preparatory survey on yangon port in thilawa area and

OS

JR

15-006

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

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


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


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


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


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


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 (hereinaftercalled “Myanmar”) has moved forward with democratization/economic open-door policies andcargo handling volume at ports and harbors are expected to rise dramatically as the nationaleconomy grows in the days ahead.

Against this background, “Thilawa Area Port (Yangon Port, Myanmar) Development ProjectStandard Review” was implemented and Thilawa Area Port (Plot 25 & 26) is being developedutilizing yen loan.

Meanwhile, Myanmar Port Authority (hereinafter called “MPA”), an implementing agency of theproject, 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 ofenjoying a sustainable growth. The scale of its economy could potentially be quadrupled over theperiod of 20 years from 2010 through 2030. To that end, the report judges it is necessary tocultivate the manufacturing industry and improve the logistics infrastructure, such as port andharbor, that forms the base for overseas trading. A surge in the country’s total cargo handlingvolume is also forecasted.

While demand for Thilawa Area Port is expected to grow accordingly, there are some uncertainfactors, such as competition with existing terminals and new port construction planning, as shownbelow.

1) Competition with existing terminalsSince operators of existing terminals in Yangon Inner Portand Thilawa Area Port are also planning to raise cargohandling capacity, competition among the terminals islikely to heat up.

Yangon Inner Port

Thilawa Area Port

2) Geological disadvantage (in access)At Thilawa Area Port, Thilawa SEZ is being developed inits hinterland and for this reason it has a geologicaladvantage in handling of cargoes destined for the ThilawaSEZ. However, given that cargoes destined for otherdestinations are concentrated in Yangon and to the north,Thilawa has poorer access compared to Yangon Inner Port. Figure 1.1-1 Yangon Port

6


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.

4) Development of new port

Figure 1.1-2 Thilawa area 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.

③ Dawei Port

Dawei Port as a deep sea port located 300 km west of Bangkok was expected to become a logistics base for connecting the Andaman Sea, the Indian Ocean and the South China Sea with planned construction of a deep sea port

Figure 1.1-3 Main port in Myanmar

7


and a SEZ by Italian-Thai Development PLC, a major Italian general contractor, acting as a leader, but, due to difficulty in fund-raising, the main developing body has been transferred to the hands of a Special Purpose Company (SPC) jointly funded by Myanmar and Thai governments.

Under the aforementioned conditions, stable operation of Thilawa Area Port, which is to be newly developed, will need improvements in cargo pickup capacity as well as competitiveness by providing valued added services and other means. Considering the above, in this survey feasibility of the Thilawa Area Port operator (SPC) will take into account the effects brought by domestic logistics business and valued added services. At the same time, a basic business plan is formulated under the assumption that the project is funded by JICA’s overseas investment finance. Appropriateness, effectiveness and efficiency of the project will also be confirmed.

1.2 Objects of survey

As to the operation of Thilawa Area Port, streamlining of the port and harbor operation, as well as the domestic logistics status that gives a great influence on port and harbor operation, will be surveyed.

The current logistics in Myanmar’s whole country is structured centered on Yangon Port. Most import cargoes, after arriving at Yangon Port, are distributed by coastal vessels either to the 8 regional ports located all over the country or otherwise to inland areas in the north by inland transportation by water, by road or by rail. Export cargoes are distributed in the reverse order. Rice and beans, in particular, are transported to Yangon Port by inland water transportation, and from there they are transported overseas. The cargo volume for each transportation mode in Myanmar’s whole country in 2012 was about 25,528k tons by road, about 5,256k tons by inland water transportation, about 3,124k tons by rail and about 2,701k tons by coastal. Besides, according to the Development Project Report, the annual cargo volume per each transportation mode in Yangon metropolitan area is about 3,400k tons by road (68%), about 600k tons by inland water transportation (12%), and about 1,000k tons by rail (20%).

8


Table 1.2-1 Quantity of Cargo in Myanmar (Source: AJTP Information center)(Unit: thousand tons)

2009 2010 2011 2012 Ratio

By road 30,474 20,664 22,532 25,528 69.73%

By inland water 4,684 4,791 3,996 5,256 14.36%

By rail 3,326 33,22 3,576 3,124 8.53%

By coastal 1,907 2,519 2,421 2,701 7.38%

Total 40,391 27,974 32,525 36,609

2009 2010 2011 2012

Figure 1.2-1 Cargo traffic volume in Myanmar

As mentioned above, the cargo transportation in Myanmar is worked out by collaboration betweenYangon Port and road, rail and inland water transportation, which are connected thereto, both inlong distance throughout the country and short distance within the Yangon metropolitan area. Asthe economy grows into the future, it is anticipated the cargo volume associated with the inlandtransportation will also grow, ever increasing the importance of the road, rail and inland watercargo transportation interconnecting Yangon Port and inland.

For example, in Mandalay, the second largest city in Myanmar with population of 2,140,000(Population census data in 2014), there is Mandalay Industrial Park where 1,400 companies areoperating, though emigrant foreign companies there are few, but in addition, Mandalay MyothaIndustrial Park (Phase 1, with 4,000 ha) is being developed and preparation for an distributionbase to accommodate container transportation is under planning. As Mandalay is the geographicalcenter of Myanmar and a central transfer point for Asian Highway, it is highly likely this city maybecome a commercial center for processed foods such as beans and pulses, and sesame, majorexport items from north Myanmar as well as for the processing industry of primary products suchas timber and woodwork. In addition, in Bago Province about 80 km northeast of Yangon,

9


construction of Hanthawaddy New International Airport is to be started in 2014 and major companies such as Nissan Motor Company are planning to make a foray by building factories.

As described above, port and harbor operation is closely related to the domestic logistics network. While SPC (Special Purpose Company) engages in the operation of Thilawa Area Port, whether the Thilawa Area Port can collect a greater amount of cargo largely depends on the status of the domestic logistics network interconnected to the Port. Myanmar utilizes road, rail and inland water transportation for its domestic logistics. We will conduct a further survey as follows to see if Thilawa Area Port has been fully developed for future cargo consolidation.

1) Road transportation: Survey on the status of roads connecting Hlayingthaya/Yangon area and Thilawa area, and status of truck operators

2) Rail transportation: Survey on railway route (Mandalay-Yangon-Thilawa area), which is

one of the cargo collection means in the north

3) Water transportation: Survey on collecting cargo from around Yangon and Pathein Port by water transportation

Figure 1.2-2 Surveyed project

10


1.3 Business Description of SPC

SPC’s project, feasibility of which is to be confirmed in this survey, is “Thilawa Port operation” in the Figure 1.2-2 Surveyed Project. Description and scope of the business are as follows.

1) Business Description: Container loading/unloading and warehousing at port facilities that connect ocean and land container transportation at Thilawa Area Port

2) Scope of business: Scope of business of the surveyed project is as per described in the

Figure 1.3-1 “Scope of Business”.

Figure 1.3-1 Scope of business (Income sources are container handling and warehousing at port facilities inside Thilawa Area Port.)

3) Domestic logistic business: Will be operated by other companies because this is out of the

scope of SPC’s business.

1.4 Survey period: October 15, 2013–March 31, 2014

In Myanmar, seasons are divided into the hot season of mid-March through mid-May, the rainy season of mid-May through mid-October and the dry season (winter season) of mid-October through mid-March. This survey period falls on the dry season when electricity supply falls down. As of June, 2013, the electricity supply capacity of Myanmar was estimated at 2,254 MW

11


(megawatt), of which about 70% comes from 18 hydroelectric power stations with generating capacity of 1,270 MW in the rainy season and 1,000 MW in the dry season. In addition, the Irrawaddy River, another object of survey, has water level difference of 6 meters between the rainy season and the dry season at Mandalay, the linchpin for the inland water transport utilization. Consequently, the survey has been implemented under severe conditions for inland water transport. Though the severed road and railway conditions due to swollen rivers during the rainy season, which might have occurred outside of this survey period, have not been verified, the factual situation should be complemented using literary documents, interview and etc.

1.5 Composition of survey team

Constituent member: KAMIGUMI CO., LTD. TOYOTA TSUSHO CORPORATION

Collaborating member: NIPPON KOEI CO., LTD The Overseas Coastal Area Development Institute of Japan International development & environment system Inc. (Ides)

H. Kanayama A&E Co., Ltd. Pacific Design Systems, Inc. NISHIMURA & ASAHI SUMITOMO CORPORATION

Area of work responsibility Company responsible for the work

General control : KAMIGUMI

Project background & purpose : KAMIGUMI/TOYOTA TSUSHO

Verification of project necessity : KAMIGUMI/TOYOTA TSUSHO

Demand forecast : KAMIGUMI : TOYOTA TSUSHO : SUMITOMO CORP.

Related legal systems : NISHIMURA & ASAHI

Natural conditions and background zone : NIPPON KOEI

Domestic logistics development plan : KAMIGUMI : NIPPON KOEI

General facility plan, designing & calculation : NIPPON KOEI

12


: H. Kanayama A&E Co., Ltd.: Pacific Design Systems, Inc.: OCDI

Business analysis/scheme & fund procurement : TOYOTATSUSHO

: KAMIGUMI/TOYOTA TSUSHOReview of business plan

Environmental and social considerations : Ides

Verification of outcome : OCDI

Risk analysis : TOYOTATSUSHO

Comprehensive evaluation and recommendations : KAMIGUMI/TOYOTA TSUSHO

1.6 Implementing agencies in counterpart country

Implementing Agencies : Ministry of Transport, Myanma Port Authority(MPA)

Person in charge : Managing Director

Tel phone number : (95)1-391310

E-mail : [email protected]

Figure 1.6-1 MPA organization chart

Scope of work① Port development, control and management② Establishment of port planning③ Provision of port facilities and materials and control of maintenance④ Aid to navigation and piloting services⑤ Maritime agency services

13

mailto:[email protected]


1.7 Survey outline

“Chapter 2. Present status of Myanmar” firstly reports results of a survey on the present status of Myanmar’s logistics. Along with the current status of Yangon Port, requests from ship/cargo owners have been confirmed.

“Chapter 3. State of Domestic Distribution Network Development” talks about a survey on the status of Myanmar’s domestic logistics means— road, rail and water transportations, confirms current issues and introduces Kamigumi’s approach to the country’s domestic logistics business.

“Chapter 5. Demand Forecast” forecasts cargo volume in Myanmar when operating Thilawa Area Port alone, and also when taking into account an increase in demand resulting from infrastructure development around the area.

“Chapter 6. Study of Business Plan” introduces a capital investment plan created based on the demand forecast in Chapter 5. Public investment (for port construction) is financed by yen loan by MPA, and design and calculation were reverified. As for private investment, terminal operation system and other additional investment costs required for operation were calculated. Personnel assignment plan for terminal operation will also be formulated.

“Chapter 8. Project Feasibility Analysis, Project Scheme, Financing” forecasts income and expenditures based on the estimated demand in Chapter 5, and analyzes them according to the type of feasibility.

Chapter 11 suggests credentials of Thilawa Area Port operating company in light of the survey results.

14


Chapter 2. Present status of Myanmar

Growth of Thilawa Area Port is strongly influenced by Myanmar’s future political regime and

economic development. For this reason, Myanmar’s current status has therefore been confirmed.

Furthermore, in view of anticipated competition with Yangon Inner Port and existing terminals of

Thilawa Area Port, hearings on the status of the existing terminals and what port users want were

conducted.

2.1 Political regime

Since 1998, the military government continued to rule Myanmar but in 2003, Khin Nyunt, then Prime

Minister, formulated 7-step roadmap for democratization and in 2008, a new constitution was adopted

by the national referendum. In November 2010, a general election was held first time in 20 years, and

in March, 2011, the current democratically elected Thein Sein government was born. The present

political regime adopts the presidential system and the federal republican institution with the bicameral

parliament consisting of the upper house (House of Nationalities) with 224 seats and the lower house

(House of Representatives) with 440 seats. Of the lower house, 25% of the seats are appointed by the

military. Also, the next presidential election is slated for 2015.

2.2 Social circumstance

Myanmar is blessed with abundant natural resources as well as human resources exceeding 51 million

in population (Population census data in 2014). In recent years, s the transfer of control to the

democratic regime has been realized with the start of the current Thein Sein government in 2011, the

country has promoted democratization and made efforts for economic reforms including adoption of

the controlled floating exchange system aiming unification of the exchange rate as well as legal

amendments enabling smooth inflow of foreign investments. These political and economic reforms

promoted by Myanmar have been internationally appreciated.

The reason why Myanmar is attracting attention of the political and financial circles of many countries

as the “country with potential for growth” is due to the following internal and external factors relating

to Myanmar.

① Highly industrious, abundant and inexpensive manpower ② Attractiveness as a consumer market with population of 63 million ③ Abundant natural resources, minerals, agricultural products and marine products ④ Exposed China’s country risks ⑤ Rise in manpower cost in China, Thailand, Vietnam and Indonesia

15


To China also, Myanmar is very attractive. Amid the economic sanctions on Myanmar imposed by

western countries, China continued to provide aids to Myanmar from its strategic standpoint and

accessibility to the Indian Ocean. At present, China is constructing a deep sea port at Kyaukpyu,

transporting natural gas and crude oil to Yunnan Province, China through a pipeline, and has built a

hydroelectric power station along the border to transmit electricity to the Chinese side. Myanmar,

however, is heading in the direction of strengthening actively its relationship with Japan, to begin with,

and with western countries and accelerating its infrastructure building for achieving economic

development.

2.3 Economic circumstances

With respect to Myanmar’s economy, the domestic economy has progressed steadily thanks to the

domestic demand increase as stimulated by the SEA Games held in December, 2013 and the various

international conferences held in relation to its assumption of ASEAN chairmanship in 2014. The

economic environment is being improved through implementation of the exchange rate unification

and relaxation of the import regulations encouraging overseas enterprises to make investments in

Myanmar. The IMF forecasts the country will sustain close to 7% economic growth from now on.

Table 2.3-1 Real GDP & Economic growth rate of Myanmar

(Source.: IMF October 2013) (Estimate figure by IMF after 2012/Unit:10B Kyat)

Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Real GDP 35,998 37,850 39,873 42,229 44,915 47,977 51,279 54,842 58,687 62,839 67,288

GDP growth 3.60% 5.14% 5.35% 5.91% 6.36% 6.82% 6.88% 6.95% 7.01% 7.08% 7.08%

As for export, the natural gas exported wholly to Thailand occupies about 40% or more of the total

export value to be followed in size by beans and pulses exported to India and China. Regarding the

garments which are 100% containerized, the U.S. has lifted its sanctions on Myanmar almost entirely,

and in June, 2013, the EU officially announced reviving the general preferential duties applied to

Myanmar and therefore solid future growth can be expected. The Myanmar government plans to boost

up the export volume of rice to 2,500,000 tons by 2014-2015 and to 4,800,000 tons by 2019-2010. Its

delivery to China and African countries in particular has increased, almost doubling year on year.

Depending on the market conditions of Vietnamese rice and Thai rice, however, rice is sometimes

exported to China by inland water transport and by road from Pathein, the distribution center for rice.

As for the marine products, 75,000 tons were exported in the first half of 2013 by ocean transport and

92,000 tons were exported across the border by inland water transport and by road. Export ban is

imposed on raw wood effective from April, 2014, and processing treatment is now required for export.

16


IMPORT

on CIF basis

2011 2012

USD USD Ratio

Transport Equipment 1,824 2,646 29.2%

Petro. Products 1,927 1,592 17.6%

Base metal/products 947 1,025 11.3%

Electrical machine 466 489 5.4%

Plastic Products 312 351 3.9%

Synthetic 254 309 3.4%

Vegetable oil 395 304 3.4%

Drug medicine 218 273 3.0%

Fertilizer 20 168 1.9%

Cement 150 158 1.7%

Others 2,522 1,754 19.2%

Total 9,035 9,069

At present, about 30% of the timber export is containerized, and it is anticipated containerization

should be further accelerated. Sesame is subject to quality deterioration sometimes during

transportation due to changes in water content, necessitating expanded use of fixed-temperature

warehouses which provide drying treatment.

As for import on the other hand, the largest items are transport machinery including natural gas

extracting equipment and materials, construction and mine development machinery, trucks, passenger

vehicles, etc. to be followed by petroleum products such as diesel oil. Thanks to the relaxed regulations

on used car import implemented from September, 2011, import of Japan-made used cars increased

rapidly but at the moment, the trend is on the decline, as the market in Yangon city for used passenger

cars has almost been saturated. On the other hand, as construction of plants for manufacturing new

vehicles is scheduled in the Thilawa SEZ and the Bago Industrial Zone, import of containerized

assembly parts is expected to increase.

Table 2.3-2 Main export & Import cargo based on a custom-cleared basis

(Source: Central statistical organization) (Unit:USD1M)

EXPORT

on FOB basis

2011 2012

USD USD Ratio

Natural gas 3,503 3,666 40.8%

Bean 986 962 10.7%

Garment 498 695 7.7%

Rice 267 544 6.1%

Fish 349 442 4.9%

Teak 310 359 4.0%

Jade 34 298 3.3%

Sesame 58 278 3.1%

Hardwood 295 220 2.5%

Rubber 130 218 2.4%

Others 2,706 1,294 14.5%

Total 9,136 8,976

17


2.4 Outline of Yangon Port

2.4.1 Natural conditions for port site

The major facilities of Yangon Port are separately located at

Yangon Inner Port and Thilawa Area Port, and as both are

river ports along the Yangon River watershed and subject to

the influence of the natural conditions of the flow rate of

4,000–6,000 tons and sand bars created by sedimentation as

well as tidal level differences, any arrival and departure of

vessels of 200 GT or larger is obligated to accompany a pilot

on board.

Figure2.4.1-1 Yangon River

The Yangon Inner Port is located 32 km upstream from the Yangon River mouth, and 64 km away

from the pilot boarding area off the Yangon River mouth. Vessels arriving in or leaving the Yangon

Inner Port are restricted by the sand bars at two locations, one being the Outer Bar at the river mouth

of so-called the Elephant Point and the other the Inner Bar at the so-called Monkey Point where the

Yangon River and the Bago River merge together. Particularly, as the water depth at the Inner Bar is

only 4.5 meters, vessels are required to arrive in and leave the port utilizing the tidal level differences

(5.85 meters at spring tide, 2.55 meters at neap tide). While marine navigation on the Yangon River is

allowed 24 hours but passage through the Inner Bar area is limited only to the daylight hours. At the

Outer Bar, the sand bar area varies periodically, and 3 different navigation routes are used in turn

depending on the water depth conditions, but dredging about 200,000–400,000 cubic meters per year

is required. At the Inner Bar, 1,000,000–2,000,000 cubic meters per year must be dredged on a daily

basis to ensure navigable area with total extension of about 1,850 meters and width of about 100 meters

having water depth of –6 meters. MPA has maintained the channel by 4 dredgers.

Meanwhile, since Thilawa Area Port is located at 16 km downstream of Yangon Inner Port and 16 km

from the river of the mouth, vessels arriving and leaving the port need to pass the Outer Bar only. The

allowable vessel sizes can be enlarged as per the Table 2.4.1-1 compared with Yangon Inner Port.

18


Table 2.4.1-1 Comparing Yangon Inner Port and Thilawa Area Port

Yangon Inner Port Thilawa Area Port

Distance from Pilot Station 64km 48km

Distance from Outer Bar 32km 16km

Permissible ship

Length of overall(LOA) 167m 200m

Draft 9m 9m

Deadweight capacity(DWT) 15,000 tons 20,000 tons

2.4.2 Verification on handling capacity

At present, 4 terminals can handle containers at the Yangon Inner Port, i.e. Hteedan Port Terminal

(HPT), Asia World Port Terminal (AWPT), Myanmar Industrial Port (MIP) and Bo Aung Gyaw Street

Wharf (BSW), and at Thilawa Area Port, having 37 blocks for port sites, the terminal which can handle

containers at present is only one, i.e. Myanmar International Terminal Thilawa (MITT).

Yangon Inner Port Thilawa Area Port

Figure 2.4.2-1 Terminal Location at Yangon Port

The container cargo handling records at the Yangon Port are shown in Table 2.2.2-1.

19


Table 2.4.2-1 Container throughput at Yangon Port (Source: MPA Seaborne Trade Statistics)

Year

No. of

Ship

Import

(TEU)

Export

(TEU)

Total

(TEU)

Year on Year

TEU

/Ship

2003 283 88,753 91,813 180,566 94% 638

2004 248 80,394 77,553 157,947 87% 637

2005 273 83,030 79,330 162,360 103% 595

2006 313 93,962 95,782 189,744 117% 606

2007 450 113,059 109,953 223,012 118% 496

2008 442 125,364 121,348 246,712 111% 558

2009 456 149,472 148,482 297,954 121% 653

2010 456 168,335 167,011 335,346 113% 735

2011 604 192,102 188,573 380,675 114% 630

2012 239,447 235,334 474,811 125%

For the purpose of determining the computational capacity of the existing 5 terminals which can handle

container cargoes at Yangon Port, the Development Project Report has estimated the future handling

capacity (Future Capacity) on the basis of the existing maximum handling capacity (Existing Capacity)

retained by the respective terminals and the future expansion plans for the quays and yards developed

by the respective terminals including the assumption of allocating 2 quay container cranes per each

berth in order to maximize the cargo handling efficiency and with the premises for efficiency and

capacity specifications together with grounds for supporting capacity estimation calculations for

respective terminals as mentioned below. In addition, the total capacity of the existing terminals is

determined by the quay capacity or the yard capacity whichever is smaller.

1) Efficiency and capacity specifications used for annual handling capacity calculation for quay

container cranes

① Number of cranes = 2 units/berth ② Number of containers handled per unit time = 25/hour ③ Average efficiency of cranes (efficiency degradation coefficient for the second unit onward)

= 0.95 ④ Annual operating days for cranes = 365 days ⑤ Actual operating hours for cranes = 21 hours ⑥ Berth Occupancy Ratio (BOR) = 0.4 ⑦ 20 ft: 40 ft = 3: 2 ⑧ Box Ratio (TEU Factor) = 1.4

20


The Development Project Report has calculated the quay capacity of the existing terminals using

the following estimating equation.

Capacity/Berth = (25 Box/hr) × 2 units × 0.95 × 21Hr × 365 days × 0.4 × 1.4

= 203,889 TEUs/Year

Table 2.4.2-2 shows the quay capacity obtained on the basis of the quay capacity per berth

calculated as above and multiplied by the number of berths at each terminal.

Table 2.4.2-2 Annual capacity of existing container terminal (Source: Development Project Report)

Terminal Existing capacity Future capacity

No. of Berth Capacity (TEU) No. of Berth Capacity (TEU)

HPT (AWPT) 2 407,778 2 407,778

AWPT 3 611,667 4 815,556

MIP 2 407,778 2 407,778

BSW 3 611,667 3 611,667

MITT 4 815,556 4 815,556

Total 14 2,854,446 15 3,058,335

2) Efficiency and capacity specifications used for annual handling capacity calculation for container yards ① Number of ground slots ② Number of stages for stored containers = 3.5/existing terminal, 3.6/future plan ③ Availability at cargo handling = 0.75 ④ Daily maximum versus weekly average handling volume ratio = 1.4 ⑤ Container storage days = 7 days ⑥ Annual operating days = 365 days

The Development Project Report has determined the future yard capacity by adding the yard capacity

estimated on the basis of the yard expansion area of the expansion plans developed by the respective

terminals to the yard capacity estimated on the basis of the current storage capacity of the existing

terminals.

21


Table 2.4.3-3 Yard capacity of existing container terminal (Source: Development Project Report)

<<Existing capacity>> Storage

Capacity

Stacking

Tiers

Utilization

ratio

Peak

factor

Storage

period

Annual

Capacity

HPT (AWPT) 5,342 TEU 3.5 0.75 1.4 7 days 149,222 TEU

AWPT 6,860 TEU 3.5 0.75 1.4 7 days 191,625 TEU

MIP 4,710 TEU 3.5 0.75 1.4 7 days 131,568 TEU

BSW 2,046 TEU 3.5 0.75 1.4 7 days 57,152 TEU

MITT 5,000 TEU 3.5 0.75 1.4 7 days 139,668 TEU

Total 23,958 TEU 669,235 TEU

<<Future capacity>>

AWPT 3,168 TEU 3.6 0.75 1.4 7 days 88,494 TEU

MIP 2,088 TEU 3.6 0.75 1.4 7 days 58,326 TEU

MITT n.a

2.4.3 Port development status

As a result of hearings conducted during this survey from MPA and each terminal at Yangon Port,

additional terminal expansions already implemented as well as new construction plans developed after

the Development Project Report was prepared have been revealed and, therefore, the port development

status is now updated as follows. According to MPA, the following 7 quays are either under

construction or scheduled for construction on the BOT basis with additional 7 quays being planned

for construction as shown in Figure 2.4.3-1.

Figure 2.4.3-1 Future development plan of Yangon Inner Port (Source: MPA Presentation)

22


1) Hteedan Port Terminal (HPT) is being developed under a BOT contract between Shwe Nar Wah Co., Ltd., a subsidiary of Asia World Company, Limited and Myanmar Economic Corporation (MEC), the owner of the land. This terminal is a sister terminal being contiguous with Asia World Port Terminal and as there is no divider between the two, these terminals can be operated as one unit. HPT started construction of 180 meter berth extension in January, 2014, which will extend the overall quay length to 616 meters.

2) Asia World Port Terminal (AWPT) started its business from April, 1996 and is developing a 238 meter berth extension at Ahlone Area, as Phase 4, which will extend the overall quay length to 852 meters. In addition, on top of existing Mobile Harbor Crane × 2 units, Quay Container Crane × 4 units and RTG × 8 units will be installed by 2014. In combination with the aforementioned HPT and AWPT, the overall quay length will be 1,468 m, with container storage capacity of 6,310 TGS, on Ground Slot basis.

3) Myanmar Economic Corporation (MEC), affiliated company of Ministry of Defence is operated by Myanmar military related entities. The terminal operation project at Ahlone Area has been their new entry, with a 200 meter berth under construction as Phase 1 in a bid to start the terminal operation by June, 2014. Quay Container Crane × 1 unit and Mobile Harbor Crane × 1 unit have been already ordered. The target handling volume for Phase 1-(1) is containers, 100,000 TEUs and general cargoes, 600,000 tons. In addition, as Phase 1-(2), a 200 meter berth extension construction was commenced from January, 2014, and another 200 m berth extension is under planning as Phase 1-(3). Furthermore, after the abovementioned construction of total 600 meter berth, phased construction of 690 meter and 350 meter quays are under planning, with an ultimate goal of achieving the total quay length of 1,640 meters and an annual handling capacity of 923,750 TEUs. Meanwhile, the same company has filed an application with Myanmar Investment Committee (MIC) for a construction plan of port facilities under BOT arrangement in Eadin Area in the northwest of Yangon City where industrial parks are concentrated as well as in Naung Ton Area in the east.

4) In addition to the existing 2 berths with 310 meter length which opened business in January, 2003, Myanmar Industrial Port (MIP) is constructing 3 berths with total length of 600 meters as Phase 1 of the 60 year BOT contract with Myanmar’s Ministry of Transport, with completion slated for March, 2014 combined with the total terminal area of 105 acres. Furthermore, the adjacent east side area is made available for 1,400 meter berth construction as Phase 2. Also, in the early part of 2014, Japan-made used Quay Container Crane × 4 units and used RTG × 10 units are planned for installation, and as for Terminal Operation System (TOS), introduction of the Navis Spark 4 which is commonly used by world-class mega-operators will be completed towards the end of 2014. The reputation of MIP operation at present is not favorable but, terminal improvements are being implemented at a high pace.

5) Bow Aung Kyaw Street Wharf (BSW) was purchased from MPA, in 2010, by UMEHL (Union of Myanmar Economic Holdings Ltd.), an affiliated company of Ministry of Defence

23


and is operated by Lan Pyi Marine Co. Ltd., a UMEHL’s subsidiary. The 3 berths in total with overall quay length of 440 meters consist of 130 meter berth for conventional ships, 130 meter multi-purpose berth and 180 meter berth for container vessels. Quay Container Crane × 1 unit and Rail Mounted Gantry Crane × 2 units are available, but the main vessels handled are one container feeder vessel serving one shipping route between Malaysia and Yangon and conventional vessels operated by UMEHL purchased Myanmar Five Star Line. Hence, the Quay Container Crane is seldom used. When vessels bound for Singapore used to call in, there were LCL cargoes at the CFS, but at the moment, there are no CFS users at all. Although there is a plan for quay development in eastside BSW, there is no definitive plan yet.

6) Sule Pagoda Wharf (SPW) with 7 quays having overall length of 1,041 meter is a bulk terminal mainly used for cement imported from Thailand, out of which 548 m quays No.1– 4 are under consideration for converting to a multi-purpose terminal capable of handling containers by a JV between Sein Yadanar Company and MPA. As the wharf is very narrow with a little over 100 meter horizontal depth and the usable area as a container yard is very much restricted, the annual handling volume of the said wharf is estimated about 50,000 TEUs as per the Development Project Report.

7) Myanmar International Thilawa Terminal (MITT) with 1,000 meter long 5 berths and Quay Container Crane × 2 units is presently capable of handling 118,000 TEUs of containers annually but as of the end of 2013, no container vessels had called in. However, as necessity arises, Quay Container Cranes can be procured within one year through its own overseas network so that the terminal can handle up to 1,000,000 TEUs per year.

Compared to the terminals in the Yangon Inner Port, the Thilawa Area Port is under disadvantageous

conditions in terms of geography relative to the existing industrial parks. Consequently, the said

company intends to reduce the drayage (container transport charge) which is borne by the cargo owners

through its drayage division or plans to start barge transport pick-up services from a Yangon River

jetty adjacent to the Shwe Pyi Thar Industrial Zone.

For ocean shipping lines, AWPT situated

innermost among the river ports is not very

convenient to use fundamentally, but for cargo

owners, AWPT is highly convenient thanks to the

major industrial parks being concentrated in the

northwest of Yangon City. For this survey, the main

issue is how best such cargoes from the northwest

of Yangon City are attracted to the Thilawa Area

Port. For this survey, the main issue is how best Figure 2.4.3-2 Industrial Area near Yangon

24


such cargoes from the northwest of Yangon City are attracted to the Thilawa Area Port. Incidentally,

the container handling volume at Yangon Port in 2012 was about 474,811 TEUs, out of which AWPT

group including HPT handled 303,794 TEUs, about 64%, and MIP captured 145,537 TEUs, about

31%, both terminals covering 95% of cargoes handled at Yangon Port.

At present, AWPT is handling about double of what MIP is handling, but as the terminal facilities and

services at MIP are upgraded progressively in the future, it is anticipated the two companies may come

to compete with each other fiercely including price competition. In addition, it is expected that the

new participation of MEC and MITT’s catch-up efforts shall spur the competition among terminals

further. For reference, the past records of cargoes handled by AWPT group, the largest container

handling terminal in Yangon Port, are shown in Table 2.4.3-1.

Table 2.4.3-1 Container throughput of AWPT group (Source: Asia World Port Terminal)

Year No. of

Ship

EXPORT

(TEU)

IMPOR

(TEU)

TOTAL

(TEU)

Year on

Year

TEU

/Ship

Market

Share

2003 133 36,135 38,012 74,147 557 41%

2004 104 34,746 33,664 68,410 92% 658 43%

2005 99 32,315 30,969 63,248 92% 639 39%

2006 126 37,999 39,188 77,187 122% 613 41%

2007 145 52,522 47,748 100,270 130% 692 45%

2008 177 69,397 67,015 136,412 136% 771 55%

2009 234 91,264 91,189 182,453 134% 780 61%

2010 245 108,135 100,775 208,263 114% 850 62%

2011 271 131,644 124,775 256,419 123% 946 67%

2012 293 158,036 145,758 303,794 118% 1037 64%

2.4.4 Re-verification of handling capacity

The Development Project Report assumes the development for increasing the terminal handling

capacities will be initiated at Ahlone (AWPT) and MIP from 2016 when the capacity shortage at

Yangon Port becomes obvious, and as the construction of facilities requires about 2 years lead time, it

estimates 147,000 TEUs capacity expansion shall be realized gradually through 2018 to 2020. Also,

as for MITT, it assumes the handling capacity will be increased gradually starting from 2016 when

shortage in the container handling capacity at overall Yangon Port is expected to become evident, and

in 3–4 years thereafter, expansion to the maximum annual handling capacity of 815,000 TEUs will be

25


achieved. These results are summarized and shown in Table 2.4.4-1 and Table 2.4.4-2.

Table 2.4.4-1 Future Capacity of Yangon Port (Source: Development Project Report)

Capacity of

Existing Facilities

Capacity of Future

Development

Future Capacity

Hteedan(AWPT) 149 0 149

Ahlone(AWPT) 191 89 280

MIP 131 58 189

BSW 57 0 57

Sule Pagoda 0 50 50

Yangon Inner Port Subtotal 528 197 725

MITT 203 612 815

Ground Total 731 809 1,540

Except for MITT at Thilawa Area Port, the container handling capacities at the above terminals,

together with all other terminals in the Yangon Inner Port, are being determined by their yard capacities.

Table 2.4.4-2 Container throughput of Yangon Port (Source: Development Project Report) (Unit: thousand TEU)

2012 2013 2014 2015 2016 2017 2018 2019 2020

Hteedan(AWPT) 149 149 149 149 149 149 149 149 149

Ahlone(AWPT) 191 191 191 191 191 191 221 250 280

MIP 131 131 131 131 131 131 150 170 189

BSW 57 57 57 57 57 57 57 57 57

Sule Pagoda 0 0 0 50 50 50 50 50 50

Subtotal 528 528 528 578 578 578 627 676 725

MITT 203 203 203 203 320 485 650 815 815

G. Total 731 731 731 781 898 1063 1277 1491 1540

The Development Project Report presumes the current container handling capacity at Yangon Inner

Port is more or less 528,000 TEUs p.a. as shown in Table 2.4.4-1. On the other hand, while some

terminals are initiating quay extension work and yard improvement work to cope with the expanded

container cargo volume, the terminal capacity is determined by either the cargo handling capacity at

26


the quay or the storage capacity at the yard whichever is smaller. Consequently, it assumes the handling

capacity even in the future should be limited to 725,000 TEUs p.a. in view of the difficulty in securing

sufficient yard space due to the narrowness of the land area at Yangon Inner Port. In contrast, at

Thilawa Area Port, while it presumes part of the MITT with 1,000 meter long quay may have 203,000

TEUs annual container handling capacity, it further assumes the annual container handling capacity of

815,000 TEUs can be achieved in the future through the yard expansion work and installation of

additional cargo handling machinery, and as a result, it is estimated the combined container handling

capacity in the future at Yangon Inner Port and MITT will be more or less 1,540,000 TEUs p.a. In

summary, according to the Development Project Report, it is presumed the 5 terminals at Yangon Inner

Port and MITT at Thilawa Area Port all combined possess an annual capacity of 731,000 TEUs at this

moment, and hereafter through 2015 to 2020, it is possible to reinforce the capacity with additional

809,000 TEUs, which all totaled will enable the total capacity to reach 1,540,000 TEUs as at the year

2020.

However, on the basis of the hearings as part of this survey conducted as of December, 2013 with each

terminal, the handling capacity and the future plan of Yangon Port have been updated as shown in

Table 2.4.4-3.

Table 2.4.4-3 Reviewed Future Capacity of Yangon Port by this survey No. of Berth/Quay

Length No. of

Quay Crane Storage Capacity Future Capacity

HPT(AW Group) 3/616m 2 3,738 TGS 617,000 TEU AWPT(Ahlone) 4/852m 4 2,572 TGS MEC (Phase1-1) 1/200m 1 13,210 TEU 273,750 TEU

(Phase1-2&3) 2/400m n.a. (Phase2) 3/690m n.a. 14,310 TEU (450,000 TEU) (Phase3) 3/250m n.a. 8,000 TEU (200,000 TEU)

MIP (Existing) 2/310m 0 150,000 TEU (Phase1) 4/600m 4 200,000 TEU (Phase2) /1200m n.a. (500,000 TEU)

BSW 3/457m 1 2,046 TEU 57,000 TEU SPW n.a. n.a. MITT 5/1000m 2 1,000,000 TEU Total 2,297,750 TEU

(3,447,750 TEU)

If the maximum available capacity for expansion including all the expansion plans shown in Table

2.4.4-3 is taken into consideration, the maximum limit of the handling capacity is regarded as

3,447,750 TEUs. In consideration of the problems relating to the land-based access to the terminal and

27


congestion in the shipping routes, however, 2,297,750 TEUs consisting of the existing capacity at

Yangon Inner Port plus berth capacities either under construction already or scheduled to start

construction in 2014 and MITT’s expansion capacity which is regarded as realistic should be assumed

reasonable as the future capacity. During the three years from 2010, the base year for the previous

Development Project Report to 2013, the base year for this survey, the estimate value of the future

capacity of Yangon Port has ballooned from 1,540,000 TEUs to 2,298,000 TEUs. Though there is

some difference in prospective estimation methods, the future capacity is unmistakably on the trend

of upward modification.

The handling volume ratios for loaded containers and empty containers at Yangon Port from January

through to September, 2013 are shown in Table 2.4.4-4 and Figure 2.4.4-1. The empty container

handling ratio shown is about 32%.

Table 2.4.4-4 Comparing Laden container and Empty container at Yangon Port (Source: UMFCCI in Myanmar Port Development Forum 2013)

2013 Jan Feb Mar Apr May Jun Jul Aug Sep

Laden Imp. 19,499 18,647 22,657 21,990 25,042 20,648 20,789 22,434 21,958

Laden Exp. 7,796 10,222 11,674 7,180 8,761 7,305 8,213 10,040 8,532

Empty Imp. 763 1,115 1,280 783 943 933 1,653 1,379 999

Empty Exp. 12,064 8,589 8,462 12,095 17,165 14,705 13,397 15,458 15,740

Total 40,122 38,573 44,073 42,048 51,911 43,591 44,052 49,311 47,229

Figure 2.4.4-1 Comparing Laden container and Empty container at Yangon Port

As shown in Table 2.4.4-5, there are Inland Container Depots (ICD) in the vicinity of Yangon Inner

Port. Since empty containers do not need customs inspection, carrying them in and out directly

between the terminal and ICDs is allowed 24 hours and these ICDs play a complementary role for the

terminal where available land is limited.

28


Capacity (TEU)

Botataung No.1 ICD (MIP-Allied 4,390

Botataung No.2 ICD (rent by MIP) 2,820

MIP Inland Container Depot 4,710

Thaketa 2,000

DIL Yuzana ICD 2,000

Table 2.4.4-5 Inland Container Depot in Yangon Port (Source: UMFCCI in Myanmar Port Development Forum 2013)

2.5. Needs of port users

Port users consist generally of ocean shipping lines and cargo owners/distribution companies. By

conducting hearing surveys from the port users, the present status of Yangon Port and behavioral

factors of the users can be comprehended and with this understanding of the market structure relating

to Yangon Port, determination in which direction the competitive logistics network should be

structured is made possible. The results of the hearings are shown below.

2.5.1 Needs of shipping lines

1) Coverage of hearings to Ocean-going shipping/Shipping agency Corporate name Category Shipping line Terminal name

Myanmar MOL Limited Ocean going shipping (J

(JV with EFR)

MOL MIP

China Shipping (Myanmar)

Co., Ltd.

Ocean going shipping

(China)

(JV with EFR)

China Shipping

Container Line

Asia World Port

Myanmar ECL Co., Ltd. RORO/Conventional

(Japan)

Eastern Car Liner MITT, others

Meridian Shipping Services

Group

Sub-agency OOCL (Taiwan)

KMTC (Korea)

Namsung (Korea)

MIP

Myanmar Greenways

Shipping Agency Co., Ltd

Sub-agency

(JV with EFR)

Evergreen Marine Asia World Port

WIN PACIFIC Co., Ltd. Sub-agency PIL Asia World Port

29


2) Comprehension of present status of Yangon Port market

① Relationship among ocean shipping lines, agency and terminals

The official agency for oceangoing vessels calling in Yangon Port is SAD (Shipping Agency

Department), one of MPA organizations and the private sector exclusive agency belonging to each

of the ocean shipping lines is positioned as an operating agency. Consequently, the total amount

of expenses based on the port tariff for the vessel calling in Yangon Port including port charge and

handling charge is transferred by overseas remittance in U.S dollar from the ocean shipping line

once to SAD prior to the vessel arrival. After the vessel has departed and within 3-4 weeks, SAD

pays the handling charge, etc. to the terminal based on the port tariff. However, with regard to

container vessels handled by a foreign enterprise-owned terminal such as MITT, the said expenses

are directly charged to the ocean shipping line by the terminal, not by way of SAD. Meanwhile,

the official agency system involving SAD will be abolished by 2015. SAD’s manager said in a

hearing that, as MPA is reorganized into a public corporation, SAD’s new organization would

continue to take care of navigation, pilot, tugboat and other duties which should be done more

efficiently by port management body than individual shipping lines. Duties which individual

shipping lines can do more efficiently, such as issuance of bill of lading and delivery order, would

be transferred to private sector sub-agencies.

② Usage of berth

As to container vessel’s use of berth, service contracts agreed between terminals and shipping lines

according to the universal rules have given priority in berthing to container vessels of designated

shipping lines during a certain time period agreed as berth window. During non-berth window

hours, a vessel berthed first has a priority based on the “First In First Service” basis.

Regarding the berths to be used by conventional vessels, in Japan priority is given to a vessel

berthed first because of less port congestion with well-developed port facilities. Still, it’s a

common practice across the world that a port management body makes adjustments in berth

allocation or entrance order of arriving vessels to ensure efficient operation of port facilities. In

Myanmar, which faces port congestion, MPA and terminals decide berth and berthing time through

mutual consultation at 10:00 a.m. a day before vessel arrival.

