Myanmar - logistic opportunities and prospects

Myanmar - logistic opportunities and prospects

The world globalization is increasingly links between the North and South, the West and East. Countries and regions that previously had never met with each other and virtually no overlap in the economic relations - today more strengthen mutual ties, increasing integration into the world economic system. In the period of global saturation of goods and services and fierce competition for markets, come to the fore emerging markets - even those countries which recently the international community regarded as the countries of the third world, today become the objects of the competition of world leaders. One of the clearest of the representatives was the Republic of the Union of Myanmar, located on the doorstep of the present economic recovery. In 2015, the growth of the economy of Myanmar took the 13th place in the world.

The Republic of the Union of Myanmar (MMR) - acountry in Southeast Asia that is located along the west coast of the peninsula of Indochina. The country is bordered with India and Bangladesh in the West,with China in the north-east, with Laos in the east and Thailand in the south-east. From the south and the south-west of its surrounded by the Bay of Bengal and the Gulf of Martaban (Martaban), as well as the Andaman Sea. The area of the country, including the adjacent islands, is 670 000 square kilometers. The population is more than 55 million people.

The country exports in 2015 amounted to 5.95 billion US dollars, as well as import - 15,92 billion US dollars. In terms of export and import of Myanmar occupies the 90th place in the world. The export of natural resources provides up to 80% of government revenue, while the majority of the population (70%) is engaged in the agricultural sector [1]. 

The main export items ofMyanmar are gas, oil, woods, rice, beans, seafood, copper, clothing, precious and semi-precious stones. In turn, imported fuels and lubricants, consumer goods, semi-finished products, machines and equipment, metal, oil, cement, fertilizers, medicines. 

Myanmar is undergoing a period of transition from a centralized economy to a market economy and dynamically evolving after the reform of 2011, gradually opening up opportunities for foreign and domestic investments. 

One of the main objectives of the Government of Myanmar in accordance with the national development plan of the concept of economic and social reform is to increase the share of industry in GDP by the end of 2016 to 32%, together with the growth of the services sector and balanced reduction in the share of agriculture.

Myanmar has shown solid GDP growth in recent years, expanding by 7% in 2015 and well above the ASEAN bloc’s average growth of 4.5%. For 2016, GDP growth is expected to accelerate to 8.6%, driven mostly by foreign direct investment (FDI).The total amount of FDI in Myanmar reached US$63.7 billion in March 2016. The export of Myanmar grew up 11% and reached US$11 billion in the financial year ending March 2016. Myanmar is the seventh largest economy of the 10-member ASEAN members. It has a large agriculture sector which accounts for about 35% of GDP, with services and industry respectively accounting for 40% and 25% of GDP. Major sectors include processing, manufacturing, construction and transportation.At the same time major investments in the amount of more than 2 billion US dollars accounted for oil and gas and transport sectors of the economy, as well as for infrastructure projects[2]. 

According to the directorate of the investment and management companies of Myanmar (DICA) level of foreign investment in recent years has increased many times that demonstrates the existing interest in the country. The total amount of foreign FDI to the current time is $59.9 billion. More All invested PRC ($15.5 billion), Singapore ($12.3 billion); Thailand ($10.3 billion), Hong Kong ($7.3 billion), and the United Kingdom ($4.1 billion). Investments of the EU countries are $1.7 billion [3] 

In addition, Myanmar is a leader in the number of the UNOPS project - the Office for Humanitarian and infrastructure projects of the United Nations. According to the official site of UNOPS (www.unops.org), in the MMR is implemented 425 projects and total funding was approximately 1 billion dollars [4]. 

With regard to the Russian Federation, the diplomatic relations with Myanmar grew since 1948. In 1996, Russia has become a full partner of ASEAN. In August 2014, Russia and Myanmar signed the Agreement on the establishment of a bilateral commission on trade and economic issues, and it was decided that the year 2017 the volume of trade between Russia and Myanmar will increase up to 500 million US dollars [5]. 

In 2015, trade turnover between Russia and Myanmar amounted to 130.5 million dollars, including Russian export to Myanmar reached 114.8 million and imports from Myanmar 15.7 million dollars. The basis of Russian exports to Myanmar are: machines, equipment and vehicles (85.9%), mineral products (4.3%), metals and products from them (3.7%), chemical products, Rubber (3%). The structure of import was formed textiles and products from him (49.9%), food products and agricultural raw materials (48.9%).

The main focus of interaction between Russia and Myanmar is cooperation in the areas of transport, mining , energy and education. 

