.68 77.82% 2010-11 937.83 862.452 1800.282 2130.19 84.51% 2011-12 1821.898 1163.52 2985.418 3367.99 88.64% Source: Calculation data from Ministry of Commerce Business activities in Mandalay have been increasing with goods from the China border trade (export-import goods) passing through the city. This border trade between Myanmar and China has been growing year by year. In 2011-12, the value of the Myanmar-China border trade was about US$ 3,000 million which is almost three times the value from last two year period. There is still great potential to develop in the future as well. D. MERCHANDIZE CENTERS AND RELATED ACTIVITIES IN MANDALAY REGION Mandalay is located at the middle part of Myanmar and it is the dry zone region with low levels of annual rainfall. That is the reason why the main agricultural products of the Mandalay and nearby regions are beans, pulses and cotton. One of the major export cargoes from Myanmar is beans and purses. Mandalay is the biggest market place and distribution hub for these beans and pulses from Mandalay itself, and nearby regions, to Yangon for export. Agriculture related equipment and fertilizer are the main import cargoes from China and the main distribution area is Mandalay city. Mandalay City Development Committee (MCDC) established the new Mandalay highway bus terminals and the Merchandise Center project in the western part of Mandalay city area (about 20 km far from the city center). The project has a land area of 65.95 acres and the following buildings:
  30. 30. Pre-feasibility Study of Dry Port in Myanmar - 18 - Shop house (30' x 80') = 160 units Shop house (40' x 60') = 34 units Warehouse (60' x 80') = 236 units Extra block = 13 units Landscaping = 1 unit Total buildings = 346 units Total Area = 61.589 acres Including 2 x 30' access roads = 65.950 acres (for the better arrangement of traffic the road area is about 42.59% of the total area.) Figure 8 shows the site plan of the merchandise center of the Mandalay Highway Bus terminals and Merchandise Center and Figure 9 shows a recent satellite photo of it. Figure 8: Mandalay Highway Bus terminals and Merchandise Center (plan) Figure 9: Mandalay Highway Bus terminals and Merchandise Center (satellite)
  31. 31. Pre-feasibility Study of Dry Port in Myanmar - 19 - Figure 10: Construction of warehouse in Merchandise Center (4.7.2012) E. INDUSTRIAL ZONES AND SPECIAL ECONOMIC ZONES NEAR MANDALAY REGION M andalay Industrial Zone is one of the biggest zones around the country. There are a total of 18 main Industrial Zones and 28 branch zones in Myanmar. M andalay Industrial Zone was Mandalay Ind. Zone Myingyan Ind. Zone Meiktila Ind. Zon Monywa Ind. Zone Kalay Ind. Zone Pakokku Ind. Zone Yenanggyaung Ind. Zone Pathein Ind. Zone Myangmya Ind. Zone Hinthada Ind. Zone Myeik Ind. Zone Pyay Ind. Zone Mawlamyine Ind.Zone Taunggyi Ind. Zone
  32. 32. Pre-feasibility Study of Dry Port in Myanmar - 20 - Figure 11: Industrial zones in Myanmar established in 1990 at the east side of the Yangon-Mandalay highway road, in Pyigyitagon township, Mandalay Division. It is 1820 acres in area and it has 3530 blocks. Mandalay region itself has been saturated as the center of the country and main location for the distribution of the border trade from China and India as well. Thus Mandalay industrial zone has more advantages over other industrial zones. In the Mandalay industrial zone, there are 406 large scale industries7 , 323 medium scale industries and 722 small industries. In total there are 1442 industrial sites. Total investment amounts to about 33.372 billion Kyats (about 33 million USD with the exchange rate of that time). Production value for Mandalay Industrial Zone are as below: (a) 2006-07 83,500 million Kyats (est. 66.80 million usd8 ) (b) 2007-08 99,800 million Kyats (est. 83.17 million usd) (c) 2008-09 119,200 million Kyats (est. 108.36 million usd) (d) 2009-10 134,600 million Kyats (est. 134.60 million usd) (e) 2010-11 127,001 million Kyats (est. 158.75 million usd) (f) 2011-12 127,900 million Kyats (est. 155.98 million usd) F. POTENTIAL PROJECTS NEAR MANDALAY REGION Regarding the regional transportation routes, the most important Asian Highway routes are AH1 (from Myawaddy-border with Thailand to Tamu-border with India) and AH14 (from Mandalay to Muse-border with China). Because of the strategic geographic location, Mandalay regional commercial trade will be growing continuously and there are many potential projects for development undergoing feasibility study or in the development stages, such as new Mandalay city development projects, re-training of Ayeyarwaddy River and development of the Inland Water ways ports projects. 