③ Service related matters a) Due to the geographical merit, cargo owners prefer Yangon Inner Port for cargo handling,

especially AWPT. The main reason is that the inland transport cost alone from Thilawa Area Port is about double compared with that from Yangon Inner Port. In addition, Yangon Inner Port allows the customs clearance procedure to be handled with one or two persons in charge including witnessed inspection, etc. but at Thilawa Area Port, it is pointed out that more

30


manpower and time are required.

b) Compared with other terminals in the Yangon Inner Port, AWPT is speedier in freight handling and the customs clearing procedure. But, there are some ocean shipping lines not using the said terminal for some business reason.

c) At MIP, location control over containers is not performed accurately resulting in occasional dead freight due to unidentified container location. In addition, all the operations including carrying in/out through the gate are manually handled and are very time consuming. But, as described in the aforementioned port development status, MIP is tackling large scale service improvements.

d) Thilawa Area Port, with its innovative Terminal Operation System (TOS) and the state of the art cargo handling equipment, is an international operator and also with its geographical advantage, widely attracts ocean shipping lines by shortening the vessel’s laytime considerably.

e) Regarding repair of damaged containers, it should be effective to repair containers in Myanmar where manpower cost is inexpensive, but as Myanmar lacks in service engineers who meet the international repair standard, major repairs cannot be handled and repair is limited only to light damages and on a temporary basis.

As above, the hearings from ocean shipping lines and vessels’ sub-agencies have resulted generally in

common answers. In summary, the issues concerned for the terminal to attract ocean shipping lines

are as follows.

① Vessels’ call depends on cargo owners/cargoes ② Low charges ③ Shortening vessels’ laytime ④ Provision of accurate and efficient services by state of the art equipment/facilities and TOS ⑤ Container damage repair as ancillary service, etc.

But, as problems which the terminal alone cannot solve per se, there are issues relating to flux and

reflux of the tides and lack of knowledge about CY CUT. Generally speaking, considering the cargo

size of vessels calling in Yangon Port, continuous cargo handling should complete the work in 24

hours, but due to the aforementioned reasons, the average laytime spent is somewhere in between 2–

3 days.

31


2.5.2 Needs of cargo owners

1) Hearing coverage: Industrial Park Committee Shipper, consignee and cargo owner Logistics companies

2) Comprehension of the current market status

① Yangon area

a) As the import is based on CIF (Cost Freight Insurance) and the export on FOB (Free On Board), Myanmar side has no right of choice for ocean shipping lines.

b) While at Yangon Inner Port, the customs clearing procedure can be completed in one day thanks to the related agencies being concentrated in the urban area, at Thilawa Area Port, additional manpower and time are required due to its remote location.

c) As textile related products, agricultural products, etc. generally with thin profit margin are the main export items from Myanmar, the distribution cost need to be reduced as much as possible.

d) Functionalities of ICDs within Yangon City for customs clearance and storage are creditable to some extent. But, sufficient frequency is the key to the barge transportation from ICDs.

e) For export of sewn products in particular, urgency of shipment with emphasis on Lead Time is frequently desired as is characteristic about the industry, and choice is more inclined toward a yard accommodating flexibility with less inland transport time rather than the inland transport cost. Therefore, timely transportation by trucking offers greater convenience.

f) Container transport charges by road from the major industrial parks to Yangon Port are shown in Table 2.5.2-1. As for the container transport charges by road from Shwe Pyi Thar Area and Hlaing Thar Yar Area in the northwest of Yangon City, the Thilawa Area Port is doubly expensive compared with Yangon Inner Port, but the container transport charge by road thereto from Dagon Area in the east of Yangon City comes only 15% more expensive.

32


Table 2.5.2-1 Container transport charge by road (Source: Local trucking company)

(Unit: Kyat)

AWPT/MIP Thilawa

20’ 40’ 20’ 40’

Shwe Pyi Thar 81,000 118,000 154,500 191% 214,000 181%

Hlaing Thar Yar 83,000 122,000 155,500 187% 216,000 177%

Mingalar Don 98,500 142,500 153,500 156% 212,000 149%

East Dagon 98,000 150,500 120,500 123% 176,500 117%

South Dagon 76,000 120,500 85,500 113% 136,500 113%

② Garment factory in Bago Area

a) Bago is located about 65 km to the northeast from Yangon by Asian Highway 1.

b) Imported clothing fabrics (Italy, India, and China): 20 containers/month, Exported products: 40’ × 15 containers/month, more or less.

c) Main export destinations are Japan, Europe and the U.S. for men’s apparel, luxury casual clothes, and heavy coat products.

d) Manpower cost in Yangon is US$100 ~ 110/month vs US$95 ~ 100/month in Bago.

e) Construction of new Hanthawaddy Airport is scheduled. As the sewn product is a seasonal commodity and urgent deliveries in some cases are made by air, construction of the new airport becomes an advantage.

f) Container transport by road takes about 2.5 hours, leaving Bago at 12:00 and arriving at Yangon Port at 14:30. The container transport charge by road is 200,000 ~ 300,000 kyats/40’.

g) In 2015, Nissan Motor Company will complete 80 acre Sunny CKD production line factory in Bago Industrial Park, and production of 10,000 cars per year becomes possible. Also, a Japanese glove manufacturing factory has already moved in.

According to the “Yangon City Development Master Plan”, there are 24 industrial zones in the Yangon

Urban Area including those under planning and it is estimated workers engaged in the secondary

industry will increase by 550,000 by 2040. It is anticipated, therefore, that the labor cost in Yangon

will increase and shortage of skilled labor will occur due to moves of workers between factories. Cargo

owners point out their incentives to move in Bago which could compensate the long transport distance

and the expensive transport cost to Yangon Port as follows.

33


1. Possibility of securing inexpensive and large number of skilled labor

2. Reduction in transport cost ratio in the product by producing high end product

3. Air-freighting of cargo having urgency

4. Provision of incentives from authorities concerned ③ Industrial Park Committee in Mandalay Area

a) The Mandalay Industrial Park located in the southern suburb of Mandalay City is the first industrial park in Myanmar with 1,372 current resident companies in 1,820 acre land. Due to restrictions on factory construction within the urban area, the industrial park is under “sold-out” state but the majority of the residents are medium to small-sized enterprises. Accordingly, they do not own any equipment/facilities to handle containers and are not engaged in any container transport.

b) Export cargo includes furniture, textile (5 companies), food products, etc. which are small and make up only about 5% of the total.

c) Export/import procedures are entrusted to distribution companies in Yangon and the inland transportation to Yangon Port is arranged by cargo owners.

d) Road transportation to the Chinese border accommodating containers is available making Mandalay a potential distribution base geopolitically for trading with China and India.

e) As the said industrial park is already sold out, the chairperson of the same Industrial Park Committee is taking an initiative for developing Myotha Industrial Park in the vicinity of Mandalay.

④ Mandalay Myotha Industrial Development Public Co., Ltd. (MMID)

a) MMID located 60 km to the west of Mandalay is 100% locally capitalized company and is registered as the first publicly-held company in Myanmar. Including the last Phase 6, total 10,438 acre (about 4,223 ha) development is to be implemented. With a land leasing contract concluded with the Mandalay regional government having tenure of 70 years + 10 years + 10 years, the development is initiated by a Singaporean consultant and MIC has already approved the project.

b) 2,400 acre (about 971 ha) Phase 1 is scheduled to be completed within 5 years, and Samsung

is already considering construction of 500 acre factory. Also concurrently, construction of a highway connecting the Simokhon River Port on the Irrawaddy River 18 km to the west from the industrial park with the Mandalay Airport 72 km to the east is scheduled for completion within 3 years.

c) Simokhon River Port has 381 acres (about 154 ha) and cargo handling using pontoon barges

34


equipped with cranes that can handle containers is planned. The Irrawaddy River in front of the same facilities has a narrowed river width and they say there is no problem in securing water depth.

d) MMID, providing a residential area, a business park and a logistics area, assumes to offer a

real industrial park area of 6,000 acres (about 2,427 ha). By estimate using the average container generation (basic unit) from Asian industrial parks, it is expected this industrial park after completion of Phase 6 could generate the following container cargoes.

Export 2,427 ha × 0.8 (Development factor) × 200 TEU/ha/year = 388,320 TEU Import 2,427 ha × 0.8 (Development factor) × 100 TEU/ha/year = 194,160 TEU

Total 582,480 TEU

Geopolitically, this industrial park has a strong linkage with China and India and, presumably, is

expected to handle export and import items for border trades with both countries as well as a lot of

cargoes transported by sea from Sittwe Port and Kyaukpyu Port which are being developed with

supports from these countries. The question is how best these cargoes from this industrial park are

transported with minimal Lead Time and transportation cost to Yangon Port.

⑤ Pathein

a) Pathein, located 150 km to the west of Yangon, is the distribution center of rice produced in the Irrawaddy Delta Area. The jetty in the Pathein urban area is exclusively used for passenger vessels and shipment of rice is made at a jetty (120m) located in the outskirts of the city where warehouses combined with rice-cleaning mills are concentrated.

b) According to Ayeyar Pathein Rice Paddy Trading Co., Ltd., one of the local major rice dealers, * Rice is harvested during October ~ November and March ~ April periods by double cropping.

* The whole Pathein area delivers about 1,000 ton/day to Yangon, of which 50% is exported.

* At the moment, trucking charges are on the downside, but throughout the year, 80% uses

inland water transportation in average.

* At the warehouse, unhulled rice is stored and is it is milled upon receipt of a delivery order.

Distribution ratio of milled rice is 90%.

* In 2013, as the prices of Thai and Vietnamese rice were low, rice from Mandalay which is not

competitive for export via Yangon was exported to China through Mandalay by barge.

* Transportation cost per 50 kg bag;

Pathein–Yangon: by Truck: 700 kyat/by Barge: 350 kyat Pathein–

Mandalay: by Truck: 3000 kyat/by Barge: 1200 kyat

* MOT Inland Water Transport (IWT) offers inexpensive services compared with private sector

35


inland water transporters but its procedures are too complicated. Passenger-freight

combination vessels with too many ports of call are not user-friendly either.

c) After observing the warehouse combined with rice-cleaning mills, the following were identified. * The warehouse is spacious with 160f × 400f size, but location control is inefficient.

* The zinc roof shall be properly maintained to protect cargoes from rain leakage.

* 50 kg plastic bags are manhandled.

* A rice-cleaning mill isn’t efficiently utilized due to lack of electric power.

In late years, the trade volume of rice has risen sharply due to increase in population as well as

improved living standard in Asian and African countries and international product commercialization

of rice has been progressing in the world grain market. Myanmar has restarted private sector export of

rice in full swing and plans to boost the export volume from about 700,000 tons, 9th in the world now,

to 4,800,000 tons in 5 years. Importance will grow with respect to the price in completion with

Thailand and Vietnam as well as storage at the distribution center and quality control during

transportation. Myanmar’s rice export destinations are shown in Table 2.5.2-2.

Table 2.5.2-2 Direction of Rice Export Trade (Source: Central Statistical Organization)

(Unit: Thousand ton) 2006 2007 2008 2009 2010 Malaysia - - 17 18 1 0.2% Singapore 3 55 24 80 16 3.0% Philippines - - 1 38 - China - - 4 1 - Sri Lanka - - 8 1 - India - 1 14 2 3 0.6% Bangladesh - 193 202 10 161 30.0% ASIA Others - - 1 - 11 2.1% Iran - - - 7 * EUROPE - 7 4 5 107 20.0% Ivory Coast - - 178 468 224 41.8% AFLICA Others - 58 199 176 12 2.2% Others 12 44 14 12 1 0.2% TOTAL 15 358 666 818 536 100.0%

⑥ Log exporter in Yangon City a) Raw wood is transported from growing areas to MITT in 500 ~ 1,000 ton barges and trucked

to company-owned distribution centers at 3 locations near South Dagon and Thanlyin bridges. Upon receipt of an export order, the product is re-transported to MITT and exported.

36


b) Export destinations are Hong Kong, Singapore, Thailand, etc. shipped in containers, and India, Thailand. UAE etc. shipped in bulk.

c) The handling volume of the company is about 10,000 tons per month, of which 30% is

containerized at the company-owned distribution center and exported in containers.

d) If the log export is banned after April, 2014 onward, it is expected containerization of work timber should be promoted. At present, laws and regulations for specifying exportable processing standard are not available and Forestry Agency is considering formulation of such laws and regulations.

The combined export values in 2012 of teakwood and hardwood reached USD 579 million and they

have become Myanmar’s main export items. However, the forested area ratio of Myanmar has

decreased due to unrestrained logging from 57% in 1962 down to 51% in 2005 and then to 24% in

2008, drastic drop in recent years, and the raw wood export is banned from April, 2014 out of concern

for resource depletion.

But, as the timber processed internally still remains exportable hereafter, Indian and Singaporean

companies have filed applications for constructing saw mills with MIC. Two more Indian companies

have also applied for approval on factory construction in Dagon Industrial Area. The raw wood export

embargo will help increase container collecting opportunity for Thilawa Area Port from Dagon

Industrial Area for its relatively favorable location.

The main raw wood production area is Sagain State as shown in Table 2.5.2-3, generating about 30.4%

of the country’s total production. The distribution center for Sagain State is Monywa located on the

Chindwin River 120 km west-northwest of Mandalay City. While having saw mills in this area, there

are no facilities on the river that can handle containers. Therefore, transportation to Yangon depends

on barge or rail transportation in case of raw wood and for processed timber on container transportation

by road (1,300,000 kyat (Approx. USD1, 300)/20’and 1,600,000 kyat (Approx. USD1, 600)/40’) using

Asian Highway 1.

To win over the containers increased due to the raw wood embargo, it could be effective to develop a

distribution base in the cargo generating area and establishing an efficient transportation system.

Raw wood production areas in Myanmar and export destinations are shown in Table 2.5.2-3 and Table

2.5.2-4.

37


Table 2.5.2-3 Logs extraction by region and state in 2010

(Source: Central Statistical Organization) (Unit: Cubic ton) Sagaing Region 465,309 30.4% Bago Region 276,483 18.1% Mandalay Region 261,464 17.1%

Shan State 177,134 11.6% Kachin State 161,196 10.5%

Ayeyarwady Region 61,452 4.0%

Magway Region 47,396 3.1%

Tanintharyi Region 29,333 1.9% Rakhine State 14,599 1.0% Kayin State 10,997 0.7%

Mon State 10,737 0.7% Kayah State 9,438 0.6%

Chin State 4,864 0.3%

UNION TOTAL 1,530,402

Table 2.5.2-4 Direction of timber export trade (Source: Central Statistical Organization) (Unit: Cubic ton)

2006 2007 2008 2009 2010 Malaysia 7 6 5 2 3 0.3% Singapore 27 24 18 14 22 2.3% Thailand 76 51 67 41 46 4.8% Indonesia 2 1 1 Vietnam 69 100 44 64 40 4.2% China 89 146 64 40 58 6.0% Korea 4 1 1 1 0.1% Hong Kong 35 34 12 1 1 0.1% India 563 589 426 614 651 67.7% Japan 1 1 1 Pakistan 21 12 12 8 7 0.7% Others 79 93 73 109 128 13.3% MID. EAST 2 1 2 1 3 0.3% EUROPE 14 11 3 1 0.1% G. TOTAL 985 1,074 728 896 961

2.6 Basic policy concerning governmental body’s Thilawa area port development project

As democracy and economy develop in Myanmar, the amount of import and export cargoes is expected

to surge, making Yangon Inner Port facilities, the nation’s major port, unable to handle cargoes rapidly

38


increasing in volume. For this reason, the Myanmar government is developing Thilawa Area Port on

the east bank of the Yangon River, 25km south of Yangon. Thilawa Area Port’s shorter waiting time

for bar passage and capacity for receiving larger vessels compared with Yangon Inner Port will boost

convenience of ocean transportation. Additionally, simultaneous development of the Thilawa SEZ in

the hinterland of Thilawa Area Port is anticipated to integrate the port and industrial parks, thereby

increasing logistics efficiency.

The Japanese government also believes that Thilawa Area Port, by corresponding to the future cargo

demand of Myanmar and improving user-friendliness of the Thilawa SEZ, would be able to push for

attracting foreign enterprises including Japanese enterprises to start with and contribute to the

economic development of Myanmar through industrialization and therefore is prepared, as its policy,

to provide the maximum support with this project.

More specifically, in June, 2013, the Japanese government signed an agreement with yen loan in up to

20 billion then current yen to cover the infrastructure development project at Thilawa Area (Phase 1)

for the purpose of promoting transport efficiency and stabilization of electric power supply through

the development of the port terminal facilities and electric power related facilities at Thilawa Area.

Project implementing agencies on Myanmar side related to Thilawa Area Port Development Project ① Port sub-project implementing agency

Myanmar Port Authority, Ministry of Transport (MPA)

② Electric power sub-project implementing agency

Myanmar Electric Power Enterprise, Ministry of Electric Power Yangon City Electricity Supply Board, Ministry of Electric Power

2.7 Port and harbor policy

Yangon Port presently handles about 90% of overall port cargo transportation volume of Myanmar

and its social importance is very high. The containerization in Myanmar will be accelerated all the

more in the future and cargo owners would demand incomparably larger volume of cargo

transportation than before, reduction in lead time and transportation cost cutting. Ocean shipping lines

are considering improvement of vessel turnover by shortening of laytime as well as mass

transportation by vessel upsizing in order to enhance competitiveness including reduction in

transportation cost.

39


In contemplating port and harbor policy, it is necessary to develop a master plan looking ahead with

strategic objectives, instead of formulating expansion and development plan of an independent port

and harbor, so that urban functionalities and the nationwide distribution network are well considered

to balance with the distribution efficiency over the cargo generation areas or cargo consuming areas

as well as with the transport and environmental problems that affect the peripheries. The Yangon Inner

Port expansion and development project is an emergency evacuation measure to cope with the future

cargo demand. As a whole, while a sweeping changeover of the port and harbor policy is required,

promoting the full swing development of Thilawa Area Port which abounds in unlimited possibilities

should undoubtedly meet Myanmar’s national interest.

The public administration over port and harbor has traditionally practiced governmental port

development to supplement shortage of port facilities, but port development in late years on BOT basis

has come to require consideration for the private sector’s involvement in the port management. When

the handling volume of an existing terminal in Saigon Port, in Vietnam was reaching its capacity limit,

an aimless terminal construction on BOT basis was promoted at Cai Mep-Thi Vai Port. As a result of

this, the terminal capacity exceeded the cargo handling volume drastically, and as of 2012, the capacity

usage ratio of the 7 international terminals was as low as 15-20%. The same port needs to receive

USD88 per container to operate soundly but the current average port charge is USD32, and some of

them have lowered it down to USD23. Under these circumstances, each terminal is unable to control

and maintain the facilities satisfactorily and it is really worried that rapid deterioration of the facilities

may occur. The government should keep in mind that hasty expansion of the port not meeting the

demand does harm the healthy management of the port. The port is the social capital, and the

government is seriously responsible for accumulation as well as maintenance of the social capital.

2.8 Port and harbor issues

Issues concerning Yangon Port have been mentioned as above, and now specific issues will be

discussed.

1) Enhancement of port facilities to correspond to large size vessel

It is required for Myanmar to gain export competitiveness, which is essential for its economic growth,

through ocean transportation cost reduction by acquiring capacity to receive large vessels in the global

competition with ports of the neighboring countries, e.g. Chittagong Port, Bangladesh, as well as

reduction of manufacturing prices of export goods and domestic logistics cost. Compared with Yangon

Inner Port, which has a capacity of allowing entry of up to 1,000 TEU container vessels with its

40


allowable vessel sizes of 167 m in length and 15,000 DWT, Thilawa Area Port can allow up to 1,400

TEU container vessels for its allowable vessel sizes of 200 m in length and 20,000 DWT. Large vessels’

call at Thilawa Area Port will reduce ocean transportation cost per container. It will also maximize

handling efficiency at terminals where a massive amount of cargoes are handled by introducing the

latest cargo handling equipment and computer controlled-terminal operation system (TOS), thereby

reducing handling charge.

2) Customs Clearance System

So far trade volume has been small in Myanmar, and import/export declaration is submitted in written

documents, which are cross checked manually by officers. However, there’s a limit on working

manually on written documents to respond to a future rapid increase in trade volume. Even if hardware

is improved through upsizing of incoming vessels and enhancement of port facilities, port logistics

will be slowed unless software including customs clearance procedures is improved. At present,

customs clearance system that manually handles documents is a potential obstructive factor in

strengthening global competitive edge of the port.

NACCS (Nippon Automated Cargo and Port Consolidated System), a “comprehensive logistics

information platform” developed in Japan is an online system that handles customs and other

administrative organization-related procedures required for the private sector. At present there’s an

attempt to introduce MACCS (Myanmar Automated Cargo and Port Consolidated System), a

Myanmar-version NACCS, to Myanmar as Japan’s grant aid in order to improve custom clearance

system.

Introduction of MACCS will enable appropriate risk management. Consequently, declarations judged

as low risk will be able to obtain approval by going through a simple inspection and trade will go

smoothly. As to declarations judged as high risk, prudent inspections using X-ray or by opening, will

be conducted to ensure speedy and reliable operation of the custom clearance system, and to strengthen

global competitive edge of the port.

3) Terminal Operation System (TOS)

Asia World Port, the leading operator of Yangon Port, said in hearing that they are using their original

TOS. However, it seems to be an old-model TOS because terminal monitor is not mounted on handling

equipment, and a yard checker paired with a handling equipment is looking for containers.

MIP, the second largest operator of Yangon Port, is currently conducting all operations manually

41


including Gate carrying in/out. According to a hearing made with user shipping lines, there were some

cases that containers were not found and not placed aboard on the designated vessel because MIP

didn’t accurately grasp the container location. As to empty overseas container positioning, around 200

containers per vessel are transferred in advance from ICD to MIP, but carrying in containers takes a

lot of time due to manually-managed gate system and yard system. MIP, however, is expecting the

introduction of NAVIS SPARK4, the latest 200 million yen-worth TOS, to be completed at the end of

2014. This, combined with upgrading of four secondhand Japan-made gantry cranes, will enhance

MIP’s port infrastructure, bringing a major change in power relation at the Yangon terminal, where

Asia World Port boasts of 60%-strong share of the total cargo volume handled in Yangon. BSW and

MITT said in hearing that they were still considering because of small handling volume. Details were

not disclosed.

Necessity of TOS is as with the case of MACCS. A small volume cargo can be handled manually with

documents carrying container information. However, there’s a limit on responding manually with

written documents to a future rapid increase in trade volume, and it’s obvious that a gap in

competitiveness among terminals will widen.

For instance, loaded export containers are brought into a terminal, yard location should be classified

according to the container information, such as name of vessel, destination, weight, etc. If handled

manually, a gate clerk cross-checks the containers with a container list to see if there’s a mistake and

forwards the container information to a controller at the administration building, the controller decides

yard location and responds back to the gate clerk and hands out the yard location-containing

documents to a trailer driver; this series of container carry-in work takes several minutes. On the other

hand, when TOS has been introduced, once the gate clerk input the container number to the TOS

terminal, a series of carry-in work will be completed and the trailer driver will receive yard location

slip on the spot. This can shorten gate passing time dramatically.

Also, when unloading containers inside yard, in manual operation the each terminal equipment’s

operating status is not visible hindered by obstacles, and optimal instruction cannot be given as the

number of terminal equipment increases. Moreover, manual operation requires yard checkers paring

with terminal equipment operator, which may cause a concern over bodily injury in a yard where large-

size terminal equipment are running and raise a labor issue as well. On the other hand, if TOS is

introduced, perfect choice of container carry-in/out or vessel loading/unloading is notified to each

terminal equipment’s operator through vehicle-mounted terminals, and efficient use of terminal

equipment and yard checker are not necessary.

In Japan, NACCS, ship owner’s system and TOS are connected by EDI (Electric Data Interchange),

42


and thereby current status of containers is shared instantly. In other words, dramatically accelerated

terminal work-related information communication, e.g. container carrying-in/out, customs clearance

status, planning of vessel loading/unloading and completion of work, etc. enables efficient terminal

operation and smooth handover of cargoes.

4) Improvement of Access

There are two access routes from industrial parks around Yangon to Thilawa Area Port. Container

trailers are not allowed to cross Yangon Thanlyin Bridge (1. Thanlyin Bridge) located at the

downstream of the Bago River, which has a rail track as well as motorway, due to the aging bridge’s

load restriction of 36 tons. Meanwhile, Yangon Thanlyin Bridge (2. Dagon Bridge) at the upstream

has a load restriction of 60 tons and container trailers are allowed to cross it.

Figure 2.8-1 Access to Thilawa

Roads are mainly used for access between industrial parks around Yangon and Thilawa Area Port.

However, except Dagon Bridge which has three tracks on each side, all access roads are general road

with one track on each side, and this is likely to generate future traffic jams as development of the

Thilawa area proceeds. To cope with this, expansion of roads around Dagon Bridge and development

of industrial roads bypassing commercial district, as well as river-utilized barge transportation are

required. Development of road takes time and money, however early commencement of Yangon River-

utilized container barge transportation is possible.

43


Figure 2.8-2 Road Network of the Yangon Metropolitan Area in 2040 (Source: “Preparatory Survey for the Formulation of Yangon Metropolitan Area Development

Program” by JICA Survey Team)

44


5) Wide-area Logistics Network

Some Japanese companies are aiming to enter the inner

hinterland. Nissan Motor has decided to build a factory

jointly with Malaysia’s Tan Chong Motor in Bago

Industrial Park located some 80 km northeast of

Yangon. In the Bago Industrial Park, three Japanese

sewing factories have already been operating.

Phase I project of Myotha Industrial Park, which is

located some 58 km west-southwest of the city center

of Mandalay, is due to be completed between 2017 and

2020, and export processing zone, logistics area,

commercial, housing and research districts are going

to be constructed in its site of 2,400 acres. In the

neighboring Simikon, a port that can secure 5-10-

meter water depth even in dry seasons will be built.

The Myotha Industrial Park will serve as an export

base that will deliver lumbers and stone materials,

which are abundant in northern areas, as well as

Figure 2.8-3 Suggested Hinterland Logistics Bases

food and other primary products, to China and India, or countries geologically close to Myanmar.

Establishing domestic transportation means to Thilawa Area Port through development of road, rail

and inner land transportations will open the way for cargo transportation to Thilawa Area Port.

Demand for rice is expected to increase in Africa from now onwards, and Myanmar, which was once

a huge rice exporter, has resumed full-fledged export of rice through a state-owned company MAPCO.

Rice produced in the Ayeyarwaday Delta, Myanmar’s main rice-growing region, is accumulated and

polished in Pathein and then delivered to Yangon. However, the rice is not kept in a good condition in

Pathein, instead, kept in an ordinary-temperature warehouse with pin hole. Consequently, the quality

of rice deteriorates. In terms of transportation means, since 50 kg bags are stuck up directly on a barge,

transportation is difficult in rainy seasons. To address this problem, a low-temperature warehouse that

can maintain the quality of rice and container loading-unloading facilities for container barge

transportation should be built at the river.

Besides the above, construction of logistics bases for container handling in inner hinterlands that

spread across the country and optimal transportation mode selection among road, rail and inner water

45


transportations are required to build a competitive wide-area logistics network that will accelerate

cargo concentration at Thilawa Area Port.

6) CY CUT (Container Yard Cut-Off)

Currently, some container vessels calling in Yangon Port need approx. 1,000 moves for landing and

loading, but the operation can be completed within 24 hours if worked continuously. Actually, due to

cargo owners’ insufficient understanding of CY CUT, the vessel’s laytime is extended for awaiting

containers scheduled for loading. Observing CY CUT will ensure the vessel’s punctual departure from

Yangon Port and connection with mother vessel at hub port, thereby benefiting both cargo owners and

ocean shipping lines. Raising cargo owners’ awareness of CY CUT is needed.

46


Chapter 3. State of Domestic Distribution Network Development

3.1 Overview of domestic distribution network

Domestic traffic network of Myanmar features the transport system which is divided in the east – west

direction by major rivers flowing from north to south and places a focus on connection of southern

and northern regions. Although focus is placed on development of ports and airports in order to

promote an open-door policy, development of infrastructures has not sufficiently been implemented

due to limited budgets.

Transportation of cargoes between inland region and Yangon Port which handles approximately 90%

of total marine cargoes in Myanmar is not implemented in a timely manner because of insufficient

management, fledgling forwarders, undeveloped roads and railways, aging trucks and trains, etc.,

which results in prolonged transportation times. If three factors of distribution linked to Thilawa

District Port, i.e. reliability, safety and swiftness are assured, it is possible to facilitate increase of

container handling volume at Thilawa Port. Since development and modernization of infrastructures

involve enormous cost, it is desirable to utilize the existing facilities as much as possible and renew

them from time to time. This is a realistic and reliable measure to increase container cargoes.

Total domestic cargo transportation in Myanmar in 2012 amounts to 36,609 thousand tons or 15,253

million ton kilometers. The share by transportation means on ton kilometer basis is as follows: roads

approximately 70%, railways approximately 8.5% and rivers approximately 14%. The followings

describe the examination on road transportation, railway transportation and river waterborne

transportation as domestic transportation means linked to Thilawa District Port.

Table 3.1-1 State of Domestic Cargo Transportation by Transportation Means (2012) (Source: ASEAN - Japan Transport Partnership Information Center)

Transportation

means

Ton basis Ton kilometers basis

Tons

(thousand)

Transport share

Ton kilometers

(million)

Transport share

Road 25,528 69.73% 3,854 25.26%

Railway 3,124 8.53% 1,041 6.82%

River waterborne 5,256 14.36% 1,120 7.34%

Coastal waterborne 2,701 7.38% 9,238 60.56%

Total 36,609 100.00% 15,253 100.00%

47


3.2 Road transportation

Total road length of Myanmar was 78,266 km in 2003 and 148,689 km in 2012. During these 10 years

it had been extended by 190%. Among them, however, paved roads were 31,465 km in 2012, which

means that pavement rate was only 21.2%. Since the capital was relocated from Yangon to Naypyidaw

in November 2005, development of road for improvement of access to the new capital from each state

district has been prioritized. Furthermore, express highway is under construction connecting Yangon,

the largest city, with Mandalay via the capital city of Naypyidaw. A part of this Yangon – Naypyidaw

highway was opened to traffic in March 2009. It is, however, prohibited for a truck to drive into this

express highway.

Table 3.2-1 State of Roads and Number of Registered Heavy-duty Truck in Myanmar (Source: Myanmar International Forwarder Association)

Year

Total road length

(km)

Paved road (km)

Pavement rate

Registered heavy-duty

truck (unit)

2003 78,266 n.a n.a n.a

2004 90,713 22,153 24.4% 30,499

2005 92,859 22,830 24.6% 31,437

2006 104,058 23,955 23.0% 31,990

2007 111,737 24,670 22.1% 33,160

2008 125,355 25,553 20.4% 33,928

2009 127,942 26,333 20.6% 35,125

2010 130,050 28,569 22.0% 36,820

2011 142,395 30,879 21.7% 38,053

2012 148,689 31,465 21.2% 41,075

48


Figure 3.2-1 State of Roads and Number of Registered Heavy-duty Truck in Myanmar

Because of import restriction of an automobile enacted until 2012 in addition to low pavement rate in

Myanmar, there is a shortage of truck and accordingly cost of road transportation in Myanmar tends

to be relatively high. On the other hand, since 1996 roads and bridges have been constructed under a

BOT scheme. The extension and maintenance works of the existing roads constructed by Public Works

Bureau are also undertaken by private companies which recover operation expense from usage charge

of the infrastructure (toll). In 2012, approximately 15% (5,896 km, 61 routes) of the total length of

39,083 km under control of Public Works Bureau is operated by private companies under a BOT

scheme. In Yangon and Mandalay Regions where demand of road transportation is especially high,

road management under a BOT scheme is prevailing. It is predicted that foreign-owned logistics

operators like a joint venture between Kamigumi and EFR, one of leading local logistics companies

will enter into road transport business in future. As state of roads is further improved, road

transportation will be increased more and more.

Mandalay Township can be one of targets for collection of containers for Thilawa District Port if

Myotha Industrial Park is developed. Since there are only small and medium-sized companies

currently operating in Mandalay Industrial Park, however, little container demand can be expected for

the time being. Under such background, collection of containers for Thilawa District Port from

surrounding area of the Greater Yangon will be discussed hereinafter.

49


It will become an important key for success in

business of Thilawa District Port how many

containers can be collected from Hlaingthayar

Township where not less than 60% of

containers handled at Yangon Port are

produced. Road network in the Greater

Yangon is, however, formed in a radial pattern

from urban area. While there are Route No. 5

(to the west), Route No. 4 (to the north),

Route No. 1 (to the north), Route No. 3 (to the

north), Route No. 2 (to the north east) and

Route No. 6 (From Thilawa District to the

east) and so on, there is neither national road

nor industrial road connecting the Greater

Yangon and Thilawa District Port. In

addition, there is no loop road connecting

Hlaingthayar Township and Thilawa District

Port bypassing urban area.

Figure 3.2-2: Road Network of the Greater Yangon

For access to Thilawa District Port from Hlaingthayar Township, there are two bridges over Bago

River constructed under a BOT scheme. While Yangon-Thanlyin Bridge (2) has weight limit of 60

tons, Yangon-Thanlyin Bridge (1) has weight limit of 36 tons. A container vehicle is, therefore,

prohibited to pass the latter bridge. Consequently the route between Hlaingthayar Township and

Thilawa District Port on which a container vehicle is allowed to pass is as shown in Figure 3.2-3. The

distance of this route is approximately 65 km one way. Since only local roads are available except the

port road in front of Yangon Main Port, it takes approximately 3.5 hours for one way transportation

and when traffic is congested it takes as long as 5 hours. Regarding road transportation cost on this

route, the cost between Hlaingthayar Township and Thilawa District Port is US$160/20f container

while that between Hlaingthayar Township and Yangon Main Port is US$83/20f container.

50


Figure 3.2-3: Existing Route for Container Vehicle between Hlaingthayar Industrial Park and Thilawa District Port

Development of social infrastructure such as a road, a bridge and so on under a BOT scheme is in

vogue all over the world. Although a road and a bridge belonging to the category of social

infrastructure have public nature, it is reasonable to request to bear cost through toll collection in

proportion to usage. However, toll of Yangon-Thanlyin Bridge (2) over Bago River constructed under

scheme of a BOT is as high as US$10 for 18-wheel trailer and US$11 for 22-wheel trailer. Since

consignors/consignees shall bear toll of the bridge as domestic transportation cost in addition to the

road transportation cost mentioned above, it is one of the reasons that consignors/consignees do not

like carrying containers into and out of Thilawa District Port.

The annual container throughput of MITT in Thilawa District Port in FY2012 is as few as 13,248 TEU

which is of the volume that does not affect current road network. If development of Thilawa District

Port and SEZ are progressing, however, it is predicted that due to increased traffic of container vehicles,

roads surrounding Yangon-Thanlyin Bridge (2) which is the only access to Thilawa District Port will

be congested. Furthermore, if the capacity of Yangon Main Port overflows and flow of container

cargoes is shifted to Thilawa District Port, local roads not developed as industrial roads will be

damaged rapidly and repair works of such damages will cause further traffic congestion. In any case,

51


the existing road network will not be able to afford to play a role of access to Thilawa District Port in

the near future.

In order to build up efficient road transport network to Thilawa District Port, it is necessary to develop

an outer loop road connecting major industrial parks and Thilawa District Port bypassing urban area

of the Greater Yangon. The road network of the Greater Yangon as shown in Figure 3.2-4 has been

proposed as a new road network in 2040.

Figure 3.2-4: Proposal on Road Network of the Greater Yangon (Source: JICA Survey Team of the Project for

the Strategic Urban Development Plan of the Greater Yangon)

52


3.3 Railway transportation

While road transportation between Mandalay and Yangon costs US$1,000/20f container, the

transportation cost of railway transportation is as cheap as US$300/20f container and it is competitive

in price even if including short drayage at both ends. Table 3.3-1 shows major goods which are

transported by railway. The goods are mainly raw materials and primary products such as rice, pulses,

lumber, petroleum products, minerals, stones and others. Regarding lumber which is the most common

freight transported by railway, export in the form of a log has been prohibited since April 2014 and it

is currently exported in the form of lumber. It is assumed, therefore, that containerization will be

facilitated in future. It is effective from the viewpoint of development of Thilawa District Port and

environmental consideration to construct railway yard in Thilawa District Port and collect container

freights from inland hinterland by railway transportation.

Table 3.3-1 Classification of Major Goods Transported by Railway (Unit: 1,000 tons)

Goods 2008 2009 2010 2011 2012

Rice and rice processed products 62.0 92.8 103.0 97.9 113.5

Lumber 179.3 169.9 242.1 285.9 238.5

Pulses/noodle 52.5 18.4 33.0 17.5 11.5

Petroleum 90.7 99.7 107.7 128.4 117.3

Minerals 44.6 33.5 26.4 21.2 26.3

Stones 75.1 88.6 118.4 119.8 193.8

Salt 50.0 63.8 69.6 47.5 31.8

Military goods 89.3 39.1 71.3 56.1 48.9

Thilawa Branch Line, which is connected to Trunk Line operating between Yangon and Mandalay,

branches off at Toe Kyaung Galay Station 12 km away from Yangon Central Station and the track is

laid to the front of MITT. The train currently couples one passenger car and provides four round trip

services between Yangon Central Station and Thilawa Station a day, however container transportation

is not available.

53


Figure 3.3-1 Thilawa Branch Line

54


The reasons that no container transportation to Thilawa District Port is available are as follows: ① Maintenance sufficient enough to allow transportation of freights is not performed, for example,

deficiency of track bed strength, deficiency of track ballast, etc.

② Yangon Thanlyin Bridge (1) installed over Bago River is a large-scale bridge for use common for

railway and road on which container transportation is difficult because of restriction from

clearance limit.

In order to substantiate mass, high-speed and stable container transportation from long-term

perspective, it is necessary to improve the existing facility and establish container yards in major

regions such as Thilawa, Mandalay and others. In order to minimize short drayage, it is appropriate to

establish a railway container yard within a terminal or in hinterland.

3.4 River waterborne transportation

The river waterborne transportation in Myanmar has been developed, mainly on Ayeyarwady River.

The river features 8 m difference in water level between rainy season and dry season, and during dry

season from December through March there appears a place where water level drops as low as below

1 m, which is likely to hinder stable operation. Regarding collection of container cargoes directed at

Thilawa District Port by river waterborne transportation, therefore, it is assumed that the target place

of the collection of container cargoes will be surrounding area of the Greater Yangon and Pathein Port,

one of major cities in Ayeyarwady Delta where stable operation of a container barge is possible

throughout a year.

55


Khanti

Homemalin

Bamaw

Kathar

Kalaywa

Monywa Mandalay

Pakkuku MyinMu

Magway

Pyi

Pathein

Yangon

Figure 3.4-1 Major Water System and River Ports in Myanmar

(1) Surrounding area of the Greater Yangon

In order to build up efficient container transportation system from surrounding area of the Greater

Yangon to Thilawa District Port, it is necessary to develop new road network such as outer

industrial loop road, etc. connecting major industrial parks and Thilawa District Port bypassing

urban area of the Greater Yangon. However, it takes time and involves tremendous cost. In order

to enhance immediately transportation capacity utilizing the existing transportation network,

waterborne transportation utilizing Yangon River brings the most immediate effect.

There are three major industrial parks around Hlaing thayar Township located in the north

western part of the Greater Yangon. Not less than 60% of containers are produced from these

industrial parks. It is effective also from the viewpoint of development of Thilawa District Port

and environmental consideration as well as urban planning to set up ICD (Inland Container Depot)

with a jetty along Yangon River to which container cargoes from these industrial parks are

collected and then transported by means of river waterborne transportation on a barge.

56


Figure 3.4-2 Waterborne Transportation Utilizing Yangon River

(2) Pathein Port

Pathein Port, a river port located at the west end of Ayeyarwady Delta, 14 km to the west of Yangon

and approximately 110 km upstream of Pathein River from Yangon is one of hubs of river

waterborne transportation service in the Delta Area. The goods transported from Pathein to other

cities are mainly rice. Approximately 80% of transportation from Pathein to other cities is

implemented by means of river waterborne transportation and approximately 20% by means of

road transportation. There are a lot of warehouses to store rice in the city and most of rice produced

in the neighboring area is once gathered and polished in Pathein and then transported to various

regions. The size of a barge currently used at Pathein is approximately 50 m (L) × 20 m (W), and

it has capability to transport rice as much as 1,000 tons and it takes two (2) days to transport it to

Yangon. Since no cargo handling equipment for a container is available, it is packed in a bag (50

kg) so as to allow for manual handling and transported by means of bulk transportation. Since a

57


shipping company of ocean-going vessels is studying construction of ICD in Pathein, however, it

is expected that the river waterborne transportation of rice will become containerized in future.

Delta Division Hinthada

Pyay

Ngathaichaung

EainMe' Yangon

Pathein ShweLaung

Myaung Mya Wahkhema KyaukLatt

Kyounmange

Kyarkan

Higyi

Lattputa

Running

FINISH

Figure 3.4-3 Route of Delta Division of IWT (Source: IWT)

Figure 3.4-4 Pathein Port and Manual Cargo Handling

58


3.5 Investigation on Optimized Transportation Mode

The following is a summary of advantage and issues to be resolved of respective transportation mode

to collect container cargoes to Thilawa District Port:

<<Advantage>>

Road transportation * Door-to-door service shortens lead time. * Flexibility that handling freights from a small lot to a large lot

is possible.

Railway

transportation

* Low transportation cost * Relatively superior ability to maintain punctuality * Less environmental load (CO2 emission)

Waterborne

transportation

* Low transportation cost * Ability to transport mass or heavy cargoes * Less environmental load (CO2 emission)

<<Issues to be resolved>>

Road transportation * Access to Thilawa Port is insufficient because no industrial road has been developed.

* Damage to freight is caused by many unpaved sections of roads * High transportation cost

Railway

transportation

* No direct access to Thilawa District Port * Aging of civil structures including tracks *A high cube container of 9’6’’ cannot be transported because of structure over tracks

* Road transportation is required at both ends.

