UK businesses keen to modernise Myanmar’s railways and airports
- By Thompson Chau | Thursday, 27 July 2017
UK businesses are keen to leverage their strengths and expertise to support Myanmar’s transport and infrastructure development, the UK Prime Minister’s Business Ambassador told The Myanmar Times.
Top priorities include the intercity railway networks, Yangon’s mass rapid transit system and airports in Yangon and Mandalay.
Andrew McNaughton, the UK Prime Minister’s Business Ambassador for infrastructure, visited Myanmar in May to follow up on a scoping visit which was conducted by the UK Department of International Trade (DIT) last December, according to the DIT in Myanmar.
In April, the Secretary of State for Scotland David Mundell sat down with The Myanmar Times to talk about the partnership between Scotland and Myanmar in the oil and gas sector.
Mr McNaughton’s visit sought to further explore potential opportunities in the infrastructure projects for both the DIT and UK companies. However, due to the impending UK General Election, Mr McNaughton, as a public servant, was unable to speak to any media during his visit.
Subsequently, he spoke to The Myanmar Times on July 26 about British commercial interest and capabilities in Myanmar’s infrastructure projects as well as the role of infrastructure in Myanmar’s urbanisation process. Mr McNaughton is the chief operating officer of France-based Systra Group, which is an international engineering and consulting firm specialising in rail and public transport.
During the December scoping visit, a number of infrastructure projects were identified for British firms as opportunities to collaborate with local partners for direct investment, supply of technology and solutions.
Mr McNaughton told The Myanmar Times that the sectors included in the follow-up visit include various parts of transportation, water and healthcare infrastructure in Myanmar.
He noted that the country’s pipeline for over the next decade involves most elements across the infrastructure market and the need for investment in infrastructure development is evident. However, the top priority for British businesses in the short term would be Myanmar’s transport sector, particularly the development of railway networks and airports, with a focus on revamping Yangon’s transport landscape and connectivity between cities.
“The immediate opportunity for the United Kingdom to provide support would be in transport and, in particular, mass transportation rail projects and the airport development program.
“In rail, this included the upgrade of long land intercity lines between major centres of population, such as Yangon, Mandalay and Nay Pyi Taw, and the development of commuter lines for the Yangon MRT [mass rapid transit].
“Specifically for the MRT in Yangon, these are urban projects seeking to both solve existing transport congestion issues and support the projected growth of the city that is projected to double [its population] to 10 million by 2040.
“Therefore, it includes an upgrade of the circle line and initially two new metro lines.
“There is also the planned connection to the airport,” he said, adding that the development of cross-border connections to increase international trade is a medium-term target.
For the aviation transport industry, Mr McNaughton said that the immediate priority would be developing the airports in both Mandalay and Yangon.
“In the airport sector, the immediate focus would be support for the development of the Mandalay International Airport and the new Hanthawaddy International Airport in Yangon.
“Over the medium term, the opportunity exists to support department of civil aviation [DCA] on the regional airport development program,” he continued.
A market structure which attracts international finance
The lack of investment is a major challenge for infrastructure in Myanmar and ASEAN to take off.
According to the Asian Development Bank (ADB), ASEAN will require US$26 trillion in investment by 2030 to meet the region’s infrastructure needs. The investment demand for infrastructure is a recurring theme repeatedly highlighted by experts and businesses. It is the key reason that businesses in the country welcome China’s Belt and Road Initiative’s (BRI), which is widely touted as an investment boost for large-scale projects. Many of the proposed infrastructure projects in the country are major schemes requiring substantial finance.
Earlier this year, businessmen such as William Greenlee from DFDL, Tomoaki Yabe from Daizen Myanmar, Nick Powell from Delta Capital Myanmar and Khin Maung Win from Myan Shwe Pyi Group pointed out that the BRI represented an investment opportunity for the country’s infrastructure.
“Better infrastructure is vital for a robust logistics sector. Myanmar needs more investments to get the hardware ready. We have worked with Chinese companies and more collaboration, encouraged by the BRI, is definitely good news,” Mr Yabe remarked.
“At this nascent stage of infrastructure development, I would think all financing assistance would be welcome. Organisations like Asian Infrastructure Investment Bank [AIIB] and China Development Bank will be able to provide inexpensive financing to large and expensive projects,” Mr Greenlee said.
In contrast, the UK is keen to leverage its strength in the professional services industry, ranging from financial and legal sectors to urban planning and taxation, in order to help Myanmar develop the legal and regulatory frameworks necessary to raise capital investments from abroad.
Mr McNaughton told The Myanmar Times that the UK infrastructure services industry has the experience and expertise to support building an internationally-recognised market structure for Myanmar to attract international finance. In the short term, the focus would be to develop the legal and regulatory frameworks.
“In the short term, there is work to be done to develop the legal and regulatory frameworks that will support the ability to attract international finance and project delivery
“The establishment of a market structure requires significant development of regulations and legal structures to be able to establish an environment to contract with international organisations.
“It also requires the establishment of robust and transparent procurement processes.
“UK legal, financial and support services companies have extensive experience of working with governments around the world to establish such structures,” he added.
In addition, prioritisation of the projects requires a developed process of strategic planning, in terms of catering for urbanisation and economic growth, according to the business ambassador. Such planning is needed at both the national and sub-national levels. In this area, there is significant experience which can be drawn from British specialists in the infrastructure sector.
Apart from urban and economic planning, Mr McNaughton said that British technical and technological know-how in project finance and management would be particularly valuable for Myanmar’s railway and airport projects.
“There is established expertise in project finance, procurement and delivery both at the project management level and for downstream products and services.
“This is especially in the field of technology and specialist systems for rail and airports,” he noted.
Transport and urbanisation
When asked about the importance of infrastructure in Myanmar’s urbanisation and economy, the COO of Systra said that transport is crucial for cities to successfully accommodate urban migration, sustain inward investment and retain human capital.
“Infrastructure development is essential to the Myanmar future growth and sustainability. In this regard, transport is key.
“The global trend is towards urbanisation and therefore the ability for cities not only to accommodate the natural migration but to attract inward investment and talent in a globally competitive market is key. To do this, they must have efficient and effective infrastructure.
“This is both economic infrastructure such as power, water and transportation, but also social infrastructure in the form of healthcare and education facilities,” he explained, adding that improving trade requires the ability to move products for export as well as having the facilities to accommodate growth in quantities.
According to the business ambassador, Brexit presents more opportunities to Myanmar and the region because, upon Brexit, the UK would be able to strengthen its involvement in the region without having to take into account the views of EU countries.
“From Myanmar and the ASEAN region’s perspective, there are few challenges related to Brexit and mainly opportunities.
“As an outcome of the Brexit process, the UK government and individual businesses are seeking to establish long term relationships beyond the European Community. This is being done without having to consider the views of 26 other member states. This creates an agility and a momentum that can only be an advantage to the region,” he concluded.