7 the classification of the size of the industries is according to the Notification No. 23/1991 of the Ministry of Industry-1 as below: Small Scale Private Industrial Enterprise has manpower of up to 50, using house power from 3 and up to 25, Medium Scale Private Industrial Enterprise has manpower from 51 up to 100, using house power from above 25 and up to 50, and Large Scale Private Industrial Enterprise has manpower above 100, using house power from above 50 8 exchange rate that was used in this calculation is estimated from annual average market rate
  33. 33. Pre-feasibility Study of Dry Port in Myanmar - 21 - Many urbanization projects are being planned in Myanmar these days. Most noticeable potential projects are in Yangon region and Mandalay region. Different ministries and regional organizations have also been organizing a series of workshops and seminars related to regional development in the Mandalay region. Two examples, “Road Transport Development workshop in Mandalay” which is related to the ASEAN Free Trade Area in 2015, and a workshop on “Development of hotels and tourism sectors in Mandalay” arranged by Ministry of Hotels and Tourism, were held recently. Recently, one of the potential city development projects is “The new city project” and it will cover 22,000 acres of land, and is located within five and a half miles of the Mandalay International Airport, according to information from the local development company of that intended project. All these situations show that there will be driving forces and demands for the development of the city itself too. Figure 12 shows a scale-model of the proposed new city project in Mandalay Region. Figure 12: Scale-model of the new city project in Mandalay Region (proposed) Another potential project relating to inland water transport is at the east bank of Ayeyarwady river (about 70 km north-west of Mandalay city center) as shown in Figure 13. That project is intended to be built within 3 months with the objective of reducing the transportation cost for cargoes from Yangon and the lower part of Myanmar by using inland water transport along the Ayeyarwaddy river9 . 9 Project information was obtained from the local news journal (The Voice Weekly Vol. 8/No. 34).
  34. 34. Pre-feasibility Study of Dry Port in Myanmar - 22 - Figure 13: Proposed site for river port development project That inland waterway river port project will cover a land area of 370 acres and the intended construction period is about 30 months. The berth length is about 5000 ft and it can be used by up to 3000 DWT local barges and vessels. The intended project consists of other related industries including developing warehouses for agricultural products, packing factories, other industrial zones and so on. A study report on the impact on environmental and social sectors has been started for the development of that project. G. SUMMARY AND CONCLUDING REMARKS Myanmar is an LDC and faces many challenges for developing its economy and international trade. Myanmar joined the Association of South East Asia Nations (ASEAN) in July 1997 together with Lao PDR and about two years earlier than Cambodia. Myanmar was under military rule from 1988 to the end of March, 2011. Under the military rule, there were partial liberalizations of trade and the economy with the open market policy. But, there were many bad situations with low FDI compared to other regional countries. Economic sanctions from EU and United states resulted in few concrete developments in that era. In April, 2011, a new democratically elected government took over power from the military government. After reform of the political system, much progress can be seen such as improved international relationships with other countries, the economic sanctions have been lifted, the banking and financial system has been reformed, and many local and international workshops and seminars regarding reform and development of various sectors have been held.