As can be seen from the above, tan interest in Myanmar is growing in geometric progression. The country has a population more than 50 million, thereby not only a huge untapped market and investment-attractive site for dynamic industrial growth. Improving the quality of life, level of education and an active inflow foreign investment will create a powerful impetus for the accelerated development of the region.

Another important factor that attracts investors is the unique geographical location of Myanmar. The country has a special significance in the Asia and Pacific region and occupies an important strategic position between the two competing giants - India and China [6]. Significant continental territory and the access to the Indian Ocean, which enable for the development of port infrastructure, dramatically increase its geopolitical opportunities as well as the proximity of the Asian markets contribute to attract investment in infrastructure (roads, power plants, telecommunications and logistics). This is the sort of continental bridge between the three regions - South-East and South and East Asia.

For the implementation of the geographical advantages and the creation of favorable conditions for the effective functioning of the economy, particular attention should be given to the development of transport corridors, which is a key element of the production infrastructure and policies of effective cooperation between various countries.

Transport corridors is the main direction to ensure (through the multifaceted development of transport infrastructure and communications in general) use intermodal technologies as well as combining different modes of transport - for ad-hoc queries of transport, optimally located on multi-transport terminals and transshipment of their facilities. By using these corridors can significantly reduce the distance and the delivery time of the goods. 

On the territory of Myanmar the major international transport corridorsare:

  1. East West Corridor: Pathein-Yangon/ Thilawa-Bago-Thaton-Hpa An- Kawkareik-Myawaddy-Mae Sot-Tak-Bangkok: which is a strong potential to become economic corridor in Myanmar and give easy access to regional and global markets and value chains.
  2. The Northern corridor:Ruili – Muse – Lashio-Mandalay –Monywa-Kalewa-Kale-Tamu-Moreh-Imphal, which is a strategic corridor of India, Myanmar and China with strong potential for growth in the medium and long term. For China, the development of the transport corridor through the Myanmar would allow to solve problems, such as with the development of the internal provinces of the country, which did not have before the outputs on the external markets.
  3. The Southern Corridor: Dawei - Kanchanaburi - Bangok (Thailand) - Cambodia - Viet Nam (fig.3).

Part of the Northern Corridor Mandalay-Monywa has a good potential for economic development and the importance for the development of the Sagaing Division (and for the other areas) [7]. These corridors are shown in Fig.1.

Figure 1 - International transport corridors of Myanmar 

with the South-East Asiacountries

In Fig.2 shows the corridors, which provide regional and global communication of Myanmar.

Figure 2 - The regional and global corridors of Myanmar  

All of the corridors shown in above may be used in international trade for Myanmar with some of the ASEAN countries and the countries of the EU. For example, corridor "east-west", which connects the Yangon - Myawady–Mae Sot( Thailand) - Viet Nam (fig.3), and the Northern corridor connecting the Yangon - Mandalay - Lashio - Muse - Ruili with China (fig.1). 

On fig. 3 shows the economic corridor of the south part, connecting the Dawei - Kanchanaburi - Bangok (Thailand) - Cambodia - Vietnam. This corridor can be used for the EU and ASEANcountries. In addition, this corridor can be used for trade between the EU countries, African countries, and some of the ASEAN countries in order to reduce the time of transportation for goods and the growth of regional development [7.8].

 

Figure 3 - Corridor of the east-west and the economic corridor of the south part

From the point of view of the development of the transport system of the country and its infrastructure, the greatest prospects for a transport corridor connecting the main partners - members of ASEAN, such as Russia - Iran - Myanmar - China. This corridor is also important in the field of trade between the countries of Africa and Asia (figure 4).

 

Figure 4. Corridor Russia - Iran - Myanmar - China

Activation of cargo flows Myanmar opens great prospects for transit. Aware of the importance of this direction in the economy of the country, the Government of the Republic of the Union of Myanmar is aimed at development of the three special economic zones, with special attention being given to the Thilawa Ports, Dawei and KyaukPhyu. All of these ports are in dire need of infrastructure development. 

DaweiPort – deep sea port, which is a special area of economic development, which is expected to be operational by 2020 and currently in the port is built one berth, which after the dredging up to 7.5 m is planned to use for processing feeder vessels. To the sea port can be use roadway [8.9]. In the nearest future planned settlement of railway, which would connect the port with the transport route Yangon - Mandalay-Muse, as well in the future with the railway system the PRC in Kunming.

