Pre-Feasibility Study Report for the Dry Port in Myanmar(2012)

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(Final Draft before UNESCAP’s editing)
Prefeasibility Study of
Establishing a Dry Port in Mandalay region,
the Republic of Union of Myanmar
(October, 2012)
i
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 စာတမ်း နှင့် ပတ်သက်ြပီး
အက
ြ ံြပု ဆွေးဆနေးမှုများ ြပုုပပ်ုုပပ ကက ဆကျးဇူးတင် ဝမ်းဆမ
ြ ာက်စောြဖင့် ြကုုွုပပ ကသ််
Myo Nyein Aye
Assistant General Manager
Myanma Port Authority, Ministry of Transport.
Tel: (95 9) 510 8613
email: [email protected]
PhD candidate
Shipping, Port and International Logistics Program,
Shipping Management Department,
Korea Maritime University (KMU), Busan, Korea.
This copy of the research report is prepared for the participants of the seminar on the Dry Port in Mandalay,
Myanmar (28th January 2013).
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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.
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.
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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.
v
CONTENTS
EXECUTIVE SUMMARY .......................................................................................................................................... IV
CONTENTS ............................................................................................................................................................. VI
TABLES ................................................................................................................................................................. VIII
FIGURES ...................................................................................................................................................................X
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.
B.
C.
RATIONALE OF DEVELOPING A DRY PORT IN MANDALAY AND THE KEY FUNCTIONS OF DRY PORT......................................... 64
LOCATION AND CAPACITY OF DRY PORT ................................................................................................................ 66
SUMMARY AND CONCLUDING REMARKS............................................................................................................... 69
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VI. PHYSICAL DEVELOPMENT PLAN ....................................................................................................................... 71
A.
B.
PROPOSED SITE FOR DRY PORT .......................................................................................................................... 71
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.
B.
C.
CONCLUSIONS ON DEVELOPMENT OF DRY PORT IN MANDALAY ............................................................................... 108
RECOMMENDATION FOR FULL-SCALE FEASIBILITY STUDY ........................................................................................ 109
RECOMMENDATION FOR UTILIZING THIS PREFEASIBILITY STUDY ............................................................................... 110
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
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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
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
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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
xi
Pre-feasibility Study of Dry Port in Myanmar
I. INTRODUCTION
A. BACKGROUND
The Republic of the Union of Myanmar 1 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
-1-
Pre-feasibility Study of Dry Port in Myanmar
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.
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Pre-feasibility Study of Dry Port in Myanmar
Component 1:
the general background of
the prefeasibility study report
Component 2:
Social and economic context
of developing a dry port in
Mandalay region area
Ch I.
Introduction
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
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 3:
Functions, locations,
economic and financial
analysis, social and
environmental issues of
development of a dry port in
Mandalay region.
Component 4:
Conclusion
Ch X.
Conclusions and recommendations
Figure 1: Organization of the study report
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Pre-feasibility Study of Dry Port in Myanmar
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
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
68
230,800
67
677,000
65
510,900
Country
Myanmar
59.8
54.416
Thailand
67.3
318.5
1,050
*
379.6
**
4,150
Vietnam
86.5
106.4
1,160
70
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
-4-
310,100
Pre-feasibility Study of Dry Port in Myanmar
Source: www.un.org
Figure 2: Map of Republic of Union of Myanmar
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Pre-feasibility Study of Dry Port in Myanmar
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
GDP (US$ billions)
Gross capital formation/GDP
2010
12.4
18.9
22.7
1.9
0.5
0.1
0.1
11.7
12.3
18.9
22.7
-
-
-
-
2000-10
12.3
2009
10.6
2010
10.4
2010-14
-
Gross domestic savings/GDP
Gross international savings/GDP
1990-00
7.0
2009
13.4
Exports of goods and services/GDP
(average annual growth)
GDP
2000
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
Agriculture
Livestock and Fishery
Manufacturing
Construction
II.
SERVICES
Transportation
III.
TRADE
64.20
63.16
63.73
62.94
62.64
62.36
38.40
36.01
35.34
31.59
29.36
27.55
7.66
7.38
7.57
8.28
8.34
8.42
12.80
13.99
14.89
16.82
18.10
19.52
3.76
3.87
3.83
4.23
4.48
4.54
14.09
15.77
15.21
15.94
17.03
17.80
10.44
10.97
10.86
11.89
12.62
12.95
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
-6-
Pre-feasibility Study of Dry Port in Myanmar
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.
II.
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
15.2
16.2
15.6
14.5
15.3
13.2
16.2
16.0
14.4
16.7
15.9
13.9
12.1
12.9
11.6
9.6
9.9
10.3
SERVICES
Transportation
III.
TRADE
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)
(b)
Normal Trade
Border Trade
3127.73
429.48
4585.47
647.21
5655.03
746.68
6121.55
657.3
6922.59
664.35
7746.66
1114.35
7107.21
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)
(b)
Normal Trade
Border Trade
Total Trade
Value
Trade
imbalance
1692.78
291.63
2491.33
445.4
2770.57
582.85
3852.27
691.18
3462.07
719.33
5396.89
1015.84
5,541.62
8,169.41
9,755.13
11,322.30
11,768.34
15,273.74
7695.46
1339.60
18,170.6
6
1,572.80
2,295.95
3,048.29
2,235.40
3,405.54
2,448.28
3
4
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
-7-
Pre-feasibility Study of Dry Port in Myanmar
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
1
a
Countries/ Groups
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
Major trading partners
5040.79
6161.281
6466.58
7193.711
8534.615
8745.024
2836.197
3504.957
3853.41
4141.03
3930.84
4676.692
1.04
1.22
0.98
0.75
0.37
1.33
0.04
0.36
41.11
40.94
0.02
0.03
ASEAN countries
Brunei
2
Cambodia
0
0
Indonesia
88.23
86.58
28.45
Lao PDR
0.01
0.07
0.04
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
210.27
200.06
159.9
132.05
120.88
131.52
972.847
1345.574
1291.15
1582.668
3098.25
2255.768
61.54
73.82
63.22
75.58
148.39
214.82
37.43
b
EU Countries
c
China
d
Republic of Korea
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
Others
191.89
240.43
312.27
393.23
326.39
390.58
5232.68
6401.711
6778.85
7586.941
8861.005
9135.604
Total (Export)
Source: CSO + DOBT
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Pre-feasibility Study of Dry Port in Myanmar
Table 7: Direction of trade (Imports) of Myanmar
No
1
a
Countries/ Groups
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
Major trading partners
2840.873
3218.005
3971.56
3994.095
6006.663
8627.61
1566.34
1556.9
2042.75
1922.137
2840.6
4020.57
0
0.03
ASEAN countries
Brunei
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
Malaysia
2
0.02
0.4
0
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
95.86
135.41
571.89
187.3
406.07
407.453
2936.733
3353.415
4543.45
4181.395
6412.733
9035.063
Others
Total (Import)
Source: CSO + DOBT
-9-
Pre-feasibility Study of Dry Port in Myanmar
Table 8: Structure of international trade of Myanmar
(USD million)
2006-07
1
Export
2008-09
2009-10
2010-11
2011-12
5232.68
6401.71
6778.85
7586.94
8861.006
9135.604
931.13
1221.22
1403.17
1678.36
1800.391
2372.983
(a)
Agriculture
(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
2936.727
3353.424
4543.45
4181.400
6412.733
9035.063
2
3
2007-08
Import
(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
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
Permitted Enterprises
Particulars
%
No.
Approved Amount
5
19067.498
46.41
1
Power
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
485
41086.957
100.00
Total
Source: http://www.dica.gov.mm/dicagraph.htm
- 10 -
Pre-feasibility Study of Dry Port in Myanmar
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.
4369.481
329.580
984.764
205.720
719.702
158.283
91.170
86.948
19.002
217.688
58.150
40
800
2800
700
1400
400
100
30
280
449
6065.675
19998.965
(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)
Trade & Investment Environment in Myanmar, presented by Capt. Aung Khin Myint (Chairman, MIFFA) on
11 May 2012.
3
- 11 -
Pre-feasibility Study of Dry Port in Myanmar
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,
Figure 5: Mandalay location map
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.
- 12 -
Pre-feasibility Study of Dry Port in Myanmar
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 subcategories, 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
(in Million Kyats)
Year
Production
Services
04-05
296,124.10
83,905.80
05-06
902,949.80
06-07
Trade
105,459.70
Total
Est. USD
(million)
Est.
Exchange
rate
485,489.60
693.56
700.00
306,844.20
308,585.20 1,518,379.20
1,265.32
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
1,200.00
Source: Planning department
Table 12 shows the ratio of Mandalay GDP compared with GDP of Myanmar for the
past several years.
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
4
- 13 -
Pre-feasibility Study of Dry Port in Myanmar
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)
1600
1400
1200
1000
800
600
400
200
0
2006-07
2007-08
Mandalay city
2008-09
2009-10
2010-11
Mandalay Division
Figure 7: Per capita GDP of Mandalay city Vs. Mandalay division
- 14 -
Pre-feasibility Study of Dry Port in Myanmar
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
In
Out
Total
Yangon with all the regions
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)
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.
5
- 15 -
Pre-feasibility Study of Dry Port in Myanmar
Table 14: Statement of IN/ OUT Cargo Transportation with truck (by vehicles)
with Mandalay region
Period
with all the regions
Total
In
Out
%
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
Thailand
2006-07
157.60
2007-08
148.96
2008-09
137.86
2009-10
139.22
2010-11
151.62
2011-12
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
0.01
0.07
0.04
-
0.02
0.03
25.46
31.26
23.07
17.18
16.60
22.43
647.21
746.68
657.3
664.35
1114.35
2028.39
Lao
Bangladesh
6
Total (export)
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
4.75
3.92
4.40
5.95
4.52
6.54
-
-
0.40
-
-
-
1.38
1.20
1.14
1.30
1.51
1.40
445.40
582.85
691.18
719.33
1015.84
1339.69
India
Lao
Bangladesh
5*
Total (import)
Source: Calculation data from Ministry of Commerce
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.
6
- 16 -
Pre-feasibility Study of Dry Port in Myanmar
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)
China border trade
% of
Total
2006-07
Export
453.12
Import
296.64
Total
749.76
Total border
trade
1092.61
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%
Year
68.62%
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:
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Pre-feasibility Study of Dry Port in Myanmar
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)
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Pre-feasibility Study of Dry Port in Myanmar
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
Monywa Ind. Zone
Kalay Ind. Zone
is
one of the
Taunggyi Ind. Zone
biggest
Pakokku Ind. Zone
Yenanggyaung Ind. Zone
zones
around the
Mandalay Ind. Zone
Myingyan Ind. Zone
Meiktila Ind. Zon
Pyay Ind. Zone
country.
There are
a total of
Pathein Ind. Zone
Myangmya Ind. Zone
Hinthada Ind. Zone
Mawlamyine
Ind.Zone
18
main
Industrial
Zones and
28 branch
zones
in
Myanmar.
Myeik Ind. Zone
M
andalay
Industrial
Zone was
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Pre-feasibility Study of Dry Port 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
Figure 11: Industrial zones in Myanmar
406 large scale industries 7 , 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)
(b)
(c)
(d)
(e)
(f)
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
83,500
99,800
119,200
134,600
127,001
127,900
million Kyats (est. 66.80 million usd8)
million Kyats (est. 83.17 million usd)
million Kyats (est. 108.36 million usd)
million Kyats (est. 134.60 million usd)
million Kyats (est. 158.75 million usd)
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.
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
7
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Pre-feasibility Study of Dry Port in Myanmar
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).
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Pre-feasibility Study of Dry Port in Myanmar
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.
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Pre-feasibility Study of Dry Port in Myanmar
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.
The Irrawaddy: Burma’s Economy Can Triple by 2030: ADB, BY SIMON ROUGHNEEN on August 21, 2012
retrieved from http://www.irrawaddy.org/archives/
10
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Pre-feasibility Study of Dry Port in Myanmar
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. T here 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 China 12 . 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 Subregion (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.
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.
11
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Pre-feasibility Study of Dry Port in Myanmar
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
1.
Name of
city
modes of
transport
Mandalay
* Capital of Mandalay Division
(Trimodal) * The 2nd largest economic city
Rail, Road, * AH1, AH 14, TAR-S1, TAR-S2
Inland water * on the bank of Irrawaddy river
* adjacent to the Industrial zone
Description
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
2.
5.
6.
7.
Bago
Monywa
Pyay
(Trimodal) * Capital of Mon state
Rail, Road, * AH 112, TAR-S1,
Inland water * on the bank of Than Lwin River
(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
* Large hinterland
(Trimodal)
* Capital of Sagaing division
Rail, Road,
* AH 1, TAR-S1, TAR-S2
Inland water
* on the bank of Chindwin River
(Trimodal) * Large hinterland
Rail, Road, * on the bank of Irrawaddy
Inland water * the most potential city forecasted by an expert team.
Source: see footnote 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.
14
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Pre-feasibility Study of Dry Port in Myanmar
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
- 26 -
Pre-feasibility Study of Dry Port in Myanmar
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.
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
15
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Pre-feasibility Study of Dry Port in Myanmar
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
- 28 -
Pre-feasibility Study of Dry Port in Myanmar
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.
Dry ports are an important element in the transport chain and can be
Transport and
largely influenced by transport or intermodal transport policy. For
multimodal transport 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
Port
Investment
In some countries, dry ports are categorized as logistics service centres
and relevant logistics policies and regulations are applicable to dry ports.
In some countries, dry ports are categorized as ports and relevant
policies and regulations on ports are applicable to dry ports.
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.
- 29 -
Pre-feasibility Study of Dry Port in Myanmar
Table 20: Potential dry port investors
Investors
Government
Examples
 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 railside 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
Build-OperateTransfer (BOT)
Concessions
 India: Faridabad Inland Container Depot
 Cambodia: So Nguon Dry Port
 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
 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
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Pre-feasibility Study of Dry Port in Myanmar
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 committees 16 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
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
16
- 31 -
Pre-feasibility Study of Dry Port in Myanmar
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
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
18
- 32 -
Pre-feasibility Study of Dry Port in Myanmar
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)
(b)
(c)
government-owned lands;
land owned by the government department, organization;
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.
20
The new Import/ Export law is
Directorate of Investment and Company Administration (DICA), Ministry of National
http://www.dica.gov.mm/30-2011.htm
Development,
- 33 -
Planning and Economic
Pre-feasibility Study of Dry Port in Myanmar
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
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Pre-feasibility Study of Dry Port in Myanmar
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 Bituminous Gravel Metalled
Road
Road
Road
Road
(Km)
(Km)
(Km)
(Km)
Earth
Road
(Km)
Donkey
Road
(Km)
Total
(Km)
Ministry of Construction, Public Works
1
Highway
2
Regional & State Roads
Sub-total
611.7
11733
2440.8
2700.3
1973.5
44.1
19503
49.7
5451.8
3299.6
2941.4
6497.1
1340
19580
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
1239.7
1747.5
12.9
454.9
472.9
-
3928
22
5
Yangon CDC
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
2726.3
28739
26320
12635
76885
1384
148690
Total
Source: see footnote23
22
CDC = City Development Committee
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Pre-feasibility Study of Dry Port in Myanmar
Table 21 shows the lengths of the various types of road controlled by respective
Departments such as Ministry of Construction, Ministry of Progress of Border Area and
National Races, City Development Committees for Yangon, Mandalay and Naypyitaw cities,
Army Corps of Engineer under Ministry of Defense, and some access roads for the hydroelectric power plants under the Ministry of Electrical Power (No.1).
Table 22 shows road progress from 2004 until June 2012. Every year, total paved road
length has been just about 20% of the length of the whole country. For the lengths of the roads
under the Public Works, Ministry of Construction is about 45% of total. This shows a significant
amount of important roads are unpaved.
Table 22: Road progress in Myanmar
Year
Under Ministry of
Construction
The Whole Country
Total Road
Length
Ratio
of Paved
to Total
Total Road
Length
Paved Road
2004
29497 km
14126 km
90713 km
22153 km
24.42%
2005
29825 km
14356 km
92859 km
22830 km
24.58%
2006
30433 km
14956 km
104058 km
23955 km
23.02%
2007
30711 km
15213 km
111737 km
24670 km
22.08%
2008
30902 km
15387 km
125355 km
25553 km
20.38%
2009
32070 km
15583 km
127942 km
26333 km
20.58%
2010
34178 km
16550 km
136749 km
28569 km
20.89%
2011
37784 km
17260 km
142395 km
30879 km
21.68%
2012
39081 km
17846 km
148690 km
31464 km
21.16%
Paved Road
Source: Same as Table 21
Myanmar has a 30 years long-term road development plan and its general objective is to
develop transport linkages and economic corridors between the neighboring countries and to
develop roads and bridges standing along the roads among Regions and States, and the Union
Highways. Figure 17 show the current roads network of Myanmar.