  35. 35. Pre-feasibility Study of Dry Port in Myanmar - 23 - Analysts from Asia Development Bank (ADB) say that Myanmar‟s economy can triple in size by 2030 if sufficient reforms are undertaken in the coming years10 . The newly elected government encourages the development of all sectors and international investors are also interested in starting their business investment in Myanmar. Moreover, regional trade (including border trade) has dramatically increased year by year. There are many proposed and potential development projects at the feasibility stage in parallel with each other. Mandalay is the second largest economic city of Myanmar and capital of upper Myanmar. Mandalay division contributes about 7% of the country‟s GDP and per capita GDP is also higher than national per capita GDP. The location of the Mandalay region is strategically favourable for it to be a distribution and economic hub of other regions in upper Myanmar and China and India border trade as well. Mandalay is situated on the east bank of the river Ayeyarwaddy and it is also the biggest port city along the river. Moreover, it was the last royal capital of Myanmar and rich in cultural sites and tourist attractions. There are so many regional development project plans and city development plans being continuously considered and launched for the Mandalay region, especially nowadays. The border trade between China and Myanmar has been developing year by year. The volume of the border trade with China plays a vital role in the country‟s border trade and it is about 80% of the whole border trade volume. Most of the cargo from China is distributed at Mandalay and almost all of the export cargo going to China passes through the Mandalay region too. All these factors are the driving force for Mandalay to be a logistics center of upper Myanmar for both domestic and regional border trade. 10 The Irrawaddy: Burma’s Economy Can Triple by 2030: ADB, BY SIMON ROUGHNEEN on August 21, 2012 retrieved from http://www.irrawaddy.org/archives/
  36. 36. Pre-feasibility Study of Dry Port in Myanmar - 24 - III. POLICY AND INSTITUTIONAL ISSUES ON THE DEVELOPMENT OF A DRY PORT IN MYANMAR A. POLICY ISSUES ON DEVELOPING DRY PORTS IN MYANMAR Like many other countries in the world, there is not a single policy or regulation exclusively designated for dry ports in Myanmar. There was no specific law in Myanmar exclusively designated to dry ports but the Multimodal Transport Law had been drafted and was in the process of being enacted as a state law11 . Instead, development and operation of dry ports are under the auspices of different rules and regulations. The Myanmar government well understood that the geographical location of the country itself favours the country to be a land-bridge connecting South-East Asia and South Asia as well as with China12 . The advantages of the geographical location of Myanmar provides large potential for it to be a regional hub of the continental South East Asia and Greater Mekong Sub- region (GMS). Myanmar is keen to develop the transportation sector with its own resources, and through better cooperation and integration with development partners from local and overseas as well. UNESCAP member countries have to consider the following suggestions by the secretariat of UNESCAP about the implementation of a dry port in their respective countries; (i) prioritizing development of dry ports in their country; (ii) assessing challenges and opportunities for development of dry ports; and (iii) institutionalizing development of dry ports at the national level. Myanmar, as a member of the UNESCAP, government policy has to be in line with UNESCAP‟s intentions. Myanmar has already proposed seven potential sites of international importance for dry ports in accordance with the liberalized economic policy of the newly elected government. The Myanmar government is also ready to sign the intergovernmental agreement on dry ports which was drafted in July 201213 . 11 the discussion of Myanmar delegation at the Regional Expert Group Meeting on the Development of Dry Ports along the Asian Highway and Trans-Asian Railway Networks, Bangkok, 1-3 November 2010 12 Country report (Myanmar), Ad Hoc Intergovernmental Meeting on an Intergovermental Agreement on Dry Ports, Bangkok, 20-22 June 2012. 13 E/ESCAP/CTR(3)/2 , United Nations Economic and Social Commission for Asia and the Pacific, Committee on Transport, Finalized draft intergovernmental agreement on dry ports, 31 July 2012.