Waterborne

transportation

* Navigation restriction when water level is lowered during dry season

* Container handling equipment has not been installed at local ports.

* On-time operation is difficult. * Long lead time * Road transportation is required at both ends.

The road transportation will continue to be utilized as a primary transportation means in future. In

order to improve efficiency of logistics to Thilawa District Port and facilitate collection of containers

59


there, however, it is necessary to establish the distribution network making use of advantage of long-

distance mass transportation provided by railway transportation and waterborne transportation as

shown in Figure 3.5-1.

Kamigumi is investigating development of ICD and inland ports in the regions which will become

hubs of distribution network to collect container freights from whole of Myanmar. The function of

ICD and an inland port is to provide services for delivery and acceptance of containers between

consignors/consignees and shipping companies as same as delivery and acceptance of containers

between consignors/consignees and shipping companies at Thilawa District Port. Since the prevailing

export condition in Myanmar is FOB (Free onboard) and the prevailing import condition is CIF (Cost,

Insurance and Freight), domestic transportation cost shall be borne by consignors/consignees in

Myanmar. Delivery and acceptance of a container at ICD or an inland port will provide

consignors/consignees in Myanmar with advantage to mitigate domestic transportation cost. On the

other hand, although a shipping company shall bear transportation cost of a container between ICD or

an inland port and Thilawa District Port, it will provide a shipping company with advantage to enhance

competitiveness in collecting containers against other shipping companies. Thilawa District Port will

be provided with advantages to enable to establish cooperative relationship with

consignors/consignees and shipping companies in coordination with ICD and inland ports.

60


Figure 3.5-1 Distribution Network

(1) Collection of containers from inland hinterland

ICD or inland ports will be built up in inland hinterland such as Mandalay, Pathein, Bago, etc.

where container demand is expected in future in order to provide services for delivery and

acceptance of containers as an agent of shipping companies. For transportation to Thilawa District

Port, an operator of ICD or an inland port will arrange optimized transportation mode selecting it

among road transportation, railway transportation and waterborne transportation considering lead

time, cost, etc. fulfilling needs of consignors/consignees and shipping companies. In addition, if

operation systems of ICD or an inland port and Thilawa District Port are connected each other, it

becomes possible to immediately get hold of information on current state of a container.

(2) Collection of containers from the Greater Yangon

ICD will be established in Hlaingthaya Township which is located in the north western part of the

Greater Yangon and where approximately 60% of containers loaded and unloaded at Yangon Port

is produced. The container cargoes will be transported to Thilawa District Port by means of

61


waterborne transportation and collected there. In South Dagon Township which is located in the

eastern part of the Greater Yangon and is relatively close to Thilawa District Port, more than 2,000

small and medium-sized companies are operating; therefore, establishment of ICD there will be

also effective.

Figure 3.5-2 Major Industrial Parks in the Greater Yangon

(3) Collection of containers from Thilawa SEZ

A bonded distribution center in Thilawa SEZ has functions as described below as an affiliated

facility of Thilawa District Port. Since it supplements customs procedures, storage and delivery

service of containers carried into and out of Thilawa District Port, it will enable to provide

consignors/consignees with value-added type services by integrating the port and the SEZ.

* Customs office

* Customs inspection area

* Bonded warehouse

* Bonded yard

* CFS

* Warehouse of general cargo

* ICD

* Truck terminal

62


<<Benefits to SEZ>> <<Benefits to Port>>

Provision of reliable and efficient port

operation in accordance with production

activity of investors in SEZ

Value-added type logistics service such as

special carrying-in and -out, preferential

handling, etc. Simplification of procedures for carrying-

in and -out by means of state-of-the-art

port operation system

Supply of container cargoes mainly to/from

Japanese companies Improvement of container rotation rate

through seamless logistics service by

means of bonded transportation and

customs procedure

Promotion of collection and creation of

export/import cargoes taking opportunity of

consultation of export/import procedures

provided to investors

3.6 Logistics Depot

There are 24 industrial parks around the Greater Yangon as shown in Table 3.6-1. Among them, South

Dagon Township in the eastern district and Hlaingtharyar Township in the northern district, where a

lot of factories are operating, are appropriate to establish ICD. Application for permit of expansion of

sawmill machinery and new construction of sawmill factory are being submitted in South Dagon

Township where wood product industry is prevailing because of export restriction of logs coming into

force from April 2014 and consequently the export of containerized lumber will be increased. In

addition, Hlaingtharyar Township and its surrounding industrial parks, such as Shwelinban Township

and Shwepxitar Township, are major hubs of container cargoes handled by Yangon Port.

63


Table 3.6-1: Industrial Parks around the Greater Yangon (Source: JETRO Report of Survey Team for Industrial Parks in Myanmar)

District

Name of industrial park

Commencement

of operation

Area (ha)

Number of

factories Eastern

District

South Dagon (1) 1992 192.4 137

South Dagon (2) 1996 86.8 661

South Dagon (3) 2000 21.6 1280

Dagon 1997 489.1 102

East Dagon 2000 317.3 45

North Dagon 1998 44.4 94

South Okkalapa 2000 14.2 95

North Dagon 1996 10.1 0

Thaketa 1999 89.9 80

Shwepaukkan 1998 38.3 244 Northern

District

Hlaing Thar Yar (1, 2, 3, 4, 6) 1995 567.1 519

Hlaing Thar Yar 5 1996 90.2 164

Shwelinban 2002 445.2 203

Shwe Pyi Thar (1) 1990 136 132

Shwe Pyi Thar (2 ,3, 4) 1998 399.6 108

Shwe Than Lwin 2001 176.5 10

Anawrahta 2002 314.8 5

Mingalardon 1996 89.8 6

Tahadukan 2001 194.3 7

Wataya 2004 445 3

Yangon Industrial Zone 2000 365.2 31

Myaungtaga (Hmawbi) 2006 411 22

Southern

District

Than Lyin/Kyak Tan 1996 175.1 0

Thilawa 2000 175.1 3

3.6.1 Inland Container Depot (ICD) around the Greater Yangon

The function of ICD established in the periphery of an industrial park is to provide a consignor who

64


is located far from Thilawa District Port with benefit that delivery and acceptance of a container can

take place at neighboring facility. Furthermore, in the case that a consignor cannot afford to carry out

vanning and devanning by itself, it is possible to go through the customs formalities and carry out

vanning and devanning in ICD and accordingly a consignor has advantage that all a consignor needs

to do is to bring a truck to receive contents of a container.

Since an empty container, returned to ICD after import devanning of a container, is cleaned and

repaired so that it can be reused as a container for export vanning, a shipping company can save cost

of domestic transportation of an empty container except positioning of a part of empty containers in

foreign countries.

Figure 3.6-1 Function of ICD

Thilawa District Port has a geographical disadvantage which is far from major industrial parks when

competing with Yangon Main Port. Furthermore, in Thilawa District Port, the new terminal has

disadvantage of being a late comer when competing with MITT which is an earlier comer. It is

necessary for the new terminal to take an action to differentiate itself from competing terminals by

fencing in consignors/consignees and shipping companies through ICD and trying to collect and create

freights.

65


3.6.2 Inland port in inland hinterland

Ministry of Construction quotes eight regions as

developing regions (planned sites) as shown in Figure

3.6-2. On the other hand, Ministry of National Planning

and Economic Development quotes only three regions:

Yangon, Mandalay and Taunggyi. In the case that ICD

or an inland port is built in inland hinterland, it is

desirable to build it as a connection point of railway

transportation, waterborne transportation and road

transportation. Table 3.6-3 shows industrial parks in

inland hinterland.

Figure 3.6-2 Developing Regions

Table3.6-2: Industrial Parks in Inland Hinterland (Source: JETRO Report of Survey Team for Industrial Parks in Myanmar, February 2013)

Region

Industrial park

Commencement

of operation

Area (ha)

Number of

factories

Mandalay Mandalay 1990 501.5 1,379

Myingyan 1995 66.2 265

Meikitila 1997 156 295

Sagaing Monywa 1999 147.8 596

Kalay 2004 67.7 34

Magwe Yaenanchaung 1998 69.5 121

Pakokkn 1998 153.3 272

Bago Pyay 1992 48.9 132

Ayeyarwaddy Pathein 1993 43 54

Myaungmya 1995 23.5 9

Hinthada 1995 34.9 9

Shan Taunggyi 1995 365 767

Mon Mawlamying 1995 69.2 86

Thanintharyi Myeik 1999 128.9 8

66


ure 3.6-3 Distribution of Industrial

Parks in Hinterland

Only small volume of container freights is currently

produced in inland hinterland. However, as candidates of

distribution bases in inland hinterland, Mandalay,

Monywa and Taunggyi where industrial clusters are

relatively facilitated and future container demand can be

expected and Bago which is close to a planned site of New

Yangon International Airport and Pathein which is

agglomerations of rice can be lined up. If warehouses

which are appropriate for properties of freights (normal

temperature, constant temperature, cold and refrigerated)

and yards where containers can be handled are developed

and cooperative relationship between distribution bases in

inland hinterland and Thilawa District Port is established,

quality control of domestic transportation, shortening of

lead time and cost reduction will be substantiated, which

can be led to enhanced competitiveness of Thilawa

District Port.

Fig

3.6.3 On-dock multi-purpose distribution center (refrigerated, cold, distribution processing and

other facilities)

An on-dock warehouse which is located on the premises of a port terminal means a warehouse

integrated with the terminal. Multi-purpose distribution center does not only store cargoes but also

performs a series of distribution processing works at a single site including vanning, inspection of

goods and works up to delivery service to small shops. The establishment of an on-dock multi-purpose

distribution center brings the following benefits:

1) Intermediate cargo handling on the way of transportation can be eliminated – Reduction of

domestic transportation cost and shortening of delivery lead time

2) No consignor’s warehouse for storage of inventory is required – Reduction of inventory control

cost

3) Transportation within the same bonded area is possible.

There is a commercial cold/refrigerated warehouse for seafood currently operating in Yangon. Because

it gives an offensive smell, it cannot handle the other goods. Since it is expected that exporting frozen

food other than seafood and importing frozen food for large-scale shopping centers and convenience

67


stores will be increased, refrigerated and cold facility shall be set up in an on-dock multi-purpose

distribution center to collect container freights by offering services with attentive quality control.

Kamigumi Co., Ltd. has accumulated operation knowhow at own terminals and warehouses for many

years and possesses logistics technology based on comprehensive logistics concept. It will transfer,

not only as a mere terminal operator but also as a comprehensive logistics operator, to Thilawa District

Port the technology of collection and creation of container cargoes with respect to both hardware and

software.

KAMIGUMI Multipurpose Distribution Center

KAMIGUMI Kobe PC-18 Container

KAMIGUMI Port Island General Logistic Park

Figure 3.6-4 Kamigumi Distribution Facilities at Kobe Port Island

68


Chapter 4. Proposal on Improvement of Operational Efficiency (Enhancement of Competitiveness)

Improvement of operational efficiency of a port terminal does not mean an approach to merely increase

cargo handling speed by introducing state-of-the art cargo handling equipment and facilities, but

means an approach to secure the handling volume equivalent to its maximum capacity and operate

with the minimum cost. On the other hand, a ship tends to call at a port that has cargoes but does not

tend to call at a port that has a terminal. Sufficient cargoes will not be collected only by constructing

an excellent terminal. A key for success of port terminal business is to provide to consignors

/consignees with attractive services and collect containers so as to achieve collection of the maximum

cargo volume. In order to operate Thilawa District Terminal in an efficient way, the following four

factors are important:

1) Introduction of state-of-the-art equipment and utilization of Japanese operation knowhow

2) Cooperation with domestic logistics operators

3) Cooperation with Thilawa SEZ

4) Cooperative relationship with shipping companies

4.1 Introduction of State-of-the-Art equipment and utilization of Japanese operation knowhow

In order to expand handling volume of a terminal, an idea how to utilize limited space of a terminal

will become a key point. What is important for that purpose is state-of-the-art equipment and operation

knowhow. Regarding cargo handling equipment covered by public finance, it is expected that state-

of-the-art equipment will be introduced. The details of private investment will be described in Chapter

6 “Study of Business Plan”. Introduction of terminal operation system already introduced in Japan,

efficient personnel allocation plan and utilization of Japanese operation knowhow will help a terminal

in shortening cargo handling time and accordingly handling more cargoes.

4.2 Cooperation with domestic logistics operators

The design annual handling capacity at Thilawa District Port Phase 1 is 200,000 TEU. In order to

achieve the container handling volume with which viability of the business is promised, it is not

sufficient enough if just waiting for the existing terminal falls into the condition of overflow. Under

the circumstance that expansion of a competing terminal and new entry is predicted, current production

volume of containers is insufficient at Thilawa District Port and enhancement of competitiveness will

become an important issue to assure the business viability.

69


Even under the situation that cargo handling time in a terminal can be shortened and efficient operation

can be implemented, it does not make sense with respect to efficiency unless sufficient cargo handling

volume is assured. In order to assure cargo handling volume, therefore, Thilawa District Port should

implement proactively collection and creation of container cargoes in coordination with affiliated

businesses operated with domestic logistics operators. That is to say, in order to investigate an

approach to efficient operation of Thilawa District Port, it is important to comprehend not only flow

of containers in a port terminal but also flow of containers in surrounding area of Thilawa District Port

and to cooperate with domestic logistics operators which collect containers at Thilawa District Port.

Furthermore, it should be noted that a port terminal is not storage facility of containers but the place

where containers unloaded from and loaded to the ship are temporarily stored and delivery and

acceptance thereof take place. If Thilawa District Port achieves the shortest container storage period

in Thilawa District Port by dispatching container cargoes to facilities of affiliated business outside

Thilawa District Port such as ICDs, inland ports, distribution centers in SEZ, etc. or implementing

positioning of empty containers, it becomes possible to utilize effectively limited yard space in a port

terminal at the maximum. According to international standard, storage period of a loaded container is

7 days and storage period of an empty container is 14 days. If Thilawa District Port can reduce this

storage period by further 25%, container rotation rate is improved and handling capacity is increased

by 25% to 250,000 TEU.

In March 2014, Kamigumi Co., Ltd. established a joint venture logistics company with EFR mainly

operating business of truck road transportation which will become substantial means of container

cargo collection, antecedent to commencement of business operation in Thilawa District Port.

Furthermore, it is investigating ICD business in Hlaingthayar in order to promote business with

consignors of shipping companies for collection of more containers.

4.3 Cooperation with Thilawa SEZ

Thilawa SEZ which is being developed in the hinterland of Thilawa District Port will be undertaken

by Japanese companies and it is expected that a lot of Japanese companies will move in the SEZ. It is

expected, therefore, that import and export cargoes between Japan and Myanmar will be increased and

demand for intermodal transportation of cargoes between Japan and Myanmar will then be increased.

It will become possible to fence in cargoes from SEZ by enhancing cooperation with Thilawa District

Port and SEZ and providing the services like bonded transportation and others.

70


4.4 Cooperative relationship with shipping companies (agents)

It is necessary to build up cooperative relationship with shipping companies (agents) and win the

shipping companies calling at Thilawa District Port by acquiring cargoes. A shipping company of

ocean-going ships opens a local office at each port of call, executes outsourcing agreement with a local

agent or establishes a joint venture with a local agent for business operation of the shipping company.

The following Table shows shipping companies operating container ships and agents which are

providing container service at Yangon Port:

Table 4-1: Shipping Companies Operating Container ships and Agents at Yangon Port

Shipping Company Local Office or Agent

China Shipping China Shipping (Myanmar) Co., Ltd. (JV with EFR)

Evergreen Myanmar Greenways Shipping Agency Co., Ltd. (JV with EFR)

Hanjin Myanmar Shipping Service SVC.LTD,

Samudra MAHAR SHIPPING CO LTD

T.S.Line TRANS STREAM LOGISTIC COMPANY LIMITED

ACL/PIL WIN PACIFIC CO. LTD

Interasia Lines Flower News Co., Ltd. (Fortune Shipping)

CMA-CGM CMA CGM (Myanmar) co., ltd (JV with EFR)

MOL

MOL Myanmar Office - Ever Flow River Forwarding

& General Services Co Ltd (JV with EFR)

RCL Tangent Marine Services Co., Ltd

OOCL Sea Asia Shipping Services Myanmar Limited

MCC Transport Maersk Line Myanmar Limited

Myanmar Five Star Myanmar Five Star Line

In normal business of collection of containers, deal is closed following presentation of offer of fee for

terminal works and ocean freight to a consignor by a shipping company (agent). Upon request by a

shipping company, a terminal offers discount of fees for labor work and storage as an incentive to a

consignor which becomes a weapon for business to collect containers. As such, it is important for

success of Thilawa District Port to win consignors who are indirect users of a terminal under

cooperative relationship with shipping companies (agents) who are direct users of a terminal.

Ever Flow River (EFR) which establishes joint ventures with respective shipping company such as

China Shipping, Evergreen, CMA-CGM and MOL among those mentioned in the above Table and is

acting as a local shipping company (agent) is handling approximately 30% of total import containers

71


and approximately 19% of export containers at Yangon Port and is also investigating entry into the

terminal business. Since it is advantageous to let an agent of shipping companies participate in

operation of Thilawa District Port in order to fence in shipping companies, a study will be proceeded

along the line that EFR will participate in operation of Thilawa District Port.

Kamigumi already established and has been operating a truck transportation company as a joint

venture with EFR. Furthermore, it is investigating another joint venture for ICD business in

Hlaingthayar Township and is thus enhancing relationship with EFR.

4.5 Improvement of operational efficiency of Thilawa port

In order to make efforts to improve operational efficiency of Thilawa District Port (enhancement of

competitiveness) as mentioned above, it is necessary to fulfill several factors. If such factors are

fulfilled, operation of Thilawa District Port can assure stable profitability. Figure 4.1 shows schematic

view of assumed operational efficiency improvement of Thilawa District.

72


Figure 4-1 Assumed Operational Efficiency Improvement

73


Chapter 5. Demand Forecast

5.1 Estimation of size of the economy

The container demand in Myanmar for these years shows strong growth as shown in Table 5.1-1.In this Chapter, fluctuation of the container demand due to change in preconditions will beestimated against fundamental future cargo demand forecast.

Table 5.1-1: Container throughput in Yangon Port 2006 2007 2008 2009 2010 2011 2012 2013

Container 162,360 223,012 246,712 297,954 335,346 402,614 474,997 614,639

Increase 103% 137% 111% 121% 113% 120% 118% 129%

Figure 5.1-1 Container throughput in Yangon Port

As a precondition to calculate an elemental future container cargo demand, the DevelopmentProject Report estimates the economy size (1.0 for 2010) for each target year and populationgrowth as shown in Table 5.1-1. As for the economic growth, here, the high case value is close tothe growth rate target value upheld by the present government while the low case value is closeto the expected value assumed by Asian Development Bank. As for the population, the estimatedpopulation in 2009 published by Central Statistic Organization which is 59.13 million people andthe population growth rate of 1.29% are used.

Table 5.1-1: Size of economy and population estimates on target year Annual Growth Rate Reference Year Target Year

2009 2010 2015 2020 2025

Economic

Growth

High Case 7.70% 1 1.38 2.00 2.90

Low Case 5.30% 1 1.32 1.71 2.21

Population

(Thousand)

Augmentation Factor 1 1.066 1.137 1.212

Growth Rate 1.29% 59,130 59,893 63,856 68,083 72,589

74


5.2 Estimation of port cargo volume

The Development Project Report assumes the port cargo volume should vary in proportion to the economy size (GDP) and estimates the future cargo volume in proportion to the economy size of the target year with 2010 as the base year. The correlation between the Myanmar’s trade value and the foreign trade cargo volume is shown in Figure 5.2-1 and the statistical values supporting those data are shown in Table 5.2-1. From this correlation figure, it is known that the growth of trade volume and the increase of port cargo volume are generally proportional.

Table 5.2-1 Amount of trade and trade volume in Myanmar (Source: Development Project Report)

2005 2006 2007 2008 2009 2010

Export Amount

Million Kyat

20,647

30,026

35,297

37,028

41,289

49,107

Million US$ 3,554 5,223 6,414 6,793 7,569 8,856

Import Amount

Million Kyat

11,514

16,835

18,419

24,874

22,837

35,509

Million US$ 1,982 2,928 3,347 4,563 4,187 6,404

Total Amount

Million Kyat

32,161

46,861

53,716

61,902

64,126

84,616

Million US$ 5,536 8,151 9,761 11,356 11,756 15,260

Cargo Volume (ton) 10,023,012 10,315,344 11,353,897 13,857,959 20,319,024 19,055,026

Figure 5.2-1 Correlation between amount of trade and trade volume in Myanmar

(Source: Development Project Report)

75


Based on these assumptions, the Development Project Report assumes that the foreign trade cargovolume is proportional to the Myanmar’s trade value, and further the trade value is proportionalto the economy size, and assumes Myanmar’s port cargo volume as shown in Table 5.2-2. As themethod of assumption, the combined domestic and foreign trade cargo handling volume(21,455,574 tons) of all the ports in Myanmar in 2010 is used as the basis and the port cargohandling volume in each year is calculated by multiplying the economy size growth rate for eachtarget year.

Table 5.2-2 Estimate of seaborne cargo volume in Myanmar(Source: Development Project Report)

Reference year (2010)Seaborne cargo volume (Ton)

Seaborne cargo volume on Target year

Case

Target Year (Ton) Ton % 2015 2020 2025Foreign Export 11,908,660 56%

High Case 29,607,000

42,999,000 62,221,000Trade Import 7,146,366 33%

Subtotal 19,055,026 89%Domestic Inbound 1,027,881 5%

Low Case 28,321,000

36,689,000 47,417,000Trade Outbound 1,372,667 6%

Subtotal 2,400,548 11% G. Total 21,455,574

Remarks: Target year port cargo volume = (Port cargo volume in 2010) × (economic growth rateup to the target year)

5.3 Estimation of container cargo handling volume

According to the Development Project Report, the Preparatory Survey of the DevelopmentProject used 4-step calculation procedure to calculate the future container cargo handling volume.

① Estimation of correlation coefficient and regression expression for the container handlingvolume per capita versus GDP per capita in the economically similar countries (ASEAN)

② Estimation of GDP per capita in the future target year③ Estimation of the population in the future target year④ Regression expression and GDP per capita in the future target year and estimation of the

container cargo volume by use of population

1) Correlation of GDP per capita versus the container cargo handling volume in ASEANcountries

The correlation of GDP per capita versus the container cargo handling volume (export/importcargo) in ASEAN countries (in 2008) is shown in Table 5.3-1 and Figure 5.3-1. The data

76


GDP/capita TEU/capita

Thailand USD 4,099 0.103

Malaysia USD 7,867 0.221

Philippines USD 1,908 0.048

Indonesia USD 2,181 0.036

Vietnam USD 1,047 0.058

Myanmar USD 233 0.004

Cambodia USD 742 0.021

source is “Confirmation Study on the ASEAN Priority Issues for the Strategic Maritime Infrastructure Maintenance in Asia, Final Report in March 2013”. The economic activities of the ASEAN countries located in the similar region have enjoyed increased industrial products moving from agricultural products as well as increased import container cargo thanks to the economic growth. By comparing the process of the increasing container cargo (TEU per capita) through the degree of economic development (increase in GDP) of the ASEAN countries, the relation between GDP per capita and the container cargo is calculated. Singapore and Brunei which are not comparable on the same level have been excluded from the comparative coverage and the transshipment cargo volume is excluded from the container cargo volume of Malaysia as well.

0.25

0.2

0.15

0.1

0.05

0

0 5,000 10,000

Table 5.3-1 GDP per capita in ASEAN (Source: Development Project Report)

Figure 5.3-1 Correlation between GDP and cargo volume

As above, the Development Project Report has established the following relational expression. TEU/capita = 0.000027 × GDP per capita + 0.000331

The assumption that “the total container cargo volume of a country is proportional to the country’s economy size (GDP)” means the estimated value comes into effect in the region where the economic structures are identical. It is quite natural the respective values of GDP and the container cargo volume divided by the respective populations should basically show the same tendency.

2) Estimated values of Myanmar’s GDP per capita and container cargo volume in target year

a) GDP

Table 5.3-2 shows the estimated value of Myanmar’s GDP per capita in each target year. The estimation method is to multiply the Myanmar’s estimated GDP per capita in the base year of 2010 (IMF estimated value: USD702) by the growth rate of the economy size (GDP) in the

77


target year.

b) Population Each population in the target year is estimated by multiplying Myanmar’s estimated population in the base year of 2010 of 59,893,000 people by the powers of population growth rate of 1.29%.

c) Estimation of container cargo volume in target year

Estimation is made using the correlation equation of the aforementioned container handling volume per capita versus GDP per capita. The result of estimation is shown in Table 5.3-2

Table 5.3-2 Estimate of GDP per capita and Container throughput on Target year (Source: Development Project Report)

Unit

Reference

Year (2010)

Case

Target year

2015 2020 2025

GDP per

Capita

USD

702

High 969 1404 2036

Low 927 1200 1551

Population Person 59,893,000 63,857,000 68,083,000 72,589,000

Container

cargo volume

TEU

1,155,036 High 1,691,827 2,603,426 4,014,389

Low 1,619,414 2,228,425 3,063,837

Remark: Container cargo volume = (0.000027 × GDP per capita + 0.000331) × (Population)

3) Rate of deviation (rate of reduction) from requisite container cargo volume The container cargo volume estimated as above represents the Myanmar’s requisite container cargo volume as estimated from the economy size of each target year. According to this estimate equation, Myanmar’s estimated requisite container cargo volume in the year 2010 is calculated on the basis of the estimated GDP value and the estimated population in the year 2010 as about 1,155,036 TEUs ((0.000027 × 702 + 0.000331) × 59,893,000 = 1,155,036 TEU)

which is substantially deviated from the actual result of Myanmar’s container handling volume. The actual result of Myanmar’s container handling volume was 335,346 TEUs and the deviation rate from the requisite container cargo handling volume was 71%.

It is necessary to assume when Myanmar’s economic potentiality displays its real ability and catches up with the requisite container cargo volume where it inherently should be. Though it may take some time to catch up with the requisite container cargo volume, it is hard to believe that it will take very long time, as the economy is activated, before the deviation of the container cargo volume from its inherently requisite container cargo volume becomes zero.

78


Ref. year

(2010)

Case

Target year

2015 2020 2025

Estimate of container cargo volume

(Appropriate cont. cargo volume (a))

1,155,037 High 1,691,827 2,603,426 4,014,389

Low 1,619,414 2,228,425 3,063,837

Deviation rate (b) 71% 47.3% 23.7% 0.0%

Estimate of container cargo volume

(Appropriate cont. cargo volume (c))

Result

335,346

High 892,000 1,986,000 4,014,000

Low 853,000 1,700,000 3,064,000

For example, Vietnam, as a result of encouraging foreign capital introduction according to its Doi Moi policy, has rapidly developed its industrialization in the latter half of 1990s and its container cargo volume per capita is in a position to exceed the correlation equation as compared to GDP per capita. As for Myanmar, with the inflow of foreign capital from here on, a rapid economic development is expected and it is assumed that in 2025, the requisite container volume, i.e. zero deviation rate, will have been caught up with.

On the basis of the above, with assumption of zero reduction rate (deviation rate from the requisite cargo volume) for the container cargo handling volume in 2025, and with reduction rate of 71% in 2010, and assuming the reduction rate during the years in between to decrease at an constant ratio, the deviation rate in the target year can be obtained by the following calculation formula.

Container cargo volume reduction rate in target year = 71% × (number of lapsed years ÷ 15 years)

Table 3.3-3 Deviation rate on target year

Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Deviation rate 47.3 42.6 37.8 33.1 28.4 23.7 26.7 14.2 9.5 6.7 0.0

4) Container cargo volume considering reduction rate The estimated value of Myanmar’s total container cargo handling volume considering the reduction rate is shown in Table 5.3-4. Based on this estimated value, the Development Project Report has projected the facility planning at Thilawa Area Port.

Table 5.3-4 Estimate container cargo volume on target year on the basis of deviation rate (1)

(Source: Development Project Report) (Unit: TEU per year)

79


5.4 Elasticity between GDP growth rate and container cargo volume growth rate

For the estimate of container cargo volume based on GDP per capita as described above, two fixed economic growth rates are used, i.e. 7.70% for High Case and 5.30% for Low Case. High economic growth however will not continue permanently, but will eventually turn into drop. In the case that long-term container cargo volume is estimated, therefore, it would be appropriate to adopt gradually diminishing economic growth rate. On the other hand, certain elasticity is observed in the relationship between GDP growth rate and container cargo volume growth rate irrespective of fluctuation of economic growth rate. Although it is difficult to apply the maturing Thai economy to the Myanmar economy, it is considered that common elasticity between GDP growth rate and container cargo volume growth rate can be applied to Myanmar case in association with globalization of economy. Elasticity calculated from actual values of economic growth rate and container demand for the last 11 years in Thailand is 2.05 as shown in Table 5.4- 1.

Table 5.4-1 Elasticity between GDP growth rate and Container demand in Thailand

Container demand (TEU)

Container increase rate GDP growth rate Elasticity

2000 3,270,016 113.1% 4.75% 2.76 2001 3,425,834 105.1% 2.17% 2.34 2002 3,896,427 113.4% 5.32% 2.52 2003 4,397,879 112.9% 7.13% 1.80 2004 4,952,876 112.6% 6.32% 2.00 2005 5,195,141 104.9% 4.64% 1.05 2006 5,696,570 109.7% 5.09% 1.90 2007 6,424,054 112.8% 5.04% 2.53 2008 6,509,857 101.3% 2.48% 0.54 2009 5,972,349 91.7% -2.33% 3.54 2010 6,690,912 112.0% 7.82% 1.54

Average 108.1% 4.40% 2.05

Table 5.4-2 shows container demand in Myanmar for 2014 and thereafter estimated based on the actual GDP growth rate from 2010 to 2013 in Myanmar and the forecasted GDP growth rate from 2014 to 2019 by IMF - World Economic Outlook Database (as of April 2014).

Table 5.4-2 estimated container demand based on GDP growth rate and Elasticity

Year GDP growth

rate

Elasticity Container increase

rate

Estimated container demand based on Elasticity (TEU)

Estimated container demand based on GDP per capita

Low Case (TEU) 2010 5.35% 2.35 12.55% 335,346 2011 5.91% 3.29 20.06% 402,614

80


2012 7.30% 2.46 17.98% 474,997 2013 7.50% 3.92 29.40% 614,639 600,0002014 7.80% 2.00 15.60% 711,000 709,0002015 7.80% 2.00 15.60% 822,000 853,0002016 7.80% 2.00 15.60% 950,000 991,0002017 7.80% 2.00 15.60% 1,098,000 1,142,0002018 7.80% 2.00 15.60% 1,269,000 1,311,0002019 7.70% 2.00 15.40% 1,464,000 1,496,0002020 7.50% 2.00 15.00% 1,684,000 1,700,0002021 7.00% 2.00 14.00% 1,920,000 1,926,0002022 6.50% 2.00 13.00% 2,170,000 2,172,0002023 6.00% 2.00 12.00% 2,430,000 2,443,0002024 5.50% 2.00 11.00% 2,697,000 2,743,0002025 5.00% 2.00 10.00% 2,967,000 3,064,0002026 4.50% 2.00 9.50% 3,234,000 2027 4.00% 2.00 8.00% 3,493,000 2028 3.50% 2.00 7.00% 3,738,000 2029 3.50% 2.00 7.00% 4,000,000 2030 3.50% 2.00 7.00% 4,280,000

GDP Growth and Flexibility GDP per Capita Base

Figure 5.4-1 Estimated container demand based on GDP growth rate and Elasticity

As shown in Figure 5.4-1, estimated values for future container demand are almost the same inthe medium term prospect between the one calculated assuming the elasticity between GDPgrowth rate and container demand growth rate is 2 and the other calculated by the Low Casegrowth rate of GDP per capita, 5.3%. If economic growth rate of Myanmar falls below 5.3%,however, divergence between the above two estimates will accrue.

81


The GDP growth rate mentioned above is based on April 2014 issue of IMF - World EconomicOutlook Database. These data were revised in its October 2014 issue as shown in Table 5.4-3.The point to which attention should be paid here is the fact that the data for 2013 through 2017were revised upward but data for 2018 and thereafter were revised downward.

Table 5.4-3 GDP growth rate estimated by IMF 2013 2014 2015 2016 2017 2018 2019

As of April 7.50% 7.80% 7.80% 7.80% 7.80% 7.80% 7.70%

As of October 8.25% 8.50% 8.50% 8.25% 8.00% 7.75% 7.60%

Thailand, which is said to be a role model for economic growth, after enjoying high economicgrowth from 1987 to 1995, experienced Asian Crisis from 1997 to 1998 and since then the annualgrowth rate did not reach to 5% in many years. As implied by economic stagnation of Thailand(refer to Figure 5.4-2), problems that cannot be controlled by single country have been increasingfor these years. Influences of global economy are unpredictable on Myanmar that keeps economicopen-door policy. Nevertheless it is assumed that GDP growth rate will be generally falling afterhigh economic growth which has lasted for as long as 10 years.

Lehman shock

Asia Crisis

High-growth period

Figure 5.4-2 Transition of GDP growth rate in Thailand

5.5 Supply-demand balance of terminal facility

(1) New entryTable 5.5-1 shows future container handling capacity and average utilization rate in Yangon Port.This Table is made based on the data of Table 2.4.4-3 “Future Container Handling Capacity inYangon Port” in Chapter 2 of this report and additional data of Terminal Phase II (Plot 26) and

82


Phase III (Plot 23/24) covered by yen loan.

Table 5.5-1 Future container handling capacity in Yangon Port (Unit: 1000 TEU)

Year AWPT MEC MIP BSW MITT Plot 25

Plot 26

Plot 23/24

Total Estimated Demand

Utilization rate %

2014 429 189 57 200 875 711 81.3

2015 617 274 350 57 200 1498 822 54.9

2016 617 274 350 57 400 200 1898 950 50.1

2017 617 274 350 57 400 200 1898 1098 57.9

2018 617 274 350 57 600 200 2098 1269 60.5

2019 617 274 350 57 600 200 200 2298 1464 63.7

2020 617 274 350 57 800 200 200 2498 1684 67.4

2021 617 274 350 57 800 200 200 400 2898 1920 66.3

2022 617 274 350 57 1000 200 200 400 3098 2170 70.0

2023 617 274 350 57 1000 200 200 400 3098 2430 78.4

2024 617 274 350 57 1000 200 200 400 3098 2697 87.1

2025 617 274 350 57 1000 200 200 400 3098 2967 95.8

2026 617 274 350 57 1000 200 200 400 3098 3234 104.4

Only with the container handling capacity in Yangon Port as shown above, it is predicted that it will fall into the condition of overflow in 2026. If the supply-demand balance can assure the viability of the terminal at Thilawa Area Port, however, it is likely that a new comer will appear and enter into container business in Plot 37 of Thilawa Area Port as multi-purpose terminal after changing intended use. Furthermore, along with the increase of container handling volume in Yangon Port, new entry of a mega-terminal operator capable of handling 500,000 TEU or more is also predicted.

Yangon Port is currently handling approximately 90% of container freight flow in Myanmar. In future, Sittwe Port, Kyaukpyu Port and Dawei Port will contribute to container freight produced in Myanmar as international container ports.

83


Table 5.5-2 shows forecasted new entry into terminal business from 2024 to 2034 in relation to supply-demand balance. New entry at initial phase will appear in Thilawa Area Port since industrial structure is concentrated to surrounding area of Yangon and transportation infrastructure is developed with a focus on Yangon. As Kyaukpyu SEZ, Dawei SEZ and other regional industrial parks are being developed, new comers will also appear in local ports.

Table 5.5-2 Future container handling capacity in Yangon Port taking new entry into account (Unit: 1000 TEU)

Year AWPT/MEC /MIP/BSW/

MITT& Plot 23, 24, 25, 26

New entry

1

New entry

2

New entry

3

New entry

4

New entry

5

New entry

6

Total Estimated Demand

Utilization rate

%

2023 3098 3098 2430 78.4

2024 3098 500 3598 2697 75.0

2025 3098 500 3598 2967 82.5

2026 3098 500 500 4098 3234 78.9

2027 3098 500 500 4098 3493 85.2

2028 3098 500 500 4098 3738 91.2

2029 3098 500 500 4098 4000 97.6

2030 3098 500 500 500 4598 4280 93.1

2031 3098 500 500 500 4598 4580 99.6

2032 3098 500 500 500 500 5098 4901 96.1

2033 3098 500 500 500 500 500 5598 5244 93.7

2034 3098 500 500 500 500 500 500 6098 5611 92.0

2035 3098 500 500 500 500 500 500 6098 6004 98.5

Figure 5.5-1 shows relationship between demand forecast of container and handling capacity in the whole Myanmar from 2014 to 2035 estimated as described above. In the case that a terminal is constructed under BOT scheme, it needs huge capital and long-term recovery period, resulting in increased risk exposure. However, even though current demand will not necessarily be linked to future viability, new comers tend to appear where demand is currently assured because the container terminal business features relatively high stability as compared with other businesses. Therefore, even if there may be the case that container freight occasionally overflows, handling capacity of a terminal will always exceed forecasted demand as new comers will appear.

84


Estimated

container demand

Estimated

handling

capacity

2014 2020 2025 2030

Figure 5.5-1 Demand forecast and handling capacity of container in whole Myanmar

Then there is the case that will become a problem; for example, the case that a port is rapidlydeveloped based on exaggerated demand forecast or the case that increased number of newcomers appear on a pace significantly exceeding growth of demand. Since the construction of aterminal needs the period of a few years, it cannot respond to rapidly increasing demand.Therefore, a port operator tends to develop relatively excessive handling capacity of a terminal.From the viewpoint of sound development of the whole port, however, it is necessary to grantappropriately a business permit to port development and new comers considering economicviability of the existing terminal.

(2) Consequence of new entryA container terminal and a shipping company using the terminal normally execute service contractfor 1 year. Unless either party gives prior notice to other party, the contract is renewedautomatically. In addition, their mutual computer systems are connected and information on theterminal’s handling is incorporated in the shipping company’s global network system. Thisconnection work takes time and involves costs. Therefore, once such service contract is executed,the contract is never terminated unless route is deviated, change is made to consortium of shippingcompanies or unreasonable default of a terminal is constituted. It is, therefore, important for aterminal to enter into the market as early as possible and execute service contract with a shippingcompany. If a terminal enters into the market belatedly, it will bear the burdens of excessivelylong negotiation time and significant discount condition to attract shipping companies under thecompetition with the existing terminal.

85


On the other hand, at a port which is matured to a certain extent, if terminals provide services of the same level, container freights tend to be equalized in proportion to scale of terminals (berth extension and number of gantry crane), because a shipping company would like to avoid waiting offshore due to congestion of the berth in order to keep efficient operation of a ship as much as possible. In other words, a shipping company always requires berthing on arrival and arranges a ship to an empty berth as if water flowed from high place to low place. Laem Chabang in Thailand is just a typical example. As a terminal is being developed as a port to a certain degree and gets crowded on a certain day of the week, berthing on arrival is not possible and a shipping company will move to an empty berth because of default of a terminal who fails to secure a berth at a terminal. Consequently, each terminal equalizes handling volume in proportion to its scale.

In this survey, the handling volume in the 1st year is reduced by multiplying the factor of 50% to the handling volume that should have naturally been equalized in proportion to scale of a terminal, according to predicted adverse conditions at initial stage of new entry. Since overall utilization rate of Yangon Port will be increasing over time taking advantage of strong container demand,

the factor is multiplied to the handling volume in the 2nd year through the 5th year, gradually getting bigger, 60%, 70%, 80% and 90% respectively and it is assumed that the handling volume in the

6th year and thereafter will be absolutely equalized. In addition, discount rate of 50% that represents the largest level among those offered by the existing terminals is applied to the port tariff. It is seldom that the discount rate once offered could be withdrawn in Japan. In general, unless supply shortage takes place at terminal facility, the discount rate once offered could be withdrawn. It is assumed, however, that rebound of tariff to a certain degree might be expected depending on inflation rate and supply-demand balance in Myanmar.

(3) Enhancement of the existing terminal Table 5.5-3 shows the handling capacity and utilization rate of the terminal in the case that the expansion development of the terminal in Yangon Port is completely executed. It is predicted that from 2015 to 2022, supply at terminal facility will become relatively large against growth of container demand and the utilization rate of the whole terminal will be hovering at the level of 50% and thus business condition of each terminal will be worsened. Especially at Thilawa Area Port which is a new comer, the utilization will become lower than Yangon Port due to adverse geographical condition in relation to major industrial parks. If the handling capacity in Yangon Port is expanded before the business of Phase I Project in Thilawa Area Port gets on track, it will become significant obstructive factor for sound development of Thilawa Area Port. It is, therefore, indispensable to make planning of the future port development with careful consideration of economic growth and increasing trend of container demand in Myanmar.