In accordance with the plan of the strategic development of the port (fig.5), it is expected the construction of two space suitable for the reception of ships with a draft of up to 16m and deadweight up to 135 000 (DWT), and port area was 10 square kilometers, which will include the container terminal, terminals for transshipment of oil, coal, ore, grain, fertilizer and general cargo. In addition, outside the port is planned to place the oil and gas industry, steel plant, the coal power plants and plant for the production of LNG [143,066 heads net Capitalia].

 

Figure 5 - The Plan for a possible perspective development of the port Давэй

 

It is planned that the Daweisea port will become not only the main port in the southern economic corridor, but it is also an important industrial center of Myanmar, which includes industrial petrochemical complex. 

Thus, the deep-sea portDawei is f strategic importance for the countries of Southeast Asia and will play an important role in the development of regional economic integration. 

Port KyaukPhyu (fig.6) –a strategic port, located at the geographical center of the three economically viable and dynamic markets in the ASEAN region. The port has sufficient land and the amount of labor force for the expansion and industrial development. The depth of the berths of dry cargo areas of the port is up to 10m that gives the ability to handle vessels with lifting capacity up to 20 000 tons (DWT).

Since 2015 in the port on the island of Madaioperates deepwater oil loading port terminal, which can processed by  tankers up to 300,000 (DWT). The terminal is a part of the pipeline system Sino-Myanmar execution pipelines linking the KyaukPhyu -Kunmin- Yunnan province in China.

 

Figure 6 - Port KyaukPhyu

 

However, for the further development of the port KyaukPhyu necessary to build the railroad to the terminals of the port as well as the construction and reconstruction of hydroelectric facilities with modern requirements. 

After the completion of the project, expected annual capacity sea port can reach up to 7.8 million tons of dry cargo and 4.9 million TEU containers per year. In Fig.7 shows plan for the possible development of the port [10,11].

 

Figure 7 - The Plan of possible perspective development of the port KyaukPhyu

Port Thilawa - port is a one of the main port of the Myanmar Yangon port, which handles approximately 80 per cent of the export and import of the country. The Port of Yangon is accessible for vessels up to 167 m, handling ships of up to 9 m and the lifting capacity of 15 000 tons (DWT). In view of the limited water of the river and the thewater level of the Ayeyarwady River, the development prospects of the port of Yangon, likely not to rise above the local level.

Port Thilawa is located at a distance of 25 km from the port of Yangon on the right side of the Yangon river in the Kyauktanarea. With the port link the road, rail and inland waterways.

The Port has multiple terminals, in particular the specialized container terminal Myanmar International Terminals Thilawa (MITT), universal terminal Myanmar Integrated Port Limited Terminal (MIPL), bulk terminals Great Petroleum Terminal and Green Asia Port Terminal.

The depth of the port Thilawa reach up to 10 m, port is available for the reception of vessels up to 200 m, handling ships of up to 9.5 m and with lifting capacity up to 20 000 tons (DWT). MITT provides processing of container vessels with a capacity of up to 2000 TEU.

Main processed loads in the Port: containers, general cargoes, metals, cars, vehicles, machinery, coal, cement, fertilizers, rice, petroleum products, palm oil and other goods [11].

To increase the volume of marine traffic through the port of Thilawa (fig.8), a program to deepen the Yangon river with the inclusion of the Thilawaport  and special economic zone (SEZ) with the name of the Thilawa Special Economic Zone [12].

 

Figure 8 - Port Thilawa

 

If we compare the above ports, the best prospects for the expansion of the port facilities and transport infrastructure are in port Dawei. But this port is located beyond the other ports from the major industrial areas of Myanmar that will affect the cost of delivery of the goods.

The development of the port KyaukPhyucan say when it will be made certainty by the terms of the construction of the railway and port infrastructure.

As the depth of the port Thilawa (up to 10 m) does not allow to handle the vessels with the large capacity, this also does not have the ability to count on a significant increase in cargo turnover. However, due to the presence of road and railway infrastructure, as well as a convenient geographical situation of the port Thilawa can be seen as a main project for the processing of trade services corridor Russia - Iran - Myanmar - China.

As an alternative, you can also search the new location for the deep-sea port. This object must satisfy the following conditions: 

  1. Located close to the major industrial centers of the country (the presence of cargo base);
  2. Have direct outputs on the maritime waterways;
  3. Have the depth in the approaches and at the berths at least 15 m (for processing vessels type Penamax and higher);
  4. Be available developed railway, road and engineering infrastructure.