Presentation of “Road Infrastructure Current Situation and Future Development Plan” by U Kyaw Linn,
Managing Director, Public Works, Ministry of Construction
23
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Pre-feasibility Study of Dry Port in Myanmar
Source: Ministry of Construction
Figure 17: Current roads network of Myanmar
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Pre-feasibility Study of Dry Port in Myanmar
According to the 30 years plan, project implementation will be carried on step by step
according to the serial priority; first priority: ASEAN and ASIAN highways, second priority:
upgrading the current Union highways and third priority: upgrading of other highways and new
construction projects24.
There are several major highways linked to neighboring countries passing through
Myanmar. They are Asian highways, ASEAN highways, Greater Mekong Sub-region GMShighways, BIMSTEC, India-Myanmar-Thai Tripartite highways, India Myanmar highways and
GMS East-west economic corridor highways and GMS North-south economic corridor
highways.
There are 4 Asian highways passing through Myanmar in the Asian Highway Network.
These Asian Highways are named AH1, AH2, AH3 and AH14 and link to the neighboring
countries China, India and Thailand and provide access to Yangon which is the major port of
Myanmar currently. They are also important land bridges to South and South-East Asia
countries. Myanmar is working to maintain and upgrade the main road network, including Asian
highways, with private sector participation. In the Asian Highway Network, the Myanmar road
sections are as follows:
(a)
AH1 - Myawaddy-Payagyi(Yangon)-Meikhtila-Mandalay-Tamu(1665 Km)
(b)
AH2 - Tachilak-Kyaing Tong-Meikhtila-Mandalay-Tamu (807 Km)
(c)
AH3 - Mongla-Kyaing Tong (93 Km)
(d)
AH14 - Muse-Lashio-Mandalay (453 Km)
Figure 18 shows a map of Myanmar with the Asian Highway network and ASEAN
highway networks. Most of the portion of these two ASEAN and Asian Highways are along the
same route.
Extract from the presentation of “Road Infrastructure Current Situation and Future Development Plan” by
U Kyaw Linn, Managing Director, Public Works, Ministry of Construction
24
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Pre-feasibility Study of Dry Port in Myanmar
Figure 18: Asian and ASEAN highways network
Also, regarding the GMS countries’ economic corridor highways, there are a total of 9
corridors in 6 countries. Among these 9 corridor highways, Myanmar is involved in 4 corridors,
namely North-South corridor (Kuming-Bangkok), East-West corridor (Mawlamyine-Danang),
Northern corridor (Fancheng-Tamu) and Western corridor (Tamu-Mawlamyine). Figure 19
shows a map of the 9 GMS corridors connecting the 6 GMS countries. Inside Myanmar, NorthSouth, East-West, Northern and Western Corridors pass through.
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Pre-feasibility Study of Dry Port in Myanmar
Source: ADB
Figure 19: Economic corridor highways of GMS countries
(2). RAILWAY TRANSPORT
In terms of rail transport, this is monopolized by the state owned transport enterprise,
Myanma Railways under the management of Ministry of Rail Transport. There is a total of
3652.52 mile length of the railways and 926 railway stations around the country. In comparison
to the total area of Myanmar, there is only one route mile per 71.5 square miles. There is only
one city- circular railway line in Yangon. Rail transport is a carrier of bulk freight traffic. Rail
transport of containers has been under the testing and implementation stage and there will be
more progress in the future, in parallel with development of related legal issues, infrastructure
and so on. Nowadays, local cargo transport by rail is minor compared with road transport
because of the limited infrastructure for rail transport. Figure 20 shows the rail routes of
Myanmar and Table 23 shows the freight traffic by rail for 5 years25.
25
Facts about Myanmar Railways (2011-2012), Ministry of Rail Transportation
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Pre-feasibility Study of Dry Port in Myanmar
Source: Facts about Myanmar Railways (2011-2012)
Figure 20: Existing Rail routes of Myanmar
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Pre-feasibility Study of Dry Port in Myanmar
Table 23: Freight transported by railways
Classification
Year
2007-08
2008-09
2009-10
2010-11
2011-12
Tons carried (million)
2.93
2.95
3.33
3.41
3.58
Ton/Day (thousand)
8.03
8.09
9.12
9.34
9.83
53.54
56.99
65.83
69.78
72.27
182
193
198
205
200
Ton Miles (10 million)
Avg: Lead Miles/Ton
Source: Facts about Myanmar Railways (2011-12)
On the Trans-Asian Railway (TAR) Network, according to the definition of railway lines
of international importance described in the Intergovernmental Agreement, Figure 21 shows the
existing rail line segment and missing rail linkS of the TAR in Myanmar. The blue colour shows
the width of rail track used in Myanmar is one meter.
Source: www.unescap.org/ttdw/common/Maps/TAR-map-GIS.pdf
Figure 21: Segment of the Trans-Asia railway network in Myanmar
Under the current condition of the TAR Network, the following railway sections falls
under this category26.
Mandalay-Yangon (617 km)
Mandalay-Lashio (313 km) [ Muse (border station and break of gauge)-Rueli(China)]
Mandalay-Kalay
(539 km) [ Tamu (border station and break of gauge)-Jiribam
(India)]
Bago (Junction) – Thanpyuzayat (Junction) (270 km) [Three Pagoda Pass (border station)Namtok (Thailand)]
Country Report (Myanmar), Ad Hoc Intergovernmental Meeting on an Intergovernmental Agreement on
Dry Ports, Bangkok, 20-22 June 2012.
26
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Pre-feasibility Study of Dry Port in Myanmar
There are three missing lines to connect the neighbouring countries along the TAR
Networks. These are Kalay-Tamu (about 135 km**27 to India), Lashio-Rueli (about 141.8 km**
to China) and Thanbyuzayat-Three Pagoda Pass (about 110 km** to Thailand).
Regarding the link between Myanmar and India, the missing length between Kalay and
Tamu is 135 km in Myanmar territory. A survey team from Rail India Technical and Economics
Services (RITES) made a feasibility study for that link in 2004 and is waiting for further
discussions.
Regarding the link between Myanmar and China, a feasibility study and general
alignment of Muse (border with China) - Kyaukphyu has been completed and submitted to the
governments in April 2012. This project starts from Ruili to Muse and terminates at Kyaukphyu
Port after passing through Lashio, Mandalay, Magway, Minbu and Ann in Myanmar. The total
length of the railway line is 813.015 km, 4.2 km in China and 808.8 km in Myanmar. This line
will be a standard gauge and a single line. The running speed will be 120km/hr. This project will
be implemented on a BOT basis and is expected to be finished before 2015.
Regarding the link between Myanmar and Thailand, a feasibility study for
Thanphyuzayat-Three Pagoda Pass (Myanmar)-Namtok (Thailand) was done by KOICA and
submitted in April 2007. That route was found to be not feasible. There is an on-going project in
Myanmar for building a deep sea port and a special Economic Zone at Dawei. It is a BOT
project with Italian Thai from Thailand, as developer. The project includes a road link as well as
a rail link from Kanchanaburi (Thailand) to Dawei deep sea port (Myanmar). This railway line is
expected to play a much larger role in the regional transportation network28.
Regarding the signing of the TAR Agreement, Myanmar has faced technical and
financial constraints to upgrade the existing railway lines in conformity with the guiding
principles for technical characteristics of the TAR network. Actual moving dimensions, axleloads, signaling and operating conditions are very poor and too far from the specifications of the
TAR standards. There will be a heavy burden on the national economy to reconstruct the whole
rail network. That is the main reason why Myanmar hasn’t entered the member list signing the
Intergovernmental Agreement for TAR.
27
** The route lengths of missing lines are referred from feasibility reports
All the international rail links information is from the Country Report (Myanmar), Ad Hoc
Intergovernmental Meeting on an Intergovernmental Agreement on Dry Ports, Bangkok, 20-22 June 2012.
28
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Pre-feasibility Study of Dry Port in Myanmar
(3). INLAND WATERWAYS TRANSPORT
In terms of Inland Water Transport, there are four major rivers in Myanmar. Usually,
these rivers flow from north to south. According to the statistics from AJTP information
platform, there is around 12,775 km length of navigable waterways and 235 river ports
networks. These are mainly based on the Ayeyarwaddy and Chindwin rivers and the extensive
channel system in the Ayewaddy Delta. This inland waterway navigable length has become
shorter and shorter as shown in Figure 22, because of climatic changes and other environmental
effects on the depth of the rivers.
25,000
20,000
15,000
10,000
5,000
0
2007
2008
2009
2010
2011
Source: AJPT website
Figure 22: Total inland waterways length (km) in Myanmar
There is one government agency, namely Inland Water Transport (IWT), under the
management of the Ministry of Transport. IWT is responsible for both long haul passenger and
freight services, and cross-river ferry services in various places along the rivers. Statistics in
2011 show IWT could carry about 5 million tons of freight along the main rivers. It is about 1.5
times the volume carried by Myanma Railways. Additionally, there are some private barges
which carry bulk cargo (such as fuels, crops, stones for road construction, fertilizer) along the
rivers. The total volume of shipments handled in all the domestic shipping services was about
6.687 million tons29.
During the low water season, from November to May, many of the inland water transport routes
do not provide sufficient water depth for inland waterway vessels to operate safely. Improving
river channels and navigation aids would benefit all providers of inland water transport services,
IWT vessels and private vessels as well.
Nowadays there are so many development projects to drain the main Ayeyarwaddy river
and inland river ports along the river. If there are upgraded river ports to use integrated transport
services in the future, there will be a better playing field for the logistics and transport operators
in Myanmar.
That cargo volume was contributed by both of IWT vessels and private vessels. (ref: ASEAN logistics
survey, March, 2012)
29
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Pre-feasibility Study of Dry Port in Myanmar
(4). AIR TRANSPORT
In terms of Air Transport, Myanmar has two international airports in Yangon and
Mandalay, and one international airport project has been under construction in Naypyitaw where
the new government capital city of Myanmar is located. Apart from these international airports,
there are 30 domestic airports around the country30.
Table 24 shows airborne cargoes, both domestic and international, and they are
increasing every year. Total international airborne cargo increased more than 50 percent for the
five years from fiscal 2006 to fiscal 2011. International aircraft traffic cargo almost doubled
from 2005 to 2011. Major destinations of the airborne cargoes include Guangzhou, China; Hong
Kong; Bangkok; and Hanoi. As described above, however, most commodities destined to these
cities are transported via Bangkok or Singapore31.
Table 24: Airborne cargoes and traffic in Myanmar
Indicator name
Unit/scale of
measurement
2005
2006
2007
2008
2009
2010
2011
Domestic air cargo
Thousand ton
1.52
0.86
2.21
0.74
3.39
0.76
41.34
International air cargo
(export)
Thousand ton
4.74
5.09
5.38
5.88
7.16
9.31
9.64
International air cargo
(import)
Thousand ton
4.56
4.62
4.73
6.35
6.28
6.36
6.33
International aircraft
traffic
Count
7,870
8,026
8,602 7,184 7,889 11,234 14,150
Source: data for AJTP web
(5). PORT SECTOR
The Yangon Port which is the river port and premier port of Myanmar lies along the
Yangon River at Yangon city. The Yangon Port (including Thilawa terminal area) at present is
the only international port for the country and it can accommodate 24 ocean liners at 24 wharves
(18 at Yangon Port and 6 at Thilawa port). Figure 23 shows the Yangon river estuary and
location of Yangon port and Thilawa port area. All these port areas are situated on the bank of
the Yangon river. Yangon port is about 32 km inland from Elephant Point on the Gulf of
Martaban which is the mouth of the Yangon river and Thilawa port is just half way to the
Actually there are a total of 69 airports including small airport cities that can be used for some type of
aircrafts. According to the ICAO standard, Myanmar had only 30 domestic airports and 2 international
airports in the 2011 statistics.
31 ASEAN logistics survey, March 2012
30
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Pre-feasibility Study of Dry Port in Myanmar
Yangon port from the mouth of Yangon river. For all vessels calling to the Yangon Port,
pilotage is compulsory if they are over 200 GRT.
Pazundaun
YANGO
Creek
g
RIVER
N
YANGO
PORT
N
INNERBA
R
BRIDG
E
THANLYA
N
Liffey
SECONDARY CHANNEL
N
Main
Channel
d Silva Pt.
Chokey
pt.
THILAWA PORT AREA
Kyauktan Creek
THANTE
-10
ELEPHANT
pt.
-3
5
EASTEN
GROVE
FLATS
OUTER
BAR
Source: Myanmar Port Authority
Figure 23: Map of Yangon river estuary with Yangon and Thilawa port area
Currently all vessels calling to the Yangon Port and Thilawa Port have generally been
sailing on flood tides, crossing both the Inner Bar and Outer Bar at near high tide to assure
sufficient water depths. In view of natural conditions and the meanderings of the Yangon River,
Yangon Port is accessible by vessels of 167m LOA, 9m draft, 15,000 DWT and Thilawa Port is
accessible by vessels of 200m LOA, 9m draft, 20,000 DWT.
The number of vessels calling at Yangon Port in the 2011-12 fiscal year was 1833. The
port handled more than 408,0430 TEU and 20.408 million metric tons of cargo in the same
fiscal year. Table 25 shows the number of vessels calling at Yangon Port (including Thilawa
- 46 -
Pre-feasibility Study of Dry Port in Myanmar
terminals) for five years and Figure 24 shows the trend in the number of vessels over the past 11
years calling at Yangon port.
- 47 -
Pre-feasibility Study of Dry Port in Myanmar
Table 25: Number of vessels calling at Yangon Port (including Thilawa terminals)
No
F. Year
MPA
MITT
AWPT
MIPL
MIP
MOGE
MPE
HCB
LPM
Total
(+/-)
1
2007-2008
441
163
267
29
68
124
173
28
-
1293
12%
2
2008-2009
406
172
324
32
84
120
150
1
-
1289
(0.3%)
3
2009-2010
654
214
380
43
93
108
106
-
-
1598
24%
4
2010-2011
656
267
373
48
139
73
88
31
100*
1775
11%
5
2011-2012
632
241
356
38
149
74
112
89
142*
1833
2%
Source: Myanmar Port Authority32
Number of vessels calling to the Yangon Port
2000
1775
1800
1833
1598
1600
1293
1400
1200
1000
1098
1087
951
1102
1289
1153
971
800
600
400
200
0
Source: Myanmar Port Authority
Figure 24: Vessels calling at Yangon port (2001-02 to 2011-12)
Description;
MPA: Berths owned by MPA (including Boaungkyaw Street Wharves –BSW); MITT: Myanmar International
Terminals Thilawa; AWPT: Asia World Port Terminals; MIPL – Myanmar Integrated Port Limited; MIP:
Myanmar Industrial Port; MOGE: Myanmar Oil and Gas Enterprise (wharf for fuel oil); MPE: Myanmar
Petroleum Enterprise (wharf for fuel oil); HCB: Hteedan Coal Berth (actually it has been used for GC vessels);
LPM: Lanthayar Pilot (anchoring for medium size liquid bulk carriers)
* From 2010, government allowed investment in the fuel import and distribution business by private sector.
So, medium size liquid bulk carriers have been anchoring at LCM.
32
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Pre-feasibility Study of Dry Port in Myanmar
Regarding the cargo throughput and container throughput of the Yangaon port, Tables 26
and 27 show the past 6 year records of all types of cargo and containerized cargo throughput
respectively. Moreover, Figures 25 and 26 show trends in cargo throughput from 2001-02 to
2011-12 at Yangon port as well.
Table 26: Seaborne trade of the Yangon port (including Thilawa)
(M.Ton in Thousands)
No
Year
Import
Export
Total
Yearly Growth
Rate%
1
2006-2007
5623
5332
10,955
7%
2
2007-2008
6240
5619
11,859
8%
3
2008-2009
6150
6166
12,316
4%
4
2009-2010
9492
6655
16,147
31%
5
2010-2011
12307
6131
18,438
14%
6
2011-2012
12590
7818
20,408
11%
Source: Myanmar Port Authority
(M.Ton in Thousands)
Source: Myanmar Port Authority
Figure 25: Seaborne trade of the Yangon Port (including Thilawa) (2001-02 to 2011-12)
- 49 -
Pre-feasibility Study of Dry Port in Myanmar
Table 27: Volume of containers handled in port of Yangon (including Thilawa)
Total
(M.T in
thousand)
Yearly
Growth
Rate%
No
Year
Import
Export
Total
(TEU)
1
2006-2007
99,942
97,337
197,279
3148.324
15%
2
2007-2008
115.267
111.236
226.503
3462.489
15%
3
2008-2009
133.712
130.294
264.006
3937.131
17%
4
2009-2010
152.077
151.333
303.410
4372.025
15%
5
2010-2011
175,315
171,327
346,642
4,571,902
14%
6
2011-2012
207,540
200,503
408,043
5,594,589
18%
Source: Myanmar Port Authority
Source: Myanmar Port Authority
Figure 26: Volume of containers handled in port of Yangon (including Thilawa)
(by TEU in thousands, 2000-01 to 2011-12)
All these statistics show gradual development of cargo throughput at Yangon Port
(average 15% for containerized cargo for 6 years continuously). To cope with the seaborne
traffic growth resulting from the economic liberalization program of the country, port
development has been carried out by inviting local and foreign investment at Yangon and the
Thilawa Port area. Myanma Port Authority is planning to implement the Yangon Port
- 50 -
Pre-feasibility Study of Dry Port in Myanmar
Improvement Project which will be able to accommodate bigger size vessels up to 35,000 DWT
at Yangon Port and Thilawa Port.
In parallel, it may need to upgrade existing port infrastructure which shall include, but
not be limited to, wharf strengthening, installation of modern cargo handling facilities, providing
navigation aids and other related facilities to cater for 35,000 DWT vessels and to cope with the
growth of seaborne cargo traffic. MPA has been planning to conduct a detailed feasibility study
on Yangon River Improvement and Strengthening of Existing Port Facilities by inviting foreign
and local interested parties to cooperate.
Apart from the existing Yangon port, Myanmar has other potential projects related to
implementation of the deep seaports in Kyauk Phyu (western part of Myanmar in Rakhine State
at Bay of Bengal) and Dawei (Southern part of Myanmar in Tanintharyi Division) area.
In Kyauk Phyu area, there are two potential
maritime infrastructure development projects. They
are the development of Oil and Gas Pipe Lines and
Terminal at Kyaukphyu Region, and Kyaukphyu
Economic and Technological Development Zone,
Deep Sea Port and Railway Projects.
Kyaukpyu
Regarding the development, operation and
management of the Myanmar Crude Oil Pipe Line
Project, a Memorandum of Understanding (MOU)
was signed between the Ministry of Energy of the
Union of Myanmar and China National Petroleum
Corporation of the Republic of China in June,
2009. The total investment amount of the project is
estimated over US$ 2.0 billion. The construction
Figure 27: Map of
Kyauk Phyu
work of the oil and gas terminal will be completed
by December, 2012 while construction of the
Work-boat Wharf at the project area was started in
October 2010.
Regarding the Kyaukphyu Economic and
Technological Development Zone, Deep Sea Port and Railway Projects, the Memorandum of
Understanding (MOU) was signed between Ministry of National Planning and Economic
Development, the Union of Myanmar and CITIC Group, People's Republic of China in
- 51 -
Pre-feasibility Study of Dry Port in Myanmar
December 2009. The MOU proposed to construct development zone facilities with port,
railroad, airfield and municipal facilities in Kyaukphyu.
Total expected investment cost of the project is about US$ 75 billion including US$10
billion for development of a deep sea port. The deep sea port is expected to handle 250 million
tons per year. In phase-1 of the development plan, a deep sea port to accommodate 50,000 DWT
vessels will be developed with an investment of US$ 0.21 billion within three years.