86


Table 5.5-3 Handling capacity and utilization ratio taking expansion plan into account in Yangon Port

Year Estimated container demand

Current status Expansion plan

Handling capacity

Utilization rate

Handling capacity

Utilization rate

2014 711 875 81.3% 875 81.3%

2015 822 1,498 54.9% 1,642 50.1%

2016 950 1,898 50.1% 2,186 43.5%

2017 1,098 1,898 57.9% 2,329 47.1%

2018 1,269 2,098 60.5% 2,673 47.5%

2019 1,464 2,298 63.7% 3,017 48.5%

2020 1,684 2,498 67.4% 3,361 50.1%

2021 1,920 2,898 66.3% 3,904 49.2%

2022 2,170 3,098 70.0% 4,248 51.1%

2023 2,430 3,098 78.4% 4,248 57.2%

2024 2,697 3,598 75.0% 4,748 56.8%

2025 2,967 3,598 82.5% 4,748 62.5%

2026 3,234 4,098 78.9% 5,248 61.6%

2027 3,493 4,098 85.2% 5,248 66.6%

2028 3,738 4,098 91.2% 5,248 71.2%

2029 4,000 4,098 97.6% 5,248 76.2%

2030 4,280 4,598 93.1% 5,748 74.5%

2031 4,580 4,598 99.6% 5,748 79.7%

2032 4,901 5,098 96.1% 6,248 78.4%

2033 5,244 5,598 93.7% 6,748 77.7%

2034 5,611 6,098 92.0% 7,248 77.4%

2035 6,004 6,098 98.5% 7,248 82.8%

5.6 Effect of surface transportation from surrounding countries

Ocean transportation between Bangkok and Yangon has so far taken 14 days since transshipment at Singapore is required. As container freights directed at Yangon are increasing, loop ocean transportation service for the route of Bangkok – Laem Chabang – Singapore – Port Kelang – Yangon – Port Kelang – Laem Chabang – Bangkok is now available and shortened to 10 days. It

87


takes, however, approximately 1 week for inland transportation and customs clearance at a loading port and an unloading port. Against this service, surface transportation enables transportation within 3 to 4 days on door-to-door service basis. Regarding the cost, surface transportation is approximately 1.4 times as expensive as ocean transportation, but surface transportation is advantageous in view of cost effectiveness. East-West Economic Corridor that is mainly used for surface transportation has, however, mountainous narrow route between Thingangyun and Kowkareik (44 km) in the route between Myawaddy and Mawlamyaing and thus is significantly inferior in development of hard infrastructure including pavement of road and extension of road. Once high standard highway is completed in April 2015, use of surface transportation will become more convenient. There still remain, however, many issues to be resolved in order to utilize it as commercial service such as mutual entry of vehicles at the border, extension of customs opening hours, simplification of customs procedures and especially consequence of temporary closure of the border at Myawaddy because of instability of political situation in surrounding area of the border.

Containers being transported between Myanmar and Thailand contain imported automobile- related goods, cement, electrical apparatus, etc. as shown in Table 5.6-1. Since lead time may not be considered when transporting cement, ocean transportation is used for cement since its transportation cost is cheaper.

Table 5.6-1 Trade information in Myanmar (Source: “Golden Opportunities in Myanmar” by EFR)

Export from Myanmar Commodity item % Trade partner

Beans 43.0% ISC, M.E. ,SEA Rice 10.0% EU, Africa, Russia, Manila Timber log, Scantling 9.7% China, HKG, EU, MED Garment 10.0% EU, MED, Japan, Korea Marine products 12.0% China, M.E., SEA, Japan Others 15.3% SEA, Japan, China Import to Myanmar Commodity item % Trade partner Construction material, Home decoration product, Tires, E. goods, Textile, Fabric 40.0%

China, HKG, SEA Automobile, Vehicle 15.0% Japan, Thailand, M.E. Cement, E. goods 20.0% Thailand, Malaysia Medical, Steel product, Urea, Palm oil 10.0% Malaysia, Philippine Bitumen, Engine oil 5.0% M.E., Iran Others 10.0%

88


Because container freights which would be switched from ocean transportation to surface transportation are limited ones for which lead time is regarded as important, it is assumed that handling in Thilawa Area Port will not be significantly affected by them.

5.7 Estimation of cargo volume at Thilawa SEZ

The cargo volume at Thilawa SEZ consists of two types of cargoes, one generated along with the operation and the other due to materials used for factory construction. The cargoes generated along the operation consist of the consumption volume of the raw materials and the volume of shipped products. As the container cargo relating to the materials used for factory construction is only a small quantity of Myanmar’s overall cargo volume, it is omitted here in this section. As for the cargo volume at SEZ, the Development Project Report assumes it with the following points of view.

① Overseas development by business enterprises are for the purpose of cost reduction, and for

ensuring the same level of quality, the production control method is standardized anywhere in the world. For this reason, productivity per unit area can be assumed almost the same in Japan as well as in foreign countries.

② For determining the cargo volume per unit area from the Japanese industrial parks, the statistically obtained product shipment value is converted into the cargo weight and made as the basic cargo unit per product shipment value. The raw material consumption volume is obtained by converting the amount calculated from the ratio of the product shipment value and the raw material consumption value available in the industrial statistics into the cargo weight.

(1) Port cargo generated by operation at Thilawa SEZ 1) Calculation of shipment value per unit area at Japanese SEZ

A number of industrial parks are developed in Japan, but each industrial park has different characteristics and wide variety in shipment volume depending on its size, location, and constituent enterprises. As examples used for the calculation, the Development Project Report has made reference to those industrial parks having a certain scale and having constituent businesses that produces the same products as are expectedly produced in Myanmar’s SEZ in the future.

<<Example of Japanese industrial park>> a) Kanegasaki Industrial Park (Iwate Pref.)

Constituent enterprises : Fujitsu Limited, Shionogi & Co., Ltd. Kanto Auto Works, Ltd., Aisin Seiki Co., Ltd., etc.

89


Main line of business : Pharmaceutical products, semiconductor, automotive industry

Total area : 311.0 ha (Area for factory: 264.4 ha)

Product shipment value : 417.2 billion yen (2005 industrial statistics)

Product shipment value per unit area

: 1,577.92 million yen/ha

b) Moka No.1 Industrial Park (Tochigi Pref.)

Constituent enterprises : Honda Motor Co., Ltd., Komatsu, Ltd., Pana Home Corporation, Shinwa Aluminum Industry Co., Ltd.

Main line of business : Automotive industry, construction machinery, housing industry

Total area : 175.4 ha (Area for factory: 156.8 ha)

Product shipment value : 258.7 billion yen (2010 Tochigi Pref. statistics)

Product shipment value per unit area

: 1,649.87 million yen/ha

The average product shipment value per unit area of the two industrial parks is 1,613.89 million yen/ha.

2) Raw material consumption value per unit area at Japanese industrial park Regarding the raw material consumption value at industrial parks, the Development Project Report uses, from the survey results of the 2010 industrial statistics, the total raw material consumption value of 24.8682 trillion yen and the total manufactured product shipment value of 42.1707 trillion yen in the Japanese cities designated by ordinance, and as the ratio of the two is 0.59 versus 1, the received material value per unit area is determined as 952.20 million yen (1,613.89 million yen × 0.59 = 952.20 million yen).

3) Conversion of product shipment value and raw material consumption value to cargo weight As to the conversion of the raw material consumption value and the product shipment value to the cargo weight, the Development Project Report uses the relation between the imported container cargo and its value in Tokyo Bay as recorded in Tokyo Customs’ “Study on 2008 Goods Movement, Tokyo Bay/Narita Airport”.

<<Conversion from product shipment value to cargo volume>> Assuming the most product shipment should be containerized, weight conversion is made

90


using the value per unit weight of exported container cargo in Tokyo Bay. Weight conversion of raw materials is also made using the value per unit weight of imported container cargo assuming raw materials should similarly be containerized.

Product shipment volume 1,613.89 million yen/ha ÷ 868,132 yen/ton = 1,859 ton/ha Received raw materials volume 952.220 million yen ÷ 527,708 yen/ton = 1,804 ton/ha

Total 3,663 ton/ha

4) Cargo volume in target year The Development Project Report estimates the cargo volume in each target year using the obtained basic unit of the cargo volume per unit area and based on the development area of SEZ in each target year. In addition, the container volume in each target year is estimated on the assumption of the weight per 1 TEU for exported container: 7.4 ton/TEU and for imported container: 14.4 ton/TEU.

On the assumption as described above, the estimated cargo volume as generated by the operation of Thilawa SEZ is shown in Table 5.7-1.

Table 5.7-1 Cargo & Container volume from Thilawa SEZ (Development Project Report)

Unit

Basic unit per area & Weight per TEU

Cargo & Container volume on target year

2015 2020 2025 SEZ Area ha 150 450 780

Cargo volume

Ton

Export 1,859 ton/ha 278,850 836,550 1,450,020 Import 1,804 ton/ha 270,600 811,800 1,407,120

G. Total Total 549,450 1,648,350 2,857,140

Round up 549,000 1,648,000 2,857,000

Container Volume

TEU

Export 7.4 ton/TEU 37,682 113,047 195,949 Import 14.4 ton/TEU 18,792 56,375 97,717

Subtotal Total 56,474 169,422 293,666 Empty cont.

factor Laden 3: Empty 1 1.33 1.33 1.33

G. Total Round up 75,000 225,000 391,000

(2) Cargo volume of SEZ based on Thang Long Industrial Park in Vietnam (Reference)

86 companies centering Japanese electrical and mechanical manufacturers are massed in Thang Long Industrial Park. Amount of export from this industrial park occupies slightly

91


below 5% of total export amount of Vietnam and the whole industrial park creates employmentapproximately 50,000 Vietnamese.

Companies operating : Denso, Canon, HOYA, Panasonic and othersMain industrial sectors : Automobile parts, precision machinery, household

electric appliances and othersArea for factories : 272 haProduct shipment amount(Results of 2012)

: Export: US$2,528,379,359.-Import: US$2,856,131,841.-

Product shipment amount per unit area: Export: US$ 9,295,512/ha

Import: US$10,500,485/ha

<< Conversion from product shipment to cargo volume >>Product shipment: US$ 9,295,512/ha ÷ US$8,681/ton = 1,071 ton/haRaw material receipt: US$10,500,485/ha ÷ US$5,277/ton = 1,990 ton/ha

Remarks: Regarding the amount per unit import and export container in Thang Long, no datais available. Therefore, the amount of Tokyo Port is adopted, from the point of view thatstandardization reaches over anywhere in the world where companies are globally deployed.

<< Cargo volume in target year >>Thang Long Industrial Park which features high domestic consumption rate of products issimilar to the pattern of SEZ at the initial phase. It is assumed, however, that in future ThilawaSEZ will be transformed to an export intensive industrial park and become closer to thepreceding example of industrial parks in Japan. Table 5.7-2 shows the estimated value of cargovolume generated from operation of Thilawa SEZ based on above assumption.

Table 5.7-2 Cargo & Container volume from Thilawa SEZ

Item Unit Basic unit per area

& Weight per TEU

Cargo & Container volume ontarget year

2015 2020 2025SEZ Area ha 150 450 780

Cargovolume

Ton

Export 1,071 ton/ha 160,650 481,950 835,380Import 1,990 ton/ha 298,500 895,500 1,552,200

G. totalTotal 459,150 1,377,450 2,387,580

Round up 459,000 1,377,000 2,387,000

Containervolume

TEU

Export 7.4 ton/TEU 21,709 65,128 112,889Import 14.4 ton/TEU 20,729 62,188 107,792

Subtotal Total 42,439 127,316 220,681Empty cont.

factor Laden 3: Empty 1 1.33 1.33 1.33

G. Total Round up 56,000 169,000 293,000

92


5.8 Cargo demand from affiliated business

If a bonded distribution center in SEZ or Hlaingthaya ICD is established as an affiliated independent business with Thilawa Area Port funded by private capital, additional collection of containers will become possible.

(1) Affiliated distribution center in Thilawa SEZ If an affiliated distribution center is established in Thilawa SEZ, it will be possible to preferentially allocate containers in SEZ to the new terminal in Thilawa Area Port. It is expected that other logistics operators will enter into SEZ, so it is assumed that the affiliated distribution center will handle 10% of container freights generated from Thilawa SEZ. In addition, since more container ships are assigned to Yangon Port, it is assumed that approximately 65% of total containers will be shifted to Thilawa Area Port. Table 5.8-1 shows estimated volume of containers collected from relevant logistics facilities to Thilawa Area Port. Table 5.8-1 Container demand from relevant logistics facilities in Thilawa SEZ (Unit: TEU)

Year

Container demand generated from Thilawa

SEZ

Container demand allocated to relevant

logistics facilities

Container demand allocated to

Thilawa Area Port

2016 78,600 7,860 5,109

2017 101,200 10,120 6,578

2018 123,800 12,380 8,047

2019 146,400 14,640 9,516

2020 169,000 16,900 10,985

2021 193,800 19,380 12,597

2022 218,600 21,860 14,209

2023 243,400 24,340 15,821

2024 268,200 26,820 17,433

2025 293,000 29,300 19,045

2026 318,000 31,800 20,670

2027 343,000 34,300 22,295

2028 368,000 36,800 23,920

2029 393,000 39,300 25,545

2030 418,000 41,800 27,170

93


(2) Hlaingthaya ICD (HICD) There are 3 major industrial parks, Hlaingthaya Industrial Park, Shwelinban Industrial Park and Shwepxitar Industrial Park in northern-west part of the Greater Yangon and they produce not less than 60% of container freights in Yangon Port. EFR, a leading Myanmar logistics company who acts as a shipping agent of major shipping companies of ocean-going vessels calling at Yangon Port has already been involved in ICD business in this region and is planning to construct a new large-scale ICD keeping an eye on future growth of demand of ICD. EFR forecasts handling at HICD based on demand survey from shipping companies and consignors as shown in Table 5.8- 2. They assume that the volume of collected cargoes to Thilawa Area Port will be equivalent to approximately 30% of that at HICD. In the case that this joint venture ICD business with Kamigumi is successfully established as an affiliated business with Thilawa Area Port, however, it will be possible to increase gradually collection of cargoes to Thilawa Area Port.

Table 5.8-2 Container demand from HICD(Unit: TEU)

Container demand in Myanmar

Container demand from

HICD

Year-to-year

basis

To Thilawa Area Port Allocation rate

Container Demand

2016 950,000 25,000 140% 20% 5,000

2017 1,098,000 35,000 140% 25% 8,750

2018 1,269,000 49,000 139% 30% 14,700

2019 1,464,000 68,000 126% 30% 20,400

2020 1,684,000 86,000 126% 30% 25,800

2021 1,920,000 108,000 124% 30% 32,400

2022 2,170,000 134,000 118% 30% 40,200

2023 2,430,000 158,000 116% 30% 47,400

2024 2,697,000 184,000 116% 30% 55,200

2025 2,967,000 213,000 115& 30% 63,900

2026 3,234,000 244,000 114% 30% 73,200

2027 3,493,000 277,000 105% 30% 83,100

2028 3,738,000 291,000 100% 30% 87,300

2029 4,000,000 291,000 100% 30% 87,300

2030 4,280,000 291,000 100% 30% 87,300

Remarks: Designed area of HICD is 40 acres and Maximum handling capacity is 291,000TEU per year.

94


Chapter 6. Study of Business Plan

6.1 Outline of project

The terminals which will be constructed at Thilawa Port utilizing yen credit (hereinafter referred to as “the Terminal”) are multi-purpose terminals which will handle container ships, bulk carriers, heavy-lift ships, RORO (Roll-On Roll-Off) vessels/PCTCs (Pure Car & Truck Carrier). Because a bulk carrier occupies a berth as long as 1 week and calls at a port on an irregular basis, however, it interferes with berth window (berthing time zone during which priority right of cargo handling is guaranteed) of a container ship which calls at a port weekly on a regular basis. Furthermore, there may be the case that RORO vessels/PCTCs have no choice but to suspend cargo handling because they are unable to land a ship’s ramp-way due to difference between high and low tides and consequently they occupy a berth waiting for export cargoes for approximately 2 days. Under the current situation, even a container ship occupies a berth for approximately 2 days. If continuous cargo handling becomes possible by introducing customs system and port EDI and observing strictly CY CUT in future, however, it will be possible to shorten the time of berth occupation. First of all, in the case that berth windows of a RORO vessel/PCTC and a container ship conflict each other, priority must be given to a container ship for which punctuality for connection to a mother ship is considered to be significant.

The Terminal has 2 berths and under the current situation is able to handle 6 vessels a week at the maximum because a container ship occupies a berth for approximately 2 days. In the case that less than 6 vessels call at a port a week, it is able to handle a bulk carrier or a RORO vessel depending upon berth window of a container ship. Since container yard is available only at Plot 25, however, it can handle 3 container ships at a maximum taking container storage space into consideration. (Utilizing ICD outside the Terminal, freight volume can be increased from 200,000 TEU to 250,000 TEU.)

The Terminal which is provided with full facilities to deal with container ships can bring out its maximum ability if it deals with container ships which call at a port frequently as many as possible. The Terminal shall, therefore, make the maximum efforts to attract container ships. The study will be conducted based on the assumption that the Terminal shall deal with mainly container ships.

In order to attract container ships, it is not only important to provide service to shipping companies of container ships but also to provide service to consignors/consignees who are users of container ships. In other words, it is not only important to provide service within the Terminal but also to

95


provide domestic logistic service connected to the Terminal. In order to respond to “Cost Reduction”, “Shortening Lead Time” and “Maintaining Quality of Cargoes” required by consignors/consignees, it is necessary to conduct comprehensive study of the domestic logistic service taking place between a port and a consignee and the service provided within the Terminal. Accordingly, the business relating to the Terminal such as an ICD, an inland port, a multi-purpose distribution center, etc. shall be enhanced.

6.2 Terminal service contract

Since a container ship calls at a port weekly on a regular basis, terminal service contract is executed between a shipping company and a consignor and the shipping company reserves berth window for its own container ship. The contract mainly consists of work fee, scope of works and contract period.

(1) Work Fee The work fee to be collected and received by the Terminal is generally billed to 2 parties, a shipping company and a consignor as shown in Table 6.2-1. The main source of income of the Terminal is basic work fee which is mainly billed to a shipping company. The port tariff specified by MPA is indicated in both MMK, local currency, and US dollar. A shipping company of an ocean-going vessel makes payment in US dollar. Since Central Bank of Myanmar abolished the fixed rate exchange system which had lasted for 35 years and introduced the managed floating exchange rate system in 2012, the tariff in MMK is not applicable. Consequently, a Myanmar shipping company and a Myanmar consignor shall pay the fee of port tariff in MMK converted from US dollar based on current exchange rate.

Table 6.2-1: Billing Destination of Work Fee

Shipping Company Local Cargo Owner

Basic work fee

Container storage fee

Container repair fee

Container cleaning fee

Container shifting fee

Container lift-on/off fee

CFS work fee

96


Refrigerated container monitoring fee

Refrigerated container pre-trip inspection fee

Refrigerated container electricity charge

1) Basic Work Fee This is a fee to be paid to the Terminal by a shipping company for the work including unloading from a ship, storage at CY, lift-on to consignee’s trailer in the case of an import container and the work including lift-off from consignor’s trailer, storage at CY, loading to a ship in the case of an export container. This fee occupies approximately 90% of total income of the Terminal.

Table 6.2-2 shows fee of basic work to be paid by and collected from a shipping company. In the case that a terminal operator is a Myanmar company, the work fee is paid to the terminal through MPA in US dollar based on the tariff. In the case that a terminal operator is a foreign company, the work fee is paid to the Terminal directly by a shipping company based on the terminal service contract, not through MPA.

Table 6.2-2: Comparison of Port Basic Work Fee (Exchange rate: ¥107/THB33/US$)

MPA Port Tariff

Laem Chabang Port Tariff

Work Fee at Japanese Port

Import (FCL Container)

20f Loaded Container US$ 165 US$ 54 US$117

20f Empty Container US$ 150 US$ 19 US$ 86

40f Loaded Container US$ 330 US$ 81 US$150


Export (FCL Container)

20f Loaded Container US$ 165 US$ 40 US$ 117


40f Loaded Container US$ 330 US$ 61 US$ 150


The work fee at a Japanese port is calculated based on cost and reasonable profit by each terminal operator and the amount of port cargo handling fee is notified as basic fee to each district transport bureau which is an organization under the umbrella of Ministry of Land, Transport, Infrastructure and Tourism. It is also specified in the Port Transport Business Act that notified amount shall be applicable when collecting and receiving the work fee. While the

97


method to calculate the cost is slightly different among terminals depending upon the scale of a terminal and handling volume, the work fee for a 20f loaded container amounts to approximately $100 and the work fee for a 40f loaded container is 1.35–1.50 times of that for a 20f container.

Laem Chabang Port in Thailand also has the port tariff specified by Port Authority of Thailand (PAT). The basic work fee for a 20f container for import amounts to approximately $54 and that for export amounts to approximately $40. The work fee for a 40f container is approximately 1.5 times of that for a 20f container. Note that the work fee relating to export is fixed at lower rate than that for import because of export promotion measures the country is taking.

As shown in Table 6.2-2, the port tariff specified by MPA is set at very high rate as compared with that at Laem Chabang in Thailand and that in Japan. It was found through hearing survey from shipping agents that approximately 40% - 50% of port tariff was reimbursed to shipping companies by a terminal at Yangon Port. It can be easily understood that shipping companies who are familiar with work fees in the world demand discount by approximately 40% - 50%. It therefore shall be discussed that discount of the port tariff of approximately 50% may be given in order for the Terminal to attract shipping companies. Note that the work fee at Yangon Port after discounted by 50% is still more expensive than the current prevailing rate after discount at Laem Chabang Port.

Regarding the basic work fee of MPA tariff, a different point from the basic work fee in Japan is selection of a ship’s derrick crane or a quay crane. Although the usage charge of a ship’s derrick crane is cheaper than that of a quay crane, its handling efficiency is so poor that it can handle only 10 and a few containers per hour and a berth is occupied for extended time, which is disadvantageous to a terminal. Even though a terminal has the right to select cargo handling equipment, it is necessary to consult with a shipping company and there may be some shipping company requesting use of the ship’s derrick cranes in view of amount of charge. It is assumed that the Terminal performs the work using a gantry crane even in the case that a ship is equipped with a derrick crane and adjusts difference in charge between a ship’s derrick crane and a gantry crane from the viewpoint of effective use of the berth.

Table 6.2-3: Basic Work Fee Classified by Cargo Handling Equipment (Source: MPA Port Tariff)

Import/Export (FCL Container) Ship’s Derrick Crane Quay Crane

20f Loaded Container US$ 150 US$ 165

20f Empty Container US$ 135 US$ 150

40f Loaded Container US$ 300 US$ 330

40f Empty Container US$ 270 US$ 300

98


2) Container Storage Fee The storage fee specified in the tariff of Myanmar Port Authority is currently fixed at the rate of US$2/TEU/day. Since the container storage yard at Yangon Main Port is becoming tighter, however, the stepwise charge system as shown in Table 6.2-4 will be applied from January 2015 in order to avoid the terminal being used like a storage yard.

Table 6.2-4: Empty Container Storage Fee

Storage Period Empty Container Storage Fee

1st Day–7th Day Free

8th Day–60th Day US$2/TEU/Day

61st Day–180th Day US$4/TEU/Day

181st Day–365th Day US$6/TEU/Day

366th Day–730th Day US$8/TEU/Day

Nevertheless there are many cases that a shipping company demands large discount of or dispensing with storage fee of an empty container since it incurs the cost which cannot be billed to anyone. On the other hand, the terminal side often accepts discount of or dispensing with the storage fee as a tool to attract a shipping company since it does not incur new cost. Therefore, it is assumed in the income and expenditure plan that income from storage will be classified as a part of miscellaneous income which accounts for approximately 10% of basic work fee.

(2) Scope of Works The scope of works to be performed by the Terminal pursuant to the terminal service contract is generally as follows:

1) Import container <<Stevedoring work>>

① Preparing a stevedoring plan in accordance with an instruction of a shipping company ② Untying container lashing device on the ship ③ Unloading from the ship: Unloading containers from the ship to apron of quay ④ Checking container number, seal number and appearance damage at apron of quay ⑤ Transporting containers form apron of quay to CY and storing them at CY

<<Carrying-out of import containers>> ⑥ Checking work order for a container for which request for collection has been issued by a

consignee at a gate ⑦ Lifting-on a container to a consignee’s trailer at CY ⑧ Checking whether or not a container carried out for a consignee is correct and inspecting its

appearance damage at a gate <<Return of empty containers>>

99


⑨ Checking whether or not a container returned form a consignee is correct and inspecting

appearance damage ⑩ Lifting off an empty container from a consignee’s trailer at Empty Container Yard (ECY)

Figure 6.2-1: Procedure for Import Container

2) Export container

<<Carrying-out of empty containers>> ① Checking work order for a container to be carried out for a consignee at a gate ② Lifting-on an empty container to a consignee’s trailer at ECY ③ Checking whether or not an empty container carried out is correct at a gate and inspecting

internal and appearance damage <<Work when export containers are carried in>>

④ Performing visual inspection of appearance damage of a container and checking weight and seal number of a container at a gate

⑤ Lifting-off an export container from a consignee’s trailer at CY <<Stevedoring work>>

⑥ Preparing a stevedoring plan in accordance with an instruction of a shipping company ⑦ Transporting a container from CY to apron of quay ⑧ Checking container number and seal number and inspecting appearance damage ⑨ Loading a container from apron of quay to the ship ⑩ Tying container lashing device on the ship

Figure 6.2-2: Procedure for Export Container

100


(3) Contract Period In general, contract period of terminal service contract between a terminal operator and a shipping company is 1 year and it is automatically renewed unless either party to the contract gives a notice of termination. However, there may be some provision for termination of the contract with prior notice given even during the contract period.

Once the terminal service contract is executed, computer system between a shipping company and a terminal is connected and it is not so easy to terminate the contract. Due to significant deterioration in the service provided by a terminal or an offer of any incentive by a competing terminal, however, a shipping company may change a terminal as a result of comprehensive judgment.

On the other hand, the contract relating to an operational right of the Terminal is of the nature that the terminal operator is obliged to operate, maintain, improve and refurbish facilities of the Terminal in exchange of a right to collect and receive fee as compensation for the work provided to the port facilities already constructed based on yen loan scheme and to pay concession fee to MPA. Long term lease contract based on concession scheme is executed between MPA and the terminal operator and it is assumed that the contract period will be as long as 40 years in the same way as repayment period of yen loan.

In the case of concession scheme, assurance of container cargoes for long term affects continuity of the Project. Since emergence of a new competing terminal is, however, beyond control of the terminal operator, it is important for MPA as an administrator of ports to pay due consideration to demand and supply balance of terminal facilities. As a matter of fact, Myanmar International Terminals Thilawa (MITT) which stepped into the business at Thilawa Port in 1997 has a secret agreement with MPA that no other terminal could commence business until MITT achieves handling of 40,000 TEU per gantry crane or handling of cargo volumes equivalent to those handled by 8 gantry cranes (320,000 TEU) at the maximum.

According to “Survey Report on PFI/PPP Methods (Concession Scheme) in Various Foreign Countries” issued by Price Waterhouse Coopers, also in USA there are many examples of the contract which provides that a private operator shall have a right to claim compensation if it is proved that its revenue has been reduced because of new construction of the facility which was not planned at the time of contract execution.

It is very difficult for a private company to take risk of demand deficiency due to an external

101


factor. It is desirable that the government shall take risk of demand deficiency when assumed container cargo volume is not achieved or regulate new entry of a competing terminal until stability of the terminal’s operation is assured.

(4) Berth Window Regarding berth window, no specific provision is specified in the contract and it is subject to consultation every time any change is made, since there are many changes in rotation of a connecting mother ship and a feeder ship calling at a hub port. Furthermore, while a terminal shall guarantee the berth window, a shipping company will never guarantee handling volume or assignment schedule of ships.

As increasing in size of a container ship progresses, it is predicted that a type of container ship with loading capacity of 1,200 TEU and overall length of 155 m will become prevailing also at Yangon Port. It is, therefore, assumed that 2 container ships can simultaneously come alongside the berth with total extension of 400 m.

Table 6.2-5: Specifications by Type of Container Ship (Source: Study on Challenge of Shipbuilding Technology Development by Shipbuilding Research Association of Japan)

Loading of Container 500TEU 800TEU 1,200TEU 1,500TEU

Dead-Weight Tonnage 5,539DWT 11,423DWT 17,254DWT 20,000DT

Length Overall 100 m 137 m 155 m 175 m

Draft 6.65 m 8.02 m 9.00 m 10.0 m

Occupation of berth by a container ship at Yangon Port is currently approximately 2 days because of inefficient stevedoring work and export containers waiting for carrying in CY. Accordingly, the berth windows of 2 berths are equivalent to that for 6 vessels per week.

Berth wind

Crane usage

No.1

No.2

SUN

MON

TUE

WED

THU FRI

SAT

Figure 6.2-3: Berth Window of 6 Vessels/Week

However, there may be the case that the berth windows requested by multiple shipping

102


companies are overlapped due to connection with a mother ship at a hub port and the berth windows for 6 vessels per week cannot be assured because effective assignment of berth windows is impossible.

In the case of handling approximately 1,000 containers, total loading turnaround time can be shortened from 40 hours to 34 hours if productivity of stevedoring work is improved from 25 containers/crane/hour to 30 containers/crane/hour and early carrying-in of export containers to CY becomes possible. Performing the stevedoring work with 2 gantry cranes as shown in the following Figure, the berth window for the maximum of 8 vessels per week can be assured. Although it is difficult to cope with 8 vessels per week from the viewpoint of maintenance, it will become possible to adjust overlapped berth windows by shortening the occupation time of the ships.

Berth wind

SUN

MON

TUE

WED

THU

FRI SAT

Crane usage

No.1

No.2

(5) Repair of Container Figure 6.2-4: Berth Windows of 8 Vessels/Week

The terminal service contract executed between a terminal operator and a sipping company provides that check of damage of a container shall be performed at a gate where delivery and acceptance of a container take place and at the ship’s side of apron. While only appearance damage is checked for a loaded container, a door is opened and internal damage is also checked for an empty container. In the case that any damage to a container is found, a terminal operator is obliged to report to a shipping company kind and scale of the damage and in some case may repair the damage to a container upon execution of a separate agreement on container repair apart from the terminal service contract.

103


Figure 6.2-5: Container Repair Yard in Terminal (Source: Kamigumi Kobe Container Terminal)

Only minor repair works such as repair of a pin hole, depression, a bulge, crack, rust, etc. areperformed in Japan because labor cost is expensive in Japan. Regarding major repair workssuch as repair of a deformed frame, a corner post, side rails and so on, upon locating emptycontainers in foreign countries where labor cost is cheap and they have export cargoes, therepair works are performed there. Although Myanmar has an advantage that labor cost is cheap,they have stagnating surplus empty containers because there are too many import containers.Furthermore, because no skilled worker who can repair major damage to a container isavailable, only minor repair of a container is performed at ICD.

Figure 6.2-6: Minor Damage (Source: Kamigumi Kobe Container Terminal)

Regarding repair works of a damaged container, normally, minor repair, sweeping, washingwith water, chemical cleaning, etc. are outsourced to subcontractors upon providing themwork space within a terminal. For a terminal, such works constitute only a part of minor effortsto attract a shipping company and it is not so significant to just add a slight margin to theinvoices from subcontractors. For the Terminal, however, it is desirable to enhance such

104


functions as repair, sweeping, washing with water, chemical cleaning of a container so that itcan provide any and all services requested by shipping companies.

Figure 6.2-7: Container Repair Work in Terminal (Source: Kamigumi Kobe Container Terminal)

Figure 6.2-8: Cleaning of Container and Purification Unit(Source: Kamigumi Kobe Container Terminal)

6.3 Management system

6.3.1 Organization

Figure 6.3-1 shows an organization chart of the Terminal. A General Manager (GM) who is thetop management of the organization shall be a Japanese and a Deputy General Manager (DeputyGM) shall be a Myanmar person. In addition, for the time being Japanese are assigned as aManager of Operational Dept. and a Manager of Sales & Marketing Dept., while a Myanmarperson is assigned as a Manager of Administration Dept. who deals with labor administration andother tasks with which local person needs to be coping, provided, however, that Japanesemanagers shall be reduced from time to time depending upon progress of human capacity building

105


of Myanmar personnel in association with transfer of technology. In addition to the above, Japanese technical instructors will be dispatched during the period of inauguration of the Terminal and during initial period just after inauguration for short period to promote technology acquisition of Myanmar personnel.

Figure 6.3-1: Organization Chart of the Terminal

6.3.2 Plan of provision of cargo handling equipment

A plan of provision of cargo handling equipment is divided into 3 types depending upon the number of ships’ calling at a port. Each ship has basically handling capacity of approximately 1,400 TEU. Type 1 is the case that one (1) ship calls at a port a week and handles approximately 72,800 TEU in a year; Type 2 is the case that two (2) ships call at a port a week and handle approximately 145,600 TEU in a year; and Type 3 is the case that three (3) ships call at a port a week and handle approximately 218,400 TEU in a year; Table 6.3-1 shows the plan of provision of cargo handling equipment. Note that the upper part of the Table shows the equipment procured using yen loan scheme, while the lower part shows the equipment procured through private capital investment.

106


Table 6.3-1: Plan of Provision of Cargo Handling Equipment

Type 1 Type 2 Type 3 Capital Investment using Yen Loan

1) Gantry Crane 2) RTG 3) Reach Stacker 4) Empty Container Lifter 5) Tractor Head 6) Chassis 7) Weighing Apparatus 8) X Ray Inspection

Building

Equipment

and

2 6 3 2 6 6 4

2

2 6 3 2 6 6 4

2

2 6 3 2 6 6 4

2

Private Capital

1) Empty Container Lifter 0 0 1 2) Tractor Head 6 6 8 3) Chassis 12 12 16 4)a) Forklift 24T 1 1 1 4)b) Forklift 10T 1 1 1 4)c) Forklift 3T 10 10 14

Investment 5) Fuel Supply Vehicle 1 1 1 6) Pickup Truck 2 2 2 7) Company Car 4 4 4 8) Pickup Bus (29 Passengers) 4 5 6 9) TOS 1 1 1 10) Emergency Generator (2000 kVA) 2 2 3

107


《Apron》（Public）Gantry Craneｘ 2 units （Private）3tons Forklift ｘ1 unit

《Ship Operation》（Public）Tractor head ｘ 6 units （Public）Chassis ｘ 6 units （Private）Tractor Head ｘ4 units （Private）Chassis ｘ6 units

《Container Yard》（Public）RTG ｘ 6 units

《Maintenance Shop》（Private）3tons Forklift ｘ 2 units （Private）Fuel Car ｘ1 unit

《Container Repair & Cleaning》（Public）Empty Cont. Lifter ｘ 1 unit

《Conventional Cargo Yard》（Public）Reach Stacker ｘ 1 unit （Private）24tons Forklift ｘ1 unit

《Empty Container Yard》（Public）Empty Cont. Lifter ｘ 1 unit （Private）Empty Cont. Lifter ｘ 1 unit

《Custom Inspection/CFS》（Public）Reach Stackerｘ1 unit （Private）10tons Forklift ｘ 1 unit （Private）3tons Forklift ｘ 7 units （Private）Tractor Head ｘ2 units （Private）Chassis ｘ6 units

Figure 6.3-2: Layout of Cargo Handling Equipment

108


The followings are explanation of the equipment which needs to be procured using private capital investment:

1) Empty Container Lifter (@US$250,000) Due to excessive import cargoes, locating empty containers to foreign countries now reach to approximately 30% of total container handling volume. It is predicted that it will be gradually reduced in association with development of export-centered industry though it still takes time. Positioning of these empty containers is arranged in such way that they are intensively loaded on the upper part of the deck to assure the stability of the ship. In the case that the stevedoring work is performed with 2 gantry cranes, therefore, 2 units of empty container lifter are operated for the stevedoring work of the ship almost simultaneously. While 2 units of empty container lifter are being operated for the stevedoring work of the ship, it is also possible to carry in and out an empty container by a reach stacker. In principle, however, a reach stacker is used for vanning/devanning work on land or heavy cargo handling work at CFS. Taking into consideration any failure of the existing empty containers and reach stackers caused by deterioration due to aging and their regular maintenance, it is necessary to arrange one (1) spare empty container and establish 3-container arrangement with private capital investment when handling volume of Type 3 reaches to 200,000 TEU.

2) Tractor Head (@US$100,000) The surrounding tracks from empty container yard to the ship’s side are as long as1.4 km. If a tractor head runs at the speed of 20 km/hour, it can circle around 6 minutes even if taking it into consideration that the tractor head reduces speed and stops on the way of circling. Because it will improve productivity of cargo handling if winding-up/winding-down of a gantry crane and RTG is never suspended. It is however desirable to always keep the condition that a succeeding tractor head already arrived under the gantry crane and RTG and is waiting for completion of unloading of containers from a preceding tractor head. In the case of unsatisfactory rotation of tractor heads, a driver of the tractor head tends to fail to drive it safely since he/she feels as mental state of “impatience” against the fact that a gantry crane or RTG is kept waiting. Since especially on the day of CY CUT tractor heads of contractors coming from the outside for carrying-in/out are converging there, running of tractor heads for the stevedoring work of the ship may be interfered resulting in the condition that normal running is impossible and accordingly efficiency of the stevedoring work is lowered. It is assumed taking a margin into account, therefore, to make a tractor head for the stevedoring work of the ship circle around 6 times per hour and 5 units of tractor head shall be arranged for each gantry crane so that cargo handling productivity of a gantry crane can be kept at the rate of 30 containers per hour. Furthermore, considering occurrence of failure and regular maintenance of a tractor head and direct transport of an imported hot delivery container from the ship to on-dock CFS, rotation of chassis detached at CFS, etc., it is necessary to arrange separately at least 2 units of tractor head. As such 12 units of tractor head for Type 1 in total are required and 6 units procured as private capital investment are required in addition to 6 units procured using yen loan scheme.

109


3) Chassis (@US$35,000) As explained in the preceding paragraph of Tractor Head, 10 units of chassis are required for the stevedoring work of the ship performed with 2 units of gantry crane. In addition to these units, it is assumed that 2 units of spare chassis will be procured to eliminate wasted time to exchange tires during the stevedoring work in addition to regular maintenance because rear wheels of chassis are subject to heavy load and damage due to puncture occurs frequently. Furthermore, regarding an out-of-gauge container in the stevedoring work of the ship, since it is dangerous to use a tractor head and chassis owned by a contractor coming from the outside for the work under a gantry crane, such container shall be loaded to chassis of the Terminal after making the chassis detached. In total, 6 units of chassis are necessary as detached chassis to be used for vanning/devanning work at CFS. As such 18 units of chassis for Type 1 are required in total and 12 units procured by private capital investment are required in addition to 6 units procured using yen loan scheme.

4) Forklift a) 24T Forklift (@US$250,000)

Heavy cargo handling work includes slinging type cargo handling by means of a reach stacker and handling by means of a forklift that scoops up a cargo. In the case of handling a heavy cargo under the eaves of a warehouse or in the hold of a RORO vessel, 1 unit of 24T forklift is necessary for handling of a heavy cargo, since any reach stacker for slinging work cannot be used because of restriction of height in the work and instead of this, the work by means of a forklift that scoops up a cargo is performed. Incidentally, while 5 workers in total, i.e. 4 assistant workers for wire slinging work and 1 sign man are required for the work using a reach stacker, it is possible to perform the cargo handling work using a forklift with 3 workers, i.e. 2 assistant workers and 1 sign man.

Figure 6.3-3: Restriction of Height of Reach Stacker and 10T Forklift

b) 10T Forklift (@US$100,000) 1 Unit of 6-10T forklift with relatively sharp maneuvering feature is necessary because it is expected to import heavy cargoes including steel coils and the like in a dry container which exceeds 3 tons. Handling of an empty container also becomes possible if the forklift is equipped with long forks (2,440 mm), though normally the length of the forks is 1,220 mm. When an empty container lifter is fully occupied and cannot be used for replacement of empty containers at container repair yard, it will be possible to perform replacement work of empty containers with a 10T forklift.

110


Figure 6.3-4: Vanning Work by Forklift (Source: Kamigumi KMDC)

c) 3T Forklift (@US$30,000)＊Forklift for Cargo Handling at CFS

According to a shipping company, LCL (Less than Container Load) cargoes potentiallyoccupy approximately 5% of an imported loaded container and there may be the case thatalso devanning of FCL (Full Container Load) cargoes is performed at CFS.

Type 1: 72,800 TEU/2 (Import) × 5% = 1,820 TEU/ (5 Days × 52 Weeks)= Approximately 7 TEU/Day in averageAlthough vanning or devanning takes 2 hours/TEU, it is assumed that 3 unitsfor container works and 3 units for track works shall be arranged in view of thefact that workers do not get skillful in the work at initial period just afterinauguration and in order to deal with peak time.

Type 2: 145,600 TEU/2 (Import) × 5% = 3,640 TEU/ (5 Days × 52 Weeks)= Approximately 14TEU/Day in averageConsidering that workers get accommodating to the work, 6-unit arrangementshall be maintained, assuming that 4 TEU/daytime work and overtime worksare possible.

Type 3: 218,000 TEU/2 (Import) × 5% = 5,450 TEU/ (5 Days × 52 Weeks)= Approximately 21 TEU/DayAlthough it may be possible to deal with increased volume of cargoes by 8-unitarrangement, 10-unit arrangement shall be established assuming peak time.

＊1 unit of Forklift for Customs Inspection Area

Currently approximately 10% of both import and export cargoes are subject to opening-doorinspection by the customs. There are few cases that a customs officer actually takes goods outof a container but in most cases, they adopt the method that a customs officer enters into acontainer for inspection. Because it may become necessary to perform devanning when it isimpossible for them to enter into a container, 1 unit of forklift shall be available in the customsinspection area.

111


＊1 unit of Forklift to Support Maintenance Work Because there are many parts and materials when performing maintenance work of cargo handling equipment and a forklift is used for such purpose, 1 unit of forklift shall be always available in a maintenance shop.

＊1 unit of Forklift to Support Stevedoring Work of the Ship

Because it is necessary to unload a box containing lashing gear for fixing containers from the ship to quay and arrange the gear box on the front apron of quay in front of each hatch of the ship, 1 unit of forklift shall be available for the work of the ship.

＊1 unit of Spare Forklift Figure 6.3-5: Box Containing Lashing

Taking maintenance of a forklift for each work into consideration, 1 unit of spare forklift shall be available.

5) Fuel Supply Vehicle (@US$100,000) Although essentially fuel supply to a tractor head, a reach stacker and an empty container lifter is performed at the fuel supply station located beside the maintenance shop, fuel is supplied to RTG by a mid-size tank track at safe place within CY to avoid missing of cargo handling opportunity because it takes time for RTG to move to the place where fuel is supplied.