  37. 37. Pre-feasibility Study of Dry Port in Myanmar - 25 - The potential proposed places for the development of a dry port in Myanmar are Mandalay, Tamu, Muse, Mawlamyine, Bago, Monywa and Pyay. Table 18 shows these potential places with the priority of implementation of the Dry Ports of International Importance in Myanmar. Table 18: the Dry Ports of International Importance in Myanmar. Priority Name of city modes of transport Description 1. Mandalay (Trimodal) Rail, Road, Inland water * Capital of Mandalay Division * The 2nd largest economic city * AH1, AH 14, TAR-S1, TAR-S2 * on the bank of Irrawaddy river * adjacent to the Industrial zone 2. Tamu (Bimodal) Rail, Road * border station to India * transshipment (break of gauge) * AH1, TAR-S1, TARS2 3. Muse (Bimodal) Rail, Road * border station to China * transshipment * AH14, TARS1 4. Mawlamyine (Trimodal) Rail, Road, Inland water * Capital of Mon state * AH 112, TAR-S1, * on the bank of Than Lwin River 5. Bago (Bimodal) Rail, Road * Capital of Bago division * Junction railway station of TAR-S2 & Yangon - Mandalay rail line, AH 1 * Junction of Yangon – Mandalay line & Mawlamyine - Bago line 6. Monywa (Trimodal) Rail, Road, Inland water * Large hinterland * Capital of Sagaing division * AH 1, TAR-S1, TAR-S2 * on the bank of Chindwin River 7. Pyay (Trimodal) Rail, Road, Inland water * Large hinterland * on the bank of Irrawaddy * the most potential city forecasted by an expert team. Source: see footnote 14 14 Extracted from Country report Presentation of Thura U Aung Myo Myint, Deputy General Manager, Myanma Railways, Ministry of Rail Transportation, Union of Myanmar that was shown at Ad Hoc Intergovernmental meeting on an Intergovernmental Agreement on Dry Ports, in 20-22 June, 2012, Bangkok, Thailand.
  38. 38. Pre-feasibility Study of Dry Port in Myanmar - 26 - Most of the proposed places are located on the paths of Asian Highway (AH1) and the future Tran-Asian Railway (TAR-S2). Among them, Mandalay is highest priority and it has many comparative advantages over others. Figure 14 shows the location of the potential dry port places in Myanmar. Source: Country report (Myanmar) Figure 14: Proposed Dry Ports in Myanmar B. INSTITUTIONAL AND REGULATORY ISSUES ON DRY PORTS IN ASIA (1). INSTITUTIONAL FRAMEWORK Development of dry ports involves various governmental agencies concerned with transport, trade, commerce, finance, environment, customs, ports and logistics as well as private sector organizations, financing companies and banks. Therefore, planning, development and operation of dry ports requires considerable coordination and collaboration. Planning, development and operation of dry ports involve, amongst other things, the issuance of licenses, provision of guidelines on investment policies and guidelines on land use for development as a consequence, and the coordination of many agencies is essential. One of the ways of improving coordination could be through clearly defining the roles of various departments and agencies as well as the process involved in implementing legislation and
  39. 39. Pre-feasibility Study of Dry Port in Myanmar - 27 - regulations. Familiarity with the existing institutional and regulatory environment would allow dry port project developers to follow the prescribed processes necessary and to obtain the necessary approvals. In most cases both central and local governments are involved in dry ports, often at the planning and approval stage of a project as well as during its operation. For example in Lao PDR, the Department of Transport, Ministry of Public Works and Transport is the main government department dealing with dry ports and other institutions involved in their planning, development and operations, along with other departments such as Department of Customs, Ministry of Finance, Department of Immigration, Ministry of Public Security and Department of Quarantine, Ministry of Agriculture and Forestry respectively. In Indonesia, the Ministry of Transportation, Ministry of Finance and Governor of West Java were involved in approving the Cikarang dry port project. The location, construction and operation permit was issued by the Ministry of Transportation, while the Ministry of Finance issued permits for temporary storage areas (TPS) and implementation of the Customs Advance Trade System (CATS). Therefore, even though there may be different structures coordination among various levels of government is also necessary. At the Regional Expert Group Meeting on the Development of Dry Ports along the Asian Highway