In the scope of the Development of Dawei Deep Sea Port, Industrial Estate and Road &
Rail Link to Thailand, there will be a deep sea port, industrial zone and road and rail links to
Thailand. The Framework Agreement in respect to this project was signed between Myanma
Port Authority and Italian-Thai Development Public Co., Ltd in November, 2010. The Dawei
Project is sitting on a strategic location along Tanintharyi coast of Myanmar. The project will
provide a competitive advantage as a communication link with direct access from GMS
countries and China to the Andaman Sea and India Ocean for the transportation of goods and
commodities. The project will serve as a new commercial gateway providing an alternative sea
route to India, China, Middle East, Europe and Africa as shown in Figure 28. This can lessen the
dependence on the congested Straits of Malacca and reduce transportation and logistics costs as
well33.
Source: Dawei deep seaport project presentation
Figure 28: Dawei deep seaport (New commercial Gateway)
These notes were obtained from the handouts and presentation booklets of the Implementation of Dawei
deep seaport project, Myanmar Port Authority
33
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Pre-feasibility Study of Dry Port in Myanmar
- 53 -
Pre-feasibility Study of Dry Port in Myanmar
(6). LOGISTICS PERFORMANCE
Measuring the overall performance of logistics in Myanmar, one perspective comes from
the World Bank’s logistics performance index (LPI) in which a higher value up to 5 indicates
better performance. Table 28 shows the LPI index list for Myanmar and selected countries. The
LPI consists of both descriptive and objective measures and has three parts: perceptions of
trading partners on each country’s logistics environment, information on the logistics
environment, and real time-cost performance data. On this index table, China is ranked 27th and
highest amongst the neighboring countries and Thailand is ranked 35 th in the world, while
Myanmar is the weakest country (with 133rd ranking), below Lao PDR and Cambodia.
Customs
Infrastructure
International
shipments
Logistics
competence
Tracking &
tracing
Timeliness
27 China
3.49
3.16
3.54
3.31
3.49
3.55
3.91
35 Thailand
3.29
3.02
3.16
3.27
3.16
3.41
3.73
47 India
3.12
2.7
2.91
3.13
3.16
3.14
3.61
53 Vietnam
2.96
2.68
2.56
3.04
2.89
3.1
3.44
79 Bangladesh
2.74
2.33
2.49
2.99
2.44
2.64
3.46
118 Lao PDR
2.46
2.17
1.95
2.7
2.14
2.45
3.23
129 Cambodia
2.37
2.28
2.12
2.19
2.29
2.5
2.84
133 Myanmar
2.33
1.94
1.92
2.37
2.01
2.36
3.29
Country
Int. LPI Rank
LPI
Table 28: Logistics performance index for Myanmar and selected countries, 2010
Source: World Bank, Logistics Performance Index,
(http://www1.worldbank.org/PREM/LPI/tradesurvey/mode1b.asp)
According to the ASEAN Strategic Transport Plan 2011-2015 (Final report), the LPI
index for Myanmar with a lower GNI per capita is located below the curve as shown in Figure
29. The graph shows that Myanmar has achieved a lower logistics performance than its income
group. The key issue pointed out in that report is that the trade supply chain of Myanmar (Lao
PDR and Cambodia as well) is only as strong as its weakest link. This situation is one of the
major challenges for AMSs and they have to find out how to support these low performing
countries so they can benefit from a global trading system. Accordingly Myanmar needs to make
substantial improvements in logistics competence, processes, and business practices.
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Pre-feasibility Study of Dry Port in Myanmar
Source: ASEAN Strategic Transport Plan 2011-2015 (Final report)
Figure 29: Correlation between LPI and Income per Capita
Moreover,
as
the
ASEAN
Strategic
Transport Plan 2011-2015 (Final report) shows,
logistics
related
performance
indicators
for
Myanmar are far below ASEAN and world
averages (Figure 30) 34 . The ASEAN Strategic
Transport Plan 2011-2015 highlighted weak
logistics competence, poor logistics quality and
undeveloped infrastructure as major constraints in
Myanmar. Also, the availability and quality of
trade-related
infrastructure
seems
a
major
constraint to the performance of Myanmar.
But, Myanmar is now on a new track
under the newly elected government since 2011.
Figure 30: Myanmar’s LPI Scores
Improvements can be seen including better
international relationships, aid from international
institutions, and restructuring of the internal and external affairs of the country. Logistics related
transport and trade will also improve in the near future.
Source: ERIA Study Team, based on data quoted from “Logistics Performance Index 2010”
Note: World average and ASEAN average were calculated as simple arithmetic averages.
34
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Pre-feasibility Study of Dry Port in Myanmar
B. ROAD TRANSPORT LINKING BANGLADESH, INDIA, CHINA,
LAO PDR AND THAILAND
As discussed earlier, Myanmar has 5 neighbouring countries, namely Bangladesh, India,
China, Lao PDR and Thailand. Among them, the shortest border is with Bangladesh but there
was no air link, no road link and no coastal shipping connection with Bangladesh up to last
year35. A bilateral relationship with Bangladesh has been looking to enhance the potential of
both countries including Multi-modal transport connectivity. Myanmar is also one of the
member countries of Bay of Bengal Initiative for Multi-Sectoral Technical and Economic
Cooperation (BIMST-EC) with Bangladesh and India. Thus future road transport linkages with
Bangladesh will be available.
With India, Myanmar has had regular border transport and trade for many years. The
Asian Highway route AH1, proposed Tran-Asia Rail Network and GMS Northwestern corridor
routes pass through Tamu, the border city of Myanmar, with India. Also there are many bilateral
projects between India and Myanmar. Some of the transport related projects are upgrading and
resurfacing of the 160 km. long Tamu-Kalewa-Kalemyo road; construction and upgrading the
Rhi-Tiddim road in Myanmar and the Kaladan river Multimodal Transport Project. After
finishing these intended transport related projects, the transport and trade between Myanmar and
India will be more secure and smoother than before.
The most dominant neighbouring country with Myanmar on transport and trade is China
which has about 2,185 kilometers length of border. Relevant international and regional transport
networks between Myanmar and China are the Asian Highway Road AH-14, GMS northern
corridor route and Trans-Asian Rail network path (segment of Singapore-Kunming Rail Link
network as well). The border city of Myanmar is Muse and Ruili in Yunnan Province, China.
Figure 31 shows the main transport corridors in GSM countries and road access from Ruili to
Yangon is the western window of Yunnan Province which is a land-locked region of China.
In 2010, Myanmar and China signed an MOU on development and cooperation in the
China-Myanmar Corridor Project to link Ruili and Kyaukpyu. According to the Corridor
Project, China would help Myanmar construct a railway and motorway from Kyaukphyu
Township in Rakhine State to Ruili in China36.
“Bangladesh-Myanmar relations step into a new gear” By Barrister Harun ur Rashid, Thursday, 01
September 2011 15:41 from http://www.encburma.net/index.php
36 “MoU on China-Myanmar Corridor Project inked”, The New Light of Myanmar, May19, 2010. extract from
China’s “Look South”: China-Myanmar Transport Corridor, Institute of International Relations and Area
Studies, Ritsumeikan University
35
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Pre-feasibility Study of Dry Port in Myanmar
Source: ADB, http://www.adb.org/GMS/Economic-Corridors/NSEC-Stocktaking-Initiatives.pdf
Figure 31: The main transport corridors in GMS countries
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Pre-feasibility Study of Dry Port in Myanmar
In order to streamline regulations and reduce non physical barriers for border crossing in
the GMS, GMS countries are working on ratifying and implementing the Agreement on CrossBorder Transportation of People and Goods in the GMS (CBTA for short), which covers the
following areas:
•
single-stop/single-window customs inspection;
•
cross-border movement of persons (i.e., visas for persons engaged in transport
operations);
•
transit traffic regimes, including exemptions from physical customs inspection, bond
deposit, escort, and agriculture and veterinary inspection;
•
requirements that road vehicles will have to meet to be eligible for cross-border
traffic;
•
exchange of commercial traffic rights; and
•
infrastructure, including road and bridge design standards, road signs, and signals.
Cambodia (2008), China (2008), Lao PDR (2007) and Viet Nam (2009) have ratified/
accepted all CBTA annexes and protocols. As of November 2010, Thailand had ratified 14
annexes and protocols. Myanmar signed the CBTA, but the annexes related to multimodal
transport (namely: Annex 13a: Multimodal Carrier Liability Regime and Annex 13b: Criteria for
Licensing of Multimodal Transport Operators for Cross-Border Transport Operations) have yet
to be ratified37.
Even though, neighbouring with Lao PDR for about 235 kilometers along the Mekong
river, there has been little transport and trade activity between the two countries. Recently,
comparative analysis of logistics relating to
alternative transport corridors was carried out by
ADB’s fund, namely, R3E, T3W and Mekong
River routes (see Figure 32 38 ). According to the
analysis, transport via R3W and R3E was about 75
percent more expensive than using the Mekong
River and R3W route through Myanmar has not
been widely used because of conflicting policies
related to transit goods and the sub-standard
Figure 32: Alternative transport routes
passing through Myanmar
37
38
quality of the roads.
From the Presentation of the Department of Transport, Ministry of Transport.
Source: ADB, The North-South Economic Corridor: Progress towards a Full-Fledged Economic Corridor
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Pre-feasibility Study of Dry Port in Myanmar
Thailand has the second longest border length of about 1800 kilometers with Myanmar
and there are many border checkpoints along the border. There are many types of relationship
between Myanmar and Thailand. Regarding the Asian and ASEAN regional cooperation
aspects, Asian Highway AH1 passes through Myawadi (border city of Myanmar) and AH2
passes through Tachilek (border city of Myanmar) to Thailand. ASEAN highway network route,
AH123 is going to pass from Dawei and Maesamee to Bangkok and AH112 is going to pass
through Khong Loy (border city of Myanmar) to Thailand.
From the rail network point of view between Myanmar and Thailand, the Tran-Asian
Railway network and the Singapore–Kunming Rail Link network are going to pass through the
border between the two countries. Figure 33 shows the missing link of the rail network within
the region. After completing this link, transport options between Myanmar and Thailand will be
more convenient than previously.
Source: Association of Southeast Asian Nations's Fact Sheet - www.aseansec.org
Figure 33: The Singapore–Kunming rail link network
The new deep seaport project of Dawei in Myanmar has road & toll highways and the
rail road construction plan to connect project sites to Thailand is a crucial economic corridor for
Myanmar, Thailand and for the region as well. The distance between Dawei to Myanmar-Thai
border is about 170 km and Dawei to Bangkok is only about 360 km. Once fully complete this
road will have up to eight lanes of international standard highway linking Dawei to the
Myanmar-Thai border. The road will reach the GMS Southern Corridor that leads to Vung Tau
and Quy Nhon in Vietnam through Sisiphon in Cambodia via Bangkok in Thailand (Figure 34).
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Pre-feasibility Study of Dry Port in Myanmar
Source: Dawei deep seaport project proposal
Figure 34: Proposed road from Dawei to Bangkok
C. REVIEW OF LOGISTICS, TRANSPORT AND TRADE FACILITIES
NEAR MANDALAY REGION
As mentioned earlier, Mandalay is situated in the central part of Myanmar and the 2nd
largest economic city in Myanmar. It is also in a strategically favorable location between China
and India. According to the regional development transport network, Asian highways AH1 and
AH14 are passing through Mandalay, as will the Tran-Asian Rail Network (TAR-S1, TAR-S2).
In addition the main river flowing west of Mandalay city, the Ayeyarwaddy, provides vital
inland river transport.
City
Distance (km)
Time (hour: minute)
Monywa
131
2:19
Kalay
359
5:49
Tamu
700
13:00
Shwebo
110
1:41
Banmaw
405
5:19
Myitkyina
540
7:12
Lashio
277
4:00
Muse
450
7:39
Taunggyi
282
7:15
Terchilek
825
12:20
Naypyitaw
453
6:15
Taunggu
542
8:12
Yangon
849
12:00
Note:
all the distances and times are calculated upon the
cargo transport routes
Source: Project team
Figure 35: Distances and driving hours for major cities from Mandalay
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Pre-feasibility Study of Dry Port in Myanmar
Figure 35 shows the cargo transport routes from Mandalay and related distances and
driving hours. Some of the routes are sub-standard quality roads and travel therefore takes
longer. However, Mandalay is the centre of the region in so many respects such as agricultural
cultivation, local industrial zones, and a distribution center for upper and middle Myanmar.
The roads and streets in the Mandalay metropolitan city area are under the management
of Mandalay City Development Committee (MCDC), while major highway roads and inter- city
roads are under the management of Public Works, Ministry of Construction. Mandalay region
has the highest percentage of modern concrete road infrastructure and about 45% of the concrete
roads in the whole country. Table 29 shows the roads infrastructure for each region (state and
division) in Myanmar.
Table 29: Road infrastructure under Ministry of Construction
State / Division
Kachin
Concrete
Road
(Km)
Bitum
Road
(Km)
Gravel
Road
(Km)
Metal
Road
(Km)
Earth
Road
(Km)
Donkey
Road
(Km)
Total
(Km)
18.910
564.075
660.233
1062.167
660.837
774.296
3740.518
Kayah
0.101
337.560
70.811
186.483
209.718
-
804.672
Kayin
-
627.041
213.439
208.008
762.829
-
1811.317
Chin
-
497.287
470.733
7.242
936.035
65.782
1977.079
Sagaing
-
1888.364
612.959
706.904
965.606
149.065
4322.899
Tanintharyi
-
858.585
433.115
1.609
70.409
-
1363.718
263.530
1284.659
160.934
234.964
223.699
-
2167.786
-
2080.278
270.973
504.529
465.302
-
3321.083
Manadalay
296.924
1813.127
203.180
152.888
48.280
-
2514.399
Mon State
-
604.309
8.047
89.117
32.187
-
733.660
Rakhine State
-
738.287
547.177
229.533
230.136
-
1745.132
61.155
648.465
126.736
73.125
70.811
-
980.292
2.213
3958.987
1807.092
1657.223
3350.453
276.807
11052.773
17.502
1057.641
335.146
559.750
577.151
-
2547.189
660.334
16958.664
5920.575
5673.541
8603.452
1265.95
39082.516
Bago Region
Magwe Region
Yangon Region
Shan State
Ayeyarwady
Total
Source: Public Works, Ministry of Construction
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Pre-feasibility Study of Dry Port in Myanmar
Regarding railway infrastructure, there are 183 stations and 657.43 route miles in the
Mandalay region. This is the highest number of railway stations and the greatest density of
railway routes (one route mile per an area of 21.74 square miles compared with the whole
country density of about 71.5). There are only two major diesel locomotive workshops: one is in
Yangon and one is in Ywataung near Mandalay. Ywataung is also the home of a Railway
Technical Training Center which was built and operated with assistance from Germany39.
Mandalay is about 450 km far from Muse (border city to China). Because of the nature
and quality of the road, it takes about 7.5 hours from there. Muse is the border trade city from
the Myanmar side and almost all of the border trade from China passes through Muse which is
the biggest border trade zone in Myanmar. Figure 36 shows the Customs Department x-ray
machine and cargo loading operation at 105 mile Trade zone (Muse).
Source: Presentation from Ministry of Commerce
Figure 36: 105 mile Trade Zone (Muse)
The Mandalay Merchandize Center project can give better logistics facilities than
previously mentioned. Mandalay City Development Committee (MCDC) has had a welldeveloped plan to organize the warehouse and truck/transportation facilities in that compound
area, including cargo consolidation and distribution to enhance the development of logistics and
transport industries of the region. From a holistic point of view, all these attributes and potential
development projects related to the transport sector in Mandalay region are ready to make it the
logistics hub of Myanmar.
D. SUMMARY AND CONCLUDING REMARKS
This chapter has reviewed the transport infrastructure, facilitation and operation issues in
Myanmar, including road, railway, inland waterway transport, air transport, the port sector,
39
Facts about Myanmar Railways (2011-2012), Ministry of Rail Transportation
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Pre-feasibility Study of Dry Port in Myanmar
bilateral and sub-regional transport agreement and the logistics and various transport and trade
facilities in Mandalay region.
This chapter finds that Mandalay has served as the logistics hub of Myanmar especially
in the consolidation of domestic cargo (particularly agricultural products) and as a distribution
center for the trade between Myanmar and China. With the future construction of transport
infrastructure such as Asian highways and other regional development, and implementation of
transport agreements, Mandalay region will play an increasingly important role in enhancing
national trade and regional economic corridor activities.
This chapter has also examined the development of logistics, transport and trade facilities
near Mandalay region. It shows that the existing road, railway and trade facilities in Mandalay
region and various transport related potential development projects are the driving forces for it to
be a logistic hub of the country. They favour the development of a dry port in Mandalay region.
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Pre-feasibility Study of Dry Port in Myanmar
V. FREIGHT DEMAND FORECAST OF DRY PORT IN
MANDALAY
A. RATIONALE OF DEVELOPING A DRY PORT IN MANDALAY AND THE
KEY FUNCTIONS OF DRY PORT
Mandalay is the second largest city and one of important logistics cities in Myanmar. It
is an important location for logistics services of domestic and international cargoes. Most of the
cargoes handled at the city are either import and export cargoes traded with China(via Muse)
and India(via Tamu), or exported and imported through the port of Yangon. Imported cargoes
from border trade are distributed to municipalities in Southern Myanmar. The border trade with
China accounts for about 70 per cent of Myanmar’s total border trade. It is growing gradually by
the favorable political and security conditions of the border areas in Muse and the transport route
between Muse and Mandalay. In addition, with the economic development of Myanmar it is
expected that international cargo traffic to and from Mandalay through ports will be increasing.
In order to examine the need to establish a dry port, it is essential to examine the market
demand for such dry port. As discussed in Chapters III through IV, trade volumes via Mandalay
has been increasing over the past decades. 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. A dry port will provide logistics function
such as cargo consolidation and distribution, cargo storage, customs, and intermodal transport.
The dry port will serve the trade and transport between Mandalay and overseas countries
through a seaport such as Yangon port in Myanmar and the border trade and transport between
Mandalay, and China and India.
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Pre-feasibility Study of Dry Port in Myanmar
Mandalay
Import
Cargo
Dry Port
• Function of Dry Port : cargo consolidation and
distribution, cargo storage, customs, intermodal
transport handling etc.
• Type of Cargo : container, conventional cargo etc.
• Transport Mode : road, rail transport
Export
Cargo
Mandalay
Source: the project team
Figure 37: Basic functions and cargo flows of dry port
More specifically, the dry port will include the following functions.