6) Pickup Track (@US$25,000) Two pickup tracks shall be available: one for a premise patrol vehicle and one for a pickup service vehicle which loads 1 set of equipment and materials for repair of cargo handling equipment that cannot be moved because of failure.

7) Company Car (@US$50,000) Since 4 Japanese will be engaged in operation and management just after inauguration as a General Manager, Managers of Operational Department and a Manager of Maintenance Department, 4 vehicles shall be available as cars for their commuting.

8) Pickup Bus (29 Passengers/@US$100,000) Since there is no public transport service available for access to the Terminal, all the employees will be provided with pickup service. Type 1: 124-employee arrangement: 28 passengers × 4 buses = 112 employees + Pickup

Tracks 10 employees Type 2: 134-employees arrangement: 28 passengers × 5 buses = 140 employees Type 3: 165-employees arrangement: 28 passengers × 6 buses = 168 employees

112


9) TOS (Terminal Operation System) (@US$1,000,000) Kamigumi has introduced TOS at 7 terminals in Japan as shown in Table 6.3-2. Such terminals as Omaezaki, Fukuyama and Sakai Minato, where annual handling cargo volumes are not more than 50,000 TEU, are coping with the work by means of own software developed using EXCEL. TOS was introduced to Hakata and Mizushima since the total volume of cargo handling is large at these terminals under joint operation with other companies though the cargo volume solely handled by Kamigumi itself at these terminals is small.

Table 6.3-2: Terminals of Kamigumi Which Introduced TOS

Handling Volume in FY2013

Cargo Handling Method at CY

TOS

Kamigumi-Tokyo 352,292 TEU RTG CATOS of TSB

Kamigumi-Yokohama 200,727 TEU RTG CATOS of TSB

Kamigumi-Nagoya 759,381 TEU RTG & Straddle Carrier CTMS of MES

Kamigumi-Osaka 311,852 TEU RTG CATOS of TSB

Kamigumi-Kobe 281,953 TEU RTG CATOS of TSB

Kamigumi-Hakata 47,988 TEU RTG & Straddle Carrier CTMS of MES

Kamigumi-Omaezaki 28,698 TEU RTG EXCEL

Kamigumi-Mizushima 28,040 TEU Straddle Carrier CTMS of MES

Kamigumi-Fukuyama 46,372 TEU RTG & Straddle Carrier EXCEL

Kamigumi- Sakai Minato 7,099 TEU Straddle Carrier EXCEL

The followings show comparison between the manual operation management and the operation management using TOS:

<<Manual Operation>> ① Since a work order is given in the form of a hand-written document or through radio

communication, human errors may occur such as clerical errors in the work order or misunderstanding of radio communication.

② Since replacement of complicated work sequence is necessary for change of the ship’s work order prepared in writing before commencement of the work, change of the work order cannot be effectuated promptly and consequently wasted time accrues.

③ Since state of work progress cannot be monitored from the control center because of obstacles such as a container and so on, it is impossible to utilize cargo handling equipment in an effective manner.

113


<<Operation Management by Introduction of TOS>> ① The work to carry out/in a container and to provide instruction to the ship are effectuated

promptly through terminal screen of an operator of cargo handling equipment who is located at the most appropriate position.

② Change of work order is displayed promptly on terminal screen of an operator of cargo handling equipment and cargo handling is performed correctly without interruption.

③ The control center can grasp state of work progress through monitor and can provide an effective work order.

While above description explains advantage of introduction of TOS to operation, its feature and effect of introduction are as follows:

<<Feature of TOS>> ① Computer control of various types of planning such as berth/yard/stevedoring works of the

ship, etc. ② Computer control of various operations such as gate/yard/stevedoring work of the ship, etc. ③ Computer control of various types of management such as billing/statistics/analysis, etc. ④ Connecting with computers of shipping companies and consignors/consignees to report them

information of containers on a real time basis. ⑤ Connecting with MACCS (Myanmar Automated Cargo and Port Consolidated System) and

CIS (Customs Intelligence Database System) to perform online processing of information concerning ships calling at and departing from a port and exported and imported cargoes on a real time basis.

Figure 6.3-5: Functions of TOS

114


a) Planning System ＊Berth Planning

Planning and selecting the most effective ship’s berthing position, number of gantry crane to be used, required number of stevedore, etc. before arrival of the ship, according to long term berthing schedule of the ship and works for subsequent ships

＊Yard Planning Planning and selecting the place where containers shall be stored so that storage capacity of CY can be maximized.

＊Planning of the Ship’s Work Preparing a plan of the ship’s work so that the stevedoring work of the ship can be completed within the shortest time, taking into consideration the schedule of the ship calling at a port, schedule of the berth usage, etc.

As shown in Figure 6.3-6, various planning mentioned above will enable effective terminal operation by providing instruction/direction for control of a terminal, operation/management, delivery of information and data analysis to relevant personnel in the control center, planners, personnel at a gate and personnel involved in terminal operation of various cargo handling equipment, etc. in a unified manner.

Figure 6.3-6: TOS (Source: CATOS-Computer Automated Terminal Operating System)

b) Operation System As the number of cargo handling equipment increases, it becomes more difficult to provide manually a work order to cargo handling equipment and to perform visual check of state of work progress from the control center in Administration Building. Since the TOS monitors correctly operation of cargo handling equipment and provides the most appropriate work order to an operator, it is possible to achieve the maximum cargo handling efficiency with the

115


minimum cargo handling equipment.

c) Management System ＊Billing

The billing by a terminal is roughly classified into billing to a shipping company and billing to a consignor/a consignee and is based on MPA port tariff in general. However, there are special individual agreements on discount rate, the storage period of free of charge, etc. and consequently varieties of types of billing accrue. It requires enormous amount of time to prepare invoices and it is likely to make a mistake in billing procedure. If billing data has been input to TOS in accordance with provisions of the service contract with a customer, however, preparation of correct invoice can be completed at the time of work completion.

＊Statistics and Analysis The optimized arrangement of facilities and cargo handling equipment currently available is calculated and selected. It will be useful for operation of the terminal to analyze performance of works based on TOS data as study materials for formulation of a capital investment plan and preparation of budget.

<<Effect of Introduction of TOS>> ① Shortening time for procedures at a gate. ② Optimization of allocation of personnel ③ Achievement of improved efficiency of the works by efficient control of cargo handling

equipment ④ Shortening period during which the ship occupies a berth by improved efficiency of

stevedoring work of the ship. ⑤ Correct and prompt paperwork for billing ⑥ Formulating a future business plan by statistics and analysis of various performance of

works.

10) Emergency Generator (@US$300,000) Among large cargo handling equipment at a container terminal, RTG, a reach stacker and an empty container lifter are driven by diesel oil while a gantry crane is driven by high voltage electricity. Since it is predicted that blackout during stevedoring work of the ship is likely to occur in Myanmar where electricity supply situation is severe, it is necessary at a minimum to possess an own inside-fence generator which can drive a gantry crane. As a matter of fact, MITT and AWPT possess their own inside-fence generators sufficient to drive gantry cranes. Since 2 units of gantry crane to be introduced to the Terminal will be of Panamax type with the maximum output of 1,354 kVA, 2 units of 2,000 kVA generator will be provided, in consideration of lighting of the yard and refrigerated containers.

116


<<Output of Panamax Type Gantry Crane>> Maximum output Hoist motor 410 kW × 1pc × 109%/(0.9 × 0.98 × 0.95 × 0.98) = 949 kVA Trolley motor 37 kW × 4 pcs × 180%/(0.9 × 0.98 × 0.95 × 0.98) = 325 kVA Auxiliary equipment 40 kVA Lighting and others 40 kVA

1,354 kVA/Gantry crane Average output Hoist motor 410 kW × 1pc × 90%/(0.9 × 0.98 × 0.95 × 0.98) = 450 kVA Trolley motor 37 kW × 4pcs × 63%/(0.9 × 0.98 × 0.95 × 0.98) = 113 kVA Auxiliary equipment 40 kVA Lighting and others 40 kVA

643 kVA/Gantry crane

Remarks: Motor efficiency : 0.9 Invertor efficiency : 0.98 PMW convertor efficiency

PWM convertor average output factor

: 0.95

: 0.98

6.3.3 Personnel allocation plan

The personnel allocation plan is divided into 3 types of phase depending upon the number of calling at a port of the ships. Each ship has basically handling capacity of approximately 1,400 TEU in the same way as cargo handling equipment mentioned above. Type 1 is for the case that one (1) ship calls at a port a week and handles approximately 72,800 TEU in a year, Type 2 is for the case that two (2) ships call at a port a week and handle approximately 145,600 TEU and Type 3 is for the case that three (3) ships call at a port a week and handle approximately 218,400 TEU. Table 6.3-3 shows personnel allocation plan.

117


Table 6.3-3: Personnel Allocation Plan

Type 1 Type 2 Type 3

General Manager (Japanese) 1 1 1

Deputy General Manager 1 1 1

Accounting 3 3 4

General affairs

Clerical works 3 3 4

Driver of company cars 11 12 13

IT Engineer 3 3 3

Marketing Sales 2 2 3

Administration Division Subtotal 22 23 27

Manager of Operational Department 1 1 1

Container Planner/controller 6 6 8

Container/ Non-container

Operator

36

40

44

CFS Operator 11 11 17

Maintenance & Repair Engineer 12 13 15

Operational Division Subtotal 66 71 85

Manager of Administration Department 1 1 1

CY Clerical works for import/export 6 6 8

Gate booth Receptionist/inspector 18 18 24

The ship’s side Tallyman 3 3 3

CFS Clerical works for import/export 3 4 6

CFS Tallyman 4 6 9

Administration Division Subtotal 34 38 51

Total 124 134 165

<<Conditions of Personnel Allocation>> ① It is assumed that at the beginning, 4 Japanese Managers will be assigned i.e. 1 General

Manager, 1 Operation Manager, 1 Maintenance & Repair Manager and 1 Administration Manager. As technology transfer to local staffs is progressing, Japanese staffs will be reduced from time to time and eventually one Japanese General Manager will remain in the final structure.

118


② It is assumed that stevedoring work of the ship will be performed on 364-day-per-year and

24-hour-per-day basis and a gate will be opened for 2-3 hour extended time in addition to daytime when customs can provide service on permanent station basis.

③ It is assumed that 3 people will be assigned as controllers who perform supervision of yard

and monitoring of entire operation while a gate is opened and stevedoring work of the ship is performed on a shift basis. Also planning of the ship’s work will be performed by these three on a shift basis. For Type 3 when cargo handling volume is increased, 2 teams consisting of 2 people shall be arranged to deal with continuous cargo handling.

④ It is assumed that operation of a gantry crane and RTG will be performed by 2 operators on

a basis of such shift that an operator changes every 2 hours. For 2 units of gantry crane, therefore, 4 permanent operators will be employed. For 6 units of RTG, 14 operators including 2 standby operators will be employed. As required, standby operators of a gantry crane will be selected among operators of RTG to prepare for emergency event. For Type 3 when cargo handling volume is increased because gantry cranes will be used for continuous work, the personnel allocation will be so enhanced as to allow a new arrangement of 6 persons for 2 units. At the same time, also for RTG, new rotation will be introduced by new arrangement of 18 operators for 6 units.

⑤ It is assumed that a reach stacker, an empty container lifter and a tractor head will be operated

by 1 operator all day long. In principle, operators will take a lunch break during 12:00-13:00 all together, provided, however, that they may take a lunch break by turns so that any operator may engage in continuous work as required for elimination of congestion at a gate, stevedoring work of the ship, etc.

⑥ It is assumed in principle that a CFS operator works only during daytime. 9 units in total will

be operated by 9 operators all day long; including 1 unit of reach stacker, 1 unit of 10T forklift and 7 units of 3T forklift for customs inspection area and CFS. 2 units of tractor head for rotation of detached chassis at CFS will be operated by 2 operators.

119


6.3.4 Outsourcing works

In addition to the personnel allocation plan mentioned above, the Terminal needs following outsourcing workers:

① Cargo handling workers (except operators)

It is assumed that outsourcing workers will be utilized for the following works because of fluctuation of volume of such works, provided, however, that they will be allocated as permanent personnel as far as possible from the viewpoint to assure safety. * Stevedore except operators of cargo handling equipment (lashing and releasing of

containers on the ship, attaching and detaching a container stacker at apron of quay) ＊Assistant for the works relating to cargo handling equipment at the yard (handling of

sling wire, preparation of flooring materials) ＊Vanning and devanning works in customs inspection area and CFS

② Guard Guards will be employed through outsourcing arrangement so that they can perform tasks of the guard against visitors and employees of the Terminal on neutral position. The guard will be performed on the basis of 365-day-per year and 24-hour-per-day basis with 2 shifts each of which consists of 10 guards.

③ Cleaning staff

It is assumed that cleaning of apron of quay, yard, CFS, Administration Building, maintenance shop, etc. will be performed by 7 permanent outsourcing staffs during daytime.

6.3.5 Training system

Before inauguration of the Terminal, training in Japan will be provided to Myanmar personnel who are candidates of key management of the Terminal in order for them to acquire the basic knowledge of the Terminal as described below. In addition, training regarding the business related to the Terminal such as multi-purpose distribution center and fixed temperature/cold/refrigerated warehouses, etc., will be provided to them in order to teach them the importance of concentration and development of freight from the viewpoint of enhancement of competitiveness against competing terminals. Furthermore, after the inauguration of the Terminal, on-site training in Japan will be also provided on a regular basis aiming at skill enhancement of Myanmar personnel who are candidates of management of the Terminal.

Period: 1 year (from the date one year before commencement of service of the Terminal)

120


Place: Kamigumi Kobe PC-18 Container Terminal (KGKT), Kamigumi Kobe Multi-purpose Distribution Center (KMDC), Kamigumi Rokko Island Terminal (KRIT), Packing Plant of Kamigumi, Port Training Center, etc.

Number of Person: (5 people/1 month) × 12 times = 60 people in total Contents: ＊Overview of the Terminal (Operation and Management)

＊Operation of Cargo Handling Equipment of the Terminal ＊Manipulation of Terminal Operation System (TOS) ＊Operation of TOS Connected with Systems of Shipping

Companies, NACCS and Port EDI ＊Maintenance of Cargo Handling Equipment ＊Miscellaneous Works at the Terminal (Care of Refrigerated

Container, Repair of Container, Sweeping/Cleaning, etc.)

＊Functions and Operational Management of Multi-purpose Distribution Center and Fixed Temperature/Cold/Refrigerated Warehouses

＊Safety and Hygiene Management (Industrial Accident Prevention

Plan, Safety and Hygiene Management System, Handling of Hazardous Materials, etc.)

＊Intensive Study of 5S Methodology (Sorting, Setting-in-Order, Shining, Standardizing and Sustaining the Discipline)

121


Chapter 7. Related legal and taxation systems

7.1. Related legal systems

7.1.1. Basic terms related to this scheme

1. Outline of this project and scheme

(1) The following section describes the project details regarding the Thilawa Area Port and logistics stations that are subject to the survey of the laws and regulations of Myanmar on the relevant project (the project is hereinafter called “this Project”).

(a) Construction project regarding the following facilities and equipment at the Thilawa Area Port (hereinafter called “this Construction Project”). • Cargo warehouse; • Gantry cranes and other cargo handling machines • Container terminals

(b) Operation project regarding the following businesses at the Thilawa Area Port (hereinafter called “this Operation Project”).

• Maintenance and operation business for cargo warehouses; • Maintenance and operation business for gantry cranes and other cargo handling machines • Maintenance and management of the container terminal

(c) Domestic logistics project regarding the following businesses between cargo owners and the Thilawa Area Port (hereinafter called “this Logistics Project”). It is assumed that the collection and delivery of cargo will be handled by inland water transport (barge cargo transports) and by land transport (trucks and railways). • Collection, delivery and temporary storage of containers and cargoes • Cargo transportation by vessels

(2) The following describes the scheme for this Project that was assumed in the survey of the laws and regulations of Myanmar on this Project. For details of the investment structure, refer to the sections below.

(a) A company which is governed by the laws and regulations of Myanmar (hereinafter called

122


ミャンマ－政府

日本政府（JICA)

SPC ： Special Purpose Company (J/V : MPA ＆日本企業）

ミャンマー港湾公社（MPA)

公的部分

（港湾整備、荷役設備設置など）

民間部分倉庫、事務

所棟、運営システムなど）

円借款供与

出資

the “Joint Venture Company”) will be established to prepare for the implementation of the joint venture for this Project between Japanese companies, the Myanmar Port Authority (hereinafter called the “MPA”) and a local corporation in Myanmar (hereinafter called the “Myanmar Side Joint Venture Party”, who will act in conjunction with the MPA).

(b) The Joint Venture Company shall be a private company limited by shares. (c) The Joint Venture Company shall acquire an investment permit (hereinafter called the

“MIC Permit”) issued by the Myanmar Investment Commission (hereinafter called the “MIC”) in accordance with the Foreign Investment Law.

Offer of yen loans Myanmar government Japanese government

Repa

円借款返済

n loans

(JICA)

Project operation事r 業ig運ht営

s権 Myanmar Port Authority

(MPA)

Capital

Injectio

出資

yment of ye

Establishment of the Joint

Venture Company

(MPA & Japanese companies)

Capital

injection

Japanes日e本

c企o業mpanies

Official part (e.g. improvement of Private part (e.g. Warehouses, office

ports, setup of cargo handling facilities,

buildings, operation system, etc.)

運O営p・e保r 守ation/Maintenance

Thilaテwｲラa ワP港oタrtーTミeナrルminal

Figure 4.1-1 Investment structure

(1) Types of establishment Under the national laws of Myanmar, in addition to the Myanmar Company and Foreign Company that can be established in accordance with the Myanmar Companies Act 1914, a Special Company can be established based on the Special Company Act 1950. These types of companies are categorized from the view point of the attribution of stockholders and the following table shows the specific details.

123


Description

Myanmar Company A company of which all the capital stock is, at all times, owned and controlled by Myanmar citizens (No. (2A), Item (I),

Article 2, Myanmar Companies Act 1914). Foreign Company A company, excluding the Myanmar Company and the Special

Company, that is established in accordance with the Special Company Act 1950 (No. (2B), Item (I), Article 2, Myanmar Companies Act 1914).

Special Company A company established in accordance with the Special Company Act 1950 (Item (1), Article 7, Special Company Act 1950)

Table 7.1-1 Types of Companies classified from the view point of the attribution of stockholders.

As described in the above section, the joint venture company with the government agency in Myanmar should be established as a Special Company, although there is no express term in the Myanmar Companies Act 1914 and Special Company Act 1950. Consequently, the Joint Venture Company, which is a joint venture with the MPA that is included in the definition of a government agency of Myanmar, would be established as a Special Company.

In this regard, in general, the Myanmar Companies Act 1914 seems to apply to Special Companies. In addition, it is stated that the Foreign Company shall acquire a Permit to Trade (hereinafter called the “Permit to Trade”) in order to conduct the project continuously in Myanmar (Item 3, Article 27A) in accordance with the Myanmar Companies Act 1914, however it is believed that a Special Company does not need to acquire a Permit to Trade because a Special Company is excluded from the definition of a Foreign Company and a Special Company does not fall under a category which applies to a Foreign Company. In the case of a Special Company, the acquisition of a Permit to Trade is unnecessary.

(2) Establishment procedure When a foreign investor establishes a company in Myanmar, it becomes possible to be given preferential treatment (e.g. the preferential taxation and/or a long term land lease) under the Foreign Investment Law by receiving the MIC Permit. The table shows an outline of the procedure to establish a Foreign Company governed by the Foreign Investment Law. However, the same procedure will also be taken to establish the Special Company for this Project.

124


Table 7.1-2 Outline of company establishment procedure Outline of procedures 1.

Investor or originator Submission of the applications to apply for the MIC Permit and the registration of the establishment of the company (to be applied for simultaneously).

2.

MIC(Myanmar Investment Commission)

Within 2 to 3 weeks after the receipt of the submission of an application for the MIC Permit, the initial review shall be performed by MIC to check whether or not the documentation in the applications is complete. After this review, when the application is accepted, the MIC Permit shall be issued within 90 days from the receipt of the application (Article 48, Foreign Investment Rules).

3.

MIC・DICA(Directorate of Investment and Company Administration)

After MIC has issued the temporary MIC Permit, DICA shall start processing the application and will then issue the registration certificate for a temporary company registration.

4.

Investor or originator The first payment of capital injection shall be carried out according to the investment schedule which will have been submitted as part of the document attached to the MIC Permit application.

5.

Companies Registration Office(Hereinafter called “CRO”)

When the certificate which certifies that the first payment of the capital injection has been completed is received, the registration certificate for the company registration shall be issued.

6.

Investor or originator The remained capital injection payment shall be carried out according to the investment schedule which will have been submitted as part of the documents attached to the MIC Permit application.

(3) Restricted business activities under the Foreign Investment Law

(a) Outline Article 4 of the Foreign Investment Law lists the restricted or prohibited business activities for investment by foreign investors. Article 4 of the Foreign Investment Law prescribes that among such restricted or prohibited businesses, the details of a manufacturing business and services which can be carried out by the citizens (Article 4, paragraph (f)) etc., are regulated in the Foreign Investment Rule. In view of this regulation, the 25 prohibited business types are set out in the Foreign Investment Rule, and the businesses in which an investment by a foreign investor is restricted or prohibited are clearly defined (refer to the separate schedule No.1 to the separate schedule No.4.). Furthermore, Articles 4 and 5 in the Foreign Investment Rules prescribe that notification must be given concerning the businesses that are subject to restriction or prohibition and the businesses which are allowed in the form of a joint venture with Myanmar citizens, as well as the businesses which are permitted with specific conditions, and based on this regulation, the notification given by MIC (hereinafter called the “MIC notification”), sets out (1) the businesses which are prohibited from being invested

125


Number in MIC notifications

Economic Activities that should be taken into account as activities to be allowed only in the form of a joint venture with Myanmar citizens

1. No.28 Construction related to develop rail/road links such as bridges, highways, bypass, subways etc.

2. No.37 Passengers and cargo transport services by vessels and barges 3. No.38 Building new ships and repairing services at docks

in by a foreign investor (21 business types), (2) the businesses which can be permitted only by way of a joint venture with Myanmar citizens (42 business types), and (3) the businesses which can be permitted only with specific conditions.

(b) Points to concern related to this Project It is believed that this Project will not include any type of business listed in Item (1) above, in which investment by the foreign investor will be prohibited, however, the following section shows the businesses which could fall under Items (2) and (3) as mentioned above and relevant conditions, both of which should be taken into account.

When a foreign investor intends to conduct a joint venture with Myanmar citizens in order to conduct investment in a restricted or prohibited type of business, it is specified that the investment ratio by the foreign investor who is the joint venture party (hereinafter called the “foreign capital ratio”) shall not exceed 80% (refer to Article 20 in Foreign Investment Rules).

Concerning this point, we discerned that with respect to logistics business, the Ministry of Transport has a policy to recognize in practice only up to a maximum 70% as the foreign capital ratio share. Accordingly, we confirmed this with the Ministry of Transport and we were informed that the Ministry of Transport does not set a specific restriction for the foreign capital ratio, and it decides this ratio depending on the negotiations for each specific project. According to an inquiry to MPA, we were informed the same.

Consequently, the foreign capital ratio with the Joint Venture Company may be allowed to go as high as a maximum of 80% under the Foreign Investment Law (as long as the company does not manage the warehousing business on a small or mid-sized scale, as described below in section (ii)).

(i) Economic Activities to be allowed only in the form of a joint venture with Myanmar Citizens Table 7.1-3

126



Economic Activities that should be taken into account as activities to be allowed only in the form of a joint venture with Myanmar citizens

4. No.39 Inland Port services through construction of Inland Container Depot (I.C.D) and warehouse services

(ii) ) Economic Activities Permitted with the recommendations of the Relevant Ministry Table7.1-4


Contents and conditions of the economic activities permitted with the particular conditions

Type of Economic Activities Condition

1. No.7-20 Shipping agency services for foreign

owned ships To be allowed Joint Venture with the State.

2. No.7-21 Dockyard services

3. No.7-22 Water transport related services on land

plots owned by I.W.T

4. No.7-23 Construction of buildings and other related business

(iii) nomic Activities Permitted with Other Conditions

Table 7.1-5 Number in

MIC

notifications

Contents and conditions of the Economic Activities permitted with particular conditions

Type of Economic Activities Conditions

5.

No.16

Other construction renovation and maintenance, allowed

according to rules and regulations.

To do as per the ASEAN MRA specification and Myanmar National Building Code, Rules and Regulations.

6.

No.21

Setting up branch shops

To allow only franchisor for foreigners.

127


Number in MIC

notifications

Contents and conditions of the Economic Activities permitted with particular conditions

Type of Economic Activities Conditions

7.

No.22

Warehousing business

Small, medium-sized ware-houses are not allowed [Note: unless the business is carried out in the form of a joint venture with Myanmar citizens]. In the case of a joint venture project with Myanmar citizens, the investment ratio of the citizen side shall be at least 40% [Note: this means that the warehousing business which is not a “small or medium-size” will be allowed to have

a foreign capital ratio up to 100%].

(iv) nomic Activities which require Environmental Impact Assessment

Table 7.1-6 Number in

MIC

notifications

Contents and conditions of the Economic Activities permitted with

particular conditions

8. No.3 Construction of large scale embankment

The business is permitted when the project has no adverse environmental effect or the environmental effect can be reduced to the minimum extent possible. A feasibility survey and environmental impact assessment

are necessary.

9.

No.7

Construction of large port, dockyard, laying and excavation of

water canal of long length

When a company intends to operate businesses that correspond to the MIC notifications No.3 and No.7 as mentioned above, an environmental impact assessment shall be required before application for the MIC Permit.

However, the laws or guidelines governing such an environmental impact assessment do not currently exist in Myanmar. We have discussed this with Deputy Director General of Department of Environmental Conservation, Ministry of Environmental Conservation and Forestry over the

128


phone, and we were informed that the Ministry of Environmental Conservation and Forestry and State Planning/Economic Development Ministry are currently formulating guideline for the application/approval procedures for the project by referring to the guidelines of Asia Development Bank (ADB), JICA and other countries, including the approval procedures for the environmental impact assessment, and therefore the completion of the relevant guideline is unknown at present.

(4) Stockholder’s right The following section shows the outline of the main rights of a stockholder of a private company limited by shares under the Myanmar Companies Act 1914.

Table 7.1-7 Outline Ratio Details of stockholder’s rights

Voting rights

General Meeting

Absolute majority of attending stockholders

•Appointment of board members/Decision concerning remuneration (Separate table 1. Item A69)

•Appointment of auditors (Item (3) and (7), Article 144)/Decision of remuneration (Item (9), Article 144)

•Dividend (Separate table 1. Item A95) •Capital increase (Item (1) and (2), Article 50)

Extraordinary Resolution

Not less than 3/4 of attending

stockholders (Item (1), Article 81)

• Removal of a board member (Article 86G) • Start of voluntary dissolution (when the company cannot continue its business due to its liabilities). (Item (3), Article 203)

Special Resolution

Not less than 3/4 of attending

stockholders (Item (2), Article 81)

•Change of the trade name (Item (4), Article 11)/Change of the business purposes (Item (1), Article 12)

•Change of the Memorandum of Association (Item (1), Article 54)

•Change of the Articles of Association (Item (1), Article 20)

•Capital reduction (Item (1), Article 55) •Start of the voluntary dissolution (Item (2), Article 203)

129


Outline Ratio Details of stockholder’s rights Minority stockholder rights

10% or more •Right to convene the general meeting (Article 78) •Right to demand the appointment of an inspector

to investigate the affairs of company (No. (ii), Article 138)

Single stockholder rights •Right to demand access to the minutes of the general meeting (Item 4, Article 83)/Disclosure of interests of the directors (Articles 91A and 91C)/Financial documents presented at the general meeting (Article 135)

Assuming the descriptions indicated above, it would be reasonable to consider organizing the scheme so that the joint venture partner will not have veto rights with respect to matters which require an extraordinary resolution or special resolution at the general meeting by making the investment ratio of the joint venture partner less than or equal to 25%. However, as described in (3)(b), we cannot completely deny the possibility that the foreign capital ratio will be restricted in practice to be up to 70% for the Joint Venture Party. In that case, it should be noted that the Myanmar Side Joint Venture Party will have veto rights with respect to matters which require an extraordinary resolution or special resolution at the general meeting.

(5) Minimum capital regulation The regulation governing the minimum capital of company is not contained in the express terms of Myanmar Companies Act 1914. In actual practice, the regulation governing the minimum investment amount existed under the former Foreign Investment Law, and it was a condition for issuing an MIC Permit to implement the investment beyond a certain specified amount. However, such a regulation does not currently exist under the present Foreign Investment Law. We have discussed this with DICA over the phone to confirm our understanding that the regulation concerning the minimum capital to be invested in the actual business does not exist, and DICA answered that it does not request a minimum capital investment when we acquire the MIC Permit. Since it is assumed that the Joint Venture Company will acquire the MIC Permit, it is understood that a regulation concerning such minimum capital requirement to be applicable to the Joint Venture Company does not exist.

(6) Project category In the former actual practice, it was required to establish an independent company in each category for 8 businesses; (a) Trading, (b) Services, (c) Industry and Manufacturing, (d) Hotel

130


Business, (e) Tourism, (f) Gemstones Enterprise, (g) Construction or (h) Banking (i.e. it is prohibited to establish a separate company to operate a business belonging to those categories of businesses).

However, DICA Announcement No.1/2013 announced that it is no longer necessary to establish separate companies in every business category as mentioned above since February 22nd, 2013. In this way, it is thought that it is also possible to establish the Joint Venture Company as one corporate which operates a business that belongs to the above business categories (i.e. specifically, this Operation Project and this Logistics Project seem to correspond to the “Services” category, and this Construction Project seem to correspond to the “Construction” category). It is also possible to establish other company to operate both businesses belonging to the Services and Construction categories according to the result of our inquiries with DICA.

However, in actual practice, it may be the case that it is necessary to establish separate companies in every business category, since the former actual practice seems to still apply in reality. Consequently, it would be advisable to carefully confirm this point once again closer to the establishment of the Joint Venture Company.

3. Governance

(1) Agency The Myanmar Companies Act 1914 regulates General Meeting, Director, Board of Directors and Auditor as the agents of a company.

(a) General Meeting The general meeting is the top decision-making body of a company and is required to pass the resolution on the appointment of the directors of the company (B (ii), Article 83, Myanmar Companies Act 1914) and approval of the dividends (Item 95, Attached Separate table A, Myanmar Companies Act 1914). The general meeting shall be held within 18 months from the date of its incorporation, and thereafter it shall be held at least once a year and not more than 15 months after the holding of the last preceding general meeting (Item 1, Article 76, Myanmar Companies Act 1914).

(b) Director A director is in the position to manage the company (Item 71, Attached Separate table A,

131


Myanmar Companies Act 1914). According to the Myanmar Companies Act 1914, the minimum number of directors is set up so that there shall be 3 or more directors of a Public Company (Item (1), Article 83A, Myanmar Companies Act 1914), but there is no special restriction set for a Private Company. However, the CRO regularly requests that a company register more than two directors even for a Private Company. The Myanmar Companies Act 1914 does not specify the upper limit of number of directors for either a Public Company or a Private Company.

For the qualification of a director, the director is not required to have stocks of the relevant company excluding the cases specified in the articles of association (Item (1), Article 85, Myanmar Companies Act 1914). There is no requirement concerning the nationality or locality of residence of a director.

(c) Board of Directors The board of directors is thought as the body to decide the basic policy to conduct the company business, but the details of the board of directors is not prescribed by the Myanmar Companies Act 1914. However, as CRO will supply a template for memorandum and articles of association, if the content of the template is changed, it will be difficult in practice to acquire authorization for the registration. Accordingly, as a matter of practice, it is believed that it will be difficult not to establish the board of directors.

(d) Auditor The auditor is positioned to audit the balance sheet and profit and loss account statement to submit them to the ordinary general meeting (Item (2), Article 131, Myanmar Companies Act 1914), and it is understood that the auditor does not have the right to conduct a business audit but does have the right to conduct an accounting audit. This is the different system from the system which applies to corporate auditors in Japan, which more closely resembles the “Accounting Auditor” under the Companies Act in Japan.

(2) Memorandum and Articles of Association Under the Myanmar Companies Act 1914, memorandum of association and articles of association are the constitutional documents of a company.

(a) Memorandum of Association The content of the memorandum of association is differently regulated for companies limited by shares, companies limited by guarantee and unlimited companies under the Myanmar

132


Companies Act 1914, however, the trade names, location of registered office and business purposes are designated as legally requested description items for each type of companies’ memorandum of association, even though the other contents for each are different (Article 6 to Article 8, Myanmar Companies Act 1914).

(b) Articles of Association The template of the articles of association is regulated in Table A in Separate Table 1 in the Myanmar Companies Act 1914 and this template can be used as the articles of association by adequately amending the articles provide in the relevant template, and the content of the regulation in Table A will be effective as the content of the articles of association unless the regulation in Table A are changed or omitted (Article 18, Myanmar Companies Act 1914). For some parts of the articles of association (e.g. the dividend declaration (Table A (Item 95)) and the preparation method of the profit and loss account statement (Table A, Item 107)), such provision are mandatorily deemed to be incorporated into the articles of association in any case (Item 2, Article 17, Myanmar Companies Act 1914), and accordingly, it should be noted that the amendment of the articles of association is restricted.

4. Land

(1) Use of immovable property by the foreign capital The Myanmar Constitution states that all lands in Myanmar are owned by the nation (Paragraph a, Article 37) and a private individual who wants to use land will be able to use the land by entering into a rental agreement with the relevant government authority. Foreigners are prohibited by the Transfer of Immovable Property (Restriction) Act from acquiring the immovable property by purchase and from leasing the immovable property for periods over one year (Article 3, Same Act).

Different from the above Act, upon the investment by way of foreign capital, MIC can allow the investor the right to lease or use the land for an initial term of 50 years maximum depending on the category of project and industry and the volume of investment under the Foreign Investment Law (Article 31, Same Law), and it is specified that MIC can approve an extension of 10 years at a time for up to two times at maximum for an investor who wants to continue the project after the expiration of the relevant permit period (Article 32, Same Law). Thus, the investor can use the land for up to 70 years if the permit based on this law is acquired. As described in I.1.(2)(c), the Joint Venture Company can use the land for this Project for 70 years at maximum by acquiring the MIC Permit under the Foreign Investment Law.

133


(2) Procedures for disposition of the land use right and lease The following section outlines the major procedures to acquire the land use right by way of transfer or other methods. If necessary, it is required to be concern about the point concerning the making of additional surveys of the existence and details of the land use right.

① To acquire the recorded map of the relevant land from the appropriate authority. ② To enter into a transfer agreement for the land attached to the recorded map. ③ To pay the stamp tax and other tax arising from acquisition of the relevant land. ④ To register the relevant agreement with the relevant authority.

5. Labor

The following section describes the items of concern with respect to the general labor laws in Myanmar. For the special rules for dockworkers, refer to III.2.(3) described below.

(1) Minimum wage The Minimum Wage Law, 2013 (The Pyidaungsu Hluttaw Law No. 7/2013) was established in March 2013 and this law regulates the agency and procedures, which govern minimum wage, employer’s liability and rights with respect to the minimum wage of workers.

According to this law, the minimum wage shall be proposed by the Union Committees and Region and State Committee for every region, state or project and it will be published in gazettes and newspapers after the National Committee has considered the relevant proposal, and if no objection is presented after publication, the minimum wage shall be decided by approval of the union government (Article 5 (e), Articles 8 and 10). However, there exists no minimum wage which is applicable to employers and workers in the private sector, excluding certain industries such as rice polishing or tobacco production, because no specific rule has been established which defines the minimum wage amount.

(2) Dismissal According to the sample contract of employment prepared by the Ministry of Labour and Social Security, it is stated that the employer may terminate an employment agreement if: (i) the project work is completed earlier than the scheduled time; or (ii) the project as a whole or any part of the project cannot be continued due to unforeseeable causes even if it is within the employment agreement period with an employee. In this case, the employer shall pay the following amount of money depending on the period of employment in accordance with the applicable laws and directives to the employee whose employment agreement has been terminated.

134


Table7.1-8 Period of employment Amount to be paid to the employee

Not exceeding 3 months Amount of salary for one month

More than 3 months but not exceeding 1 year Amount of salary for two months

More than 1 year but not exceeding 3 years Amount of salary for three months

More than 3 years Amount of salary for four months

However, according to the sample contract of employment, the employer may dismiss the relevant employee without paying the money amount which is specified in the sample contract of employment as mentioned above if the employer dismisses the employee because of the acts of the employee him or herself.

(3) Compensation for the injury of a workman The Workmen’s Compensation Act states that the employer shall compensate the injury of a workman due to an accident arising out of and in the course of his employment. However, a nonfatal injury which is caused directly by the following causes is excluded (Paragraph 1, Article 3).

① When the workman was under the influence of drink or drugs at the time of accident; ② When the workman deliberately disobeyed orders or written rules given for the purpose of

securing the safety of workmen,; ③ When the workman deliberately removed or disregarded a safety guard or other device

which he knew to have been provided for the purpose of securing the safety of workmen.

According to the Workmen’s Compensation Act, the amount of money that the employer shall provide as compensation is as follows (Article 4).

Table 7.1-9

Degree of injury Compensation payment Death due to injuries 36 times the amount of the relevant workman’s monthly wages

(within the specified upper and lower limits).

Permanent total disablement due to injuries

50.4 times the amount of the relevant workman’s monthly wages (within the specified upper and lower limits).

135


Degree of injury Compensation payment Permanent partial disablement due to injuries

The money amount calculated by multiplying the compensation amount which is paid in the case of permanent total disablement by the percentage of the loss of earning capacity (the percentage of the loss of earning capacity is specified by law for specific grades of injuries).

Temporary disablement (total or partial) due to injuries

As a rule, an amount equivalent to one third of the amount of the relevant workman’s monthly wages every half-month beginning on the 16th day from the date of disablement and afterwards (it shall be the shorter period of either the period of disablement or 5 years).

6. Other regulations

(1) Dividend regulation The Myanmar Companies Act 1914 states that a dividend may be paid from the profit of the company in the relevant fiscal year based on the resolution of the general meeting of stockholders, however, the dividend amount shall not exceed the range recommended by the board of directors (Table A Item (95), Item 2, Article 17, Myanmar Companies Act 1914).

In the case of a company established based on the Foreign Investment Law, the approval of MIC is required for the dividend and, thus, only when the approval of MIC has been given, the payment of a dividend is permissible by the resolution of the general meeting of stockholders to the extent recommended by the board of directors.

(2) Remittance regulation It has always been understood that the overseas remittance by the Foreign Company established in Myanmar is difficult in practice; however, the Foreign Investment Law approves the right of overseas remittance for foreign investors explicitly and therefore admits the overseas remittance of (1) foreign currency that a person who has brought in the foreign capital is entitled to, (2) foreign currency which MIC allows the party who has brought in the foreign capital to withdraw, and (3) the net profit after deducting all the taxes and relevant funds from the annual profit (Article 39, Foreign Investment Law).

However, it must be noted that it is still not clear whether setting up the relevant regulations under the Foreign Investment Law caused the overseas remittance to become practically easier than before.

136


(3) Loans from investors With respect to the payment of loans in accordance with the Foreign Exchange Management Law, to provide a loan to the Joint Venture Company from its investors, it is required to have MIC approve such a loan in the application procedures for acquiring the MIC Permit; accordingly, the relevant loan may be deemed to be a capital transaction and the relevant company may comply with the approval procedure of the Central Bank of Myanmar when making every loan payment. Consequently, it is required to survey the specific details whenever such a loan becomes necessary for the Joint Venture Company.

(4) Restrictions on transfer The Foreign Investment Law explicitly prescribes the right of the stock company to transfer some or all of the stocks that the investor possesses for investment purposes, and also prescribes that the approval of MIC is required to make the relevant transfer (Article 17 (i), Article 17 (j) and Article 18 (b), Foreign Investment Law). The Foreign Investment Rule prescribes that it is required to apply for each such transfer and as part of the application procedure it must attach a certificate of tax payment in the specified written form (Article 65 and Article 72, Foreign Investment Rule),; and MIC also has the authority to investigate based on standards such as (1) the reasonableness of the stock transfer, (2) whether or not the transfer has the possibility to affect the interests of the Union and of its citizens, and (3) whether or not the transferee can continue the project (Article 66 and Article 73, Foreign Investment Rule). There is a concern that there are restrictions when the Joint Venture Company wants to Exit by way of stock transfer, because these standards are not necessarily clear or concrete.

(5) To effect insurances The Myanmar Insurance Law states that the economic organization which has been formed under the permit of the Foreign Investment Law shall effect insurance of the specified classes that the Myanmar Insurance determines from time to time (1st Sentence, Article 19). However, the Ministry of Finance and Revenue may exempt such economic organization from the need to effect part of such classes of insurance (2nd Sentence, Article 19). It is required for the organization to effect machinery insurance, fire insurance, maritime insurance, insurance related to accidents resulting in disablement, insurance related to the natural disasters and life insurance at least, and MIC may also require the economic organization to obtain additional insurance policies.

137


7.1.2 This construction project

1. General statement

(1) Permits and licenses for the project The following permits and licenses are required to carry out this Construction Project: a permit from the Yangon City Development Committee (hereinafter called “YCDC”) for construction within Yangon City; a permit from YCDC for the construction of roads and embankments; a permit from YCDC for the modification of the existing level of land; an opening license from YCDC; a permit from MPA for removing rocks from the bank and shore of the port; and a permit from MPA for the construction of embankments. For the contents of and acquisition procedures for the relevant permits and licenses, please refer to (2) described below.