and Trans-Asian Railway Networks in Bangkok (2010), Institutional and regulatory issues have been outlined, emphasizing the direct impacts from the development of dry ports. The following issues15 have to be considered by UNESCAP member states for the promotion and development of the dry ports in their countries; (i) Developing institutional and regulatory frameworks for dry ports in their countries; (ii) Coordinating different government ministries/departments and the private sector to create an environment that is conducive to development of dry ports; (iii) Harmonizing relevant policies and regulations guiding the development and operation of dry ports; and (iv) Sharing the best experiences of promoting the development of dry ports among member countries. At the operational stage government departments, including customs and other inspection departments are directly involved in the daily operations of dry ports. Figure 15 shows an example of relevant government department/agencies involved in operations at Lat Krabang dry port in Thailand. 15 Report of the Regional Expert Group Meeting on the Development of Dry Ports along the Asian Highway and Trans-Asian Railway Networks, Bangkok, 1-3 November 2010
  40. 40. Pre-feasibility Study of Dry Port in Myanmar - 28 - Source: the project team Figure 15: Agencies involved in operation of Lat Krabang dry port, Thailand (2). REGULATORY FRAMEWORK Regulations on dry ports in a country or region are often embedded in regulations on infrastructure, transport or multimodal transport, land, logistics, port, investment, and trade and transport facilitation. Figure 16 shows linkages between dry port development with various sectoral policies. Table 19 provides further details on these policies and linkages. All these policies and regulations can have direct impacts on dry ports in terms of the time and cost of approval of a dry port project in the early stages and costs and revenues at the operational stage. Source: the project team Figure 16: Policies and regulations relevant to dry ports
  41. 41. Pre-feasibility Study of Dry Port in Myanmar - 29 - Table 19: Policy and regulations relevant to dry ports Infrastructure A dry port can be considered as an infrastructure and relevant infrastructure policy could be applicable to the development of dry ports. Transport and trade facilitation It is highly desirable to have customs clearance and relevant inspection facilities at dry ports. However, this depends on the policy of a country. Land Land policy decides whether the land can be granted to build dry ports and has direct implications on the costs Environment Dry ports might be treated as important means to encourage mode shift cargoes from road to rail to create more environmentally friendly transport. However, development of dry ports inevitably has environmental impacts during construction and operation on the surrounding areas and will have to follow environmental guidelines of the local and central government. Transport and multimodal transport Dry ports are an important element in the transport chain and can be largely influenced by transport or intermodal transport policy. For instance, a dry port can only be „rail‟-based if railway authority approves trains to use dry port and relevant railway connection is available. Logistics In some countries, dry ports are categorized as logistics service centres and relevant logistics policies and regulations are applicable to dry ports. Port In some countries, dry ports are categorized as ports and relevant policies and regulations on ports are applicable to dry ports. Investment Investment policies can directly decide who can invest in dry ports. For instance, in some countries, foreign investment might not be allowed for dry ports. In another instance, public-private partnership might be encouraged. Source: the project team (3). INVESTMENT MODALITIES Historically, many dry port projects in Asia have been developed and financed domestically. This is in contrast to container terminals at seaports which have attracted investment from well-known terminal operators such as Hutchison Port Holdings (HPH), PSA International (PSA), APM Terminals (APMT), DP World (DPW) and COSCO Pacific. Table 20 provides a selected list of different categories of investors in dry port projects in Asia. With the development of trade and rail and road transport networks in the region, it is possible for the dry ports to attract more and more investments from various sources including international terminal or transport operators.