Cargo consolidation and distribution: Small shipments which have the same
destination are transported to dry port by road or rail and then stuffed into the same
container. Alternatively, containers transported by road or rail to dry port are
unstuffed and distributed by small vehicles.

Customs Clearance: Export and import procedure as well as customs inspection is
carried out in dry port.

Conventional cargo facility: Conventional cargoes such as agricultural products,
fertilizer, construction materials, and forest products can be loaded on or unloaded
from truck or rail, and stored temporarily.

Container yard: Empty or laden containers are stored and loaded on or unloaded from
truck or rail. Container cargo movements will increase gradually and a container
depot is required to handle containers.

Intermodal transport handling: Myanmar is geographically located at the cross roads
between East and West, North and South of Asia continent as a natural link between
the Asian countries. Mandalay is located in the center of an arid area. It is an
important point for road and rail transport services. Most of the cargoes handled at
the city are imports from China (via Muse) and India (via Tamu). They are bound for
Mandalay, from which they are distributed to municipalities in southern Myanmar by
road and rail transport. Export cargoes from Mandalay are transported by road and
railway to Yangon port where they are loaded on cargo vessels.
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Pre-feasibility Study of Dry Port in Myanmar
A number of alternative operations in this respect include: 1) moving container from one
vehicle to another vehicle; 2) change chassis from one vehicle to another vehicle; 3) move
cargoes from one vehicle to another. In this process, the form of package of the cargoes may be
changed. For instance, it is possible to unstuff a container and move cargoes from a container
vehicle to a vehicle for general purposes.
B. LOCATION AND CAPACITY OF DRY PORT
Figure 38 shows the location of Mandalay city and the main transport routes. According
to the discussions with government officials, transport operators, customs officials as well as
other stakeholders of dry port during the field mission by the project team, it was decided that
the potential location of dry port is near the Merchandise Center in Mandalay which is under
construction.
Source: www.google.com
Figure 38: Location of Mandalay
In order to develop a dry port it is necessary to forecast demand for a dry port. In
forecasting the traffic volume through dry port in Mandalay in the future, the project team has
considered the following data and factors.
1. Cargo throughput of Yangon port (including Thilawa port)
-
Import of conventional and container cargo (2001-2011)
-
Export of conventional and container cargo (2001-2011)
-
Average ratio of import and export cargo (import 55%, export 45%)
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Pre-feasibility Study of Dry Port in Myanmar
-
The ratio of import and export cargo is applied to cargo volume between Yangon and
Mandalay
-
Use Brown’s Exponential Smoothing Method to forecast cargo traffic of Yangon port
from 2016 until 2035
-
SPSS software used for time series analysis
2. In/out cargo transportation from Yangon port and between Yangon and Mandalay by
truck
-
Total cargo volume moving in/out of Yangon(food stuff, consumer products, machinery
etc.) from Feb 2010 to Jun 2012
-
Cargo volumes between Yangon and Mandalay by truck from Feb 2010 to Jun 2012
-
Share of cargo volume between Yangon and Mandalay
3. Domestic freight movement by mode
-
Cargo volume from 2004-2011 by road, railway, river
-
Average ratio of cargo volume from 2004-2011 by road, railway, river(road 76%,
railway 10%, river 14%)
-
This average ratio is applied to cargo volume of dry port
4. Ratio of container cargo handling volume in Uiwang ICD in Korea
-
GDP and GRDP of major cities(Seoul and Gyeonggi Regions) near Uiwang ICD(20022010)
-
Container throughput in major container ports in Korea(2002-2010)
-
Estimation of container cargo generated in Seoul and Gyeonggi regions(2002-2010)
-
Container handling volumes in Uiwang ICD(2002-2010)
-
Average ratio of container handling volume in Uiwang ICD is 33%
5. Myanmar’s GDP and Mandalay GDP
-
Ratio of Mandalay GDP(2004-2011)
-
Average ratio of Mandalay GDP out of Myanmar’s GDP is 7.7%
6. Myanmar’s border trade
-
Ratio of China’s border trade with Myanmar (1999-2008)
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Pre-feasibility Study of Dry Port in Myanmar
-
Border trade with China accounted for 70% of Myanmar’s total border trade
-
Mandalay is a main trading partner city with China11
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. Cargo volume using dry port was
forecasted according to type of cargo and transport mode. Cargo is divided into container and
conventional cargo and transported either by road or rail. Table 30 shows forecast of annual
container traffic from 2016 until 2035. In 2016 total container volume handled in the dry port
amounts 12,775 TEUs and its annual average growth rate is 7 percent. In 2035 dry port is
expected to handle 47,815 TEUs.
Table 30: Forecast of annual container traffic through dry port
Road
Year
Import
6,205
8,760
13,140
17,885
23,360
2016
2020
2025
2030
2035
Rail
Export
5,110
7,300
10,950
14,600
18,980
Import
730
1,095
1,825
2,190
2,920
Total (TEU)
Export
730
1,095
1,460
1,825
2,555
12,775
18,250
27,375
36,500
47,815
Source: the project team
60,000
50,000
TEU
40,000
Road Import
Road Export
30,000
Rail Import
20,000
Rail Export
Total (TEU)
10,000
2016
2020
2025
2030
2035
Source: the project team
Figure 39: Projected annual container traffic volume through dry port
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Pre-feasibility Study of Dry Port in Myanmar
Table 31 presents forecast of annual conventional cargo traffic and its annual average
growth rate is 7 percent. In 2016 cargo handling volume amounts to 502,240ton and increases to
1,881,940ton by 2035.
Table 31: Forecast of annual conventional cargo traffic through dry port
Road
Year
2016
2020
2025
2030
2035
Import
244,185
344,560
515,380
689,850
914,690
Rail
Export
199,655
281,780
421,940
564,290
748,250
Import
32,120
45,260
67,890
90,885
120,450
Total (Ton)
Export
26,280
37,230
55,480
74,095
98,550
502,240
708,830
1,060,690
1,419,120
1,881,940
Source: the project team
2,000,000
1,800,000
1,600,000
1,400,000
Road Import
Ton
1,200,000
Road Export
1,000,000
Rail Import
800,000
Rail Export
600,000
Total (Ton)
400,000
200,000
2016
2020
2025
2030
2035
Source: the project team
Figure 40: Projected annual conventional cargo traffic volume through dry port
C. SUMMARY AND CONCLUDING REMARKS
This chapter is mainly focused on addressing rationale of developing a dry port in
Mandalay and its key function, discussing the location of dry port in Mandalay and forecasting
the traffic volume. The potential location will be further discussed in chapter VI.
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Pre-feasibility Study of Dry Port in Myanmar
Mandalay, the second largest city in Myanmar, has long played a role as a logistics base
due to its geographical location and international trade activities. There is an increasing
international cargo movement between Mandalay and neighboring border countries such as
China and India by land, and overseas countries through seaports with the construction of
transport infrastructures such as ports, roads, and bridges.
According to forecast of cargo traffic through Mandalay its annual growth rate is 7
percent. In order to handle the increasing volume of trade and transport efficiently, it is
necessary to build a dry port which provides logistics function such as cargo consolidation and
distribution, cargo storage, customs, and intermodal transport.
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Pre-feasibility Study of Dry Port in Myanmar
VI. PHYSICAL DEVELOPMENT PLAN
A. PROPOSED SITE FOR DRY PORT
Mandalay is the capital city of the Mandalay Division situated in the middle of the
country with overland road access to the China border in the north, the Indian border in the west,
and to the new political capital Na Pyi Taw and Yangon in the south. The city’s primary
functions are as a center for transit trade, a logistics hub, and as a base of manufacturing
facilities. Mandalay is at the important junction of Asian Highway Route AH1 from Myawaddy
to Tamu and AH14 from Mandalay to Muse.
As passenger and cargo vehicles are passing through Mandalay city, the Mandalay
Highway Bus Terminal & Merchandise Center project is planned for establishing a terminal area
between Hton Bo-Myitnge Shortcut Road and Phyut Seik Gone Village in Pyigyi Tagun
Township. The Mandalay Highway Bus Terminal & Merchandise Center Project has a land area
of 65.95 acres. Plans are to construct 360 business-apartments, a merchandise center for cargo
vehicles plying between industrial zones, warehouses, factories, and the Yatanarpon Cyber City.
The intention is to keep cargo in the center before uploading onto vehicles bound for China and
Thailand.
Figure 41: Proposed location of the dry port in Mandalay
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Pre-feasibility Study of Dry Port in Myanmar
Figure 41 shows the proposed location of the dry port in Mandalay and the main
transport routes. According to the discussions with government officials, transport operators,
customs officials as well as other stakeholders of dry port during the field mission by the project
team, it was decided that the potential location is near Merchandise Center which is now under
construction.
B. OVERALL LAYOUT OF DRY PORT
In order to estimate the size and design of the dry port facility daily cargo volume is
calculated. Daily demand for the dry port is shown in Table 32 and Table 33. In calculating
space required for container and conventional cargo, a daily cargo volume of each cargo in 2025
was considered. It is assumed that the operation of dry port starts in 2016 and lifespan of the
project is 20 years after the start of operation. The space of dry port is estimated based on its full
capacity in 2025.
In 2016 daily container volume to be handled in the dry port is 35 TEUs in which 31
TEUs are moved by road and 4TEUs transported by rail. It will reach by 131 TEUs in total in
2035.
Table 32: Forecast of daily container traffic through dry port
Road
Year
2016
2020
2025
2030
2035
Import
17
24
36
49
64
Rail
Export
14
20
30
40
52
Import
2
3
5
6
8
Source: the project team
- 72 -
Total (TEU)
Export
2
3
4
5
7
35
50
75
100
131
Pre-feasibility Study of Dry Port in Myanmar
140
120
100
TEU
Road Import
80
Road Export
Rail Import
60
Rail Export
40
Total (TEU)
20
2016
2020
2025
2030
2035
Source: the project team
Figure 42: Forecast of daily container traffic through dry port
In terms of daily conventional cargo traffic dry port needs a facility to handle 1,376tons of
cargo in 2016 and 5,156tons in 2035.
Table 33: Forecast of daily conventional cargo traffic through dry port
Road
Year
2016
2020
2025
2030
2035
Import
669
944
1,412
1,890
2,506
Rail
Export
547
772
1,156
1,546
2,050
Import
88
124
186
249
330
Export
72
102
152
203
270
Total
(Ton)
1,376
1,942
2,906
3,888
5,156
Source: the project team
6,000
5,000
Ton
4,000
Road Import
Road Export
3,000
Rail Import
2,000
Rail Export
Total (Ton)
1,000
2016
2020
2025
2030
2035
Source: the project team
Figure 43: Forecast of daily conventional cargo traffic through dry port
- 73 -
Pre-feasibility Study of Dry Port in Myanmar
There are two types of cargoes using a dry port in Mandalay. One is border trade cargo
imported to and exported from Mandalay and the other is international cargo imported to and
exported from Mandalay through seaports in Myanmar. The dry port comprises the following
facilities.