According to the results of our referral to YCDC, they think that the jurisdiction of YCDC is limited to 33 areas within Yangon City, and accordingly, for the 12 areas located outside of Yangon City including the Thilawa Area, the authority of YCDC is limited to certain restricted authorities such as the provision of maintenance services for the urban area, and YCDC does not have jurisdiction concerning large scale construction projects; therefore, YCDC lacks jurisdiction for this Project. However, under the strict letter of the YCDC law, YCDC will have legal jurisdiction over permits from YCDC in (2)(a) to (c) described below in cases concerning the boundaries of land under the jurisdiction of YCDC and also concerning projects that intend to interconnect with land under the relevant jurisdiction. For this reason, it is difficult to deny the possibility that the acquisition of the permit described in (2) (a) to (c) described below will be necessary depending upon the details of this Project in the Thilawa Area.

Additionally, specific approval or registration may be required by local, state or national governments in addition to the permits mentioned above. Furthermore, it is advisable for the operational process of the Joint Venture Company to become a member of the Myanmar Engineering Society, though this is not legally required.

(2) Contents and procedures for the acquisition of the permits and licenses for the project

(a) Permit rom YCDC for the construction in Yangon City Notification No.9/1999 by YCDC states that anyone who wants to do construction work in the Yangon City Development Boundary shall apply to YCDC in advance and then acquire

138


the permit of YCDC (Article 3 and Article 76), and YCDC will decide whether or not permission is granted within two months from the date when the application is received (Article 4). A copy of the building design that complies with the applicable technical construction specifications must be included in the application.

(b) Permit from YCDC with respect to the construction of roads, bridges or the blockade of sewage, ground water and natural streams

Notification No.11/1999 of YCDC requires the permit of YCDC to conduct the following activities (Article 19, Article 39, Article 47 and Article 48). To acquire the permits mentioned above, the company must submit the design of the foundation, construction design, and names and types and quantities of materials that will be used to YCDC and be satisfactorily inspected by YCDC.

① To construct, destroy, move, or affix roads and bridges, or to change the name or number of roads; and

② To block, disturb or change the current drain or underground or natural water currents.

(c) Permit from YCDC with respect to the modification of the existing level of the land, lake, pool and valleys

According to the YCDC law, the prior permit is required to modify or alter the existing level of the land, lake, pool and valleys.

(d) Opening license of YCDC Notification No.9/1999 and Notification No.11/1999 by YCDC state that it is necessary for the company to have YCDC issue an opening license which confirms that the company complies with the terms and conditions related to the construction permit upon the completion of the project, and this license shall be issued within two months from the confirmation of the completion of the project.

(e) Permit from MPA with respect to the removal of rocks from the bank and shore of the port According to the Ports Act, it is prohibited to remove rocks, stones, shingles, gravel, sand or soil or any artificial protection from any part of the bank or shore of the port without a permit from MPA.

(f) Permit from MPA for the construction of embankments According to the Embankment Act, a permit from MPA is required to erect any structure, building or machine, or lay any pipeline on a certain embankment. Also within the specific area, the permit from MPA is required to construct, maintain, repair and add to any dyke,

139


embankment or bund (excluding a small bank or ridge).

To acquire the permit from MPA mentioned above, the company shall submit the design to the civil engineering department of MPA, and the civil engineering department in MPA analyses the relevant design and determine whether or not the applicable technical construction specification is complied with. When MPA judges that the relevant design complies with the technical specification, they issue a letter of recommendation to MIC, which will allow the MIC permit procedure to continue.

2. Regulations of concern

(1) Compensation when a third party is damaged during the construction of buildings Notification No.9/1999 by YCDC states that a person who suffers an damage can protest to YCDC when the neighboring building or part of the building is damaged while carrying out construction work with YCDC’s permit (Article 9), and if the corresponding protest is found to be true, YCDC shall fix and pay an amount of compensation to that person after liaising with the construction work permit holder (Article 10). In addition, YCDC may request the Joint Venture Company to reimburse the cost of the relevant compensation. Consequently, when the Joint Venture Company damages the neighboring building or part of a building in the course of this Construction Project, it should be concerned that YCDC may request the Joint Venture Company to reimburse any compensation which YCDC pays regarding the relevant damage.

(2) License for Building Contractor, Architect Engineer, Building Engineer and Engineer. Notification No.9/1999 by YCDC states that YCDC can issue the license for the Building Contractor, Architect Engineer, Building Engineer and Engineer (Article 32 to Article 34), so the company cannot engage in construction works as a Building Contractor, Architect Engineer, Building Engineer or Engineer without the relevant licenses in the Yangon City Development Boundary. It is understood that the Architect Engineer and Engineer are the parties who prepare the designs of buildings that follow the technical construction specifications required by YCDC, and that the Building Contractor and Building Engineer are the parties who implement the relevant designs. There is no legal necessity in this Construction Project to employ such parties or give operational commission to them, however, it is advisable to employ such parties or give operational commission to them in actual practice because it is estimated that these parties are familiar with the interpretations and practical requirements of the related authorities.

140


7.1.3 This operation project

1. General statement

(1) Licenses for the project A license for the private warehouse and a license for the supply of seamen are required to establish this Operation Project. For the contents of and the procedures for acquiring the relevant licenses, please refer to (2) described below.

Additionally, specific approval or registration may be required by local, state or national governments in addition to the permits mentioned above.

(2) Contents and procedures for the acquisition of licenses for the project (a) License for the private warehouse at the warehousing port

The Sea Customs Act states that the Chief Customs-collector can grant a license for a private warehouse at the warehousing port from time to time (Article 14). The relevant license for the warehouse is required to apply, together with the MIC Permit, in accordance with the Foreign Investment Law. Accordingly, if the Joint Venture Company will also operate the private warehouse, it will be required to also apply for the license for the private warehouse together with the MIC Permit in accordance with the Foreign Investment Law.

(b) License for the supply of seamen According to the Burma Merchant Shipping Act, to supply seamen to Myanmar merchant ships travelling overseas, it is required to register in advance with the Seamen Employment Control Division at the Department of Marine Administration in the Ministry of Transport. Accordingly, if the Joint Venture Company will supply seaman to Myanmar merchant ships travelling overseas, it should be concerned that advance registration with the Seamen Employment Control Division at the Department of Marine Administration in the Ministry of Transport will be necessary.

2. Regulations of concern (1) Goods the company is prohibited from importing

According to the Sea Customs Act, the following goods are prohibited from being imported into Myanmar (Article 18). Consequently, the Joint Venture Company should be concerned whether or not the following goods have been imported to conduct this Operation Project.

141


① Counterfeit coins; ② Obscene books, pamphlets, papers, drawings, paintings, representations, figures or articles; ③ Goods having applied thereto a counterfeit trade-mark or a false trade-description; ④ Goods made or produced beyond the limits of the United Kingdom, India or Pakistan and

Myanmar and having applied thereto any name or trademark being, or purporting to be, the name or trade-mark of any person who is a manufacturer, dealer or trader in the United Kingdom, in India or Pakistan or in Myanmar unless:

(i) the name or trade-mark is, as to every application thereof, accompanied by a definite indication of the goods having been made or produced in a place beyond the limits of the United Kingdom, India or Pakistan and Myanmar; and

(ii) the country in which that place is situated is in that indication indicated in letters as large and conspicuous as any letter in the name or trade-mark, and in the same language and character as the name or trade-mark;

⑤ Piece-goods, such as are ordinarily sold by length or by the piece, which: (i) have not conspicuously stamped in English numerals on each piece the length thereof in

standard yards, or in standard yards and a fraction of such a yard, according to the real length of the piece; and

(ii) have been manufactured beyond the limits of Myanmar; or (iii) have been manufactured within those limits, have been manufactured beyond the limits

of Myanmar in premises which, if they were in Myanmar, would be a factory as defined in the Factories Act or

⑥ Matches made with white phosphorus.

(2) Conditions for vessels and cargoes required to clear the port According to the Sea Customs Act, the following conditions are required of a vessel which has arrived at the customs-port.

① Cargoes shall not be unloaded until the manifest is issued to the pilot or the customs officer and the order of the Customs-collector is issued (Article 57).

② The vessel shall not load the export cargo until an application is made to the Customs- collector (Article 61).

③ The vessel shall not depart from the customs-port until the port-clearance is given by the Customs-collector (Article 62).

④ When there is no permit from the Customs-collector, the vessel shall not load at the customs-

port any goods, excluding the passengers’ baggage or the ballast that are urgently required to be shipped for the vessel’s safety (Article 70).

Consequently, it is required to be concerned about the restrictions mentioned above to conduct

142


this Operation Project. (3) Regulations of the Dockworkers (Regulation of Employment) Act with respect to workers

engaged in the dock work For the employment of dockworkers, it is required to prepare a “scheme” which defines the duties, employment and benefits of dockworkers in accordance with the Dockworkers (Regulation of Employment) Act. The relevant scheme shall be prepared jointly by the representatives of the dockworkers and the employers (Paragraph 1, Article 4), and the scheme shall take effect only after it has been published in a gazette and embodied in an order made by the president (Paragraph 5, Article 4).

Consequently, the Joint Venture Company should be concerned that the Joint Venture Company must hold discussions with the representative of dockworkers, prepare the relevant scheme, and acquire an order made by the president if the duties, employment and benefits of dockworkers to be employed in the course of this Operation Project are decided by the scheme.

(4) The Burma Lighthouse Act The Burma Lighthouse Act states that the authority of superintendence and management of general lighthouses is possessed by the president (Article 6). On the other hand, it is set-out that the president can appoint a local lighthouse authority for local lighthouses.

Consequently, the Joint Venture Company should be concerned that it would be required to comply with the authority of the president or the local lighthouse authority for lighthouses if the Joint Venture Company is also conducting the superintendence and management of lighthouses in the course of this Operation Project.

7.1.4 This logistics project

1. Multimodal Transport Law

(1) Outline and applicable scope The Multimodal Transport Law which was enacted on January 31st, 2014 shall be applied to the Multimodal Transport Operator who is registered under the Central Board which is specified by this law (Article 4 (a), Same Law). The multimodal transport operator is defined as the party who contracts the multimodal transport agreement directly or through an agent and bears the responsibility for the execution of the multimodal transport agreement by itself without being a simple agent of consignor or consignee, and multimodal transport in this

143


context means that the goods are transported from one place in a country to a different place in another country by use of at least two transportation means by a multimodal operator based on a multimodal transport agreement (Article 2 (b) and (d), Same Law). It is thought that the Multimodal Transport Law shall be applied when the transport of articles presumed in this Logistics Project clearly satisfies the definition of “transporting the goods from a certain point in a certain country to another place in another country by use of at least two transportation methods”.

Meanwhile, it is presumed to be unclear whether the transportation of goods presumed in this Logistics Project currently corresponds to the definition of “transporting the goods from a certain point in a certain country to another place in another country” in certain cases, such as the case where the Joint Venture Company transports the article into Myanmar after a third party has transported it from overseas.

Accordingly, as a precautionary measure, assuming that the application of the Multimodal Transport Law may be required for this Logistics Project, it is advisable to refer to the Ministry of Transport again when additional details of this Logistics Project have been clarified.

(2) Effects when the Multimodal Transport Law is applied When this Logistics Project falls under the category of multimodal transport and when the Joint Venture Company which takes care of the transportation corresponds to the Multimodal Transport Operator, the Joint Venture Company is required to apply for registration as the multimodal transport operator to the central board and acquire a registration certificate from the Central Board (Article 9 (a) and (b), Same Law).

However, concerning the standard which will be used with respect to acquiring this registration certificate or the procedures and the time periods involved, it is not clear at present, because the relevant rules are not concretely established.

7.1.5 Environment

1. General statement As mentioned in I. 2.(3) (b) (ii) above, to conduct the construction of a large scale embankment, a large port and a dockyard, and the laying and excavation of water canal of long length, an Environmental Impact Assessment (EIA) will be requested; however, the laws governing the actual procedure with respect to the environmental impact assessment are currently being

144


designed. 2. Regulations of concern (1) Regulations when the project being performed has an impact on the environment

According to the Environmental Conservation Law, 2012, it is stated that the state can designate a project category, factory or workshop that affects the environment where a prior approval is demanded, and the owner or occupant must apply for the prior approval in accordance with the corresponding designation (See Article 21, Article 22 and Article 28). However, a definition of concrete standards has not been established concerning prior approvals. For export/import of an good prohibited by the state which may impact the environment, it is prohibited to execute the project unless there has been a prior approval by the state (Article 30), and therefore it is required to refer further to the related authorities on this point when the Joint Venture Company determines to actually conduct the project, because the definition of the terms of a prohibition has not been established.

(2) Regulations with respect to activities damaging the conservation of water resources and rivers According to the Conservation of Water Resources and Rivers Law, 2006, the Joint Venture Company should be concerned if the Joint Venture Company performs activities corresponding to the following items, because a prior approval by the Directorate of Water Resources and Improvement of River System will be required (Article 6 (a) (g)).

Table 7.1-10 Activities requiring the prior approval of the Directorate of Water Resources and

Improvement of River System 1. switchback, dockyard, wet dockyard, water-tight dockyard, jetty, pier, landing stage

or vessel landing by drainage in the river-creek boundary, bank boundary and waterfront boundary, buildings and bridges in the river-creek boundary, bank boundary and waterfront boundary

2. business of sand suction, sand dredging, sand excavating, river shingle suction in river-creek boundary, bank boundary and waterfront boundary

When it is intended to perform an activity which needs prior approval, it is required to submit a document describing the project details and location prior to commencing the relevant activity to the Directorate of Water Resources and Improvement of River System. The Directorate of Water Resources and Improvement of River System shall verify the appropriateness of the land owner and the relevant project and then carry out the procedure to issue a recommendation letter for acquisition of the MIC Permit.

145


However, further referral to the related authorities is required on this point when the Joint Venture Company determines to actually conduct the project, because it is not clear what standard will apply to the acquisition of the recommendation letter in actual practice.

(3) Other According to the Development Committees Law, the Joint Venture Company should be concerned when the Joint Venture Company intends to carry out the relevant Ferry business, because it is stated that the prior permit is required to perform the Ferry business (Article 27 (a)).

7.2 Taxation system

7.2.1 Background of survey

We performed the survey with respect to the outline/problems of various taxes related to the object project described in (1) to (3) and other individual confirmation items from the following terms.

(1) Construction project including the following facilities at the Thilawa Area Port. • Cargo warehouse • Gantry cranes and other cargo handling machines • Container terminals

(2) Operation and maintenance project including the following businesses at the Thilawa Area Port.

• Operation and maintenance business for warehouses • Operation/maintenance of the container terminal (including the operation and maintenance business for gantry cranes and other cargo handling machines). For the terminal operation, the main business shall be loading and unloading of containers to/from boats and collecting containers by using the terminal/cargo handling machines at Thilawa Area Port to be constructed.

(3) Domestic distribution project • The collection, delivery and temporary storage of containers and cargoes between each shipper and Thilawa Area Port are presumed. As a route, the water transport (barge cargo transports) and road transport (trucks and railways) are presumed.

146


7.2.2 Presumed investment structure

As shown in Fig.7.1-1, it is planned to establish SPC as the joint venture company of the Japanese corporate, Myanmar port Authority (MPA) and Myanmar local corporate and then acquire the investment permit from the Ministry of Transport (MOT) and Myanmar Investment Commission (MIC). In addition to the capital injection, the fund procurement is also scheduled by a loan of commercial banks in Myanmar. The capital injection ratio for this SPC is estimated as 80% by the Japanese corporate and 20% by the total of Myanmar Port Authority (MPA) and Myanmar local corporate.

7.2.3 Report of survey results

(1) Corporate tax (common) Since the joint venture company who performs this object project falls under the category of the Myanmar local corporate, the corporate tax of 25% of operate income and 10% of capital gain shall be laid on based on the income per company unit which totals all object projects.

Table 7.2-1

Corporate type

Operate income

Capital gain General project

corporate

Oil/Gas project corporate

Resident corporate 25% 10% Progressive tax imposition from 40% to 50%

Nonresident corporate (Myanmar branch of the foreign corporate)

35% 40%

The tax imposition scope shall be processed as the Myanmar domestic income-tax collected at the source because this object project is given a permit by the Myanmar Investment Commission (MIC) based on the Foreign Investment Law.

Table 7.2-2 Scope of the taxable income

Kind of corporate Tax imposition scope

The domestic corporate

Corporate other than the following party

Worldwide income

Corporate established based on the Foreign Investment Law

Myanmar domestic income-tax collected at the source

Non-resident corporate － Myanmar domestic income-tax

147


（Myanmar branch of foreign corporate）

collected at the source

The following tax benefit is granted because this object project is given a permit by the Myanmar Investment Commission (MIC) based on the Foreign Investment Law.

Table 7.2-3

Tax type Objects for exemption

Corporate tax

•Tax exemption of the corporate tax is given for 5 years from the start of manufacturing or supply of services. The extension of the tax exemption period may be approved depending on the case.

•The treatment which deals the profit of the relevant reserved part as the exclusion from taxation when the investment is carried out within 1 year by reserving the part of the profit for reinvestment, which has been earned through the project in Myanmar.

•The accelerated depreciation by the depreciation ratio which is approved by MIC respectively for the fixed assets for project such as the machine facility and factory building.

•The treatment which makes the 50% of income as tax exemption, which has been earned by the export sales of products

•The treatment which approves the write-off during the calculation of corporate tax for the obligation amount of the relevant income tax when the corporate bears the individual income tax of foreign employees.

•The treatment which approves the write-off of the research and development cost in Myanmar.

•The treatment which can balance out the income by carrying forward the taxation loss for 3 years.

As the forehand payment, at the payment for the following transactions, it is required for the paying side to get in the withholding tax and pay the tax in Myanmar. The receiving side shall set off the relevant withholding amount from the paid tax at the year-end declaration as the forehand payment of corporate tax. (See the problems in the table.)

Income type

Table 7.2-4

When the domestic corporate or the

When the foreign corporate (and its branch office) receives

Non-DTA resident foreign

corporate receives foreign corporate

Thailand corporate

Singapore corporate

148


Interest cost － 15% 10% 8/10%*3 Dividend －－－－

Royalty 15% 20% 10% 10/15%*2

Payment by the domestic corporate *1

Counter value of articles

2% －－－

Counter value of services

2% 3.5% －－

Payment for counter values of articles/services by the foreign corporate *1

2%

3.5%

－－

*1 When the PE approval is acquired, the amount of 2% from the income acceptance to the domestic corporate/resident foreign corporate and the amount of 3.5% from the income acceptance to the foreign corporate (and its branch office) are deducted at source.

*2 When the income is received as the counter value to the use of the copyright, patent right, trademark right, design, model, graphics, confidential system, or the use of confidential system, or the counter value to the rights for use of them, or when it is received as the counter value to the use of industrial, commercial or academic experiences or the rights for use of them: 10% is applied, and when the situation is related to other cases including the transfer of copyright: 15% is applied.

*3 8% is applied when the receiving party is the banking facilities.

<Problems> ① Originally, the self-assessment taxation has been set up, however; historically the official

assessment has been virtually used, in which the tax imposition is performed by the tax authorities by giving a limit based on the sales amounts. Since the end of March in 2013, the thoroughness of self-assessment taxation has been attempted, however the situation has not reached the penetration into business routines. Since this project is the national project for Thilawa and the tax authority is still in the course of penetration into business routines, therefore it is thought that there is a scope of improvement at the start of this project and it is required to concern on the situation continuously.

② The refund claim of the over payment of tax may not be accepted when the paid withholding tax which was paid in advance exceeded the paid tax at the year-end declaration because the official assessment is virtually used as described in (1). In other words, the refund claim may not be virtually possible even if there is some amount of refund claim because the assessed amount in accordance with the official assessment exceeds the refund claim amount.

149


(2) Commercial tax 1. Construction project

The following shows the major commercial taxes for the construction project. ① Drawing designs, decoration and repairing of land, building and construction: 5% ② Construction of the building itself: It is generally understood that this case is not subject to

the commercial tax. <Problems>

It is advisable to acquire the confirmation in advance for the actual business because the difference between (1) and (2) mentioned above has ambiguity.

2. Operation and maintenance project The following shows the major commercial taxes for the operation and maintenance project.

① Brokerage service: 5% ② Agent, Lawyers, Certified accountants, Auditors: 5%

<Problems> The application is not clear because there are only 14 sections for the service project in the commercial tax. It is advisable to acquire the confirmation in advance for the actual business.

3. Domestic distribution project The following shows the major commercial taxes for the domestic distribution project.

① Railway, waterway, airway and road way business: 5%

Additionally, when the company does not operate the distribution project by itself and subcontracts to the local company, it may correspond to the brokerage service mentioned above.

(3) Documentary stamp tax (common) The following shows the documentary stamp tax which may be related to the construction project, operation and maintenance project and domestic distribution project.

① Agreement or Memorandum of Agreement if related to the joint venture agreement, production or profit sharing contract, construction agreement or other similar agreement or contract: 1% to the counter value of the contract

* 150, 000Kyat shall be the limit amount. ② When the contract is made on a US dollar basis, the tax is 1% to the counter value of uniform

contract. In this case, the limit amount does not exist.

150


<Problems> The scope of the “other similar agreement or contract” is indefinite and the contract/agreement which corresponds to the applicable scope of this Item is opaque. It is advisable to acquire the confirmation in advance for the actual business.

(4) Tariff for import and export (common) The presumed item and HS code shall be proposed by the shipper and we will survey the tariff in Myanmar according to these information. In the case where the unique sub code is set by Myanmar, it is required to confirm with the authority by using a photograph respectively.

In the current actual business, the operation is performed which complies with the HS code and tax ratio used in countries as the common item.

Additionally, the following tax benefit is granted because this object project is given a permit by the Myanmar Investment Commission (MIC) based on the Foreign Investment Law.

Table 7.2-5

Tax type Objects for exemption

Import tariff •The import tariff for the machine facilities, equipment, machine parts, spare parts and other materials to be imported during the construction period and the exemption of other taxes.

•Exemption of the import tariff for the imported materials or parts for 3 years after the start of project.

•The import tariff for the machine facilities, equipment, machine parts, spare parts and other materials to be imported during the construction period and the exemption of other taxes according to the additional investment when the investment is executed additionally.

<Problems>

Since the case is also presumed where the amount of experience in authorities is not sufficient, it is required to confirm with the authority by using a photograph in advance particularly for the item which the unique sub code is set by Myanmar.

(5) Excise duty (common) It is said that this tax is imposed on the manufacturing/sales of the specific item such as alcoholic drinks or medicals, however the detail is unknown until the individual subject is

151


checked. It is estimated that the collecting amount will not be the amount which gives significant effect in the actual business.

(6) Land revenue (common) This tax is collected by the General Administration Department of Interior Ministry and it is said that the tax is imposed on the owners of the farm land, industrial land or fixed property land, however the detail is unknown. It is estimated that the collecting amount will not be the amount which gives significant effect in the actual business.

(7) Withholding tax (common) Refer to the item of corporate tax.

(8) Collection existence of withholding tax at the payment of dividend to the domestic/foreign corporate (common)

As described in the item of corporate tax, the withholding tax against the dividend payment is not imposed regardless of the payment to domestic or overseas.

(9) Detail of the documentary stamp tax which was applied in April 2012 (common) The revision has been executed toward increasing the tax against the background where the tax imposition on the documentary stamp tax was too low before the revision. For example, the documentary stamp tax for many contracts was very low as a few kyats in the old law, however it was increased to the range from several hundreds of kyats to tens of thousands of kyats. This revision also includes the tax imposition according to the fixed rate with the

contract amount ×%.

(10) Possibility of the remittance for the profit dividend (common)

The Foreign Investment Law defines that the overseas remittance can be performed without special problems, however, some negative effects are happening in the actual business. Particularly, for the remittance with respect to the profit dividend and the repayment of a loan, the permit by the central bank may be required while remitting from a private bank. Additionally, it is thought that the overseas remittance is possible without particular problems as long as the remittance is carried out in accordance with the repayment schedule approved by MIC including the permit by the Central Bank of Myanmar because this project is given permit by the Myanmar Investment Commission (MIC) based on the Foreign Investment Law.

(11) ssibility and contents of the regulation for the legal reserve (common)

152


Particular regulation for the legal reserve does not exist.

(12) Possibility and contents of the regulation for the authorized capital and issued capital (common) The authorized capital can be set at its option and there is no particular regulation for the rate of issued capital. On the other side, there is the actual request equivalent to the minimum capital as follows and the payment of capital with respect to the equivalent amount to the relevant minimum capital shall be required.

① Request by DICA (Corporate/Registration Administrative Bureau) in the actual business While the particular minimum capital is not defined in the Myanmar Corporate Law, the minimum capital of USD 150,000 for the manufacturing industry and USD 50,000 for services are demanded as the request by DICA in the actual business, which is the registration agency though.

② Request by Myanmar Investment Commission (MIC) in the actual business MIC does not decide the particular minimum capital and MIC judges individually according to the project content. Accordingly, the capital amount required on the application procedure for MIC shall be the minimum capital in the actual business.

(13) Possibility and contents of the regional tax in Yangon district (common) As major regional taxes, the following items are listed. However, the revision is executed frequently, it is required to ask every time for each subject for details. This project contains the possibility that the separate handling may be decided in accordance with the SEZ law after revision because this is the project in Thilawa SEZ.

1. Property Tax The property tax is the generic designation for the three taxes; ①General tax, ②Electricity

tax and ③Cleaning tax imposed every quarter of the year to the residences and accommodation facilities in Yangon City. In addition, the owner shall bear the tax obligation

(In the case of residence, there may be a case that the obligation transfers from the owner to the resident.).

2. Tax ratio of the property tax

Table7.2-6

Downtown Other areas General tax 8% *1 8% *1 Electricity Tax 5% *1 5% *1 Cleaning tax 8.50% *1 6.50% *1

153


*1 Imposed to the assessment value by YCDC

As the taxes related to the residence and accommodation facility, there are the Water tax and Light tax that are not included in the property tax.

① Water tax: Depends on the assessment value by YCDC ② Light tax : Commercial purpose: 75 kyats/unit

Residential purpose: 35 kyats/unit Residential and commercial purpose for foreigners: USD 0.12 /unit

③ Electricity tax

Imposed as the tax to public street lights by YCDC ④ Light tax

Imposed by Ministry of Electricity corresponding to the consumed amount of electricity of households and offices.

⑤ Excise Duty The name gives an image as the tax imposed on the purchase of luxury goods, however, this tax has become like a license fee to be paid annually to produce and sell specific items such as alcoholic drinks or medicals.

⑥ Land revenue This tax is collected by the General Administration Department of Interior Ministry and it is said that the tax is imposed on the owners of the farm land, industrial land or fixed property land, however the further content is unknown.

⑦ Water tax and embankment tax The water said here means the water to be used for the irrigation. This tax is not the tax at a metered rate of water itself, but imposed on the owner of irrigating land in proportion to the area of the land receiving supplies of water from the irrigation facility.

⑧ Signboard Tax The signboard tax is imposed once a year. The amount of tax to impose differs depending on the size of a signboard and its location. A party of the tax obligation shall be the owner of the land and the facility where the relevant signboard is posted, however, when the owner is YCDC, the party who has posted the signboard shall pay the tax.

⑨ Project License All the parties who manage the project in Yangon City are obligated to acquire the project license and pay the license fee every year. The license fee varies depending on the project size or business type.

⑩ Tax on motor vehicle Three taxes: (1) Wheel tax, (2) Night rest and (3) Car parking tax are called as the Tax on

154


motor vehicle generically that are imposed once a year. The logic of each tax imposition is not quite understood and all three taxes may not be imposed in case. An automobile owner in either case is responsible for paying the tax.

155


Chapter 8. Project feasibility analysis, project scheme, financing

8.1 Definition of subject project and projects in the precincts

This survey has covered not only management of Thilawa Area Port but also transportation by water,

road and railway as the domestic logistic network as well as inland distribution bases, etc. which

provide value added services. A highly functional port management system would be structured

through integrated management of these systems, however the business to be performed by the SPC

is, in essence, project management of Thilawa Area Port, which should be clearly delineated from

other domestic distribution businesses.

As port management is closely related to domestic distribution businesses such as reinforcing logistic

networks, this survey has covered not only port management of Thilawa Area Port but also domestic

distribution businesses. However, as the management project of Thilawa Area Port has been granted a

concession from the Myanmar government with a view also to establishing a joint venture with MPA,

the port should be specialized in Thilawa Area Port operations excluding domestic distribution

businesses out of the SPC’s scope of business. Such domestic distribution businesses shall be promoted

individually as private sector businesses and as they are expanded, the handling volume at Thilawa

Area Port is expected to grow.

Figure 8.1-1 Businesses covered by survey

156


As the expansion of the domestic distribution businesses has a significant impact on the feasibility of

the subject project, the status of efforts being exerted by Kamigumi, one of this investigation team

members, in conjunction with the domestic distribution businesses as of 1 December, 2014 is

introduced hereunder from the survey results of this time. ① Transportation by truck

16 transportation vehicles were brought into Myanmar from Japan and the overland transportation

by truck, a joint operation (JO) with EFR, the largest distribution company in Myanmar, started

from October, 2013. On February 20, 2014, the following year, a local corporation, Kamigumi-

EFR Logistics (Myanmar) Co., Ltd. as a joint venture (J/V), was established with a view to

expanding the container transportation system throughout Myanmar on the basis of container

transportation in Yangon area. ② Transportation by rail

The Ministry of Rail Transportation (MRT) of Myanmar publicly invited interested private

companies for participation in the railway transportation business. On July 30, 2014, Kamigumi

jointly with Japanese-affiliated companies, distribution companies in Myanmar as well as leading

agricultural organizations submitted to MRT a letter expressing interest in participating in the

railway transportation business. Railway transportation by containers utilizing the railway

networks connecting to Thilawa Area Port is under planning. ③ Transportation by water

Starting from August, 2015 through March, 2016, a demonstration experiment on container

transportation by river in Myanmar will be implemented in cooperation with 2 Japanese affiliated

companies and the Inland Water Transport (IWT). As intermediate distance transportation,

container transportation by river between Mandalay, Mongloya and Pathein areas and Thilawa

Area Port respectively, and as short distance transportation between Hlaingthaya and Thilawa Area

Port are being planned. ④ Logistic bases

There is a plan attempting to provide value-added services such as storage function based on

distribution processing and high level quality control on top of simply providing intermodal

transportation through construction of distribution facilities as bases for transportation by water

including inland ports or inland container depots (ICD) in each of the afore-mentioned areas.

Feasibility studies are ongoing already in Hlaingthaya area in Yangon district for establishing an

ICD by J/V with distribution companies in Myanmar on an already selected 40 acre land.

157


⑤ Coordination with Thilawa SEZ

This is planned jointly with a distribution company in charge of distribution within SEZ together

with the Thilawa SEZ management company for the purpose of capturing Thilawa SEZ cargoes.

The above-mentioned domestic distribution business is simply a pure private business and its

commercial realization is absolutely necessary to enhance competitiveness and project feasibility of

Thilawa Area Port although its project scale and schedule are yet to be determined. Consequently, the

project feasibility analysis of the subject project shall be implemented on Case 1, a base case where

any increase in container handling volume resulting from domestic distribution businesses is not taken

into consideration and Case 2 where such increase in cargo handling volume achieved through

coordination with the domestic distribution businesses is taken into consideration, respectively.

• Case 1: A case where any increase in cargo handling volume attributable to domestic distribution

business expansion is not assumed.

Figure 8.1-2 Project feasibility analysis (Case 1)

The main constituent is the cargo handling at Thilawa SEZ resulting from the business development

primarily based on the usual port services. The maximum container handling volume at each berth

158


shall be 200,000 TEU on the assumption that any distribution bases are not utilized.

Case 2: A case where a certain increase in cargo handling volume attributable to domestic distribution

business expansion is assumed.

Figure 8.1-3 Project feasibility analysis (Case 2)

It is anticipated that the cargo handling volume will follow an upward trend compared to Case 1 by

taking in, on top of Thilawa SEZ own cargoes, those cargoes originating from the northern districts of

Myanmar. Furthermore, the maximum container handling volume at each berth will increase to the

extent of ca. 250,000 TEU through utilization of distribution bases and so on.

8.2 Project feasibility analysis

For the purpose of the feasibility analysis of the subject project, the following shall be assumed with

regard to the capital investment and the balance of payments. Meanwhile, as the durable years of the

handling facilities (gantry cranes and RTGs) which constitute a large portion of the capital investment

among the port facilities are 20 years and the depreciation period for such facilities and the repayment

period of the yen loan are 40 years, the period of operation of the terminal project shall be assumed to

159


be 40 years from the start of operation.

8.2.1 Initial capital investment

The initial capital investment for the construction of Thilawa Area Port and its cargo handling facilities

is estimated separately for the public and private portions as follows.

Table 8.2.1-1 Details of capital investment

Public investment Construction of Jetty（Plot 25，26）、

Construction of Yard（Plot 25）& building

Gantry crane 2 units

RTG 6 units

Reach stacker 3 units

Tractor head & chassis 6 sets

Empty container lifter 2 units

Weighing machine 4 units

X-ray machine and building 2 units

Operating cost US$ 212 million

Private investment Tractor head 6 units

Chassis 12 units

Forklift 12 units

Fuel supply car 1 unit

Generator 2 units

Terminal Operation System 1 set

Business car 6 units

Microbus 5 units

Operating cost US$ 4.62 million

8.2.2 Revenue estimation

As the basic business of Thilawa Area Port is managing a container terminal, the revenue is assumed

only on the basis of container handling excluding conventional ships and car carriers which are

irregular in their port calls.

160


1) Port tariff rate ① Basic tariff rate

The existing tariff rates (for Yangon Port and Thilawa Area Port) set up by MPA shall be applied.

• Imported container: US$165/TEU • Imported container (Empty): US$150/TEU • Exported container: US$165/TEU • Exported container (Empty): US$150/TEU

Wharfage, storage and container shifting charges, etc. are calculated as miscellaneous expenditure at 10% of the container handling charge because they are relatively small in amount.

② Individual tariff rate setup

While the tariff rates are set up as above, the discount amount as agreed upon individually between the terminal management company and a shipping company is refunded from the terminal management company to the shipping company. Though exact information on such discount rates could not be identified, they are supposedly in the range of 40% - 50%.

As the operability of all the terminals increases, the discount rates tend to decrease however in consideration of this project being a new participant in the business, the applicable discount rate has been assumed at 50%, unchanged for 40 years.

The payment routes differ between terminals under local capital and those under foreign capital as shown in Figure 8.2.2-1. The SPC established under this project is intended to be under foreign capital and shipping companies are supposed to pay the discounted tariff rates directly. The payment in either case shall be in US$ currency.

a) In case of local company

b) In case of foreign company

Figure 8.2.2-1 Payment route of tariff rate

③ Enhancement of profitability For the purpose of improving profitability of Thilawa Area Port and in consideration of

161


competition with other terminals, efforts in enhancing its competitiveness are required through provision of related services such as refrigerated storage and distribution processing, etc. as well as strengthening coordination with surrounding infrastructure projects.

Furthermore, Thilawa Area Port, being a container terminal, may also expect opportunities for an additional profit-making source by handling automobiles in the light of significant expansion of car imports in late years. Therefore, study on the potentiality of handling automobiles should be necessary with the trend of container handling volume duly put in perspective.

2) Demand forecast

The container demand forecast for entire Myanmar and Thilawa Area Port is shown in Table 8.2.2.-1. The entire Myanmar container demand has been calculated using the economic growth rate with consideration to the elasticity index (2) as per 5.4 GDP growth rate and elasticity of container cargo volume growth rate and Table 5.4-2 of this report. Also, the Yangon Port total handling capacity and the average operability of all the terminals are as shown in tables 5.5-1 for 2016 through 2020 and 5.5-2 for 2021 through 2030 under 5.5 Supply-demand balance of terminal facility of this report. On the other hand, the demand forecast for Case 1 (Thilawa Area Port Plot 25 & 26, Phase I) has been calculated using the assumption of the average operability of all Myanmar’s domestic terminals. Also, as the operability at the Thilawa Area Port is expected to be lower than that of the existing terminals during the opening stage, it has been assumed that the disadvantage of low operability for a new participant shall be resolved after 5 years of operation and calculation has been conducted through a formula of multiplying factors of 50% in the first year, 60% in the second year, 70% in the third year, 80% in the fourth year and 90% in the fifth year, i.e. (Phase I handling volume 200,000 TEU) × (Yearly average operability of all terminals) × (Factors for a new participant). In addition, Case II has been assumed considering additional cargo demand expected from related businesses as per 5.8 Cargo demand from affiliated business of this report of which, for (1) the related distribution center within Thilawa SEZ by adding, to Case 1, 50% of the cargo assembled to Thilawa Area Port as per Table 5.8-1 due to Kamigumi’s low equity ratio therein, and for (2) Hlaingthaya ICD by adding, to Case 1, 100% of the cargo assembled to Thilawa Area Port as per Table 5.8-2 because it is a subsidiary of Kamigumi.

162


Table 8.2.2-1 Demand forecast (Unit: 1,000 TEU)

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Container demand

in Myanmar

950

1,098

1,269

1,464

1,684

1,920

2,170

2,430

2,697

2,967

3,234

3,493

3,738

4,000

4,280

Handling Capacity

in Yangon Port

1,898

1,898

2,098

2,298

2,498

2,898

3,098

3,098

3,598

3,598

4,198

4,198

4,198

4,198

4,198

Average availability 50% 58% 61% 64% 67% 66% 70% 78% 75% 83% 79% 85% 91% 97% 93%

Case 1 50 69 85 102 121 133 140 157 150 165 158 170 182 195 200

Case 2 58 81 103 127 152 171 187 212 214 238 241 245 245 245 245

Case 2 market share % 6.1 7.4 8.1 13.0 13.9 13.7 13.8 14.5 13.5 13.6 12.3 12.5 12.4 12.3 11.1

(Unit: Thousand TEU)

Figure 8.2.2-2 Demand forecast of container handling volume

In this survey, the results of hearings conducted with representatives in Myanmar for shippingcompanies providing services in Myanmar at present are as follows.

According to the representative for Evergreen, the actual transportation results of the companyin 2013 were 30,000 TEU/year of import, 9,600 TEU/year of export and emigrated emptycontainers of ca. 20,000 TEU and ca. 60% of full containers are derived from the industrialparks located in the vicinity of Hlaingthaya, in the north west of Yangon. As a representativeof a shipping company, they understand the advantage associated with ICD and are preparedto study involvement in container transfer services at Hlaingthaya ICD listening to what cargoowners say thereto. The challenge at issue is how to absorb the cost of the inland transshipmentbetween ICD and the Thilawa Area Port, however cargo assembly to the Thilawa Area Portshould be effective in the light of expanded domestic distribution businesses including ICDs,etc.

As mentioned in 2.5.1 Needs of shipping lines, the majority of the representatives of shipping

163


lines are of opinion that the terminals within Thilawa Area Port are greatly attractive to shipping lines offering advantages such as the innovative terminal operating system (TOS), state of the art cargo handling machinery and equipment, internationalized operators as well as geographical potentiality of substantial laytime reduction for vessels. Additional cargo assembling should be realized by developing domestic distribution businesses, not by simply waiting for Yangon Main Port to overflow.

8.2.3 Expenditure forecast

The operating cost has been calculated based on number of vessels calling and the total expenditure

for each year is shown in Table 8.2.3-1.

1) Expenditure calculation model

Table 8.2.3-1 Expenditure calculation model case

Type 1 Type 2 Type 3 Number of port call 1 ship/week ２ ships/week ３ weeks/week Throughput per year 72,800 145,600 218,000 Number of payrolls 124 persons 134 persons 165 persons 1）Operating cost Manpower cost 1,136,800 1,190,000 1,366,400 Stevedoring cost 82,080 110,160 150,240 Electricity/Fuel cost 1,020,697 1,331,757 1,656,627 Maintenance cost 3％ of income Miscellaneous expense 20％ of operating cost 2）Sales administrative expense Manpower cost 459,200 463,400 488,600 Outsourcing cost (Security・Cleaning) 168,000 168,000 168,000

Insurance cost 1％ of income Training cost The 1st year : 300,000/ from the 2nd year on：100,000 Office expenses The 1st year : 200,000/ from the 2nd year on : 50,000 System operating cost 100,000 100,000 100,000 Miscellaneous expense 25％ of sales administrative expense

Notes)

• Cost of stevedores: Container stacking operation on board

• The number of vessels and the number of containers have been calculated according to the

following formula.

700 TEU × 2 × 52 weeks = 72,800 TEU

164


• Number of employees/outsourcing expenditure: Refer to 6.3.3 Personnel allocation plan

2) Depreciation cost Years of depreciation for the facilities introduced shall be as follows. • Gantry crane : 20 years • RTG, X-ray inspection apparatus : 15 years • Other cargo handling facilities/vehicles : 10 years

3) Large-scale facility replacement expenditure Facilities passing over the depreciation years specified in 1) above shall be renewed progressively as needed (for the purpose of the project feasibility analysis, all facilities passing over the depreciation years were treated as replacement items). This facility renewal applies not only to the privately invested portion but also to the publicly invested portion as necessary including cargo handling facilities but excluding the wharf, yard and buildings.

In conducting the project feasibility analysis, the facility replacement shall be based on the following premises.

① The same number of items shall be renewed when the depreciation years have been

passed over. ② The price for the replacement shall follow the price applicable at the initial investment time. ③ The SPC’s fund on hand shall be applied to the replacement expenditure. No new

borrowings shall be implemented.

The facility renewal plan based on the above premises is as per Table 8.2.3-2 below.

