Preparatory Survey on Yangon Port in Thilawa Area and Logistics Depot Development in the Republic of the Union of Myanmar
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Preparatory Survey on Yangon Port in Thilawa Area and Logistics Depot Development in the Republic of the Union of Myanmar Final Report January 2015 Japan International Cooperation Agency KAMIGUMI CO., LTD. TOYOTA TSUSHO CORPORATION OS JR 15-006 Preparatory Survey on Thilawa Area Port and Logistics Depot Development in the Republic of the Union of Myanmar Table of Contents Chapter 1. Background and purpose of survey 6 1.1 Background and purpose of survey 6 1.2 Objects of survey 8 1.3 Business description of SPC 11 1.4 Survey period 11 1.5 Composition of survey team 12 1.6 Implementing agencies in counterpart country 13 1.7 Survey outline 14 Chapter 2. Present status of Myanmar 15 2.1 Political regime 15 2.2 Social circumstance 15 2.3 Economic circumstances 16 2.4 Outline of Yangon Port 18 2.4.1 Natural conditions for port site 18 2.4.2 Verification on handling capacity 19 2.4.3 Port development status 22 2.4.4 Re-verification of handling capacity 25 2.5 Needs of port users 29 2.5.1 Needs of shipping lines 29 2.5.2 Needs of cargo owners 32 2.6. Basic policy concerning governmental body’s Thilawa Area Port 38 Development Project 2.7 Port and harbor policy 39 2.8 Port and harbor issues 40 Chapter 3. State of Domestic Distribution Network Development 47 3.1 Overview of domestic distribution network 47 3.2 Road transportation 48 3.3 Railway transportation 53 3.4 River waterborne transportation 55 3.5 Investigation on Optimized Transportation Mode 59 3.6 Logistics Depot 63 3.6.1 Inland Container Depot (ICD) around the Greater Yangon 64 1 Preparatory Survey on Thilawa Area Port and Logistics Depot Development in the Republic of the Union of Myanmar 3.6.2 Inland port in inland hinterland 66 3.6.3 On-dock multi-purpose distribution center (refrigerated, cold, distribution 67 processing and other facilities) Chapter 4. Proposal on Improvement of Operational Efficiency (Enhancement of 69 Competitiveness) 4.1 Introduction of State-of-the-Art equipment and utilization of Japanese 69 operation knowhow 4.2 Cooperation with domestic logistics operators 69 4.3 Cooperation with Thilawa SEZ 70 4.4 Cooperative relationship with shipping companies (agents) 71 4.5 Improvement of operational efficiency of Thilawa port 72 Chapter 5. Demand forecast 74 5.1 Estimation of size of the economy 73 5.2 Estimation of port cargo volume 75 5.3 Estimation of container cargo handling volume 76 5.4 Elasticity between GDP growth rate and container cargo volume growth 80 rate 5.5 Supply-demand balance of terminal facility 82 5.6 Effect of surface transportation from surrounding countries 87 5.7 Estimation of cargo volume at Thilawa SEZ 89 5.8 Cargo demand from affiliated business 93 Chapter 6. Study of business plan 95 6.1 Outline of project 95 6.2 Terminal service contract 96 6.3 Management system 105 6.3.1 Organization 105 6.3.2 Plan of provision of cargo handling equipment 106 6.3.3 Personnel allocation plan 117 6.3.4 Outsourcing works 120 6.3.5 Training system 121 Chapter 7. Related legal and taxation systems 122 7.1 Related legal systems 122 2 Preparatory Survey on Thilawa Area Port and Logistics Depot Development in the Republic of the Union of Myanmar 7.1.1 Basic terms related to this scheme 122 7.1.2 This construction project 138 7.1.3 This operation project 141 7.1.4 This logistics project 143 7.1.5 Environment 144 7.2 Taxation system 146 7.2.1 Background of survey 146 7.2.2 Presumed investment structure 147 7.2.3 Report of survey results 147 Chapter 8. Project feasibility analysis, project scheme, financing 156 8.1 Definition of subject project and projects in the precincts 156 8.2 Project feasibility analysis 159 8.2.1 Initial capital investment 160 8.2.2 Revenue estimation 160 8.2.3 Expenditure forecast 164 8.2.4 Options for financial analysis 166 8.2.5 Project feasibility analysis 168 8.3 Project scheme 182 8.4 Fund procurement 186 Chapter 9. Confirmation of the project effect 188 9.1 Method of the confirmation of the project effect 188 9.2 Quantitative effect 188 9.2.1 Comparison of FIRR 188 9.2.2 Effect to the national economy 190 9.3 Qualitative effect 190 Chapter 10. Risk Analysis and Mitigation Measures 191 10.1 Political risk 191 10.2 Economic risk 191 10.3 Demand risk 191 10.4 Exchange risk 192 10.5 Law/regulation and taxation risks 192 10.6 Security risk 193 10.7 Natural disaster risk 193 3 Preparatory Survey on Thilawa Area Port and Logistics Depot Development in the Republic of the Union of Myanmar Chapter 11. Comprehensive Assessment and Recommendations 194 11.1 Comprehensive assessment 194 11.2 Qualification of the company 195 11.3 Future schedule 200 APPENDIX I 1 General 1 I.1. Review of phase 1 1 I.1.1 Port facility layout and operation plan (Phase-I) 1 I.1.1.1 Required port facilities and operation plan 1 