Container yard (CY)

General cargo area

Container freight station(CFS)

Railway terminal

Customs clearance area

Customs office

Operator’s office

Maintenance workshop

Parking area
Space required for each facility is calculated by using equations and assumptions in the
recent dry port project.40 The total area required for development of the dry port is estimated to
be 84,992 m2. The areas for different functions are summarized in Table 34.
Table 34: Summary of total area required for the dry port
Required Area(m2)
Item
Conventional cargo area
50,216
Container yard(CY)
16,531
Container freight station(CFS)
9,912
Customs clearance area
998
Customs office
269
Operator's office
1,569
Maintenance workshop
609
Railway terminal
2,357
Parking area
2,530
Total area
84,992
Source: the project team
UNESCAP(2011), Prefeasibility Study of Establishing a Dry Port in Luangnamtha Province, Lao People’s
Democratic Republic.
40
- 74 -
Pre-feasibility Study of Dry Port in Myanmar
Figure 44: The physical layout of the dry port
(1). CONTAINER YARD (CY)
In calculating the space required for container yard, consideration was given to the space
for container storage and maneuvers of stacking equipment such as reach stackers or forklifts.
The space required for the container storage depends upon the maximum number of containers
to be stored at any time, the dwell time of each container, the space of each container, the stack
height and safety factor, as shown in the following equation.
Container storage space = daily cargo(TEU) * dwell time * space per container / stack
height * safety factor
In this study, the average dwell time is assumed to be 3 days for imports, 3 days for
exports and 3 days for empty container. The space requirement for container storage for road
and rail cargo is shown in Table 35 and Table 36 respectively.
Table 35: Space required for container storage for road cargo
Import
Export
Empty
Total
Daily
Cargo
Dwell
Time
36
30
6
72
3
3
3
Space per
Cargo
(m2/TEU)
21
21
21
Source: the project team
- 75 -
Stack
Height
Safety
Factor
Space Requirement
(m2)
3
3
3
1.2
1.2
1.2
907
756
151
1,814
Pre-feasibility Study of Dry Port in Myanmar
Table 36: Space required for container storage for rail cargo
Import
Export
Empty
Total
Daily
Cargo
Dwell
Time
5
4
1
10
3
3
3
Space per
Cargo
(m2/TEU)
21
21
21
Stack
Height
Safety
Factor
Space Requirement
(m2)
3
3
3
1.2
1.2
1.2
126
101
25
252
Source: the project team
Apart from the space required for storage of containers, additional space is required for
turning radius of reach stacker, access for chassis and parking of reach stackers. The space
required for the operation of reach stacker is estimated at 7 times the space required by container
storage area. Therefore the total space required for the container yard for road and rail cargo is
shown in Table 37 and Table 38 respectively.
Container yard space = daily cargo(TEU) * dwell time * space per container / stack
height * safety factor * 7
Table 37: Space required for container yard for road cargo
Daily
Cargo
Dwell
Time
Space per
Cargo
(m2/TEU)
21
21
21
Import
36
3
Export
30
3
Empty
6
3
Space for
72
storage
Space for cargo handling equipment maneuvering
Total
Stack
Height
Safety
Factor
3
3
3
1.2
1.2
1.2
Space
Requirement
(m2)
907
756
151
1,814
12,701
14,515
Source: the project team
Table 38: Space required for container yard for rail cargo
Daily
Cargo
Dwell
Time
Space per
Cargo
(m2/TEU)
21
21
21
Import
5
3
Export
4
3
Empty
1
3
Space for storage
10
Space for cargo handling equipment maneuvering
Total
Source: the project team
- 76 -
Stack
Height
Safety
Factor
3
3
3
1.2
1.2
1.2
Space
Requirement
(m2)
126
101
25
252
1,764
2,016
Pre-feasibility Study of Dry Port in Myanmar
(2). CONTAINER FREIGHT STATION (CFS)
The CFS is a facility designed for less than container load (LCL) consolidation and
segregation. It is where containers holding more than one consignment are packed or unpacked.
The CFS comprises a covered shed with a loading apron for trucks accessing containers stacked
inside a shed. The shed should be divided into two sections, one for export cargo and another for
import cargo. The size of the CFS can be computed as follows.
CFS size = daily LCL cargo * (a) * (b) * (c) * dwell time * safety factor
Where
(a)=Floor space occupied by an average container load
(b)=The amount of space required for a forklift truck to maneuver
(c)=A factor for covering peak workloads during the day
The Handbook on the Management and Operation of Dry Ports by UNCTAD suggested
that for a flat floor shed, the fix factors (a), (b) and (c) an be combined as equal to 40. Therefore,
the required space for CFS is calculated as shown in Table 39.
Table 39: Space required for CFS
Daily Cargo
(TEU)
LCL
cargo(TEU)
44
35
79
22
18
40
Import
Export
Total
(a)*(b)*(c)
Dwell
Time
Safety
Factor
40
40
7
3
1.2
1.2
Space
Requirement
(m2)
7,392
2,520
9,912
Source: the project team
(3). CONVENTIONAL CARGO AREA
Conventional cargo area is a paved space provided for storage of conventional cargo for
a short time period. The space requirement for the conventional cargo area can be computed as
follows.
Conventional cargo storage = daily cargo(ton) * dwell time * space per cargo * safety
factor
The average dwell time for conventional cargo is assumed to be 3 days and the machine
maneuvering factor is 3 times the total space requirement. The space requirement for
conventional cargo handling for road and rail cargo is shown in Table 40 and Table 41
respectively.
- 77 -
Pre-feasibility Study of Dry Port in Myanmar
Table 40: Space required for conventional cargo storage for road cargo
Daily
Dwell Space per Cargo
Cargo
Time
(m2/ton)
Import
1,412
3
1.2
Export
1,156
3
1.2
Space for storage
Space for cargo handling equipment maneuvering
Total
Safety
Factor
1.2
1.2
Space Requirement (m2)
6,100
4,994
11,094
33,281
44,375
Source: the project team
Table 41: Space required for conventional cargo storage for rail cargo
Daily
Dwell Space per Cargo
Cargo
Time
(m2/ton)
Import
186
3
1.2
Export
152
3
1.2
Space for storage
Space for cargo handling equipment maneuvering
Total
Safety
Factor
1.2
1.2
Space Requirement (m2)
804
657
1,460
4,380
5,841
Source: the project team
(4). CUSTOMS CLEARANCE AREA
The customs clearance area is a paved space near the customs office. The function of
customs clearance area is mainly a buffer space for import and export containers to dwell during
customs inspection. The space requirement for the customs clearance area is calculated as
follows:
Customs clearance area = daily cargo(TEU) * 5% * dwell time * space per container
* machine maneuvering * safety factor
The average dwell time for customs clearance is assumed to be 1 day and the machine
maneuvering factor is 3 times of the total space requirement. The space required for customs
clearance area is shown in Table 42.
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Pre-feasibility Study of Dry Port in Myanmar
Table 42: Space required for customs clearance
Ratio of
Cargo
Space per
Daily Volume Dwell
machine
Safety
Space
Cargo
Cargo
for
Time
maneuvering
Factor
Requirement
(m2)
(m2/TEU)
Customs
Clearance
Import
36
5%
1
21
3
1.2
136
Export
30
5%
1
21
3
1.2
113
Space for storage
249
Space for cargo handling equipment maneuvering
748
Total
998
Source: the project team
(5). CUSTOMS OFFICE
The customs office is a building provide for the day-to-day operation of customs offices.
The size for the customs office building is determined by the needs of the customs officer. The
assumption for the space usage for customs office is as follows.

Total number of customs staff is 12 people in 2025

Total office space require per person is 6 m2 for office use and additional 10 m2 for co
nference use and/or document handling

Additional open space requirement is 40%
Customs office = total number of customs staff * (office space per person(6m 2) +
additional space(10m2)) * additional open space(40%)
The space required for customs office is shown in Table 43.
Table 43: Space required for customs office
Customs Staff
Space per Person and Additional
Space
Additional Open
Space
12
16
1.4
Source: the project team
- 79 -
Space
Requirement
(m2)
269
Pre-feasibility Study of Dry Port in Myanmar
(6). OPERATOR OFFICE
The space required for the operators working at the dry port is calculated based on the
following assumption.

Total number of staff is 70 in 2025

Total office space required per person is 6 m2 for office use and additional 10 m2 for c
onference use and/or document handling