Thus, for the further development of transport communications is necessary to make a mutually agreed strategy of rapid modernization, which will provide a balanced and effective development of all types of international transport while ensuring the quality of the transport infrastructure as a single intraregional system.

Particular attention should be given to the development of national marine communications. The volume of marine shipping, implemented by countries of the Asia-Pacificregion, demonstrates a stable tendency to increase with time, that will inevitably lead to the need to modernize the port infrastructure, increase the throughput capacity of the existing maritime ports and the development of new [13]. 

In particular, the use of Myanmar ports to move traffic on the corridor Russia - Iran - Myanmar - China, will improve the level of economic development of the regions of Myanmar which are situated along this corridor, substantially improve the relationship between the individual areas of the country, which in turn will contribute to improving the standard of living of the population. 

For the other participants of the route, corridor will be as effective as it will significantly reduce the distance and time for delivery of the goods. In addition, using this corridor is possible to provide a better integration of the markets of the ASEAN countries and the EU, to increase the trade volumes, to create opportunities for profitable investments in infrastructure and implement advanced logistics technology for the development of countries and in addition to receive opportunities for employment of the population.

From the point of view of the Russian Federation in addition to the development and modernization of transport and logistics infrastructure, Russian companies may be interested in participating in the ongoing construction of the railway in Southeast Asia, the development of network infrastructure of maritime and road transport, including through capacity-building and exchange of best practices [14].

And in this sense, Russia with Myanmar, appears a new reliable partner with the growing market of consumption of agricultural technology and equipment for the energy and other goods, and in turn offering their own products on mutually beneficial conditions. 

Bibliographical list:

  1. The Asian vector. Russia - Asia and the Pacific region. Myanmar. [Electronic Resource].URL: Http://asiavector.ru/countries/myanmar/ (Date treatment 18.12.2016 year).
  2. Document Florento, H., and M. I. Corpuz. 2014. Making: The Key Link between South Asia and Southeast Asia. ADBI Working Paper 506. Tokyo: Asian Development Bank Institute. Available. [Electronic Resource].URL:http://www.adbi.org/workingpaper/2014/12/12/6517.myanmar.key.link.south.southeast.asia/ (Date treatment 15.12.2016 year).
  3. After Cuba in Myanmar. [Electronic Resource].URL: Https://www.gazeta.ru/business/2016/03/20/8124503.shtml#comments. (Date treatment 23.12.2016 year).
  4. Source: [electronic resource.] Website: www.unops.org/
  5. Source: [Electronic Resource]. URL: Http://economy.gov.ru/minec/press/news/201506181. (date of 15 December 2016 ).
  6. The State of Local Governance: Trends in Yangon - UNDP making 2015/ [electronic resource.] URL: http://www.mm.undp.org/content/dam/myanmar/docs/Publications/PovRedu/Local%20Governance%20Mapping/UNDP_MM%20State%20of%20Local%20Governance%20-%20Synthesis%20Report.pdf. (Date treatment 15.12.2016 year).
  7. Making Logistics System: Aung Khin Trach, making, 2014/ [Electronic Resource]. URL: http://www.jterc.or.jp/koku/koku_semina/pdf/140307_presentation-04.pdf. (Date treatment 14.12.2016 year).
  8. Source: [Electronic Resource] .URL: http://www.myanmarburma.com/article/807/major-ports. (Date treatment 21.12.2016 year).
  9. Source: [Electronic Resource]: URL: http://www.bbc.com/news/world-asia-pacific-12490521. (Date treatment 22.12.2016 year).
  10.  Source: [Electronic Resource]: URL: http://www.slideshare.net/I2Ucommunication/logistics-in-myanmar-by-mraung-min-han (Date treatment 22.12.2016 year).
  11. Source: [Electronic Resource]: URL: http://dlca.logcluster.org/display/public/DLCA/2.1+Myanmar+Port+Assessment (Date treatment 22.12.2016 year).
  12. Source: [Electronic Resource]. URL: Http://www.aseanbriefing.com/news/2013/06/28/special-economic-zones-in-myanmar.html. (date of 22.12. 2016 ).
  13. Burma Water transport statistics. Burma-Japan transport partnership information center. The URL: http:// www.ajtpweb.org/statistics/compareasean/Water transport/Water transport 2012 (date treatment 09.12.2016 year).
  14.  Major projects on Burma Logistics Development. - Burma-Japan Transport Partnership Information Center.URL: http://www.ajtpweb.org/major-projects (Date treatment 09.12.2016 year).

 

Reported By Ko Ko Lwin