I.1.1.2 Layout plan of the terminal facilities (Phase-I) 24 I.1.2 Design review of berth and facilities 28 I.1.3 General of port architectural facility 42 I.1.4 Terminal facility 48 I.1.5 Cost estimate summary 51 I.1.6 Comments on Phase 1 port planning 52 4 Preparatory Survey on Thilawa Area Port and Logistics Depot Development in the Republic of the Union of Myanmar List of abbreviations Abbreviation Formal nomenclature ASEAN Association of Southeast Asian Nations BOT Built Operation and Transfer CFS Container Freight Station CIF Cost, Insurance and Freight CKD Complete Knocked Down CY Container Yard DICA Directorate of Investment and Company Administration DWT Dead Weight Tonnage EDI Electric Date Interchange EU European Union FCL Full Container Load FOB Free on Board GDP Gross Domestic Products HIDA Human Resources & Industry Development Association ICD Inland Container Depot IMF International Monetary Fund IWT Inland Water Transport JICA Japan International Cooperation Agency MACCS Myanmar Automated Cargo Clearance System MOT Ministry of Transport MIC Myanmar Investment Commission NACCS Nippon Automated Cargo Clearance System NEXI Nippon Export and Investment Insurance MPA Myanma Port Authority RTG Rubber Tired Gantry Crane SEA South East Asia SEZ Special Economic Zone SPC Special Purpose Company TEU Twenty-foot equivalent unit TOS Terminal Operation System YCDC Yangon City Development Committee 5 Preparatory Survey on Thilawa Area Port and Logistics Depot Development in the Republic of the Union of Myanmar Chapter 1. Background and purpose of survey 1.1 Background and purpose of survey Since the new administration started in 2011, the Republic of the Union of Myanmar (hereinafter called “Myanmar”) has moved forward with democratization/economic open-door policies and cargo handling volume at ports and harbors are expected to rise dramatically as the national economy grows in the days ahead. Against this background, “Thilawa Area Port (Yangon Port, Myanmar) Development Project Standard Review” was implemented and Thilawa Area Port (Plot 25 & 26) is being developed utilizing yen loan. Meanwhile, Myanmar Port Authority (hereinafter called “MPA”), an implementing agency of the project, is considering consigning operation of the Thilawa Area Port to the private sector. According to the McKinsey & Company report, Myanmar has already entered the stage of enjoying a sustainable growth. The scale of its economy could potentially be quadrupled over the period of 20 years from 2010 through 2030. To that end, the report judges it is necessary to cultivate the manufacturing industry and improve the logistics infrastructure, such as port and harbor, that forms the base for overseas trading. A surge in the country’s total cargo handling volume is also forecasted. While demand for Thilawa Area Port is expected to grow accordingly, there are some uncertain factors, such as competition with existing terminals and new port construction planning, as shown below. 1) Competition with existing terminals Since operators of existing terminals in Yangon Inner Port Yangon Inner Port and Thilawa Area Port are also planning to raise cargo handling capacity, competition among the terminals is Thilawa Area Port likely to heat up. 2) Geological disadvantage (in access) At Thilawa Area Port, Thilawa SEZ is being developed in its hinterland and for this reason it has a geological advantage in handling of cargoes destined for the Thilawa SEZ. However, given that cargoes destined for other destinations are concentrated in Yangon and to the north, Thilawa has poorer access compared to Yangon Inner Port. Figure 1.1-1 Yangon Port 6 Preparatory Survey on Thilawa Area Port and Logistics Depot Development in the Republic of the Union of Myanmar 3) New terminal development at Thilawa Area Port Of 37- berth construction site in the Thilawa Area Port, only five berths are operated by Myanmar International Terminal Thilawa (hereinafter called “MITT”) and one by Myanmar Integrated Port Ltd. (hereinafter called “MIPL”). The rest may be developed in the days ahead as needed. Figure 1.1-2 Thilawa area port 4) Development of new port ① Sittwe Port Construction of Sittwe Port as a deep sea port enabling large vessels to lay aboard has been promoted since 2010 under an interest-free loan provided by India. Sittwe Port in particular is expected to help develop a transportation infrastructure as an integral part of “Kaladan Multi- Modal Transit Transport Project” connecting southwest Myanmar with the inland region of northeast India activating the commodity distribution between the two countries. ② Kyaukphu port Kyaukpyu Port is expected to become a logistics base for connecting the Indian Ocean and inland China as a deep sea port developed jointly with China combined with development projects such as a special economic zone and installation of a petroleum gas pipeline that is destined for Kunming in Yunnan Province.