Additional open space requirement is 40%
Operator office = number of staff * (space per person(6 m2) + additional space(10 m2)
* additional open space(40%)
The space required for operator office is shown in Table 44.
Table 44: Space required for operator office
Office Staff
Space per Person and
Additional Space
Additional Open
Space
Space Requirement(m2)
70
16
1.4
1,569
Source: the project team
(7). MAINTENANCE WORKSHOP
The maintenance workshop is an area set up for maintenance of service vehicle and
container and perform minor repair. The total space required for the maintenance workshop is
calculated based on the assumption that 3 per cent of daily container and conventional cargo
converted into TEU require maintenance at the dry port. The space required for maintenance
workshop is shown in Table 45.
Maintenance workshop = daily cargo(TEU) * dwell time * space per container *
machine maneuvering * safety factor
Table 45: Space required for maintenance workshop
Daily Dwell
Cargo Time
Space per
Cargo
(m2/TEU)
Machine
Maneuvering
Safety
Factor
Space Requirement
(m2)
Import
4
1
21
3
1.2
305
Export
Total
4
1
21
3
1.2
305
609
Source: the project team
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Pre-feasibility Study of Dry Port in Myanmar
(8). GATE AND FENCING
The gate is the controlled entry and exit point in the dry port. All vehicles must present
documentation and report to security staff upon entry and exit from the dry port. The security
staff at the gate should be able to receive documents from drivers without requiring them to
alight from their vehicle. For the design of dry port, two gates will be required for the normal
operation.
The areas inside the dry port should be secured by perimeter fencing and lighting. The
length of the fencing is calculated from the total perimeter of the dry port and is calculated to be
1,200 meters.
(9). RAIL CARGO BUFFER ZONE
A railway terminal will be constructed at the dry port. It is calculated that required space
for rail cargo storage is 2,016 m2 for container cargo and 5,841 m2 for conventional cargo. It is
assumed that the required space for rail cargo buffer zone is 10 per cent of rail cargo storage
space. The required space for railway terminal is assumed to be 3 times the space required for
rail cargo buffer zone. The size of railway station is 2,357 m2 .
(10). PARKING AREA
Parking area is provided outside the perimeter fencing for arrival trucks (both import and
export) to process the documentation or waiting for shipment. It is assumed that average space
for container truck is 29 m2 and 19 m2 for conventional cargo. The space required for the parking
area is calculated as follows.
Parking area = (number of daily container truck * space per container truck) +
(number of daily conventional cargo truck * space per conventional cargo truck) *
dwell time * safety factor
Table 46: Space required for parking area
Daily
Container
(TEU)
Import
Export
Total
Average
39
31
70
Number of
Container
Truck
35
18
Daily
Conventional
Cargo(ton)
1,497
1,225
2,722
Number of
Conventional
Cargo Truck
181
91
Source: the project team
- 81 -
Dwell
Time
Safety
Factor
Space
Requirement
(m2)
1
1.2
2,530
Pre-feasibility Study of Dry Port in Myanmar
C. FREIGHT HANDLING EQUIPMENT AND UTILITY
(1). FREIGHT HANDLING EQUIPMENT
The summary of freight handling equipment at dry port is summarized in Table 47.
Table 47: Summary of freight handling equipment at the dry port
Equipment
Amount
Usage Location
Reach Stacker
Forklift(5 tons)
Forklift(2 tons)
Total
1
6
10
17
One at CY
One for container cargo, five for conventional cargo handling
Two for CFS, eight for conventional cargo handling
Source: the project team
(A)REACH STACKER
A reach stacker is a heavy-duty vehicle for loading and unloading of container.
Containers are lifted from the top by a rotating spreader fixed to the mast of a mobile
chassis. The equipment is very flexible and in small throughput situation, reach stacker
could be used for handling loads both at the railhead and in stacking operations.
The total handling volume for one reach stacker was calculated by
Handling volume = operation hour / (loading/unloading time per TEU * safety factor)
The average loading and unloading time per one TEU of reach stacker is
6mins/TEU. Assuming 10 hours of operation per day, therefore the average handling
volume per reach stacker can be calculated as
Handling volume of reach stacker = 10 / (6/60 * 1.2) = 83TEUs/day
Since the total FCL container volume at CY and at railhead for the dry port is 38
TEU/day, thus one reach stacker will be sufficient for the operation in 2025.
(B) FORKLIFT
Forklift is designed for carriage of conventional cargo which could be handled
with lifting for such as palletized cargo, crates and large bales of cargo. Forklift is
mainly used for the loading and unloading of general cargo to and from trucks, stacking
of cargo in the CFS as well as packing and unpacking of containers.
- 82 -
Pre-feasibility Study of Dry Port in Myanmar
The average loading and unloading time per one ton of a forklift with a load
capacity of 5tons is 1.5mins/ton. Assuming 10 hours of operation per day, therefore the
average handling volume per forklift (5tons) can be calculated as
Handling volume of forklift = 10 / (1.5/60 * 1.2) = 333tons/day
Since the total handling volume at conventional cargo storage in the dry port is 2,906
tons/day, thus 9 forklifts will be needed for the operation in 2025. Considering various types of
cargoes are handled in dry port it is assumed that two different types of forklifts are needed. One
is a forklift with 5tons load capacity and the other one is with 2tons of load capacity. So, total 13
forklifts with a combination of five forklifts with 5tons load capacity and eight forklifts with 2
tons of load capacity, are required to handle conventional cargoes in the dry port in 2025.
In addition, daily cargo handling volume in CFS is 40 TEUs (40 TEUs x 15tons = 600
tons). It is estimated that one forklift with 5tons load capacity and two forklifts with 2tons is
required to use in CFS.
(2). WATER SUPPLY
The usage of water in the dry port is mainly for the consumption of staff. The average
consumption of water at the dry port was calculated based on the assumption that the staff
consumes 100 liter/person/day. The consumption of water at the dry port can be calculated as
shown in Table 48.
Table 48: Consumption of water at the dry port
Consumption
Rate
(liter per day)
Safety
Factor
Water
Consumption
(liter per day)
Water
Consumption
(m3)
12
100
1.2
1,440
1.44
70
100
1.2
8,407
8.41
9,847
9.85
Consumption Unit
Staff
Customs
Office
Operation
Office
Total
Source: the project team
It is recommended that a water reservoir with a pump is installed under the ground of
the dry port. The recommended volume of a reservoir is above 4.10 m3 (10 hour operation per
day: 9.85/24 * 10 = 4.10 m3)
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Pre-feasibility Study of Dry Port in Myanmar
(3). ELECTRICITY
The electrical supply for Mandalay region is transmitted from electrical generation from
various sources of hydro power electric generation plants such as Shwe Li, Law Pi Ta and Ye
Ywar via 230 KVA transmission lines. All these power generations are under the management
of government ministry, Ministry of Electrical Power. The dry port can be equipped with on-site
33 KVA electric power distribution sub-station from the main source.
(4). TELECOMMUNICATION
Telecommunication is the backbone of operation in the dry port. Each office at customs,
operator office, CFS, railhead and workshop will have a fixed telephone line and Internet
connection.
(5). SEWAGE TREATMENT
A centralized sewage treatment system would be adopted due to concern for the
environment in the dry port and its surrounding area. This sewage collection system is designed
to collect only wastewater from domestic sewage (9.85 m3/day of wastewater from staff in the
dry port). Wastewater generated from each building will be gravitated to the treatment plant
installed in the dry port.
(6). OTHER UTILITIES
Mandalay is served by Ayeyarwaddy river which provides adequate water supply for the
area. The source of drinking water also comes from underground water in the area.
D. SUMMARY AND CONCLUDING REMARKS
This chapter provides the technical design of the dry port in Mandalay based on the
estimated traffic volume at the dry port. It is proposed to have a dry port with an area of 8.5
hectares. The most important functions at the dry port include container yard(CY), conventional
cargo area, container freight station(CFS), customs clearance area, railway terminal, customs
office, operator’s office, maintenance workshop and parking area.
- 84 -
Pre-feasibility Study of Dry Port in Myanmar
VII. COST ESTIMATES
Major cost items to develop a dry port include land acquisition, civil work, building
work, access road work, equipment cost, administration cost, consultant cost and contingency.
A. LAND ACQUISITION
The project team estimated the land acquisition fee by using the lease price from the
Government near Mandalay. The price is between 0.5 to 2 USD for one square meter per year.
Considering some of the semi-government development projects and public company receive
the permission to use the land with cheap price, it assumes that the land lease price of the dry
port is 0.5 USD per square meter per year. Accordingly, the land acquisition fee for the dry port
is estimated to be 42,496 US dollars one square meter per year.
B. CIVIL WORK COST ESTIMATE
The cost estimate for civil work is separated into five items including earth work,
pavement, utility, green area and others. The unit cost used in this study is based on the unit cost
of Merchandise Center in Mandalay which is now under construction and from sources of a
local construction company. The details of costs are shown in Table 49.
Table 49: Cost estimate for civil work
Item
Unit Cost(USD)
Pavement
Cost(USD)
0.35
/m2
84,992
29,747
Excavation
2.5
/m3
32,297
80,742
Filling
3.5
/m3
30,597
107,089
Slope protection
3.5
/m2
1,700
5,949
Pavement area
45
/m2
65,443
2,944,956
Internal road
40
/m2
8,499
339,966
Site Preparation
Earth work
Quantity
- 85 -
Pre-feasibility Study of Dry Port in Myanmar
Table 49: Cost estimate for civil work (Cont…)
Item
Utilities
Green
Other
Unit Cost(USD)
Quantity
Cost(USD)
Drainage system
175
/m
850
148,735
Water treatment
1500
/piece
1
1,500
Well
400
50
20,000
Water tank
5000
4
20,000
Water pipe
6 (PVC)
850
5,099
Electrical line
120
1,700
203,980
Lighting
600
85
50,995
Telecommunication
80
850
67,993
Grass
Tree
Fencing
Total Cost of Civil Work
2.8
10
50
6,799
1,700
1,260
19,038
16,998
63,000
4,125,788
/piece
(for 10 m)
/piece
/m
(dia 4 inch)
/m
(Material +
service fees)
/piece
/m (1 point
(complete
set))
/m2
/m2
/m
Source: the project team
C. BUILDING WORK COST ESTIMATE
For the construction of building and offices in the dry port, the cost estimate for civil
work is separated into 6 items including container freight station, customs office, operator
office, gate, maintenance workshop and parking. The details of cost estimate are provided in
Table 50.
Table 50: Cost estimate for the buildings
Item
Description
Unit Cost
(USD/m2)
Quantity
(m2)
Cost (USD)
300
9,912
2,973,600
Slate structure
High rised floor
CFS
Load = 3t/m2
H = 5.5 m from floor
Shutter
Slope for a forklift
- 86 -
Pre-feasibility Study of Dry Port in Myanmar
Table 50: Cost estimate for the buildings (Cont…)
Item
Description
Unit Cost
(USD/m2)
Quantity
(m2)
Cost (USD)
Customs office
Slate structure
212
269
56,965
Operator office
Slate structure
212
1,569
464,823
Gate
Reinforced concrete
Maintenance
workshop
Slate structure
212
609
100,800
Parking
With roof
80
2,530
593,280
6,250
Total Cost of Building Work
4,195,718
Source: the project team
D. ACCESS ROAD
For the construction of access road of the dry port, the cost estimate is separated into 3
items including earth work, pavement and utilities. The detail of cost estimate is provided in
Table 51.
Table 51: Cost estimate for access road
Item
Unit Rate (USD)
Quantity
Cost(USD)
Clearing and Grubbing
0.5
/m2
7,649
3,825
Excavation
4.5
/m3
3,825
17,211
Filling
1.5
/m3
3,825
5,737
Slope Protection
3.5
/m2
15,298
53,545
Pavement
Asphalt Concrete
45
/m2
7,649
344,216
Utilities
Street Light
600
/no.
60
36,000
Earth work
Total Cost of Access Road
Source: the project team
- 87 -
460,533
Pre-feasibility Study of Dry Port in Myanmar
E. RAILWAYS FACILITY
It is necessary to build a railway facility to load and unload containers and general
cargoes within dry port compound. There are two different costs. The cost of the concrete
platform for railway station area is 41.36 USD per square meter and one meter railway costs 345
USD. The detail of cost estimate is provided in Table 52.
Table 52: Cost estimate for railway facility
Item
Railway
Unit Rate(USD)
345
/m
Railway station
41.36
/m2
Quantity
50
Cost(USD)
17,250
1,500
62,040
Total Cost of Railway Terminal
79,290
Source: the project team
F. CARGO HANDLING EQUIPMENT
For the cost of purchase of equipment to be used in the dry port, the cost estimate is
separated into two items including a reach stacker and forklift. The detail of cost estimate is
provided in Table 53.
Table 53: Cost estimate for the cargo handling equipment
Equipment
Reach Stacker
Forklift(5 tons)
Forklift(2 tons)
Total
Quantity
Unit Cost(USD)
Total Cost(USD)
450,000
50,000
30,000
450,000
300,000
300,000
1,050,000
1
6
10
17
Source: the project team
D. TOTAL COST ESTIMATE
The total cost estimate for the dry port is shown in Table 54. The construction cost
excludes any VAT and import tax. The administration cost and consultant cost are estimated as
3% and 6% of total construction cost. Contingency including physical contingency and price
escalation is estimated as 10% of the sum of the construction cost and the consultant cost. As a
result, the total cost for the dry port project is about 10.5 million US dollars.
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Pre-feasibility Study of Dry Port in Myanmar
Table 54: Total cost estimate for the dry port project
Item
Total Cost(USD)
Land concession
1,019,898
Civil work
4,125,788
Building work
4,195,718
Railway terminal
79,290
Access road
460,533
Total Construction Cost
8,861,329
Equipment cost
1,050,000
Administration cost
265,840
Consultant cost
531,680
Contingency
939,301
Total project cost without land concession fee
Source: the project team
- 89 -
10,598,149
Pre-feasibility Study of Dry Port in Myanmar
VIII ECONOMIC AND FINANCIAL ANALYSIS
A. FINANCIAL ANALYSIS
This section presents the preliminary financial analysis of the feasibility of the dry port
project. To evaluate the desirability of the project financial internal rate of return (FIRR) of the
project is measured. FIRR is the discount rate at which the net present value of costs of the
investment equals the net present value of the benefits of the investment. To determine the
financial attractiveness of the project, it is necessary to compare FIRR of a project with
Weighted Average Cost of Capital (WACC)41. The WACC serves as a proxy for the financial
opportunity cost of capital (FOCC) to assess the financial viability of projects. If the FIRR
exceeds the value of WACC, the project is financially feasible.
(1). CONDITIONS TO CALCULATE PROJECT REVENUE
The freight volumes between 2016 and 2035 were estimated as described in chapter V.
The detailed estimation of daily demand for container cargo and conventional cargo has been
presented in chapter VI. For the purpose of estimating revenue, the daily volume was multiplied
by the assumed number of operating days a year (365 days). The dry port is assumed to reach
full capacity in 2025. After 2025 the level of traffic is maintained constant.
(2). IMPLEMENTATION SCHEDULE
It is assumed that the operation of dry port starts in 2016.
(3). LIFESPAN OF THE PROJECT
Lifespan of the project is 20 years after the start of operations. This means that the
operations end in December 2035.
(4). CASH INFLOW AND CASH OUTFLOW OF THE PROJECT
The assumption is made that the implementation body is one single unit. This section
presents the estimation of project revenue, costs, and internal rate of return. The included cost
and revenue items are presented in Table 55.
41
ADB, Financial Management and Analysis of Projects, June 2005.
- 90 -
Pre-feasibility Study of Dry Port in Myanmar
Table 55: Cash inflow and cash outflow included in project FIRR
Cash outflow Construction cost, equipment cost, operation and maintenance cost(O&M)
and land rental for dry port
Cash inflow
CFS storage charge, stuffing/unstuffing charge, value added service charge,
CY storage charge, lift on/off charge, conventional cargo storage charge
Source: the project team
(5). PROJECT REVENUE
The following revenue is anticipated from the dry port facilities, as shown in Table 56.
Table 56: Summary of revenue for dry port
Facility
Revenue
CFS
CFS storage charge, stuffing/unstuffing charge, value added
service charge
CY
CY storage charge, lift on/off charge
Conventional cargo storage
Conventional cargo storage charge
Source: the project team
The charges used for the analysis have been described in Table 50. All containerized cargo
is expected to use container yard and CFS. Conventional cargo will be handled by the
conventional cargo facilities.
Table 57: Summary of dry port charges
Facility
Charge
Storage charge
CFS
Stuffing/unstuffing
Value added services
Export(TEU/day)
Value
(US$)
2
Applied to LCL cargo
Import(TEU/day)
2
Applied to LCL cargo
Export(TEU/day)
30
Applied to LCL export cargo
Import(TEU/day)
30
Applied to LCL import cargo
per package
0.9
Export(TEU/day)
2
33 packages per TEU
Applied to 50% of FCL export
cargo
Import(TEU/day)
2
Applied to 50% of FCL import
cargo
Export(TEU)
16
All export FCL container cargo
Import(TEU)
16
All import FCL container cargo
Export(Ton)
2
Import(Ton)
2
Unit
Storage charge
CY
Lift on/off
Conventional
cargo storage
Storage charge
Source: the project team
- 91 -
Assumptions
Applied to 50% of export cargo
and unit cost of 2 USD/Ton
Applied to 50% of import cargo
and unit cost of 2 USD/Ton
Pre-feasibility Study of Dry Port in Myanmar
(6). PROJECT COST AFTER COST ADJUSTMENT
The development cost estimation of the project has been described in chapter VII. The
development costs, after price adjustment using the GDP deflator on the IMF World Economic
Outlook website, are shown in Table 58.
Table 58: Summary of dry port development cost
Item
Cost(USD)
Construction cost
Administration cost
Consultant cost
Contingency
Total project development cost
Note
9,570,235
287,107 3% of total construction cost
574,214 6% of total construction cost
1,014,445 10% of total construction and consultant cost
11,446,001
Source: the project team
The total development cost has been distributed as shown in Table 59.
Table 59: Distribution of dry port development cost
Year
2012
2013
2014
2015
Total
Ratio of Investment
5%
35%
50%
10%
Cost(USD)
572,300
4,006,100
5,723,001
1,144,600
11,446,001
Source: the project team
According to demand forecast of the dry port in chapter V cargo traffic is growing
steadily since 2016. It is more reasonable to invest in cargo handling equipments in accordance
with the increase of cargo handling volumes. The equipment is assumed to be replaced every 10
years.
Table 60: Cargo handling equipment cost
Year
2016
2018
2020
2021
2022
2023
2024
2025
Reach Stacker
Quantity Amount
1
450,000
-
Forklift(5 tons)
Quantity
Amount
3
150,000
1
50,000
1
50,000
1
50,000
- 92 -
Forklift(2 tons)
Quantity
Amount
5
150,000
1
30,000
1
30,000
2
60,000
1
30,000
-
Total(USD)
750,000
50,000
30,000
30,000
60,000
30,000
50,000
50,000
Pre-feasibility Study of Dry Port in Myanmar
The operation cost of the dry port consists of the following cost items: 1) Labour cost, 2)
Fuel cost; and 3) Indirect cost (the utility cost of working area and public space). It is assumed
that the dry port employs 70 staff for operation. Those employed in customs functions were
excluded from the financial analysis, as they are employed by the customs authority and not by
the dry port. The distribution of staff across levels of responsibility and their respective wages
when the dry port is full capacity are presented in Table 61.
Table 61: Labour cost
Role
Annual wage(USD)
2,177
1,769
1,361
1,633
1,088
Number
1
1
11
34
23
70
Manager
Assistant manager
Office staff
Operator
Worker
Total
Total value
2,177
1,769
14,775
55,522
25,242
99,485
Source: the project team
The annual fuel expenditure when the dry port is in full operation amounts 321,200
US$. It is assumed that fuel cost is 1 US$ per liter. The detail of fuel consumption is presented
in Table 62.
Table 62: Fuel cost
Equipment
Quantity
Reach Stacker
Forklift (5 tons)
Forklift (2 tons)
Total
1
6
10
17
Fuel
consumption(l/h)
Operational Hrs per Year
(365 X 8hr = 2,920)
Amount
(USD)
22
8
4
2,920
2,920
2,920
64,240
140,160
116,800
321,200
Source: the project team
Finally, the indirect costs are estimated. The utility cost of working area is assumed to
be 30% of labour costs, and utility cost of public space is estimated at 1% of total development
cost. The indirect costs are also incurred annually. All operational costs are summarized in Table
63.
Table 63: Summary of operational costs
Cost items
Annual cost(USD)
Labour
Fuel
Utility cost of working area
Utility cost of public space
Total
99,485
321,200
29,846
14,923
465,454
Source: the project team
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Pre-feasibility Study of Dry Port in Myanmar
(7). CALCULATION OF PROJECT FIRR
Table 64 shows the annual revenue, cost, and net cash flow for the project from the
financial point of view. The cash flows have been estimated for each year of operation until the
end of year 20 (2035). In the final year, residual value of the dry port is listed. This is the value
of land preparation, road work, and cargo handling equipment that remains, even if the dry port
is not operating.
As discussed previously, the cost of maintenance and operations is assumed to be
constant. Revenue for the dry port increases from 2016 to 2025 in line with increase in the
freight handled. After 2025, the annual revenue is held constant. The FIRR of the project is
calculated to be 8.31 per cent, as shown in Table 64.
Cash
inflow
Year
Years from
start of
operation
Years from
start of
construction
Table 64: Calculation of project FIRR
Cash outflow
Revenue
Development
cost
Land
rental
Equipment
cost
O & M costs
Fuel
cost
Utility
cost
Total
Net cash
flow
1
2012
0
572,300
50,995
Labour
cost
0
623,295
-623,295
2
2013
0
4,006,100
50,995
0
4,057,095
-4,057,095
3
2014
0
5,723,001
50,995
0
5,773,995
-5,773,995
4
2015
0
1,144,600
50,995
0
1,195,595
-1,195,595
5
1
2016
1,113,524
50,995
720,000
52,256
181,040
44,768
1,049,060
64,464
6
2
2017
1,228,280
50,995
30,000
58,376
192,720
44,768
376,859
851,421
7
3
2018
1,330,316
50,995
50,000
64,495
216,080
44,768
426,338
903,978
8
4
2019
1,453,832
50,995
67,348
216,080
44,768
379,191
1,074,640
9
5
2020
1,582,093
50,995
30,000
72,106
227,760
44,768
425,629
1,156,463
10
6
2021
1,715,829
50,995
60,000
80,959
251,120
44,768
487,842
1,227,986
11
7
2022
1,890,700
50,995
30,000
84,225
262,800
44,768
472,788
1,417,912
12
8
2023
2,035,751
50,995
30,000
89,667
274,480
44,768
489,910
1,545,841
13
9
2024
2,240,133
50,995
50,000
92,933
297,840
44,768
536,536
1,703,596
14
10
2025
2,370,584
50,995
50,000
100,551
321,200
44,768
567,514
1,803,069
15
11
2026
2,370,584
50,995
720,000
100,551
321,200
44,768
1,237,514
1,133,069
16
12
2027
2,370,584
50,995
30,000
100,551
321,200
44,768
547,514
1,823,069
17
13
2028
2,370,584
50,995
50,000
100,551
321,200
44,768
567,514
1,803,069
18
14
2029
2,370,584
50,995
100,551
321,200
44,768
517,514
1,853,069
19
15
2030
2,370,584
50,995
30,000
100,551
321,200
44,768
547,514
1,823,069
20
16
2031
2,370,584
50,995
60,000
100,551
321,200
44,768
577,514
1,793,069
21
17
2032
2,370,584
50,995
30,000
100,551
321,200
44,768
547,514
1,823,069
22
18
2033
2,370,584
50,995
30,000
100,551
321,200
44,768
547,514
1,823,069
23
19
2034
2,370,584
50,995
50,000
100,551
321,200
44,768
567,514
1,803,069
24
20
2035
2,370,584
50,995
-59,141
100,551
321,200
44,768
-3,356,960
5,727,544
-3,815,334
FIRR
Source: the project team
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8.31%
Pre-feasibility Study of Dry Port in Myanmar
B. ECONOMIC ANALYSIS
(1). INTRODUCTION
This section provides the information relating to the approach taken to the economic
evaluation of the dry port project. The purpose of the evaluation is to examine the economic
feasibility of the project. The economic costs and benefits of the dry port project which are not
captured by conventional financial analysis are identified based on some assumptions used in a
similar prefeasibility study42. An economic analysis using the discounted cash flow method is
used to determine the Economic Internal Rate of Return (EIRR) of developing the dry port.
(2). ECONOMIC BENEFITS
(A) ASSESSMENT OF ECONOMIC EFFECT
The implementation of the dry port project is expected to bring, inter alia, the
following economic benefits:

The dry port will generate employment for the local residents;

The dry port will generate value added as no dry port operations take place
currently;

Without the customs facilities at the dry port, there would be more congestion
at the seaport and border crossing in the future. This can lead to an increase in
the opportunity cost of cargo and vehicles;

The dry port and its users may create demand for small businesses in the area
and create further employment opportunities.
In this study, the dry port employment benefit, opportunity cost, value added and
logistics cost savings have been quantified and valued. The other effects have not been
formally valued due to the complexity of the calculation though these benefits should be
acknowledged.
The estimation of economic benefits in particular depends on a large number of
assumptions and is subject to a large degree of uncertainty. At the same time, many
benefits cannot be quantified. The presented results should therefore be viewed as an
indication of some of the benefits which may be experienced, rather than an exhaustive
evaluation of economic value.
UNESCAP(2011), Prefeasibility Study of Establishing a Dry Port in Luangnamtha Province, Lao People’s
Democratic Republic.
42
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Pre-feasibility Study of Dry Port in Myanmar
(B) EMPLOYMENT EFFECT
The dry port will provide employment to the local area, which has a few job
opportunities. It is likely that employment by dry port can offer some households in the
area a more stable income and help alleviation of poverty.
In the estimation of the employment effect, a few assumptions specific to
employment are made:

All staff is from Mandalay region;

Employment is valued using annual wage;

Given the limited social security available, it is assumed that the alternative to
working at the dry port is either other employment or low-skilled labour;

It is assumed that the salaries are in line with salaries elsewhere for a given
level of responsibility and skills;

It is assumed that workers are less skilled and have limited opportunities to
move elsewhere. In absence of the dry port, they will engage in low-skilled
labour and earn minimum wage;

Operators and office staff are assumed to have more skills and therefore better
employment opportunities in general. To account for the regional shortage of
opportunities, it is assumed that 50% of operators and office staff are not able
to find a corresponding job, and will engage in low-skilled labour earning
minimum wage;

Assistant managers and managers are able to find corresponding employment.
The annual economic employment benefit is presented in Table 65.
Table 65: Annual employment benefit
Role
Number
Manager
1
Assistant
1
manager
Office staff
11
Operator
34
Worker
23
Total
70
Source: the project team
With case
Annual
Total
wage
value
(USD)
2,177
2,177
Without case
Minimum wage = 219USD
Earning nonEarning
minimum wage
minimum wage
1
0
Total
value
Economic
benefit
2,177
-
1,769
1,769
1
0
1,769
-
1,361
1,633
1,088
14,775
55,522
25,242
99,485
6
17
0
6
17
23
9,480
31,484
5,081
49,991
5,295
24,038
20,162
49,494
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Pre-feasibility Study of Dry Port in Myanmar
(C) OPPORTUNITY COST OF VEHICLE AND CARGO
The port of Yangon which is a main port in Myanmar is facing a chronic
congestion due to a lack of space and poor performance of container loading and
unloading activities, generating a problem of long waiting time. In addition, in Myanmar,
customs officers are responsible for inspecting all import and export cargoes, either
unpacking or X-ray inspections. As a consequence, there is a long delay to have
commodities pass all necessary inspections.
Having customs facilities at the dry port could result in less congestion at ports
and borders, if most of formalities can be cleared before arrival at customs inspection
centers at either ports or borders. It is also likely that vehicles from the dry port will have
a fast lane which allows them to bypass the queue.
In a benefit-cost analysis, the value of travel time is calculated for truck and
cargo. If the truck is empty or carrying cargo, then the value of time is essentially the
average hourly labor cost for truck drivers. Cargo can also have a time value. It is based
on the interest costs of the value of the cargo. The cargo user (i.e., the shipper or
recipient) bears excess costs of late pickup or delivery. The gains in terms of opportunity
cost are based on the following assumptions and the results are presented in Table 66.

Customs inspection and clearance will be carried out for 5% of annual
container cargo volumes at the dry port;

It is assumed that travel time value for truck drivers is 170% of average
hourly wage. Regarding time value for cargo, a value of inventory carrying
cost is US$1.78/hour and user cost of cargo delay is US$2/hour43;

The average wage of truck drivers is assumed to be US$0.63 per hour.

It is assumed that as customs clearance will be conduced at the dry port, each
vehicle and cargo will save 2 hours for customs inspections.
43
http://bca.transportationeconomics.org/benefits/travel-time/categories-of-travel-time
- 97 -
Pre-feasibility Study of Dry Port in Myanmar
Table 66: Opportunity cost of vehicle and cargo through time
Customs
clearance
time
Vehicles
Time value
Cargo value
Total value
Customs
clearance
time
Vehicles
Time value
Cargo value
Total value
Benefit
Without case
Year
With case
2016
1
566
600
2,139
2,738
3
566
1,799
6,416
8,215
5,476
2017
1
621
658
2,345
3,003
3
621
1,973
7,036
9,010
6,006
2018
1
675
716
2,552
3,268
3
675
2,147
7,657
9,805
6,536
2019
1
748
793
2,828
3,622
3
748
2,379
8,485
10,865
7,243
2020
1
803
851
3,035
3,887
3
803
2,554
9,106
11,660
7,773
2021
1
876
929
3,311
4,240
3
876
2,786
9,934
12,720
8,480
2022
1
967
1,025
3,656
4,681
3
967
3,076
10,969
14,044
9,363
2023
1
1,040
1,103
3,932
5,035
3
1,040
3,308
11,796
15,104
10,070
2024
1
1,132
1,199
4,277
5,476
3
1,132
3,598
12,831
16,429
10,953
2025
1
1,205
1,277
4,553
5,830
3
1,205
3,830
13,659
17,489
11,660
2026
1
1,205
1,277
4,553
5,830
3
1,205
3,830
13,659
17,489
11,660
2027
1
1,205
1,277
4,553
5,830
3
1,205
3,830
13,659
17,489
11,660
2028
1
1,205
1,277
4,553
5,830
3
1,205
3,830
13,659
17,489
11,660
2029
1
1,205
1,277
4,553
5,830
3
1,205
3,830
13,659
17,489
11,660
2030
1
1,205
1,277
4,553
5,830
3
1,205
3,830
13,659
17,489
11,660
2031
1
1,205
1,277
4,553
5,830
3
1,205
3,830
13,659
17,489
11,660
2032
1
1,205
1,277
4,553
5,830
3
1,205
3,830
13,659
17,489
11,660
2033
1
1,205
1,277
4,553
5,830
3
1,205
3,830
13,659
17,489
11,660
2034
1
1,205
1,277
4,553
5,830
3
1,205
3,830
13,659
17,489
11,660
2035
1
1,205
1,277
4,553
5,830
3
1,205
3,830
13,659
17,489
11,660
Source: the project team
(D) CREATION OF VALUE ADDED
Value added is the difference in sale price and cost of production, i.e. the net
value of output that is created by modifying inputs. In the case of this project, there is no
alternative dry port in the province. In absence of any dry port facilities, it is likely that
cargo would be processed outside Mandalay. This means that the additional value
created by dry port activities would not be experienced by Mandalay and represents an
economic benefit lost.
As the cost of production is included as an economic cost and there is no
alternative revenue for Mandalay, the economic benefit in terms of value added is the dry
port revenue presented earlier.
(E) LOGISTICS COST SAVINGS
By operating a dry port customers such as shippers, transport operators, freight
forwarders, and other logistics organizations using the dry port will have a benefit of
- 98 -
Pre-feasibility Study of Dry Port in Myanmar
saving logistics cost due to time savings in documentation and business process. It is
assumed that one hour time savings will be incurred. The gains in terms of logistics cost
savings are based on the following assumptions and the results are presented in Table 67.