165


Table 8.2.3-2 Facility renewal plan

No. of

Initial

equipment

Depreciation No. of

Renewal

No. of

Renewal

equipment

Renewal

cost

Public portion (US$)

Gantry crane 2 units 20 years 1 times 2 units 15,000,000

RTG 6 units 15 years 2 times 12 units 14,400,000

Reach stacker 3 units 10 years 3 times 9 units 3,600,000

Tractor head 6 units 10 years 3 times 18 units 1,800,000

Chassis 6 units 10 years 3 times 18 units 630,000

Empty cont. lift 2 units 10 years 3 times 6 units 1,500,000

Weighing Machine 4 units 10 years 3 times 12 units 1,800,000

X-ray M/C & building 2 units 15 years 2 times 4 units 24,000,000

Public capital (US$)

Tractor head 6 units 10 years 3 times 18 units 2,400,000

Chassis 12 units 10 years 3 times 48 units 1,680,000

Forklift 12 units 10 years 3 times 36 units 1,950,000

Fuel supply car 1 unit 10 years 3 times 3 units 300,000

Generator 2 units 20 years 1 time 2 units 600,000

TOS 1 set 10 years 3 times 3 sets 4,500,000

Business car 6 units 10 years 3 times 22 units 850,000

Microbus 5 units 10 years 3 times 15 units 1,500,000

Total project expenses 76,510,000

8.2.4 Options for financial analysis

1) Concession fee This project is based on the PPP scheme where public and private partners cooperate with each other as mentioned in 9.3 Project scheme. The fund borrowed from the Japanese government by the yen loan for procuring construction of port facilities and cargo handling facilities which are implemented as public work projects by the Myanmar government shall be paid to the Myanmar government as concession fee to cover the original principal and corresponding interest associated therewith for the repayment of the yen loan. As for the payment schedule, the interest and original principal in the amount equivalent to the scheduled repayment by the Myanmar government of the yen loan shall be paid.

As the yen loan is actually borrowed in the Japanese yen currency, there exists an exchange risk

166


between the yen and U.S. dollars received by the SPC as its revenue, however the transition of the U.S. dollar exchange rate for the past 40 years has been as shown in Figure 9.2.4-1. After the yen had kept fundamentally strong up to the latter half of 1980s, from 1990 and onward, it has stayed in the range of ca. yen 80 to 150 per 1 U.S. dollar. You cannot predict the future exchange rate, however for the 40 long years of the repayment of the loan for this project (the original principal shall be repaid in 30 years), we have assumed the average may settle down to around yen 107 per 1 U.S. dollar despite possible excesses or deficits in the exchange amount occurring at each time of repayment. Now therefore, for the purpose of the project feasibility analysis, 10% allowance for the variation of the exchange rate at the time of repayment shall be incorporated in the estimation.

Current rate (119）

Assumption of Repayment rate (107)

Figure 8.2.4-1 Transition of yen/U.S. dollar exchange rate

2) Additional concession fee

Although the concession fee is set up at an amount equivalent to the repayment of the yen loan for the purpose of this project feasibility study, chances are high that during the actual implementation of the concession agreement, the Myanmar government may well require a higher profit-sharing which should necessitate, we believe, some payment for additional concession fee.

Since this project is based on the PPP scheme, the majority of the initial investment is implemented by MPA utilizing the yen loan and the initial investment shared by the private portion will be kept relatively small. The ratios of the initial investment shared between public

167


and private investments are as follows.

Table 8.2.4-1 Public/private investment ratios

Initial investment Renewal cost Total

Public investment US$212.00 million － US$212.00 million

Private investment US$4.62 million US$76.51 million US$81.13 million

While the project scheme provides that the repayment resource for the yen loan borrowed by the Myanmar government comes from the revenue of the SPC as mentioned above, the SPC enjoys the benefit of the substantially reduced initial investment and, therefore, it may be reasonable to equally share the profit that SPC enjoys resulting from the project and calculate the additional concession fee. Consequently, in the project feasibility analysis, 50% of the pretax profit of the SPC is analyzed as the additional concession fee.

3) Preferential taxation system For port and harbor facilities, the following preferential taxation treatments are applicable in accordance with the foreign investment law. ① Exemption of SPC’s corporate income tax for 5 years ② Loss carry-forward for 3 years ③ Accelerated depreciation at twice the normal rate

However, as practical application of such treatments has raised various problems, individual negotiation and exchange of a written agreement are necessary.

8.2.5 Project feasibility analysis

1) Project feasibility analysis On the basis of the premises for the balance of payments as per 8.2.1 through 8.2.3, project plans have been prepared using the import/export and full/empty container ratios under the demand forecast shown below.

Container ratios as of 2013, which are to be bases for the project plans, are as follows as per Table 2.4.4-4 Comparing Laden container and Empty container at Yangon Port under 2.4.4 Re-verification of handling capacity of this report.

168


Table 8.2.5-1 Import/export and full/empty container ratios at Yangon Port

2013 Throughput Proportion Import（Laden） 193,664 TEU 48.3%

Export（Laden） 79,723 TEU 19.9%

Import（Empty） 9,848 TEU 2.5% Export（Empty） 117,675 TEU 29.4%

Total 400,910 TEU

At present, the Myanmar’s trade structure is import oriented, however the country would

supposedly change its trade structure to an export oriented one like Thailand with anticipated

future increase in foreign manufactures’ participation due to its low labor costs. For reference,

container ratios in Thailand are shown below.

Table 8.2.5-2 Import/export and full/empty container ratios in Thailand

(Source: BSAA annual report 2008-2009) (Unit: TEU)

2007 2008 Average Proportion

Import（Laden） 1,799,363 2,058,304 1,928,834 27.8%

Export（Laden） 3,363,814 3,469,164 3,416,489 49.3%

Import（Empty） 1,643,885 1,512,032 1,577,959 22.8%

Export（Empty） 11,910 12,472 12,191 0.2%

Total 6,818,972 7,051,972 6,935,472

From the above, the future container ratios at Yangon Port are estimated as follows.

Table 8.2.5-3 Future import/export and full/empty container ratios at Yangon Port

2013 2016-2025 2026-2035 After 2036

Import（Laden） 48% 48% 45% 45%

Export（Laden） 20% 25% 35% 45%

Import（Empty） 2% 2% 5% 5%

Export（Empty） 30% 25% 15% 5%

Instead of the trade structure becoming excessively export oriented like Thailand, the volumes of full containers for both export and import are expected to become comparable to each other.

The reason why export of empty containers are on the increase is due to increasing number of containers distributed to the deep hinterland resulting in increased number of damaged

169


containers, but without sufficient technology in Myanmar for repairing seriously damaged containers, those are assumed to be positioned to Singapore/Malaysia.

Summary of 40 years of the project period is as follows.

Table 8.2.5-4 Project feasibility analysis

Case 1 Case 2

Capital US$ 12.0 million US$ 12.0 million

Gross Income US$ 632.0 million US$ 795.0 million

After-tax profits US$ 43.6 million US$ 94.4 million

IRR 12.7% 20.8%

For details, refer to appended Table 8.2.5-3 Project plan.

As shown above, a sufficient rate of return cannot be expected from the private investment in the case of usual port operation only (Case 1), however it has become evident that by executing positive incorporation of cargoes into Thilawa Area Port through surrounding infrastructure projects for the purpose of enhancing efficiency of the Thilawa Area Port operation which is the main purpose of this survey, the project can expectedly become capable of yielding a sufficient investment effect.

The project plan according to Case 2 is expected to attain 200,000 TEU, i.e. the handling capacity of the terminal, in 8 years after the port opening and if the future economic development of Myanmar and the status of the Thilawara SEZ are taken into consideration, early development of Plot 26 is very much desired.

170


BUSINESS P LAN SUMMARY

Conditions Precedent Case 1 Case 2

Containe r througput ・Import（Laden） 3,216,286 4,043,198 ・Import（Empty） 318,307 397,739 ・Export（Laden） 2,757,041 3,443,474 ・Export（empty） 777,552 997,463

Containe r throuput 7,069,186 8,881,874

Income （ Base d on Tairff） Tariff rate ・Import（Laden） US$165 530,687,203 667,127,701 ・Import（Empty） US$150 47,746,050 59,660,822 ・Export（Laden） US$165 454,911,733 568,173,144 ・Export（empty） US$150 116,632,841 149,619,510 ・Others 0 114,997,783 144,458,118

Total income 10% of Income 1,264,975,610 1,589,039,295

Discount rate 50% from Tariff rate Ne t income （ Afte r discount） 632,487,805 794,519,647

Conce ssion Fe e ・Concession fee (PH I : USD212M) Based on Repayment scheduleof Japanese Yen L/A 233,794,660 233,794,660

・Additional concession fee 50% of Pre-Tax Profit 55,696,516 124,903,977

Total conce ssion fe e 289,491,176 358,698,637

Ope rating cost

・Personnel cost

Based on 8.2.3 Expenditure calculation mode

53,314,800

53,897,200

・Stevedorage Based on 8.2.3 Expenditure calculation mode 5,672,880 5,821,200

・Feul & Elecity cost Based on 8.2.3 Expenditure calculation mode 54,593,948 68,229,375

・M&R cost 3% of Income 18,974,634 23,835,589

・Miscellaneous cost 20% of Operating cost 26,511,252 30,356,673

Total Operaring cost 159,067,515 182,140,037

Gross Ope rating Income 183,929,114 253,680,973

Sales administrative expense

・Personnelcost

Based on 8.2.3 Expenditure calculation mode

19,359,200

20,658,400

• Subcontracting cost（Security/Cleaning） Based on 8.2.3 Expenditure calculation mode 6,720,000 6,720,000

・Insurance cost 1% of Income 6,324,878 7,945,196

・Training cost Based on 8.2.3 Expenditure calculation mode 4,200,000 4,200,000

・Office cost Based on 8.2.3 Expenditure calculation mode 2,150,000 2,150,000

・System operating cost Based on 8.2.3 Expenditure calculation mode 4,000,000 5,800,000

・Miscellaneous cost 25% of Sales administrative expense 10,688,520 11,868,399

Total sale s administrative e xpe nse 53,442,598 59,341,995

EBITDA 130,486,516 197,016,477

・EBITDA margin ・Depreciation Applicable to private investment only 74,790,000 74,790,000

Pre -Tax Profit 55,696,516 122,226,477

Corporate Tax 25%（Initial 5 years free ） 12,051,459 27,835,286

Afte r-Tax Profit 43,595,957 94,391,191

IRR 12.7% 20.8%

Table 8.2.5-5 Business plan summary

171

Preparatory Survey on Thilawa A

rea Port and Logistics Depot D

evelopment in the Republic of the U

nion of Myanm

ar

172

Pl o t 25 Co mme nc e o p e r ati o n

Bu sin ess Pla n (Ca s e 1 )

(Unit : USD) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Containe r throuput ・Import (Laden) 24,025 33,322 40,647 48,927 58,246 63,602 67,243 75,300 71,960 79,164 ・Import (Empty) 1,001 1,388 1,694 2,039 2,427 2,650 2,802 3,138 2,998 3,298 ・Export (Laden) 12,513 17,355 21,170 25,483 30,336 33,126 35,023 39,219 37,479 41,231 ・Export (Empty)） 12,513 17,355 21,170 25,483 30,336 33,126 35,023 39,219 37,479 41,231

Totalcontaine r throuput 50,053 69,420 84,681 101,932 121,345 132,505 140,090 156,875 149,917 164,925 Number of port call／week １ ship １ ship 2 ships 2 ships 2 ships 2 ships 2 ships ３ ships ３ ships ３ ships Container loading ratio 69% 95% 58% 70% 83% 91% 96% 72% 69% 76%

Income （ base d on Tariff） (Unit : USD) ・Import (Laden) 3,964,173 5,498,099 6,706,707 8,073,023 9,610,530 10,494,410 11,095,158 12,424,532 11,873,396 13,062,057 ・Import (Empty) 150,158 208,261 254,042 305,796 364,035 397,516 420,271 470,626 449,750 494,775 ・Export (Laden) 2,064,673 2,863,593 3,493,077 4,204,700 5,005,484 5,465,839 5,778,728 6,471,110 6,184,061 6,803,155 ・Export (Empty)） 1,876,976 2,603,267 3,175,524 3,822,454 4,550,440 4,968,944 5,253,389 5,882,828 5,621,873 6,184,686 ・Other incomes 805,598 1,117,322 1,362,935 1,640,597 1,953,049 2,132,671 2,254,755 2,524,910 2,412,908 2,654,467

Total income 8,861,578 12,290,542 14,992,285 18,046,571 21,483,539 23,459,379 24,802,301 27,774,006 26,541,988 29,199,139 Discount rate 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% Income （ Afte r dicount） 4,430,789 6,145,271 7,496,143 9,023,286 10,741,769 11,729,689 12,401,151 13,887,003 13,270,994 14,599,570 Conce ssion fe e ・Concession fee (PH I : USD212M) 23,320 23,320 23,320 23,320 23,320 23,320 23,320 23,320 23,320 23,320 ・Additional concession fee 943,209 1,487,387 2,159,793 2,949,391 3,391,424 3,682,901 4,216,187 3,895,151 4,475,874

Total conce ssion fe e 23,320 966,529 1,510,707 2,183,113 2,972,711 3,414,744 3,706,221 4,239,507 3,918,471 4,499,194 Ope rating cost ・Personnel cost 1,136,800 1,136,800 1,190,000 1,190,000 1,190,000 1,190,000 1,190,000 1,366,400 1,366,400 1,366,400 ・Stevedorage 82,080 82,080 110,160 110,160 110,160 110,160 110,160 150,240 150,240 150,240 ・Feul & Elecity cost 701,767 771,943 842,120 932,341 978,958 1,025,575 1,072,192 1,118,809 1,165,426 1,251,004 ・M&R cost 132,924 184,358 224,884 270,699 322,253 351,891 372,035 416,610 398,130 437,987 ・Miscellaneous cost 410,714 435,036 473,433 500,640 520,274 535,525 548,877 610,412 616,039 641,126

Total Operaring cost 2,464,285 2,610,217 2,840,597 3,003,839 3,121,645 3,213,151 3,293,264 3,662,471 3,696,235 3,846,757 Gross Ope rating Income 1,943,184 2,568,525 3,144,839 3,836,334 4,647,413 5,101,795 5,401,666 5,985,025 5,656,288 6,253,618

Sales administrative expense ・Personnelcost 459,200 459,200 463,400 463,400 463,400 463,400 463,400 488,600 488,600 488,600 • Subcontracting cost（Security/Cleaning） 168,000 168,000 168,000 168,000 168,000 168,000 168,000 168,000 168,000 168,000 ・Insurance cost 44,308 61,453 74,961 90,233 107,418 117,297 124,012 138,870 132,710 145,996 ・Training cost 300,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 ・Office cost 200,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 ・System operating cost 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 ・Miscellaneous cost 317,877 234,663 239,090 242,908 247,204 249,674 251,353 261,368 259,827 263,149

Total sale s administrative e xpe nse 1,589,385 1,173,316 1,195,452 1,214,541 1,236,022 1,248,371 1,256,764 1,306,838 1,299,137 1,315,745 EBITDA 353,799 1,395,209 1,949,387 2,621,793 3,411,391 3,853,424 4,144,901 4,678,187 4,357,151 4,937,874 ・EBITDA margin 8% 23% 26% 29% 32% 33% 33% 34% 33% 34% ・Depreciation 452,000 452,000 462,000 462,000 462,000 462,000 462,000 462,000 462,000 462,000

Afte r-Tax Profit -98,201 943,209 1,487,387 2,159,793 2,949,391 3,391,424 3,682,901 4,216,187 3,895,151 4,475,874 IRR 0 0 0 0 0 847,856 920,725 1,054,047 973,788 1,118,968 Pre -Tax Profit -98,201 943,209 1,487,387 2,159,793 2,949,391 2,543,568 2,762,176 3,162,140 2,921,363 3,356,905

Cashflow

Year 1

Year 2

Year 3

Year 4 Year 5

Year 6

Year 7

Year 8

Year 9

Year 10 Opening balance 9,000,000 4,833,799 6,229,008 8,078,395 10,700,188 14,111,579 17,117,147 20,341,322 23,965,463 27,348,826

After-Tax Profit (98,201) 943,209 1,487,387 2,159,793 2,949,391 2,543,568 2,762,176 3,162,140 2,921,363 3,356,905 CAPEX (4,520,000) - (100,000) - - - - - - - Depreciation 452,000 452,000 462,000 462,000 462,000 462,000 462,000 462,000 462,000 462,000 Dividend - - - - - - - - - - Annual receipts and expenditures (4,166,201) 1,395,209 1,849,387 2,621,793 3,411,391 3,005,568 3,224,176 3,624,140 3,383,363 3,818,905

Closing balance 4,833,799 6,229,008 8,078,395 10,700,188 14,111,579 17,117,147 20,341,322 23,965,463 27,348,826 31,167,731

Table 8.2.5-6 Business Plan （Case 1 PH-I) 1/4




nion of Myanm

ar

173


Year 11

Year 12

Year 13

Year 14

Year 15

Year 16

Year 17

Year 18

Year 19 (Unit : USD)

Year 20 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

Containe r throuput ・Import (Laden) 71,025 76,713 82,094 87,848 90,000 89,648 86,522 90,000 90,000 90,000 ・Import (Empty) 7,892 8,524 9,122 9,761 10,000 9,961 9,614 10,000 10,000 10,000 ・Export (Laden) 55,242 59,666 63,851 68,326 70,000 69,726 67,295 70,000 70,000 70,000 ・Export (Empty)） 23,675 25,571 27,365 29,283 30,000 29,883 28,841 30,000 30,000 30,000

Totalcontaine r throuput 157,833 170,473 182,430 195,217 200,000 199,217 192,271 200,000 200,000 200,000 Number of port call／week ３ ships ３ ships ３ ships ３ ships ３ ships ３ ships ３ ships ３ ships ３ ships ３ ships

Container loading ratio 72% 78% 84% 89% 92% 91% 88% 92% 92% 92%

Income （ base d on Tariff） (Unit : USD) ・Import (Laden) 11,719,107 12,657,650 13,545,461 14,494,876 14,850,000 14,791,866 14,276,157 14,850,000 14,850,000 14,850,000 ・Import (Empty) 1,183,748 1,278,551 1,368,228 1,464,129 1,500,000 1,494,128 1,442,036 1,500,000 1,500,000 1,500,000 ・Export (Laden) 9,114,861 9,844,839 10,535,359 11,273,792 11,550,000 11,504,785 11,103,678 11,550,000 11,550,000 11,550,000 ・Export (Empty)） 3,551,245 3,835,652 4,104,685 4,392,387 4,500,000 4,482,384 4,326,108 4,500,000 4,500,000 4,500,000 ・Other incomes 2,556,896 2,761,669 2,955,373 3,162,518 3,240,000 3,227,316 3,114,798 3,240,000 3,240,000 3,240,000

Total income 28,125,857 30,378,360 32,509,107 34,787,701 35,640,000 35,500,478 34,262,778 35,640,000 35,640,000 35,640,000 Discount rate 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% Income （ Afte r dicount） 14,062,928 15,189,180 16,254,553 17,393,851 17,820,000 17,750,239 17,131,389 17,820,000 17,820,000 17,820,000 Conce ssion fe e ・Concession fee (PH I : USD212M) 7,796,653 7,795,876 7,795,099 7,794,321 7,793,544 7,792,767 7,791,989 7,791,212 7,790,435 7,789,657 ・Additional concession fee 210,676 689,351 1,142,173 1,626,387 1,807,749 1,138,513 876,094 1,168,915 1,169,304 1,169,693

Total conce ssion fe e 8,007,330 8,485,227 8,937,271 9,420,709 9,601,293 8,931,279 8,668,083 8,960,127 8,959,739 8,959,350 Ope rating cost ・Personnel cost 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 ・Stevedorage 150,240 150,240 150,240 150,240 150,240 150,240 150,240 150,240 150,240 150,240 ・Feul & Elecity cost 1,197,210 1,293,090 1,383,788 1,480,779 1,517,058 1,511,119 1,458,435 1,517,058 1,517,058 1,517,058 ・M&R cost 421,888 455,675 487,637 521,816 534,600 532,507 513,942 534,600 534,600 534,600 ・Miscellaneous cost 627,148 653,081 677,613 703,847 713,660 712,053 697,803 713,660 713,660 713,660



Total sale s administrative e xpe nse 1,309,037 1,323,115 1,336,432 1,350,673 1,356,000 1,355,128 1,347,392 1,356,000 1,356,000 1,356,000 EBITDA 983,676 1,462,351 1,915,173 2,399,387 2,580,749 3,191,513 2,929,094 3,221,915 3,222,304 3,222,693 ・EBITDA margin 7% 10% 12% 14% 14% 18% 17% 18% 18% 18% ・Depreciation 773,000 773,000 773,000 773,000 773,000 2,053,000 2,053,000 2,053,000 2,053,000 2,053,000

Afte r-Tax Profit 210,676 689,351 1,142,173 1,626,387 1,807,749 1,138,513 876,094 1,168,915 1,169,304 1,169,693 IRR 52,669 172,338 285,543 406,597 451,937 284,628 219,023 292,229 292,326 292,423 Pre -Tax Profit 158,007 517,014 856,629 1,219,791 1,355,812 853,884 657,070 876,686 876,978 877,269

Cashflow

Year 11

Year 12

Year 13

Year 14

Year 15

Year 16

Year 17

Year 18

Year 19


After-Tax Profit 158,007 517,014 856,629 1,219,791 1,355,812 853,884 657,070 876,686 876,978 877,269 CAPEX (7,030,000) - (100,000) (590,000) - (19,200,000) - - - - Depreciation 773,000 773,000 773,000 773,000 773,000 2,053,000 2,053,000 2,053,000 2,053,000 2,053,000 Dividend - - - - - - - - - - Annual receipts and expenditures (6,098,993) 1,290,014 1,529,629 1,402,791 2,128,812 (16,293,116) 2,710,070 2,929,686 2,929,978 2,930,269

Closing balance 25,068,739 26,358,752 27,888,382 29,291,172 31,419,984 15,126,869 17,836,939 20,766,625 23,696,603 26,626,873





nion of Myanm

ar

174







Total income 35,970,000 35,970,000 35,970,000 35,970,000 35,970,000 35,970,000 35,970,000 35,970,000 35,970,000 35,970,000 Discount rate 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% Income （ Afte r dicount） 17,985,000 17,985,000 17,985,000 17,985,000 17,985,000 17,985,000 17,985,000 17,985,000 17,985,000 17,985,000 Conce ssion fe e ・Concession fee (PH I : USD212M) 7,788,880 7,788,103 7,787,325 7,786,548 7,785,771 7,784,993 7,784,216 7,783,439 7,782,661 7,781,884 ・Additional concession fee 873,580 873,969 874,357 874,746 875,135 875,523 875,912 876,301 876,689 877,078

Total conce ssion fe e Ope rating cost ・Personnel cost ・Stevedorage ・Feul & Elecity cost ・M&R cost ・Miscellaneous cost

8,662,460 8,662,071 8,661,683 8,661,294 8,660,905 8,660,517 8,660,128 8,659,739 8,659,351 8,658,962

1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 150,240 150,240 150,240 150,240 150,240 150,240 150,240 150,240 150,240 150,240

1,517,058 1,517,058 1,517,058 1,517,058 1,517,058 1,517,058 1,517,058 1,517,058 1,517,058 1,517,058 539,550 539,550 539,550 539,550 539,550 539,550 539,550 539,550 539,550 539,550 714,650 714,650 714,650 714,650 714,650 714,650 714,650 714,650 714,650 714,650


Sales administrative expense ・Personnelcost 488,600 488,600 488,600 488,600 488,600 488,600 488,600 488,600 488,600 488,600 ・ Subcontracting cost（Security/Cleaning） 168,000 168,000 168,000 168,000 168,000 168,000 168,000 168,000 168,000 168,000 ・Insurance cost 179,850 179,850 179,850 179,850 179,850 179,850 179,850 179,850 179,850 179,850 ・Training cost 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 ・Office cost 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 ・System operating cost 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 ・Miscellaneous cost 271,613 271,613 271,613 271,613 271,613 271,613 271,613 271,613 271,613 271,613

Total sale s administrative e xpe nse 1,358,063 1,358,063 1,358,063 1,358,063 1,358,063 1,358,063 1,358,063 1,358,063 1,358,063 1,358,063 EBITDA 3,676,580 3,676,969 3,677,357 3,677,746 3,678,135 3,678,523 3,678,912 3,679,301 3,679,689 3,680,078 ・EBITDA margin 20% 20% 20% 20% 20% 20% 20% 20% 20% 20% ・Depreciation 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000

Afte r-Tax Profit 873,580 873,969 874,357 874,746 875,135 875,523 875,912 876,301 876,689 877,078 IRR 218,395 218,492 218,589 218,686 218,784 218,881 218,978 219,075 219,172 219,269 Pre -Tax Profit 655,185 655,476 655,768 656,059 656,351 656,642 656,934 657,225 657,517 657,808 Cashflow Year 21 Year 22 Year 23 Year 24 Year 25 Year 26 Year 27 Year 28 Year 29 Year 30 Opening balance 26,626,873 7,405,058 10,863,534 14,222,302 17,091,361 20,550,712 24,010,355 27,470,289 30,930,514 34,391,031

After-Tax Profit 655,185 655,476 655,768 656,059 656,351 656,642 656,934 657,225 657,517 657,808 CAPEX (22,680,000) - (100,000) (590,000) - - - - - - Depreciation 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000

Dividend - - - - - - - - - - Annual receipts and expenditures (19,221,815) 3,458,476 3,358,768 2,869,059 3,459,351 3,459,642 3,459,934 3,460,225 3,460,517 3,460,808

Closing balance 7,405,058 10,863,534 14,222,302 17,091,361 20,550,712 24,010,355 27,470,289 30,930,514 34,391,031 37,851,840





nion of Myanm

ar

175




Totalcontaine r throuput 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 Number of port call／week ３ ships ３ ships ３ ships ３ ships ３ ships ３ ships ３ ships ３ ships ３ ships ３隻



Total income 35,970,000 35,970,000 35,970,000 35,970,000 35,970,000 35,970,000 35,970,000 35,970,000 35,970,000 35,970,000 Discount rate 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% Income （ Afte r dicount） 17,985,000 17,985,000 17,985,000 17,985,000 17,985,000 17,985,000 17,985,000 17,985,000 17,985,000 17,985,000 Conce ssion fe e ・Concession fee (PH I : USD212M) 7,781,107 7,780,329 7,779,552 7,778,775 7,777,997 7,777,220 7,776,443 7,775,665 7,774,888 7,774,111 ・Additional concession fee 877,467 877,855 878,244 878,633 879,021 879,410 879,799 880,187 880,576 880,965

Total conce ssion fe e Ope rating cost ・Personnel cost ・Stevedorage ・Feul & Elecity cost ・M&R cost ・Miscellaneous cost

8,658,573 8,658,185 8,657,796 8,657,407 8,657,019 8,656,630 8,656,241 8,655,853 8,655,464 8,655,075

1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 150,240 150,240 150,240 150,240 150,240 150,240 150,240 150,240 150,240 150,240

1,517,058 1,517,058 1,517,058 1,517,058 1,517,058 1,517,058 1,517,058 1,517,058 1,517,058 1,517,058 539,550 539,550 539,550 539,550 539,550 539,550 539,550 539,550 539,550 539,550 714,650 714,650 714,650 714,650 714,650 714,650 714,650 714,650 714,650 714,650



Total sale s administrative e xpe nse 1,358,063 1,358,063 1,358,063 1,358,063 1,358,063 1,358,063 1,358,063 1,358,063 1,358,063 1,358,063 EBITDA 3,680,467 3,680,855 3,681,244 3,681,633 3,682,021 3,682,410 3,682,799 3,683,187 3,683,576 3,683,965

・EBITDA margin 20% 20% 20% 20% 20% 20% 20% 20% 20% 20% ・Depreciation 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000

Afte r-Tax Profit 877,467 877,855 878,244 878,633 879,021 879,410 879,799 880,187 880,576 880,965 IRR 219,367 219,464 219,561 219,658 219,755 219,852 219,950 220,047 220,144 220,241 Pre -Tax Profit 658,100 658,391 658,683 658,974 659,266 659,557 659,849 660,140 660,432 660,723 Cashflow Year 31 Year 32 Year 33 Year 34 Year 35 Year 36 Year 37 Year 38 Year 39 Year 40 Opening balance 37,851,840 15,032,940 18,494,331 21,856,014 24,727,989 28,190,254 31,652,812 35,115,661 38,578,801 42,042,233

After-Tax Profit 658,100 658,391 658,683 658,974 659,266 659,557 659,849 660,140 660,432 660,723 CAPEX (26,280,000) - (100,000) (590,000) - - - - - - Depreciation 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000


Closing balance 15,032,940 18,494,331 21,856,014 24,727,989 28,190,254 31,652,812 35,115,661 38,578,801 42,042,233 45,505,957





nion of Myanm

ar

176

Bu sin ess Pla n (Ca s e 2 ) Plo t 25 Co mme nc e O p e r atio n

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

(Unit : USD) Year 10


Totalcontaine r throuput 57,607 81,459 103,404 127,090 152,638 171,204 187,395 212,186 213,833 238,347 Number of port call／week １ ship ２ ships ２ ships ２ ships ３ ships ３ ships ３ ships ３ ships ３ ships ３ ships Container loading ratio 79% 56% 71% 87% 70% 78% 86% 97% 59% 65% Income （ base d on Tariff） (Unit : USD) ・Import (Laden) 4,562,474 6,451,553 8,189,597 10,065,528 12,088,930 13,559,357 14,841,684 16,805,131 16,935,574 18,877,082 ・Import (Empty) 172,821 244,377 310,212 381,270 457,914 513,612 562,185 636,558 641,499 715,041 ・Export (Laden) 2,376,289 3,360,184 4,265,415 5,242,463 6,296,318 7,062,165 7,730,044 8,752,673 8,820,611 9,831,814 ・Export (Empty)） 2,160,263 3,054,713 3,877,650 4,765,875 5,723,925 6,420,150 7,027,313 7,956,975 8,018,738 8,938,013 ・Other incomes 927,185 1,311,083 1,664,287 2,045,514 2,456,709 2,755,528 3,016,123 3,415,134 3,441,642 3,836,195

Total income 10,199,031 14,421,909 18,307,161 22,500,649 27,023,795 30,310,812 33,177,348 37,566,470 37,858,063 42,198,145 Discount rate 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% Income （ Afte r dicount） 5,099,516 7,210,954 9,153,581 11,250,325 13,511,897 15,155,406 16,588,674 18,783,235 18,929,032 21,099,072 Conce ssion fe e ・Concession fee (PH I : USD212M)

23,320

23,320

23,320

23,320

23,320

23,320

23,320

23,320

23,320

23,320

・Additional concession fee 205,497 1,417,558 2,213,703 3,065,490 3,983,084 4,673,486 5,281,676 6,212,910 6,259,027 7,179,856 Total conce ssion fe e 228,817 1,440,878 2,237,023 3,088,810 4,006,404 4,696,806 5,304,996 6,236,230 6,282,347 7,203,176 Ope rating cost 0 ・Personnel cost 1,136,800 1,190,000 1,190,000 1,190,000 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 ・Stevedorage 82,080 110,160 110,160 110,160 150,240 150,240 150,240 150,240 150,240 150,240 ・Feul & Elecity cost 807,683 745,080 945,804 1,162,452 1,157,803 1,298,632 1,421,445 1,609,492 1,621,985 1,807,931 ・M&R cost 152,985 216,329 274,607 337,510 405,357 454,662 497,660 563,497 567,871 632,972 ・Miscellaneous cost 435,910 452,314 504,114 560,024 615,960 653,987 687,149 737,926 741,299 791,509



Total sale s administrative e xpe nse 1,597,744 1,186,637 1,216,170 1,273,879 1,364,649 1,399,193 1,417,108 1,444,540 1,477,863 1,504,988 EBITDA 657,497 1,869,558 2,675,703 3,527,490 4,445,084 5,135,486 5,743,676 6,674,910 6,721,027 7,641,856 ・EBITDA margin 13% 26% 29% 31% 33% 34% 35% 36% 36% 36% ・Depreciation 452,000 452,000 462,000 462,000 462,000 462,000 462,000 462,000 462,000 462,000

Afte r-Tax Profit 205,497 1,417,558 2,213,703 3,065,490 3,983,084 4,673,486 5,281,676 6,212,910 6,259,027 7,179,856 IRR 0 0 0 0 0 1,168,372 1,320,419 1,553,227 1,564,757 1,794,964 Pre -Tax Profit 205,497 1,417,558 2,213,703 3,065,490 3,983,084 3,505,115 3,961,257 4,659,682 4,694,270 5,384,892

Cashflow

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9


After-Tax Profit 205,497 1,417,558 2,213,703 3,065,490 3,983,084 3,505,115 3,961,257 4,659,682 4,694,270 5,384,892 CAPEX (4,520,000) - (100,000) - - - - - - - Depreciation 452,000 452,000 462,000 462,000 462,000 462,000 462,000 462,000 462,000 462,000 Dividend - - - - - - - - - - Annual receipts and expenditures (3,862,503) 1,869,558 2,575,703 3,527,490 4,445,084 3,967,115 4,423,257 5,121,682 5,156,270 5,846,892

Closing balance 5,137,497 7,007,055 9,582,758 13,110,247 17,555,332 21,522,446 25,945,703 31,067,385 36,223,656 42,070,548

Table 8.2.5-6 Business Plan （Case 2) 1/4




nion of Myanm

ar

177


(Unit : USD)

Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

Containe r throuput ・Import (Laden) 108,616 110,100 110,100 110,100 110,100 110,100 110,100 110,100 110,100 110,100 ・Import (Empty) 12,068 12,233 12,233 12,233 12,233 12,233 12,233 12,233 12,233 12,233 ・Export (Laden) 84,479 85,633 85,633 85,633 85,633 85,633 85,633 85,633 85,633 85,633 ・Export (Empty)） 36,205 36,700 36,700 36,700 36,700 36,700 36,700 36,700 36,700 36,700

Totalcontaine r throuput 241,368 244,667 244,667 244,667 244,667 244,667 244,667 244,667 244,667 244,667 Number of port call／week ３ ships ３ ships ３ ships ３ ships ３ ships ３ ships ３ ships ３ ships ３ ships ３ ships Container loading ratio 66% 67% 56% 56% 56% 56% 56% 56% 56% 56% Income （ base d on Tariff） (Unit : USD) ・Import (Laden) 17,921,574 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 ・Import (Empty) 1,810,260 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 ・Export (Laden) 13,939,002 14,129,519 14,129,519 14,129,519 14,129,519 14,129,519 14,129,519 14,129,519 14,129,519 14,129,519 ・Export (Empty)） 5,430,780 5,505,008 5,505,008 5,505,008 5,505,008 5,505,008 5,505,008 5,505,008 5,505,008 5,505,008 ・Other incomes 3,910,162 3,963,605 3,963,605 3,963,605 3,963,605 3,963,605 3,963,605 3,963,605 3,963,605 3,963,605

Total income 43,011,778 43,599,659 43,599,659 43,599,659 43,599,659 43,599,659 43,599,659 43,599,659 43,599,659 43,599,659 Discount rate 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% Income （ Afte r dicount） 21,505,889 21,799,830 21,799,830 21,799,830 21,799,830 21,799,830 21,799,830 21,799,830 21,799,830 21,799,830 Conce ssion fe e ・Concession fee (PH I : USD212M)

7,796,653

7,795,876

7,795,099

7,794,321

7,793,544

7,792,767

7,791,989

7,791,212

7,790,435

7,789,657

・Additional concession fee 3,317,483 3,442,700 3,443,089 3,443,477 3,443,866 2,804,255 2,804,643 2,805,032 2,805,421 2,805,809 Total conce ssion fe e 11,114,137 11,238,576 11,238,187 11,237,799 11,237,410 10,597,021 10,596,633 10,596,244 10,595,855 10,595,467 Ope rating cost ・Personnel cost 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 ・Stevedorage 150,240 150,240 150,240 150,240 150,240 150,240 150,240 150,240 150,240 150,240 ・Feul & Elecity cost 1,830,846 1,855,870 1,855,870 1,855,870 1,855,870 1,855,870 1,855,870 1,855,870 1,855,870 1,855,870 ・M&R cost 645,177 653,995 653,995 653,995 653,995 653,995 653,995 653,995 653,995 653,995 ・Miscellaneous cost 798,533 805,301 805,301 805,301 805,301 805,301 805,301 805,301 805,301 805,301



Total sale s administrative e xpe nse 1,510,074 1,513,748 1,513,748 1,513,748 1,513,748 1,513,748 1,513,748 1,513,748 1,513,748 1,513,748 EBITDA 4,090,483 4,215,700 4,216,089 4,216,477 4,216,866 4,857,255 4,857,643 4,858,032 4,858,421 4,858,809 ・EBITDA margin 19% 19% 19% 19% 19% 22% 22% 22% 22% 22% ・Depreciation 773,000 773,000 773,000 773,000 773,000 2,053,000 2,053,000 2,053,000 2,053,000 2,053,000

Afte r-Tax Profit 3,317,483 3,442,700 3,443,089 3,443,477 3,443,866 2,804,255 2,804,643 2,805,032 2,805,421 2,805,809 IRR 829,371 860,675 860,772 860,869 860,967 701,064 701,161 701,258 701,355 701,452 Pre -Tax Profit 2,488,113 2,582,025 2,582,317 2,582,608 2,582,900 2,103,191 2,103,483 2,103,774 2,104,066 2,104,357

Cashflow

Year 11

Year 12

Year 13

Year 14

Year 15

Year 16

Year 17

Year 18

Year 19


After-Tax Profit 2,488,113 2,582,025 2,582,317 2,582,608 2,582,900 2,103,191 2,103,483 2,103,774 2,104,066 2,104,357 CAPEX (7,030,000) - (100,000) (590,000) - (19,200,000) - - - - Depreciation 773,000 773,000 773,000 773,000 773,000 2,053,000 2,053,000 2,053,000 2,053,000 2,053,000 Dividend - - - - - - - - - - Annual receipts and expenditures (3,768,887) 3,355,025 3,255,317 2,765,608 3,355,900 (15,043,809) 4,156,483 4,156,774 4,157,066 4,157,357

Closing balance 38,301,660 41,656,685 44,912,002 47,677,610 51,033,510 35,989,701 40,146,183 44,302,957 48,460,023 52,617,380





nion of Myanm

ar

178





Container loading ratio 56% 56% 56% 56% 56% 56% 56% 56% 56% 56% Income （ base d on Tariff） (Unit : USD) ・Import (Laden) 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 ・Import (Empty) 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 ・Export (Laden) 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 ・Export (Empty)） 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 ・Other incomes 4,000,305 4,000,305 4,000,305 4,000,305 4,000,305 4,000,305 4,000,305 4,000,305 4,000,305 4,000,305

Total income 44,003,360 44,003,360 44,003,360 44,003,360 44,003,360 44,003,360 44,003,360 44,003,360 44,003,360 44,003,360 Discount rate 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% Income （ Afte r dicount） 22,001,680 22,001,680 22,001,680 22,001,680 22,001,680 22,001,680 22,001,680 22,001,680 22,001,680 22,001,680 Conce ssion fe e ・Concession fee (PH I : USD212M) 7,788,880 7,788,103 7,787,325 7,786,548 7,785,771 7,784,993 7,784,216 7,783,439 7,782,661 7,781,884 ・Additional concession fee 2,527,228 2,527,617 2,528,006 2,528,394 2,528,783 2,529,172 2,529,560 2,529,949 2,530,338 2,530,726

Total conce ssion fe e 10,316,108 10,315,720 10,315,331 10,314,942 10,314,554 10,314,165 10,313,776 10,313,388 10,312,999 10,312,610 Ope rating cost ・Personnel cost 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 ・Stevedorage 150,240 150,240 150,240 150,240 150,240 150,240 150,240 150,240 150,240 150,240 ・Feul & Elecity cost 1,855,870 1,855,870 1,855,870 1,855,870 1,855,870 1,855,870 1,855,870 1,855,870 1,855,870 1,855,870 ・M&R cost 660,050 660,050 660,050 660,050 660,050 660,050 660,050 660,050 660,050 660,050 ・Miscellaneous cost 806,512 806,512 806,512 806,512 806,512 806,512 806,512 806,512 806,512 806,512



Total sale s administrative e xpe nse 1,516,271 1,516,271 1,516,271 1,516,271 1,516,271 1,516,271 1,516,271 1,516,271 1,516,271 1,516,271 EBITDA 5,330,228 5,330,617 5,331,006 5,331,394 5,331,783 5,332,172 5,332,560 5,332,949 5,333,338 5,333,726 ・EBITDA margin 24% 24% 24% 24% 24% 24% 24% 24% 24% 24% ・Depreciation 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000


Cashflow Year 21 Year 22 Year 23 Year 24 Year 25 Year 26 Year 27 Year 28 Year 29 Year 30 Opening balance 52,617,380 34,635,801 39,334,514 43,933,518 48,042,814 52,742,402 57,442,280 62,142,451 66,842,912 71,543,666

After-Tax Profit 1,895,421 1,895,713 1,896,004 1,896,296 1,896,587 1,896,879 1,897,170 1,897,462 1,897,753 1,898,045 CAPEX (22,680,000) - (100,000) (590,000) - - - - - - Depreciation 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000


Closing balance 34,635,801 39,334,514 43,933,518 48,042,814 52,742,402 57,442,280 62,142,451 66,842,912 71,543,666 76,244,710





nion of Myanm

ar

179





Container loading ratio 56% 56% 56% 56% 56% 56% 56% 56% 56% 56% Income （ bas e d on Tariff） (Unit : USD) ・Import (Laden) 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 ・Import (Empty) 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 ・Export (Laden) 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 18,166,525 ・Export (Empty)） 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 1,835,003 ・Other incomes 4,000,305 4,000,305 4,000,305 4,000,305 4,000,305 4,000,305 4,000,305 4,000,305 4,000,305 4,000,305

Total income 44,003,360 44,003,360 44,003,360 44,003,360 44,003,360 44,003,360 44,003,360 44,003,360 44,003,360 44,003,360 Discount rate 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% Income （ Afte r dicount） 22,001,680 22,001,680 22,001,680 22,001,680 22,001,680 22,001,680 22,001,680 22,001,680 22,001,680 22,001,680 Conce s s ion fe e ・Concession fee (PH I : USD212M) 7,781,107 7,780,329 7,779,552 7,778,775 7,777,997 7,777,220 7,776,443 7,775,665 7,774,888 7,774,111 ・Additional concession fee 2,531,115 2,531,504 2,531,892 2,532,281 2,532,670 2,533,058 2,533,447 2,533,836 2,534,224 2,534,613

Total conce s s ion fe e 10,312,222 10,311,833 10,311,444 10,311,056 10,310,667 10,310,278 10,309,890 10,309,501 10,309,112 10,308,724 Ope rating cos t ・Personnel cost 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 1,366,400 ・Stevedorage 150,240 150,240 150,240 150,240 150,240 150,240 150,240 150,240 150,240 150,240 ・Feul & Elecity cost 1,855,870 1,855,870 1,855,870 1,855,870 1,855,870 1,855,870 1,855,870 1,855,870 1,855,870 1,855,870 ・M&R cost 660,050 660,050 660,050 660,050 660,050 660,050 660,050 660,050 660,050 660,050 ・Miscellaneous cost 806,512 806,512 806,512 806,512 806,512 806,512 806,512 806,512 806,512 806,512

Total Operaring cost 4,839,072 4,839,072 4,839,072 4,839,072 4,839,072 4,839,072 4,839,072 4,839,072 4,839,072 4,839,072 Gros s Ope rating Income 6,850,386 6,850,775 6,851,163 6,851,552 6,851,941 6,852,329 6,852,718 6,853,107 6,853,495 6,853,884


Total s ale s adminis trative e xpe ns e 1,516,271 1,516,271 1,516,271 1,516,271 1,516,271 1,516,271 1,516,271 1,516,271 1,516,271 1,516,271 EBITDA 5,334,115 5,334,504 5,334,892 5,335,281 5,335,670 5,336,058 5,336,447 5,336,836 5,337,224 5,337,613 ・EBITDA margin 24% 24% 24% 24% 24% 24% 24% 24% 24% 24% ・Depreciation 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000


Cas hflow Year 31 Year 32 Year 33 Year 34 Year 35 Year 36 Year 37 Year 38 Year 39 Year 40 Opening balance 76,244,710 54,666,047 59,367,675 63,969,594 68,081,805 72,784,307 77,487,101 82,190,186 86,893,563 91,597,231

After-Tax Profit 1,898,336 1,898,628 1,898,919 1,899,211 1,899,502 1,899,794 1,900,085 1,900,377 1,900,668 1,900,960 CAPEX (26,280,000) - (100,000) (590,000) - - - - - - Depreciation 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 2,803,000 Dividend - - - - - - - - - - Annual receipts and expenditures (21,578,664) 4,701,628 4,601,919 4,112,211 4,702,502 4,702,794 4,703,085 4,703,377 4,703,668 4,703,960

Clos ing balance 54,666,047 59,367,675 63,969,594 68,081,805 72,784,307 77,487,101 82,190,186 86,893,563 91,597,231 96,301,191



2) Sensitivity analysis (risk analysis)

The project analysis for 40 years has been carried out for respective cases and the current project analysis has highlighted 3 major fluctuation risks.

