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The Impact of Rail Transportation on Regional Economic THE IMPACT OF RAIL TRANSPORTATION ON REGIONAL ECONOMIC DEVELOPMENT OF MYANMAR By Moe Nwet Nwet Aung THESIS Submitted to KDI School of Public Policy and Management in partial fulfillment of the requirements for the degree of MASTER OF DEVELOPMENT POLICY 2016 The Impact of Rail Transportation on Regional Economic Development of Myanmar By Moe Nwet Nwet Aung THESIS Submitted to KDI School of Public Policy and Management in partial fulfillment of the requirements for the degree of MASTER OF DEVELOPMENT POLICY 2016 Professor Jeong-Ho KIM The Impact of Rail Transportation on Regional Economic Development of Myanmar By Moe Nwet Nwet Aung THESIS Submitted to KDI School of Public Policy and Management in partial fulfillment of the requirements for the degree of MASTER OF DEVELOPMENT POLICY Committee in charge: Professor Jeong-ho KIM, Supervisor Professor Lisa LIM Professor Ji Sun BAEK Approval as of December, 2016 Acknowledgements Although this thesis has been done as an individual work, many inputs are added from different people who are always supporting me to finish in time my work. Without their supports, I could not do my thesis in a proper way. For this reason, I deeply would like to thank all of the people who helped me along this path. Firstly, I would like to thank my parents who are encouraging me all the time and raising me up to come to Korea and to get the Master Degree from KDI. They have trained me to have confident in every single area, where I live and work. Another important persons for my thesis are Professor Kim Jeong Ho and Professor Lisa Lim who are supporting by giving very quick fruitful guidelines in a professional way for every chapter what I wrote. It encouraged me to overcome through that difficult time to finish my thesis. I really thanks to my two professors at KDI School. For the same reason, A big thanks to Director U Htaung Sian Kan from Ministry of Transport and Communication who really helped me to get reliable information in regarding with rail performance with his busiest schedules. Very big thanks to my friends and colleagues from Ministry of Planning and Finance for their supports 2 Table of Contents The Impact of Rail Transportation on Regional Economic Development of Myanmar ....................................................................................................................................... 1 Acknowledgements ................................................................................................................... 2 Table of Contents ........................................................................................................................ 3 Abstract ......................................................................................................................................... 5 Chapter 1: Introduction ........................................................................................................... 6 1.1 Rail Transportation, Myanmar ................................................................................................. 7 1.2 Statement of Problem ................................................................................................................... 9 1.3 Research Questions .................................................................................................................... 11 1.4 Research Method and Data Collection ................................................................................. 11 1.5 Structure of Thesis ..................................................................................................................... 12 Chapter 2: Literature Review ............................................................................................... 12 2.1 Potential Impact on Economic Development ................................................................ 14 2.2 Importance for several economic transactions ........................................................... 16 2.3 Agglomeration Benefit ............................................................................................................ 17 2.4 Market integration ..................................................................................................................... 19 Chapter 3: Experiences of rail transportation in Japan and Korea ........................ 21 3.1 The Restructuring of the Rail transportation in Japan.................................................. 22 3.2 Korea’s railway transportation experience ...................................................................... 24 3.3 A Backbone Rail Network Policy as a Potential Driver for Socio-Economic Growth in Myanmar. ......................................................................................................................................... 26 Chapter 4: Structure of Myanmar Rail network ........................................................... 33 3 4.1 Route Mileage and Stations among States and Regions .............................................. 33 4.2 Fixed Assets of Myanmar Railways ...................................................................................... 36 4.3 Rail market, Competitiveness and performance ........................................................... 37 Chapter 5: Conclusion and Suggestion .............................................................................. 44 5.1 Conclusion ..................................................................................................................................... 44 5.2 Suggestion ...................................................................................................................................... 45 5.3 Summary and Policy Options .................................................................................................. 46 5.4 Rationalization of railway networks ................................................................................... 46 5.5 Corporatization............................................................................................................................ 48 References .................................................................................................................................. 49 4 Abstract The transport sector has a vital role in fostering economic growth and advancing social development particularly in rail infrastructure. The railroads have been developed in many developed countries in terms of improving the land transport technology and positively changing the movement of freights and passengers. Myanmar is currently dependent upon commodity exports and imports with limited in-country manufacturing and assembly being coupled with an abundant mix of extractive industries. National rail infrastructure is very important for economic development in terms of income and employment opportunities. Rail transportation, which, has been already developed in some countries such as Korea and Japan will be reviewed to understand how rail transportation impact on economic development. Myanmar will get the latecomer advantage by practicing these two countries experiences in terms of improving rail infrastructure. 5 Chapter 1: Introduction Myanmar has, since 2010, embarked upon a rapid and far-reaching reform program that was designed around four broad public policy areas. The ambitious transitional reform program recognized the need to sustainably reduce poverty in an inclusive manner so that all citizens could benefit from the opening of the country and the associated projected rapid economic growth. Since 2012 the government has been developing a long-term (20 year) national development plan known as the National Comprehensive Development Plan (hereafter NCDP). The NCDP, which has been finalized (2014), sets out a detailed development framework that is built around seven interconnecting strategic thrusts to achieve the long-term goals; (1) to build a growing, diversified and sustainable economy and (2) to ensure that inclusive growth and development is people centered. The NCDP proposes a holistic inter-connected pro-growth export-led development model that takes its basis from China and other Asian Tiger economies to promote the transformation of the broad sectors of the economy utilizing comparative advantage and competitiveness. To support this process, the government is adopting a corridor development policy through efficient transportation that links key growth centers internally and externally and in particular allowing connection to the Greater Mekong Sub-region (GMS) road systems. As Myanmar progresses towards graduation from its status as a Least Developed Country, poverty reduction becomes central to development policy. Although the country is witnessing significant growth (7.7%), Myanmar’s GDP per capita remains amongst the lowest in Asia (8,000 PPP) compared to an average of 14,700 PPP for South East Asia. According to McKinsey Global Institute report, It is estimated by the government that 6 Myanmar requires 650$ billion of investment by 2030 to support growth potential, 320$ billion in infrastructure alone. 1.1 Rail Transportation, Myanmar The transport sector has a vital role in fostering economic growth and advancing social development. Today new transport infrastructure is needed to capitalize on regional trade and production opportunities that will expedite Myanmar’s integration into the regional production networks and global value chains and to provide essential transport for Myanmar’s growing working population. Among Myanmar’s variety of transport
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