  42. 42. Pre-feasibility Study of Dry Port in Myanmar - 30 - Table 20: Potential dry port investors Investors Examples Government  Nepal: Birgunj dry port (with involvement of World Bank) Port authority or terminal operator  China: Hutchison port holdings invests and operates Shenzhen Hutchison Inland Container Depots (SHICD) Railway Authority  Islamic Republic of Iran: Iranian Railways operates Sarakhs Multimodal Transportation Center and Bafq Multimodal Transportation Center  Malaysia: Malaysian State Railway and four other public companies (port authorities) invested in Ipoh ICD  India: The Container Corporation of India (Concor) invests and operates numerous dry ports in the country  Thailand: The State Railway of Thailand (SRT) is the landlord of Lat Krabang ICD  Russian Federation: Trans Container company owns a network of rail- side container terminals located at 46 railway stations from St Petersburg to Vladivostok Liner shipping companies  Container Corporation of India (Concor) and Maersk jointly invested in, and operate, India's largest inland container depot (ICD) with a 1-million TEU capacity at Dadri near New Delhi Private  India: Faridabad Inland Container Depot  Cambodia: So Nguon Dry Port Build-Operate- Transfer (BOT)  Private sector contractors build, equip, manage and operate the site for a specified period (usually not less than 30 years).  Governments provide the land and road/rail access to the gate of the facility o Example: Korea: Uiwang (near Seoul) and Yangsan (near Busan) in Republic of Korea Concessions  Governments invest in terminal infrastructure and retain ownership  Private sector invest in cargo handling and transport equipment needed at the facility and operate them o Examples: Lad Krabang dry port, Bangkok, Thailand Source: the project team
  43. 43. Pre-feasibility Study of Dry Port in Myanmar - 31 - C. INSTITUTIONAL AND REGULATORY ISSUES ON DRY PORTS IN MYANMAR According to the current situation of the government structure and administration in Myanmar, six main ministries and several city development committees16 are involved in the transport sector of Myanmar. They are (i) Ministry of Transport (MOT) (ii) Ministry of Rail Transportation (MORT) (iii) Ministry of Construction (MOC) (iv) Ministry of Progress of Border Areas and National Races and Development Affairs (v) Ministry of Defence17 (vi) Ministry of Home Affairs (MOHA) (vii) Yangon, Mandalay, and Naypyitaw city development committees In addition planning, development and operation of the dry port covers much wider scope than the transport sector itself. The following government ministries/departments and other private sector organization will be involved in their respective roles for the planning, development and operation of a dry port in Myanmar; (i) Ministry of Transport (ii) Ministry of Construction (iii) Ministry of Rail Transportation (iv) Ministry of Trade and Commerce (v) Ministry of Finance and Revenue (vi) Ministry of Home Affairs (vii) Ministry of Health (viii) Private Associations like Forwarding Associations, Shipping lines, Freight Truck Associations and others: Regional Governments and City Development Committees also play a vital role in developing dry ports in Myanmar. Often Regional Government has its master plan to develop the transport system and trade facilitation in the area. These master plans may have direct impacts on establishing a dry port in the area. In the case of developing a dry port in Mandalay region, all the above-mentioned government ministries/departments, the regional government of Mandalay division and 16 These ministries and committees list came from the discussion on the draft of Myanmar Transport Sector Assessment from Asia Development Bank (ADB), June 2012. 17 some of the roads have been developed under the management of Ministry of Defense
