Myanmar to pick deep-sea port location next year

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Myanmar to pick deep-sea port location next year

24 July 2019

Exclusive: The location for Myanmar’s first deep-sea port will be decided next year, according to a senior government official.

“Construction of a Yangon deep-sea port is one of the projects included as second priority in the National Transport Master Plan. Work is being made and the location can be finally selected and approved within 2020,” U Aung Ye Tun, assistant secretary of the Ministry of Transport and Communications, told The Myanmar Times.

Asked about the cost and project details, he said an analysis would be conducted before construction work begins.

“Only after the analysis is completed, approval will be made regarding the implementation method, that is, whether it is done by a public-private partnership model or by a loan.”

In addition, the government will establish six inland ports in Bhamo (Bamaw), Upper Myanmar in Mandalay, Pakokku and Magway, and Monywa on Chindwin River, the official said.

“Our priority is in Mandalay and we will start construction in this coming October. The port [in Mandalay] will finish [construction] in March 2021. We intend to construct the remaining ports in the near future.”

Businesses welcomed U Aung Ye Tun’s intervention.

“U Aung Ye Tun has made a very helpful clarification on an issue which the industry is watching closely. A deep-sea port will be important for Myanmar’s trade growth in the long term because existing capacity won’t be able to cope. Larger vessel also lowers the ocean logistics cost,” an industrialist, who asked not to be named, commented.

“The government is right to start planning this early on. The location will be a key factor in determining the logistics cost deriving from the land transport connecting the port. It is also equally important that the government pays attention to more pressing problems as well, such as improving the customs process,” he added.

During an industry discussion in Nay Pyi Taw last month, U Aung Ye Tun listed some criteria for the facility, including water depth, transport infrastructure and connectivity to industrial zones.

He cited a Myanma Port Authority study which estimates that Yangon port will have to handle four million TEU units in 2025, and seven million in 2030. Since existing terminals can manage up to four million TEU, a deeper port is needed to meet future demand.

Based on the expected demand growth, logistic firms say the country needs only one deep-sea port to be built. Yangon already has five city terminals with one more in the pipeline, while Thilawa has two container terminals. The total capacity can already cover the next five to eight years of demand.

At present, vessels calling at Myanmar are around one tenth of the size of those handled in Vietnam or China, according to industry insiders.

Flora Pintusoontorn of Maersk – one of two major shipping lines operating in Myanmar – said a deep-sea port is attractive for Myanmar and vessel operators because vessels entering Myanmar are very small compared to the rest of Southeast Asia.

Transport infrastructure is a critical factor for the location. One of the closest deep-sea port locations, in Pathein, would be about 180km from Yangon. Existing terminals in downtown Yangon and those in Thilawa across the river are 20km and 45km respectively from the industrial zones clustered around Hlaing Thar Yar and Shwe Pyi Thar.

“With just a 20-25km difference, the Thilawa terminal took many years to gain traction with the market, because it was further and the traffic cost was more expensive,” Ms Pintusoontorn observed.

If a deep-sea port were to be built 180km from the industrial areas, she said there must be “extremely good connectivity to the factories” for it to work.

Debate over whether Myanmar urgently needs to develop a deep-sea port, and if so where, has been going on for years. Possible places mentioned include Dawei in Tanintharyi Region, Pathein in Ayeyarwaddy, Kyaukphyu in Rakhine and Mawlamyine in Mon State. Yangon government’s project bank also lists the Yangon International Multipurpose Terminal proposal, which will be located between Kawhmu and Kungyangon townships in Elephant Point on the Gulf of Martaban.

Company and government officials have claimed that such projects are being or will be built in various parts of the country. The claims, sometimes reported uncritically by local media, leave the business community confused.

The port authority’s website lists the Dawei and Kyaukphyu deep-sea port projects but information appears to be wrong. For instance, it says the Kyaukphyu port was completed in 2013. In fact, the developer, a consortium led by China’s state-owned CITIC, has only signed a framework agreement with the government last November and recently started the legally-required environmental and social impact assessment process.