A value of logistics cost savings is US$1.89/hour for conventional cargo and
US$3.78/hour for container cargo
Table 67: Logistics cost savings
2016
Annual
conventional
cargo
502,240
949,234
Annual
container
cargo
12,775
48,290
Total
logistics cost
savings
997,523
2017
547,135
1,034,085
14,235
53,808
1,087,893
2018
596,775
1,127,905
15,330
57,947
1,185,852
2019
650,430
1,229,313
16,790
63,466
1,292,779
2020
708,830
1,339,689
18,250
68,985
1,408,674
2021
772,705
1,460,412
19,710
74,504
1,534,916
2022
842,785
1,592,864
21,900
82,782
1,675,646
2023
917,975
1,734,973
23,360
88,301
1,823,274
2024
1,000,100
1,890,189
25,915
97,959
1,988,148
2025
1,060,690
2,004,704
27,375
103,478
2,108,182
Year
Logistics
cost savings
Logistics cost
savings
Source: the project team
(3). ECONOMIC COSTS
The economic investment cost was estimated from the financial investment cost. The
contingency cost was excluded, and the remainder was converted to an economic cost by using
the standard conversion factor of 96.4 per cent 44 . Conversion factor is applied to non-trade
inputs to correct for price distortions in the local market. In the case of construction, all inputs
are considered to be non-tradable. The cost is allocated using the dame distribution across years
as for financial analysis.
The economic investment cost is presented in Table 68. For cargo handling equipment
and operational costs, the economic cost equals the financial cost. It is not necessary to adjust
the financial costs for taxes, as materials and equipment for logistics parks are exempt of import
tax and value added tax. The O&M costs are unchanged from the financial analysis.
UNESCAP(2011), “Prefeasibility Study of Establishing a Dry Port in Luangnamtha Province, Lao People’s
Democratic Republic.
44
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Pre-feasibility Study of Dry Port in Myanmar
Table 68: Summary of economic development cost
Item
Financial cost
(USD)
Construction cost
Administration cost
Consultant cost
Contingency
Total project development cost
9,570,235
287,107
574,214
1,014,445
11,446,001
Percentage included
in economic
analysis
96.4%
96.4%
96.4%
0
Economic cost
9,225,707
276,771
553,542
10,056,020
Source: the project team
(4). CALCULATION OF PROJECT EIRR
Table 69 shows the annual economic benefit, economic cost and net (economic) cash
flow for the project for the 20 years of operation. As in financial analysis, the residual value of
the dry port has been listed for the final year. The project EIRR is estimated to be 19.15 per cent.
Economic cost
Logistics
cost savings
Total
Economic
construction
cost
Land rental
2012
0
0
0
0
0
502,801
50,995
0
553,796
-553,796
2013
0
0
0
0
0
3,519,607
50,995
0
3,570,602
-3,570,602
2014
0
0
0
0
0
5,028,010
50,995
0
5,079,005
-5,079,005
1,005,602
50,995
Labour
cost
Fuel cost
Utility
cost
2015
0
0
0
0
0
1,056,597
-1,056,597
1
2016
49,494
5,476
1,113,524
997,523
2,166,018
50,995
720,000
52,256
181,040
44,768
1,049,060
1,116,958
2
2017
49,494
6,006
1,228,280
1,087,893
2,371,674
50,995
30,000
58,376
192,720
44,768
376,859
1,994,815
3
2018
49,494
6,536
1,330,316
1,185,852
2,572,198
50,995
50,000
64,495
216,080
44,768
426,338
2,145,860
4
2019
49,494
7,243
1,453,832
1,292,779
2,803,348
50,995
0
67,348
216,080
44,768
379,191
2,424,157
5
2020
49,494
7,773
1,582,093
1,408,674
3,048,034
50,995
30,000
72,106
227,760
44,768
425,629
2,622,404
6
2021
49,494
8,480
1,715,829
1,534,916
3,308,719
50,995
60,000
80,959
251,120
44,768
487,842
2,820,876
7
2022
49,494
9,363
1,890,700
1,675,646
3,625,203
50,995
30,000
84,225
262,800
44,768
472,788
3,152,415
8
2023
49,494
10,070
2,035,751
1,823,274
3,918,588
50,995
30,000
89,667
274,480
44,768
489,910
3,428,678
9
2024
49,494
10,953
2,240,133
1,988,148
4,288,728
50,995
50,000
92,933
297,840
44,768
536,536
3,752,191
10
2025
49,494
11,660
2,370,584
2,108,182
4,539,919
50,995
50,000
100,551
321,200
44,768
567,514
3,972,405
11
2026
49,494
11,660
2,503,955
2,108,182
4,539,919
50,995
720,000
100,551
321,200
44,768
1,237,514
3,302,405
12
2027
49,494
11,660
2,503,955
2,108,182
4,539,919
50,995
30,000
100,551
321,200
44,768
547,514
3,992,405
13
2028
49,494
11,660
2,503,955
2,108,182
4,539,919
50,995
50,000
100,551
321,200
44,768
567,514
3,972,405
14
2029
49,494
11,660
2,503,955
2,108,182
4,539,919
50,995
0
100,551
321,200
44,768
517,514
4,022,405
15
2030
49,494
11,660
2,503,955
2,108,182
4,539,919
50,995
30,000
100,551
321,200
44,768
547,514
3,992,405
16
2031
49,494
11,660
2,503,955
2,108,182
4,539,919
50,995
60,000
100,551
321,200
44,768
577,514
3,962,405
17
2032
49,494
11,660
2,503,955
2,108,182
4,539,919
50,995
30,000
100,551
321,200
44,768
547,514
3,992,405
18
2033
49,494
11,660
2,503,955
2,108,182
4,539,919
50,995
30,000
100,551
321,200
44,768
547,514
3,992,405
19
2034
49,494
11,660
2,503,955
2,108,182
4,539,919
50,995
50,000
100,551
321,200
44,768
567,514
3,972,405
20
2035
49,494
11,660
2,503,955
2,108,182
4,539,919
50,995
-59,141
100,551
321,200
44,768
-2,893,633
7,433,553
EIRR
19.15%
-3,352,007
Source: the project team
- 100 -
0
Total
Value added
Net
cash
flow
Opportunity
cost of vehicles
and cargo
O & M costs
Employment
Equipment cost
Economic benefit
Year
Years from start of
operation
Table 69: Calculation of project EIRR
Pre-feasibility Study of Dry Port in Myanmar
C. SUMMARY AND CONCLUDING REMARKS
According to Asian Development Bank (ADB)’s Guidelines on governing the financial
management of investment projects, it is recommended that the financial internal rate of return
(FIRR) and economic internal rate of return (EIRR) of a project need to compare with the
Weighted Average Cost of Capital (WACC) to assess whether the project concerned is
financially and economically viable.
The WACC is the discount rate to be used in financial benefit-cost analyses and
represents the cost incurred by the entity in raising the capital necessary to implement the
project. Since most projects use several sources to raise capital and each of these sources may
seek a different return, the WACC represents a weighted average of the different returns paid to
these sources 45. If the calculated FIRR or EIRR of a project is above the expected WACC, the
project is financially and economically feasible.
According to the recent feasibility studies from ADB in relation to building transport
infrastructure, one project used 2.18 per cent of WACC value46 and the other one’s WACC was
3.0 per cent47. The WACC for this dry port project is conservatively calculated for comparison
with the FIRR and EIRR value. It is assumed that the dry port project is financed from two
different sources. One is from ADB grant and the other is from co-financier loan. Nominal costs
are assumed to be 6 per cent and 12 per cent for ADB grant and co-financier loan respectively.
As a result, WACC is estimated to be 6.06 per cent.
Table 70: Project weighted average cost of capital (WACC)
Financing component
Particular
Principal amount (USD)
Weight
Nominal cost(relending rate)
Tax rate
Tax adjusted nominal rate
Inflation rate
Real cost
Weighted component of WACC
ADB Grant
Co-financier loan
3,494,994
30.0%
6.00%
25%
4.50%
1.50%
2.96%
0.89%
Total
8,154,987
11,649,981
70.0%
100%
12.00%
25%
9.00%
1.50%
7.39%
5.17%
6.06%
Source: the project team
ADB, Financial Management and Analysis of Projects, June 2005.
ADB, Socialist Republic of Vietnam: Feasibility Study on the GMS Ha Noi-Lang Son Expressway Project, June
2011.
47 ADB, Lao People’s Democratic Republic: Prefeasibility Study Report TA 7243: Implementation of Asian City
Transport Vientiane Sustainable Urban Transport Project, February 2012.
45
46
- 101 -
Pre-feasibility Study of Dry Port in Myanmar
The FIRR and EIRR of the dry port project were estimated to be 8.31 per cent and 19.15
per cent respectively. Both FIRR and EIRR values were above the benchmark level of the
WACC values. This dry port project is both financially and economically viable.
- 102 -
Pre-feasibility Study of Dry Port in Myanmar
IX. ENVIRONMENTAL AND SOCIAL IMPACT ASSESSMENT
A. ENVIRONMENTAL AND SOCIAL ANALYSIS
This chapter examines the potential environmental and social impacts associated with the
construction and operation of the dry port. All possible impacts were identified based on
relevant literatures. The aim of the impact identification is to highlight all possible residual risks
associated with the interaction of the dry port facility with the surrounding environment.
Whereas some impacts could be of short term significance, others could be of long term due to
the cumulative impact of the dry port operations during the project period. Table 71 presents a
summary of the main activities and the potential receptors affected by the dry port project. The
described impacts are potential impacts from the main activities starting from land preparation
and construction of the dry port, and activities occurring on the dry port site.
The elements that are affected by the project’s activities whether on-site or off-site are
classified into two categories: the social & economic environment, and the physical
environment. The social & economic environment includes social concerns such as human
resources, services, local economy, human attitude and adaptation that could have influences on
social characteristics of surrounding communities. The physical environment is concerned with
potential contamination of soil erosion, groundwater contamination, air emissions, water
pollution, noise, waste management, and soil contamination all of which could lead to
alterations in the biotic and biotic environment.
Table 71: Project activities and impacts identification
Activity
Land preparation and construction
Rehabilitation of some roads leading
to the dry port
Dry port site (CY, Storage area, CFS,
Rail terminal, Maintenance workshop,
administration)
Duration
Receptor
Short-term
- Air quality, Water quality & Soil
quality
- Health and safety
- Noise
- Socio-economic
Short-term
- Air quality & Water quality
- Road access
- Traffic & Noise
- Socio-economic
Long-term
- Air, Water & Soil quality
- Health and safety
- Noise and Sanitation
- Socio-economic
Source: the project team
- 103 -
Pre-feasibility Study of Dry Port in Myanmar
Impacts are measured based on their type as they could be directly or indirectly affected
by the whole project, nature reflects if the impact is positive or negative, duration emphasizes if
the impact is permanent or temporary within the project time duration, and magnitude is the
power of the impact on a certain component. Data for the environmental and social impact
assessment were collected during the site visit by the project team. The likely type and
magnitude of the impacts has been indicated based on professional judgment as well as
experience from similar facilities as reported in the literature. The environmental and social
impact assessment of the dry port project is presented in Table 72.
Table 72: Environmental and social impact assessment of the dry port project
Social environment
Impact
Description
Type
Nature
Duration
Magnitude
Involuntary
resettlement
There is no village near the
project area and no inhabitant
inside the area.
Direct
Negative
Temporary
None
Local economy and
employment
opportunity
The project would contribute to
the local and national economy
and provide an employment
opportunity for local people.
Direct
Positive
Permanent
High
Land use and
utilization of local
resources
There would be no major
impact on current land use in
terms of agricultural or other
business activities that generate
income for local people.
Direct
Negative
Temporary
Low
Poor, indigenous and
ethnic people
No immediate impact on
existing livelihoods is foreseen.
Direct
Negative
Temporary
None
Cultural heritage
There is no cultural or
archaeological heritage inside
or near the project area
Direct
Negative
Temporary
None
Local conflict of
interest
There would be no conflict of
interest with local residents
Direct
Negative
Temporary
None
Sanitation
Waste water and sewage from
construction
work
and
operation may affect the project
area and its adjoining areas in
terms of sanitary condition.
Direct
Negative
Permanent
Moderate
Hazards infectious
diseases
There would be no infectious
diseases in and around the
project area due to influx and
efflux of people.
Direct
Negative
Temporary
None
Accident
During the construction and
operation of the dry port
increasing traffic may increase
the risk of accident.
Direct
Negative
Permanent
Moderate
- 104 -
Pre-feasibility Study of Dry Port in Myanmar
Table 72: Environmental and social impact assessment of the dry port project (continued)
Physical environment
Impact
Description
Type
Nature
Duration
Magnitude
Topography and
geographical features
Land preparation works may
have some impacts on current
topography and geographical
features to certain extent.
Direct
Negative
Temporary
Low
Soil erosion
Land preparation works may
cause soil erosion to certain
extent.
Direct
Negative
Temporary
Low
Ground water
Without
proper
sanitation
system ground water quality
may be affected.
Direct
Negative
Permanent
Moderate
Hydrological situation
Existing hydrological situation
may be affected as a result of
land preparation works.
Direct
Negative
Temporary
Low
Flora, fauna and
biodiversity
The project area is not
categorized as protected area
but land preparation works and
its construction would affect
the flora, fauna and biodiversity
in the project area and
adjoining area.
Direct
Negative
Temporary
Moderate
Air pollution
Deterioration of air quality may
occur due to construction and
operation of the dry port.
Direct
Negative
Permanent
Moderate
Water pollution
Water pollution may occur
during
construction
and
operation of the dry port due
to efflux of wastewater and
sewage.
Direct
Negative
Permanent
Moderate
Soil contamination
Waste and sewage from dry
port construction and operation
may cause soil contamination
to the project area and
adjoining area.
Direct
Negative
Permanent
Moderate
Noise and vibration
Construction machineries and
vehicles, operation of cargo
handling equipments and cargo
vehicles would generate noise
and vibration in and around the
project area.
Direct
Negative
Permanent
Moderate
Source: the project team
- 105 -
Pre-feasibility Study of Dry Port in Myanmar
Table 73 shows the potential socio-economic impacts of the dry port project. These
impacts can be commonly identified from similar projects48. From social and economic point of
view building a dry port in Mandalay will have more positive impacts.
Table 73: Potential socio-economic impacts of the dry port project
Impact
Economic







Social


Beneficial
Employment generation
Expenditure of wages in local area
House purchase and rental
Equipment and services procurement
Local authority business tax revenue
Increase in property value
Indirect beneficial community impacts
from employment and provision of
skilled workforce
Provide educational benefit as well as
training for employees and workers
Positive impact on human rights from
operating according to international
standards



Adverse
Negative
economical
impacts are not anticipated
Risks of occupational and
environmental health issues
Nuisance to nearby villages
due to increased dust, noise,
emissions, traffic and level
of activities
Source: the project team
B. ENVIRONMENTAL MANAGEMENT PLAN
The Environmental Management Plan (EMP) for the dry port project identifies the
measures that will be used to control and minimize the environmental and social impacts of all
construction and operational activities associated with the project. It is intended to complement
the environmental and social impact assessment of the project. Table 74 presents the actions that
can be undertaken to minimize or eliminate the major negative impacts while improving the
positive impacts.
Table 74: Environmental management plan for the dry port project
Impact
48
Mitigation measures
Local economy and
employment opportunity


Promote jobs for local communities
Provide education and job training for workers
Accident




Avoid public access by proper fencing and guarding
Provide drivers with a transport management plan
Use adequate signs and safety barrier
Provide personal with proper personal protection equipment
http://www.miga.org/documents/buchanan_fuel_ESIA.pdf
- 106 -
Pre-feasibility Study of Dry Port in Myanmar
Table 74: Environmental management plan for the dry port project (Cont…)
Impact
Mitigation measures



Avoid littering in the open fields
Educate workers on sorting waste
Raise worker awareness of hazardous waste and proper management



Ensure proper management of solid and liquid wastes
Promote plantation of trees around the site
Prohibit any action that leads to the destruction of the ecological
system
Air pollution




Ensure proper maintenance of engines and any machine used on-site
Set slow speed limits for trucks
Ensure that vehicles are turned off when not in use
Prohibit any kind of smoke or fire on-site
Water pollution



Present oil spills and ensure proper containment
Ensure proper storage of oil and lubricants
Avoid littering or discharge of any debris into nearby water bodies

Train and instruct workers on proper segregation and management of
different waste materials
Provide proper containment of stored liquids and avoid any leakages
Sanitation
Flora, fauna and
biodiversity
Soil contamination
Noise and vibration



Limit vehicle circulation near residents to daily working hours
Reduce noise emissions by enclosing any continuous source of noise
e.g. generator
Source: the project team
C. SUMMARY AND CONCLUDING REMARKS
This chapter assessed the potential environmental and social impacts associated with the
construction and operation of the dry port. The main activities and the potential receptors
affected by the dry port project were presented. The elements that are affected by the project’s
activities are classified into two categories: the social & economic environment, and the physical
environment. Impacts are measured based on their type, nature, duration, and magnitude.
The Environmental Management Plan (EMP) for the dry port project was suggested to
control and minimize the environmental and social impacts of all construction and operational
activities associated with the project. The mitigation measures recommended could help the
project owner and responsible party to eliminate the major negative impacts while improving the
positive impacts.
- 107 -
Pre-feasibility Study of Dry Port in Myanmar
X. CONCLUSIONS AND RECOMMENDATIONS
A. CONCLUSIONS ON DEVELOPMENT OF DRY PORT IN MANDALAY
The economy of Myanmar has been growing over the last two decades with annual
growth of about 10 per cent and international trade including both maritime trade and border
trade is also increasing steadily. There are 8 ports for the coastal and international maritime
traffic. Among them, the port of Yangon is the main port of Myanmar handling about 90 per
cent of the country’s export and import cargo. The growth rate of container cargo throughput in
Yangon port is about 16 per cent for the last 6 years. Border trade with China and Thailand is
also growing year by year. Main export cargoes are agricultural products such as beans and
pulses, dominantly cultivated around Mandalay region. Most of the import cargoes from the
China border are transported to Mandalay where the goods are distributed to other regions of the
country.
Mandalay is the second largest city and the economic hub of upper part of Myanmar in
terms of location, commerce, road, rail and inland waterway access. Mandalay division
contributes about 7 per cent of the country’s GDP and per capita GDP is higher than national per
capita GDP. The value of production, services and trade for Mandalay region is about 2,407
millions in 2011. About 50% of the total product value is agriculture product value. Among
services value, transportation is about 80%. Mandalay Industrial Zone is one of the biggest
zones in Myanmar and its total size is 1,820 acres. There are 406 large scale, 323 medium scale
and 722 small scale industries. Mandalay regional commercial trade will be increasing
continuously and there are many potential development projects such as new Mandalay city
development project, called “The new city project” in 22,000 acres of land, and development of
the inland waterway river port projects to boost inland water transport along the Ayeyarwaddy
river. Mandalay City Development Committee (MCDC) is constructing new Mandalay highway
bus terminal and Merchandise center in 65.95 acres of land about 20 km away from the city
center. Some of export and import cargoes will use this facility to store and distribute.
Mandalay is located on the Asian Highway (AH1 and AH14), future Trans-Asian
Railway network (TAR-S1 and TAR-S2) and the longest river of Myanmar, the Ayeyarwaddy.
Because of its geographic location it plays a role as a logistics hub in Myanmar for the
distribution of domestic and international cargoes. Business activities in Mandalay have been
increasing with goods mostly from the China border trade passing through the city and
international cargoes moving between Mandalay and the port of Yangon.
- 108 -
Pre-feasibility Study of Dry Port in Myanmar
Myanmar government has proposed seven potential sites for dry ports in accordance
with the liberalized economic policy of the newly elected government and is ready to sign the
intergovernmental agreement on dry ports which was drafted in July 2012. Among the proposed
sites, Mandalay is highest priority and has many comparative advantages over others. Ministry
of Rail Transport, Myanmar has selected Mandalay as a potential dry port for a prefeasibility
study.
This prefeasibility study drew a preliminary conclusion that a dry port located in
Mandalay should be developed based on the analysis of financial, economic, environmental and
social aspects. It is recommended that a full-scale feasibility study should be carried out.
According to forecast of cargo traffic through Mandalay, its annual growth rate is 7 per cent. In
order to handle the increasing volume of trade and transport efficiently, it is necessary to build a
dry port which provides logistics services.
It is forecasted that annual container traffic through dry port would be 47,815 TEUs in
2035 and annual conventional cargo would be 1,881,940 tons in 2035. The space required to
develop a dry port is estimated to be 8.5 hectares and the site of dry port should be adjacent to
Merchandise Center in Mandalay. The key functions of the dry port should include cargo
consolidation and distribution, cargo storage, customs clearance function, conventional cargo
handling, container yard, intermodal transport handling, and transloading and transit.
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 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.
B. RECOMMENDATION FOR FULL-SCALE FEASIBILITY STUDY
The results of this prefeasibility study present that the proposed dry port is financially,
economically, socially and environmentally feasible. Accordingly, it would be worthwhile to
proceed to the feasibility study stage. In order to fulfill full-scale feasibility study the following
factors need to be taken into consideration.
- 109 -
Pre-feasibility Study of Dry Port in Myanmar

Data collection: During the preparation of this prefeasibility study useful data and
information has been collected and included in this prefeasibility study report. Any
duplicated work of data collection could be avoided at the stage of feasibility study.

Expertise required: To conduct a feasibility study expert knowledge is required to
investigate the potential site of dry port, civil engineering for the construction of dry
port, financial and economic analysis, and social and environmental impact
assessment of dry port project.

Location that feasibility study team should visit: The potential site for dry port in
Mandalay should be visited by the feasibility study team. In particular, it is
recommended that the feasibility study team needs to visit Mandalay Merchandise
Center and investigate its function and possibility to use part of its site as a dry port.
C. RECOMMENDATION FOR UTILIZING THIS PREFEASIBILITY STUDY
With the continuous growth of economy and international trade it is important to
develop a dry port in Mandalay to handle cargo efficiently and reduce logistics costs. According
to the outcomes of the prefeasibility study there are broader social and economic benefits for the
country. 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.
The current prefeasibility study provides valuable information for further full-scale
feasibility study and the relevant government department or ministries can use the key outcomes
of the prefeasibility study report to promote and attract the investment of the dry port project
from potential investors.
- 110 -
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