  44. 44. Pre-feasibility Study of Dry Port in Myanmar - 32 - Mandalay City Development Committee (MCDC) will play important roles in terms of approving the land, issuing licenses, and making particular arrangements such as concessions for the owner of the dry port. In terms of the operation of a dry port in Mandalay region, Department of Customs (Ministry of Finance and Revenue), Directorate of Trade and Department of Border Trade (Ministry of Trade and Commerce), Department of Immigration (Ministry of Population) and Department of Quarantine (Ministry of Health) will play an essential role. Also, Traffic Department (Myanma Port Authority, Ministry of Transport) may be involved in the dry port operation18 . For instance, these departments may carry out cargo clearance and inspection at the dry port to facilitate import and export of cargo. Myanmar was under a socialist system until 1988 and then a military government had power through to March, 2011. Since a newly elected semi-civilian government came to power in April 2011, Myanmar has embarked on an ambitious program of sweeping reforms to end its isolation and integrate its economy with the global system. To complete the structural reforms for every sector, the legal industry has been one of the fundamental and important sectors. Some of the laws and acts have been operating since the time under British colony with additional amendments. Most of the laws and acts are not relevant to the existing situation and there must be amendments, updating or replacements within a short period. Nowadays, most of the foreign investors for the various sectors in Myanmar have been waiting for strong legal grounds to establish their businesses in Myanmar. Regarding the development of a dry port in Myanmar, there is also a lack of an appropriate legal environment in Myanmar. A series of notifications have been issued and announced by the relevant government departments and organizations. The following laws, regulations and notifications have direct impacts on the establishment and operations of a dry port. (1). LAND ACQUISITION LAW Myanmar still uses “The Land Acquisition Act (1894)” and “The Burma Land Purchase Act (1941) [Repealed 1992]”19 , but there are a series of notifications relating to investment and land use for development projects. With the aim of facilitating investment procedures and getting better 18 There are no clear instructions and operation procedures in this moment for the operation of a dry port in an inland place. Near Yangon port area, there is a so called dry port operation (as inland container depot) and Myanma Port Authority has been involved at that operation. 19 S. Leckie & E. Simperingham (2009), “HOUSING, LAND AND PROPERTY RIGHTS IN BURMA: THE CURRENT LEGAL FRAMEWORK”, Displacement Solutions & The HLP Institute
  45. 45. Pre-feasibility Study of Dry Port in Myanmar - 33 - opportunities in doing business, the Government has issued one notification relating to land use. The Government of the Republic of the Union of Myanmar issued the Notification No. 39/201120 on 30 September, 2011. In that notification, it is stated that relating to “Lands Allowed to be leased” in Chapter II as follows: “This Commission may, to carry out any business permitted by the Commission, permit to lease the land of the person entitled to lease land or to use land to investor the following lands with prior approval of the Union Government: (a) government-owned lands; (b) land owned by the government department, organization; (c) private land owned by citizens.” Additionally, it is stated relating to “Determining Term for the Land Use” in Chapter II as follows: “The Commission may permit the investor to lease the land for the term actually required based on the category of business and investment volume up to an initial 30 years from a person entitled to lease the land or a person the right to use land.” Currently the new drafts of “the Citizen Investment Law” and “the Foreign Investment Law” have been under a process to be accepted and to be promulgated by the Union Government. (2). TRANSPORT LAW The transport sector also faces a similar situation to others. All the existing laws and acts have been under examination to be updated or to be revoked for relevance to the current situation of the country. The Multimodal Transport Law has been drafted for submission to the Union Government to get their approval. In the draft of the Multimodal Transport Law, there are 14 chapters and all the chapters and articles are organized and prepared according to the ASEAN AGMT: “ ASEAN Framework Agreement on Multimodal Transport” and UNCTAD MT Rules: “ Implementation of Multimodal Transport Rules”. (3). TRADE LAW For the operation of a dry port in Myanmar, in the past the main governing law for the trade sector is “the Control of Import and Export (Temporary) Act 1947”, which was recently revoked with the new “Import/ export Law” on 7th September 2012. The new Import/ Export law is 20 Directorate of Investment and Company Administration (DICA), Ministry of National Planning and Economic Development, http://www.dica.gov.mm/30-2011.htm
  46. 46. Pre-feasibility Study of Dry Port in Myanmar - 34 - administered by the Ministry of Commerce, and from time to time, necessary orders, notifications and directives have been issued on all export/import matters. (4). CUSTOMS LAW In Myanmar, customs duties and license fees on imported goods are administered by the Customs Department (CD), which is one of the major tax authorities under the Ministry of Finance and Revenue. The laws relating to customs in Myanmar are “the Sea Customs Act 1878” and “the Land Customs Act 1924”21 . These Acts were overlaid with amendments from time to time up to 1960. In 1992 the State Law and Order Restoration Council enacted the Tariff Act, which repeals “the Tariff Act of 1953”. Ever since the adoption of a more liberalized economic system based on a market-oriented economy in 1988-89, the Customs Department has made reforms in its administrative procedures to ensure greater facilitation of external trade of the country. There are no direct relevant laws and acts for the dry port operation at this moment. Amendments and notifications will be needed. (5). INVESTMENT PROMOTION LAW Following the setting up of the country‟s newly elected government in 2011, many potential investors from within the country and foreign countries have been coming to express interest to establish new businesses in Myanmar. As a result the Myanmar Economic Zones Law was promulgated in January 2011. The new government welcomes and encourages investors to invest in various sectors. Also the new “Myanmar Citizen Investment Law” and “Foreign Investment Law” will be promulgated within a short period. D. SUMMARY AND CONCLUDING REMARKS This chapter has reviewed the policy, institutional and regulatory issues on developing and operating a dry port in Myanmar. Like many other countries there is no policy, regulations or rules in Myanmar exclusively designated for a dry port. Instead, issues on developing and operating dry ports have been addressed by more general policies relevant to national transport and logistics, and more general laws and regulations such as those related to customs, land, trade, transport and investment. 21 http://www.asosai.org/asosai_old/R_P_government-revenues/chapter_16_myanmar.htm
  47. 47. Pre-feasibility Study of Dry Port in Myanmar - 35 - IV. DEVELOPMENT OF TRANSPORT AND LOGISTICS IN MYANMAR AND MANDALAY AREA A. GENERAL SITUATION OF TRANSPORT AND LOGISTICS IN MYANMAR (1). ROAD TRANSPORT In Myanmar, there are several departments and organizations concerned with the construction of the roads. Myanmar has about 148690 Km (June, 2012) of road networks around the country. The lengths of various categories of road are as below: • Union Highways 19503 km • Township network road 19580 km • Major city road and other roads 27507 km • Village and boundary area roads 82100 km Union Highways and main roads including ASEAN Highways are under the control of the Ministry of Construction (MOC) while other categories of roads are under the various departments and organizations including MOC itself. Table 21: Road infrastructure in Myanmar (June, 2012) No. Department Concrete Road (Km) Bituminous Road (Km) Gravel Road (Km) Metalled Road (Km) Earth Road (Km) Donkey Road (Km) Total (Km) Ministry of Construction, Public Works 1 Highway 611.7 11733 2440.8 2700.3 1973.5 44.1 19503 2 Regional & State Roads 49.7 5451.8 3299.6 2941.4 6497.1 1340 19580 Sub-total 661.3 17185 5740.3 5641.7 8470.6 1384 39083 Ministry of Progress of Border Area and National Races 3 Urban Road 6.6 4880.7 2215.5 660.8 3509 - 11273 4 Village & Border Road 120.1 4073 17042 4976.7 55889 - 82100 Sub-total 126.7 8953.8 19257 5637.5 59398 - 93373 5 Yangon CDC22 1239.7 1747.5 12.9 454.9 472.9 - 3928 6 Mandalay CDC 10.8 573.4 119.7 - 309.8 - 1013.8 7 Naypyitaw CDC 246.1 129.3 43 734.9 1130.8 - 2284.1 8 Army Corps of Engineer 393.4 61.8 605.3 166.4 6822.7 - 8049.5 9 Ministry of Electrical Power-1 48.3 88.5 542.1 - 280.2 - 959.2 Total 2726.3 28739 26320 12635 76885 1384 148690 Source: see footnote23 22 CDC = City Development Committee

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