• Fluctuation risk in demand • Fluctuation risk in exchange rate relative to the concession fee (fund source for yen loan

repayment) • Fluctuation risk in expenditure

Accordingly, the sensitivity to the project plan due to these fluctuations risks is to be verified based on Case 2 project plans.

① Fluctuation risk in demand

Regarding the demand, it is expected the maximum handling capacity of 250,000 TEU is reached in the 12th year which, however, represents only 7% of the cargo volume handled in whole Myanmar and there is a risk that the time when 250,000 TEU is reached may well be delayed beyond the scheduled 12th year. But the risk of failing to reach the said maximum capacity in 40 years is presumably small. However, the demand fluctuation risk has been calculated multiplying the current demand forecast by the coefficient of fluctuation.

Table 8.2.5-7 Demand fluctuation risk analysis (Unit: Million dollars)

Demand Volatility Total Income Total Amount after Tax IRR

100% 795 94.4 20.8%

90% 715 65.5 16.9%

80% 635 36.6 12.2%

70% 556 7.7 -

As is evident from the above, when the actual demand undergoes a transition more than 20% below the demand forecast, the resulting IRR is 12.2% falling off to near the bottom of the anticipated investment effect.

② Fluctuation risk in exchange rate relative to the concession fee

This project provides that the SPC pays to MPA the concession fee in the amount equivalent to the yen loan which MPA has borrowed. The yen loan is denominated in yen however the SPC’s revenue is denominated in U.S. dollar. The total concession fee paid during the concession term is 234 million dollars and the impact from the exchange rate fluctuation risk relative to this payment has been verified.

180


Table 8.2.5-8 Exchange rate fluctuation risk analysis (Unit: Million U.S. dollars)

Exchange Rate Total Amount of Repayment Total Profit after Tax IRR

¥107.0 (Tentative) 234 94.4 20.8%

¥96.3 (10% decrease 260 84.6 20.4$

¥85.6 (20% decrease) 292 72.5 19.9%

¥74.9 (30% decrease) 334 56.8 19.2%

As is evident from the above, the degree of impact from the exchange rate fluctuation has proved to be minor. The reason behind this is that the payment of concession fee starts after 10 years and lasts till the 40th year and therefore the impact on the IRR becomes relatively small.

However, it is necessary to pay consistent attention to the exchange rate in an effort to disperse the exchange risk by means of depositing the excess funds in yen or concluding exchange contracts, etc.

③ Fluctuation risk in expenditure

The degree of impact due to the expenditure fluctuation risk has been verified.

Table 8.2.5-9 Expenditure fluctuation risk analysis (Unit: Million U.S. dollars)

Expense Volatility Total Expense Total Profit after Tax IRR

100% 241 94.4 20.8%

110% 266 85.1 19.2%

120% 290 75.7 17.7%

130% 314 66.4 16.0%

The degree of impact from the expenditure fluctuation risk has proved to be minor as is evident from the above. The reason behind this is that the proportion of the expenditure (running cost plus sales and general administrative expenses) out of the sales is relatively small, e.g. 30% which has held down the degree of impact from the fluctuation as being minor.

Relating to the expenditure, there is a concern about the personnel expenditure rising steeply along with the price escalation in Myanmar. As the personnel expenditure should rise in whole Myanmar, it should influence not only this project but also all the other terminal operators. For this reason, it is anticipated that the container handling charge may increase (The project feasibility analysis provides a discount rate of 50% applicable to the tariff rate, but this discount rate may decrease.) and as a result this may lead to increasing the revenue and absorbing part of the additional expenditure incurred.

181


④ Demand/expenditure fluctuation risk matrix A matrix of demand and expenditure fluctuations covering those having high fluctuation risks has been prepared and resulting IRRs have been calculated in order to verify the degree of impact therefrom.

Table 8.2.5-10 Demand/expenditure fluctuation risk matrix

Cost × 100% Cost × 110% Cost × 120% Cost × 130%

Demand × 100% 20.8% 19.2% 17.7% 16.0%

Demand × 90% 16.9% 15.2% 13.4% 11.5%

Demand × 80% 12.2% 9.9% 6.9% -

As mentioned above, the fluctuation risk analysis for the project plan has been conducted however the project plan of this time assumes the additional concession fee paid to MPA at 50% of the pretax profit which enables 50% of the above-mentioned fluctuation risk to be absorbed by the additional concession fee, thus cutting by half the impact on the profit of the SPC. The conditions relative to the additional concession fee paid to MPA should be determined through negotiation for selecting the management right, however such agreement should give consideration to the project risk allocation as well.

3) Summary As shown above, the downside risk associated with the project management at Thilawa Area Port is assumed to be limited due to its handling capacity being small in portion relative to the cargo demand for entire Myanmar, however for the purpose of securing sufficient cargo volume, efforts are required for enhancing its competitiveness through coordination with domestic distribution partners in consideration of the high probability of new terminals being developed in the future.

8.3 Project scheme

The PPP scheme based on the public and private cooperation by means of a yen loan shall be the

premise on which this project is promoted.

Public investment: For implementation, an open tender shall be invited by MPA, a public

corporation having jurisdiction.

Private investment: A terminal operating company (SPC) shall be established jointly by MPA

and Japanese enterprises.

The SPC shall acquire the concession for managing the project at Thilawa

Area Port from the Myanmar government and implement the private

182


investment as well as operation/maintenance thereof for 40 years.

It has been verified through MPA that adjacent MITT holds a preferential right to handle up to 300,000

TEU in Thilawa Area under a contract with MPA (explanation by MPA only and without verification

of the contract document). It was explained also that notwithstanding the foregoing, such condition

shall not be applicable to Plot 25 & 26 at Thilawa Area Port even when operation is commissioned to

a private company because the facilities are owned by MPA. Since there is no conclusive evidence on

this matter, it is desirable to have a terminal operating company under a joint venture (JV) with MPA.

Moreover, while the foreign investment law restricts the maximum foreign capital holding in a

distribution business at 80%, we received an explanation that the final determination on the actual

capital contribution share is under the jurisdiction of Ministry of Transport (MPA) who is the

organization responsible for the project. Therefore, 100% capital contribution by foreigners is possible

as long as MPA agrees to it (Hutchison from Hong Kong who operates a Plot in the same Thilawa Area

Port (MITT) is capitalized by 100% foreign funds).

On the other hand, there is some observation that MPA would not make any further investment (capital

contribution) as the construction of Thilawa Area Port is implemented by MPA, which suggests that a

joint venture with MPA is preferable in the light of aforementioned MITT issue.

Here, therefore, the following 2 methods shall be studied.

1) Joint venture with MPA

2) Management consignment based on a concession agreement with MPA

1) Joint venture with MPA Meanwhile, for the purpose of executing an efficient management for this project by means of private initiative, it is necessary to expand the capital contribution by the Japanese private entities as high as possible. However, the foreign investment law restricts the foreign capital holding in any distribution business up to 80% at a maximum. Now therefore, a joint venture method between the Japanese companies and MPA is recommended as illustrated in Figure 9.2-1 Project scheme.

183


Figure 8.3-1 Project scheme (J/V scheme)

The outline of the Joint Venture (SPC) is as follows.

① Capital: 12 million dollars The amount shall be equal to the initial expenditure plus amount required for 1 year operation.

- Initial investment amount: 4.62 Million dollars - Land cost: 3.00 Million dollars - Operating expenses for the first year: 4.21 Million dollars - Contingency: 0.17 Million dollars

Total 12.00 Million dollars <Land cost for Thilawa Area Port> MITT and MIPL in Thilawa Area Port paid US$10/m2 to MPA as land cost. As the total a rea of Plot 25&26 is some 300,000 m2, 3 million U.S. dollars has been allocated.

② Capital contribution share

As the management of Thilawa Area Port should preferably be implemented mainly by private companies, 100% capital contribution by private sector (foreign capital) is desired. But, according to the provision of the foreign investment law, the maximum foreign capital contribution in any distribution business is limited to 80% and there is some observation that the final determination on the actual capital contribution share is under the jurisdiction of MPA who is the organization responsible for the project, all of which necessitates that the agreement should be reached through negotiation for the terms of the concession. On top of this, in consideration of the agreement between MITT and MPA regarding the preferential cargo handling (MPA confirmed existence of such agreement though we could not verify it through

184


any documentation), it is recommendable to solicit MPA’s participation in the capital contribution. However, in view of MPA’s passive attitude toward the capital contribution together with the problem of procuring such capital funds, it should be an effective way to limit their capital contribution at minimum of 20%.

As to the 20% capital contribution by MPA, procurement of cash funds should presumably be difficult but in-kind contribution should be more realistic. As for the public portion to be procured through the yen loan under this project scheme, the yen loan equivalent amount must be paid from the revenue of the SPC as concession fee and such portion cannot be the object for any capital contribution in kind. On the other hand, while cost for the land in Thilawa Area Port (3 million dollars) is assumed as the initial expenditure, it should be appropriate to allocate the said amount to the capital contribution in kind by MPA because this expenditure is the usage charge for the land in Thilawa Area Port scheduled to be paid in lump sum by the SPC to MPA. Even if the MPA’s capital contribution (3 million dollars) is replaced by the capital contribution in kind, it should be offset by the land cost in Thilawa Area Port assumed as part of the initial expenditure with the capitalization remaining at 15 million dollars and without causing any problem in the cash flow. Where MPA’s capital contribution share is determined at 20%, the remaining 80% is to be allocated to the Japanese companies. While Kamigumi and Toyota Tsusho, members of the current survey team, are prepared for this capital contribution, it is also desirable that JICA provides support through its overseas investment and loans in consideration of the project being contemplated under PPP scheme.

Under present circumstances, the following composition of the capital contribution is assumed.

Myanmar side: MPA 20% Japanese side: Kamigumi/Toyota Tsusho 70%

JICA 10%

In addition, as for the capital contribution share of Kamigumi/Toyota Tsusho, it should be possible that some portion thereof is shared by their related business partners in the precincts.

2) Management consignment method based on a concession agreement with MPA

Where MPA does not make capital participation but employs a management consignment method based on a concession agreement, it may end up with establishing a joint venture 100% owned by private entities. However, if maximum 80% limit on foreign ownership is applied under the foreign investment law, it may become necessary to invite distribution companies in Myanmar to join the group of capital investors.

185


Figure 8.3-2 Project scheme (management consignment method)

The outline of the joint venture (under management consignment method) is as follows.

① Capital: 12 million dollars (same as J/V method) ② Capital contribution share

With respect to the maximum 80% limit specified by the foreign investment law, negotiation with MPA to minimize the local component is necessary because a large capital contribution by Myanmar’s private entities cannot be anticipated. Hence, 100% foreign ownership should be studied as a basic concept.

8.4 Fund procurement

1) Public investment It is assumed that the public investment for this project is financed by the yen loan provided by the Japanese government. The loan shall be provided under the following terms and conditions.

- Repayment period: 40 years (including 10 years of grace period) - Payment method: In equal installments for principal - Interest: 0.01% p.a. - Currency: Japanese yen

186


With regard to the repayment of the yen loan, exchange risks between U.S. dollar and yen are incurred because the revenue for this project is denominated in U.S. dollar. It is necessary to have some agreement with Myanmar as to how such exchange risks are shared but for the part of SPC, measures to hedge the exchange risks such as the following need to be studied as well.

① During the repayment grace period, if the yen/U.S. dollar rate exceeds the virtual rate,

part of the accumulated profit shall be converted to yen and retained.

② During the repayment period, if the yen/U.S. dollar rate exceeds the virtual rate, exchange contracts shall be concluded corresponding to each repayment date.

2) Private investment

As the initial funds required by the SPC are relatively small and borrowings made by the SPC are presumably difficult under this project, such entire requirement shall be covered by the capital investment (including capital contribution in kind).

In this regard, it is necessary to obtain an overseas investment and loan insurance covered by Nippon Export and Investment Insurance (NEXI) in consideration of the country risk of Myanmar.

187


Chapter 9. Confirmation of the project effect

9.1 Method of the confirmation of the project effect

Effect of the Project implementation (Case 2), in both quantitative and qualitative terms, will be confirmed, to what extent the profitability and efficiency improves compared with the general operation (Case 1).

9.2 Quantitative effect

In Case 1, the terminal operator’s extra effort to collect the container cargo is not considered as a condition, thus it is assumed that the operator will not be able to get a new customer out of existing business relationship between the other terminals and the shippers. Hence, the projected cargo handling throughput in Case 1 is only those overflowed the total capacity of all other existing container terminals in Yangon, the overflowing situation being assumed to happen due to the rapid growth in the cargo handling demand derived from a rapid economic growth of whole Myanmar.

On the other hand, in Case 2, the terminal operator will pay as much effort as it can to collect the cargo and attract more ships to call, as written in Chapter 4. Although the operational rate of the terminal is assumed to be still lower than the existing terminals, the assumption is that the terminal will be able to collect some extra cargo through the competition with other existing terminals. Hence the container handling throughput is more in Case 2 so as the revenue earnings.

The effect of this increase will be evaluated using the Financial Internal Rate of Return (FIRR) analysis of the whole project.

9.2.1 Comparison of FIRR

In order to make a comparison, FIRR of the whole project between Case 1 and Case 2 was made on Table 9.2.1-1

188


Case 1 Case 2

TEU COST REV. TAX CASHFLOW TEU COST REV. TAX CASHFLOW

2014 2015 64,000 -64,000 64,000 -64,000

1 2016 50,053 148,000 377 0 -147,623 57,607 148,000 886 0 -147,114

2 2017 69,420 2,361 0 2,361 81,459 3,310 0 3,310

3 2018 84,681 3,460 0 3,460 103,404 4,912 0 4,912

4 2019 101,932 4,804 0 4,804 127,090 6,616 0 6,616

5 2020 121,345 6,384 0 6,384 152,638 8,451 0 8,451

6 2021 132,505 7,268 847 6,421 171,204 9,832 1,168 8,664

7 2022 140,090 7,851 920 6,931 187,395 11,048 1,320 9,728

8 2023 156,875 8,917 1,054 7,863 212,186 12,911 1,553 11,358

9 2024 149,917 8,275 973 7,302 213,833 13,003 1,564 11,439

10 2025 164,925 9,437 1,118 8,319 238,347 14,845 1,794 13,051

11 2026 157,833 8,991 52 8,939 241,368 15,204 829 14,375

12 2027 170,473 9,947 172 9,775 244,667 15,454 860 14,594

13 2028 182,430 10,852 285 10,567 244,667 15,454 860 14,594

14 2029 195,217 11,820 406 11,414 244,667 15,454 860 14,594

15 2030 200,000 12,182 451 11,731 244,667 15,454 860 14,594

16 2031 199,217 12,122 284 11,838 244,667 15,454 701 14,753

17 2032 192,271 11,597 219 11,378 244,667 15,454 701 14,753

18 2033 200,000 12,182 292 11,890 244,667 15,454 701 14,753

19 2034 200,000 12,182 292 11,890 244,667 15,454 701 14,753

20 2035 200,000 12,182 292 11,890 244,667 15,454 701 14,753

21 2036 200,000 12,339 218 12,121 244,667 15,646 631 15,015

22 2037 200,000 12,339 218 12,121 244,667 15,646 631 15,015

23 2038 200,000 12,339 218 12,121 244,667 15,646 632 15,014

24 2039 200,000 12,339 218 12,121 244,667 15,646 632 15,014

25 2040 200,000 12,339 218 12,121 244,667 15,646 632 15,014

26 2041 200,000 12,339 218 12,121 244,667 15,646 632 15,014

27 2042 200,000 12,339 218 12,121 244,667 15,646 632 15,014

28 2043 200,000 12,339 219 12,120 244,667 15,646 632 15,014

29 2044 200,000 12,339 219 12,120 244,667 15,646 632 15,014

30 2045 200,000 12,339 219 12,120 244,667 15,646 632 15,014

31 2046 200,000 12,339 219 12,120 244,667 15,646 632 15,014

32 2047 200,000 12,339 219 12,120 244,667 15,646 632 15,014

33 2048 200,000 12,339 219 12,120 244,667 15,646 632 15,014

34 2049 200,000 12,339 219 12,120 244,667 15,646 633 15,013

35 2050 200,000 12,339 219 12,120 244,667 15,646 633 15,013

36 2051 200,000 12,339 219 12,120 244,667 15,646 633 15,013

37 2052 200,000 12,339 219 12,120 244,667 15,646 633 15,013

38 2053 200,000 12,339 220 12,119 244,667 15,646 633 15,013

39 2054 200,000 12,339 220 12,119 244,667 15,646 633 15,013

40 2055 200,000 12,339 220 12,119 244,667 15,646 633 15,013

3.2% FIRR 4.7%

Table 9.2.1-1 Comparison of FIRR of the whole project

FIRR

FIRR significantly improves from 3.2% to 4.7% at least.

189


9.2.2 Effect to the national economy

The case of the previous section, regarding both Case 1 and Case 2, is about the competition of cargo collection within the Yangon port, so there will be no difference in the total amount of the container handled in the port of Yangon or the whole Myanmar, which means that there will be no difference in the benefit which the Myanmar national economy will get. Hence the Economic Internal Rate of Return (EIRR) analysis is not carried out this time.

9.3 Qualitative effect

On the implementation of this Project, as described in the Project Plan in Chapter 4, not only the services provided within the terminal but also logistical services in the hinterland which connects to the terminal is considered important, and hinterland logistic service and the terminal service will be planned and implemented as one package. Hence, following the detail of the operation plan described in Chapter 4, these effects can be expected such as ‘cost saving in hinterland transportation’, ‘saving in the lead time’, and ‘better cargo transport quality’, through the strengthening of the terminal related business, such as the development and provision of Most Appropriate Transport Mode Service, Inland Container Depot, Inland Port, and Multi-purpose logistic center.

Furthermore in this project, provision of logistic related services such as temperature controlled warehouse and distributive processing services is considered as a plan. The project entity team has a long experience in provision of those services in Japan, and has acquired and accumulated the know-how through this experience, so the introduction and first ever provision of these logistic related services to Myanmar, can be expected to bring a revolutionary change in the cargo transport and logistics in the country.

190


Chapter 10. Risk Analysis and Mitigation Measures

Various project risks may occur when an infrastructure project like the Thilawa Port Project is

implemented. Mainly, the following seven risks are assumed: Political, economic, demand, exchange,

law/regulation and taxation, security, natural disaster risks. The implementation of this project on a

PPP basis is considered, but port construction/improvement has been conducted as public works.

Consequently, it is not appropriate to transfer to the private sector all project risks that have been borne

by the public sector. Proper risk sharing between the public and private sector is indispensable for the

success of the project.

10.1 Political risk

Even though democratization and open-up policy with respect to both domestic and diplomatic affairs

is being pressed forward since the coming into office of the civilian government in March 2011, there

is a concern over continuity of the current policy in future. As this is a risk attributable to Myanmar

government and so on, it is difficult for project parties to control such risk and accordingly support

from an official body is needed. When implementing the project, it is necessary to procure investment

insurance from NEXI (Nippon Export and Investment Insurance) for equity funded from Japan in

order to mitigate the risk.

10.2 Economic risk

There is a concern over whether or not legislation etc., increase of direct investment from abroad and

entry of international companies will be successfully promoted and the economy will grow as expected.

The development of the Thilawa SEZ is being smoothly advanced, but to attract foreign companies,

the Japanese government’s continuous support will be required.

10.3 Demand risk

Transition of cargo demand heavily depends on whether economic development of the Country would

progress as intended. In this project, it is assumed that container demand in the whole Country in 2030

will be approximately 4,300,000 TEU and market share of Thilawa District Port will be approximately

7%.

In Thailand, a neighboring country, the number of container per 1,000 population is about 0.1 TEU.

If 4,300,000 TEU is divided by current Myanmar population (approximately 51 million), the number

191


of container per 1,000 population is 0.084 TEU. Taking increased population and economic

development of the Country in 2030 into consideration, it is highly likely that it will exceed 0.1 TEU,

the current value of Thailand, and it is considered that 4,300,000 TEU, demand forecast for 2030 is

highly realizable forecast.

Even in the case that demand is increased as per forecast; however, there is a concern over excessive

competition when development of other berths in Thilawa District Port is promoted. Regarding this

point, it is necessary to incorporate into the contract with MPA such provision that any new entry shall

not be allowed until financially sound operation of the terminal becomes possible, etc. In addition, it

is needed to enhance competitiveness by adding value through integration with Thilawa SEZ, domestic

logistics for which ICD becomes the base, a refrigerated warehouse, etc.

Furthermore, it is under investigation to bring in shipping companies by letting their agents participate

in an operation company of Thilawa District Port.

10.4 Exchange risk

Although single exchange rate policy has been implemented since April 2012, there is a concern over

the possibility that the former multiple exchange rate system might revive in the process of future

economic development. Since almost all revenue of this project will be received in hard currency

(usually in US$), such risk will be mitigated. For the amount equivalent to long-term debt of yen loan,

however, exchange risk between US$ and Japanese yen will be involved because it will be paid to

Myanmar government as concession fee by SPC. Since repayment period of yen loan is as long as 30

years, it is necessary to study the measures as described below in order to hedge exchange risk. ① In the case that exchange rate of yen/US$ exceeds assumed rate during the repayment grace

period, earned surplus shall be retained after converting into yen.

② In the case that exchange rate of yen/US$ exceeds assumed rate during the repayment period,

exchange forward contract for future repayment dates shall be executed.

10.5 Law/regulation and taxation risks

Laws and regulations have not sufficiently been established in the Country. There are no laws and

regulations that are usually required to implement projects. In addition, the details of the actual laws

and regulations are not clarified. The interpretation of individual legal points at issue and the operation

of the laws are often left to judgment of the competent authorities substantially. Significant

192


contradiction between the provisions of the laws/regulation and the practical operations is sometimes

observed. Since the transition to civilian rule in March 2011, the revisions of many laws and

regulations, and new legislation, have been in progress. Consequently, there is a low predictability for

limitations to the project based on legal standpoints.

When Japanese companies actually enter a business in the Country, it becomes important to present to

the competent authorities the details on individual and concrete investment projects and obtain

necessary confirmation and approval of the relevant authorities, so as to minimize the above risks.

In addition, taxation-related laws have not been sufficiently established. The tax authorities lack their

abilities and experiences in taxation. The tax authorities have actively collected taxes as a nation. For

this reason, taxpayers have a low perception about proper tax payment. In addition to the revision of

the current tax law system, the Country is making efforts to strengthen the management of the tax

authorities, but it takes a considerable time to regulate the top and on-site tiers of the authorities.

10.6 Security risk

After the transition to civilian rule in 2011, the Country reached a peace agreement with main minority

armed organizations, but some militias are continuing to carry out acts for terrorism, and possibly

target a port. It is difficult for relevant business parties to deal with the said risk only by themselves,

and it is absolutely required for them to liaise with the military and the police of the Country.

10.7 Natural disaster risk

Such a natural disaster occurred after 2000 that would cause severe damage to the port facilities in

Yangon/Thilawa District is only the cyclone which formed in May 2008, landed Yangon District and

caused immense damage there. Also small-scale flood occurred a few times a year, but they were of

the scale that they have no significant impact on operation of the port. As a matter of course, it is

necessary, in principle, for an operation company to procure non-life insurance against such risk. Since

such risk is not attributable to anyone, however, it is also general concept that the risk is shared with

public sector not only taken by an operation company. It is considered to be reasonable to incorporate

Force Majeure clause in the contract; for example, clause that if the operation company is suffered

from immense damage caused by a natural disaster, the administration side shall also assume

contribution to a certain degree or the clause that if continuous use becomes impossible, the

administration side shall purchase it.

193


Chapter 11. Comprehensive Assessment and Recommendations

Finally, we conduct a comprehensive assessment on this project and propose the qualification of a

company that will actually operate the project.

11.1 Comprehensive assessment

Under this project, we conducted a survey on the development and operation of the Thilawa Port that

will play a central role in logistics of the Country that is expected to grow.

It is physically difficult to expand the current port of Yangon. Under this situation, the development

of the Thilawa Port is an essential requirement, and attracting a vital interest of the existing companies

in the special economic zone of Thilawa that is being developed behind the port.

As the cargo demand in the whole Country is predicted to substantially grow, the feasibility of the

business in the Thilawa District Port can be judged to be high. However, the expansion and increase

in capacity of other terminals in Yangon Port and Thilawa District Port are under planning. In addition

to the berths to be developed under this project (25, 26), Thilawa District Port has many candidate

sites for planned construction of a berth. For this reason, there is a possibility that new terminals will

be constructed. If the capacity of container handling becomes excessive due to these expansions and

new constructions, as shown in the cases of other countries, a competition for cargoes among terminals

will heat up and possibly affect the management of a terminal operator. In consideration of the state

of development in the Country, a terminal development should be formulated by the whole of the

Country, not developed individually by each terminal. For it, MPA will play an important role as

competent authorities.

MPA is expected to assume the following roles in the operation of Thilawa District Port.

1) As the competent authorities of port business in the Country, it shall comprehend handling capacity of terminals in the whole Country and exercise overall control over an expansion plan and a new construction plan of each terminal so that excessive supply can be avoided.

2) Since Thilawa District Port will have a new terminal for new entry, it shall assure transparency in the competition with the existing operation companies and arrange environment of fair competition.

3) In order to promote proper development by properly managing the waterfront line that is a

194


valuable public asset and restraining excessive competition, involvement of an official agency (MPA) is indispensable in the development of the port and it should participate also in equity of operation business. (Not only for this project but also for terminals that will be newly developed in future, it is desirable that MPA participates in equity also in order to coordinate and regulate the development in the whole Country as described in above 1).)

On the other hand, it is necessary for an operation company in Thilawa District Port to investigate how

to collect cargoes and secure profits under the circumstance mentioned above. In order to do that, it is

necessary to carry out efficient improvement of operation as proposed in Chapter 4.

The qualification of the company is described below in order to carry out efficient improvement of

operation.

11.2 Qualification of the company

As a terminal operator in Thilawa District Port is a latecomer, it will become exposed to a competition

with existing terminals. In order to succeed this project under such a situation, it is necessary to focus

on the following points.

* Cooperation with Thilawa SEZ * Installation of modern facilities and efficient operation utilizing Japanese know-how * Cooperation with local logistics operator * Growing ties with shipping line

1) Liaison with the Thilawa SEZ

Thilawa District Port is being developed in combination with the Thilawa SEZ. Consequently, a liaison with the SEZ becomes very important for operation of terminals.

The Thilawa SEZ is being developed and will be operated by a joint venture company between the Country and Japan. Many Japanese companies are expected to enter into the zone. Thilawa District Port, where cargos for the SEZ become dominant, is required to smoothly handle cargos such as components from other factories in Japan and Southeast Asia. A system for smooth transportation is very important for the existing companies in the SEZ. In the case of review of location in the SEZ, the said system becomes one of evaluation points.

Due to the increased needs for transportation of bonded cargoes in the SEZ, it is required to establish a close relationship between the port management and the SEZ.

In this respect, the SEZ will be operated through a joint venture between the Country and Japanese company. Consequently, joint operation of the port between the Country and Japan

195


is effective for integrated development and operation of Thilawa Port and the SEZ.

Image of general development Securing of consecutive income *Tax revenue from the enterprises in SEZ * Gain on sale of terminal concession, utility fee of terminal

Development by

private investment

Integrated

Development

Job security

Development by

public investment

Promotion of attraction of

enterprises

Waterfront line managed by governmentPort facilities consistent with

needs of SEZ

Figure 11.2-1 Image of development

Furthermore, if a terminal operator in Thilawa District Port provides a bonded distributioncenter in Thilawa Special Economic Zone (SEZ) and establishes an intermodal transportsystem combined with the SEZ for better convenience of a consignee, it can promote creationand collection of export/import container freights within the SEZ.

If the added value that cannot be followed by terminal operators of other countries is createdin Thilawa District Port as described above, it can substantiate competitive and highlyprofitable operation. It is considered to be the most appropriate that for this purpose the SpecialPurpose Company (SPC) is established and that MPA and Japanese port operators, who haveknowhow of efficient operation, as well as the Thilawa SEZ operators participate in the SPC.

In this case, it is expected that the companies concerned will play the following roles:* MPA: Instruction and support as competent authorities of PPP project

in the Country

196


ティラワ地区港ターミナル

運営会社

人材育成、運営ノウハウの提供

経済特区・港湾の一体化サポート

MPA

* Japanese port operators: Development of human resources and knowhow of efficient port operation

* SEZ operators: Support of integrated development/operation of the SEZ and the port

SEZ Japanese 経済特区日本F 事irm業s 者

Investment 出資

Integrated support by SEZ & Port

MPA Investment

Thilawa Port Investment Japanese

日本の港湾出資出資

Terminal SPC T事er業m会ina社l

監P督u 官bli庁c aとi しd てbyのco公n的

tro支l 援

Provision of personnel training and operational

Figure 11.2-2 Sharing roles

2) Introduction of latest equipment and efficient operation utilizing Japanese knowhow

Cargo-handling and port procedure efficiency will greatly affect profits in port management. The improvement of the operation efficiency absolutely requires the introduction of systems. It is useful to utilize the following two systems.

* Improvement of cargo-handling efficiency in terminal (terminal operation system) * More efficient port procedure (Port EDI, MACCS)

In order to increase cargo-handling efficiency in a terminal, containers must be controlled more efficiently. For more efficient control, it is useful to introduce a terminal operation system. Due to the introduction of this system in many ports of Japan, know-how about the operation of the system has been accumulated there.

For more efficient port procedures, the introduction of the port EDI and MACCS is planned through Japan’s aid. These systems were developed in Japan. Consequently, Japanese port industries are familiar with them.

Therefore, Japanese companies’ know-how will be of great help to effective and efficient use of the systems that will be introduced for more efficient operation of the port.

197


Furthermore, in order to perform efficient operation of a terminal, personnel allocation and development of human resources are very important. An operation company of this project will be newly established and thus employees will be newly employed. Approximately 120 people will be required at the time of commencement of operation and eventually approximately 250 people will be required. From the situation of port operation so far performed in the Country, it appears that employment of those who have experiences in port business will be very difficult. Consequently, in order to implement efficient operation, it becomes important to develop human resources by providing training and on-site practice for operation of cargo handling equipment, maintenance and control system.

In Japanese ports, the latest cargo handling equipment that are planned to be introduced to this project are installed and used and systems such as EDI, NACCS, etc. are operated. For on-site training, therefore, it is possible to provide well-developed training by skilled technicians who are familiar with the actual operation and maintenance of equipment. Regarding on-site practice and training, there are past experiences to accept trainees from various countries in cooperation with Japanese government and JICA; therefore, provision of effective training is possible.

Note that three trainings were provided to MPA employees at Kobe PC-18 Terminal of Kamigumi in Japan; Invitation by OCDI in August 2014, Invitation by HIDA in September 2014 and Invitation by JICA in November 2014. In addition, it is planned to provide to actual working level personnel with 1-month training course for a group of 5 people at Kobe PC-18 Terminal of Kamigumi which will be held continuously for more than a year.

3) Cooperation with domestic logistics operators

Since Thilawa District Port is located relatively far from the existing industrial park as compared with Yangon Port which is adjacent to Yangon City, it is assumed that more cost will incur consignors/consignees. Under such circumstance, it is necessary for a terminal operator in Thilawa District Port who is a new comer to offer conveniences to consignors/consignees such as “Inventory Control” and “Reduction of Time and Cost of Intermediate Transportation” by establishing ICD (Inland Container Depot) and a cold/refrigerated warehouse, performing added-value service such as distribution processing in a terminal and providing service of direct delivery to shops or direct transportation from production region.

Furthermore, it is necessary to secure transportation means to collect cargoes to Thilawa District Port in cooperation with domestic logistics operators including truck transportation, railway transportation, waterborne transportation and others.

The port business in Japan features relatively higher unit labor cost and less quantity of container handling as compared with large-scale ports in South East Asia. In addition, since

198


there are many operators, competition of enhanced services among operators is severe. In order to assure profits, therefore, in addition to added-value services mentioned above, “Creation and Collection of Container Freights from Broad Hinterland” and “Development of Comprehensive Logistics Technology” are practiced which collect and transport freights independently from domestic consignors. This knowhow can be adapted to operation of Thilawa District Port.

4) Enhancement of relationship with shipping companies

It is important to establish business relationship with shipping companies calling at Thilawa District Port in addition to collection of freights. In many cases, a ship of the shipping company calls at a port as requested by an agent. There is a case that an agent is independently operating domestic logistics business including truck transportation and so on in addition to performing the work as a shipping company’s agent and thus it also shows interest in the port operation business. Accordingly, the establishment of relationship with such agent becomes one of approaches to bring in a shipping company calling at Thilawa District Port.

In addition, since Japanese port operators have experiences to deal with foreign shipping companies in port operation in Japan, they can negotiate calling at port with such shipping companies at Thilawa District Port based on these experiences.

As described above, it is necessary for an operator of Thilawa District Port to possess not only experience of port operation but also experience of domestic logistics business and good relationship with shipping companies and agents.

Kamigumi, which is a member of this survey team, has sufficient qualification as an operation company of Thilawa District Port as mentioned above based on its involvement in logistics business in the Country in addition to experiences and references so far accumulated in Japan and in foreign countries. Kamigumi has been involved in this field as follows:

① Regarding experiences of port operation, it has experience of port operation at major ports

in Japan such as Yokohama, Kobe and others, and has such experience and reference that it has performed port operation in Laem Chabang Port in Thailand for 15 years utilizing our knowhow in Japan.

② Regarding cooperation with Thilawa SEZ, it established a logistics company in the SEZ jointly with Sumitomo Corporation that is a leader of an operation company of Thilawa SEZ and is conducting preparation so that it can undertake transportation of freights in the SEZ in future.

③ Regarding domestic logistics field, it separately established a truck transportation company for operation of Laem Chabang Port in Thailand to enhance its domestic logistics business in Thailand and undertake logistics between the port and consignors. In the Country, it established a truck transportation company jointly with ERF that is one of leading logistics companies in the Country and commenced operation. In addition, it is also conducting joint

199


survey regarding establishment of ICD in Hlaingthaya and railway transportation betweenYangon and Mandalay.

④ Regarding approach to fence in shipping companies, Kamigumi itself will try to promotesales to shipping companies for calling at Thilawa Port taking opportunity of port operationin Japan. In addition, it investigates possibility to fence in shipping companies such as ChinaShipping, Evergreen, Mitsui OSK Line and others by letting ERF which is an agent of theseshipping companies participate in operation business of Thilawa District Port.

Note that as many as 20% of total containers in the whole Country are handled solely by

shipping companies for which ERF is working as an agent.

From the above, it is desirable for an operation company of Thilawa District Port to utilize Japanese

operation knowhow.

PPP survey

Development of Thilawa port

Selection process of terminal

operator

Establishment of SPC

Employment of working staff

Training of working staff

Procurement of equipments

provided by private

investment

Attraction of shipping lines

2014 2015 2016

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

Figure 11.3-1: Schedule

11.3 Future schedule

Although the inauguration of Thilawa District Port has once been scheduled for beginning of 2016, it

appears that it will be postponed to sometime after middle of 2016 as far as judging from the current

state of construction of the port. In order to promote preparation of an operation company matching

this schedule, it is necessary to commence the procedure to establish an operation company from the

middle of 2015.

200


The above schedule was prepared on the assumption that the operation is started at the beginning of

2016. Consequently, MPA is recommended to immediately select a partner that is assumed to be a

Japanese company, so as to make it stand poised to open the said port.

In conclusion, Thilawa District Port will be constructed by the latest method under the assistance of

the Japanese government, and state-of-the-art cargo-handling equipment be also introduced.

Furthermore, EDI and MACCS will be also introduced for more efficient port procedures.

Consequently, it is desired that these facilities should be fully utilized to manage the port.

On the other hand, the development of a special economic zone behind the Port is being steadily

advanced. It is expected that Japan’s know-how about the management in addition to the equipment

will be introduced to satisfy the needs of the existing companies in the zone, thereby leading to a main

terminal in the Country.

201

Preparatory Survey on Yangon Port in Thilawa Area and Logistics Depot Development in the Republic of the Union of Myanmar

APPENDIX I

General

“The Preparatory Survey for the Project for Expansion of Yangon Port in Thilawa Area” is toformulate “Yangon Port Basic Development Policy” which will clarify and define the role ofYangon Main Port and Thilawa Area Port. It has been carried out for feasible study (F/S) of“Thilawa Area Port Urgent Development Plan”, which includes the urgent works as the firstphase implementation package and based on this Basic Development Policy aiming atcommencing operation of the terminal. Plus, it was shown “Thilawa Area Port DevelopmentPlan （Phase I, II, III）” covering all the projects targeting year 2025. “Sub-Project forExpansion of Yangon Port in Thilawa Area (Phase-I) under Infrastructure Development inThilawa Area (Phase-I)” was pledged in March 15, 2013, Exchange of Notes (E/N) and LoanAgreement (L/A) have been concluded in June 7, 2013, based on the F/S result.

In this chapter, the JICA study team reviews the F/S results of the Phase I.

I.1 Review of Phase 1

I.1 Port Facility Layout and Operation Plan (Phase-I)

I.1.1.1Required Port Facilities and Operation Plan

In this study, the draft final report on the preparatory survey for the expansion project of YangonPort in Thilawa Area is reviewed, and basis for deciding the required facilities, layout plan andoperation plan is addressed in this section.

(1) Preconditions for Phase-I Facility Plan

1) Targeted Container Handling Volume and its Breakdown① Targeted container handling volume：200,000 TEUs per year② Breakdown of each type of container：See Table I.1.1-1

Table I.1.1-1 Targeted Proportions of each type of Container (Phase-I)

Type of Container Targeted Proportions Present Proportions

Proportion(%) Container Volume (TEU/Year)

Proportion (%)

Container Volume (TEU/Year)

Import Full Container 45% 90,000 45% 90,000 Empty Container 5% 10,000 5% 10,000

Export Full Container 45% 90,000 35% 70,000 Empty Container 5% 10,000 15% 30,000 Amount 100% 200,000 100% 200,000

2) Container cargo flowBased on the targeted container handling volume and its breakdown, container cargo flowamong the new terminal and surrounding facilities including shipper, consignee and ICD

1


(Inland Container Depots) are drawn in Fig.I.1.1-1. This flow represents present proportionsand targeted proportion of import, export and empty containers in Yangon Port. In the newterminal planning in Thilawa area, determining the storage capacity for empty containers isone of the main issues as well as that of full containers. Because of the limited area inPhase-I stage of the new terminal, main role of the empty container yard will be as atemporary storage for discharged empty import containers and empty containers for loading,and will not include such functions as ICD.

Main reasons are as follows;Due to the nature of the export commodity, dwelling time is very long, from two (2) monthsto six (6) months, in Yangon port. It would be costly and impractical to keep a considerablequantity of empty containers at the on dock yard or to have ICD functions. Compared withcompeting ports in Yangon area, the new terminal in Thilawa is farther from theconsumption area (for import cargo) or from industrial parks (for export cargo) located inthe hinterland of Yangon Port. ICD should be located at a site near these areas, which is also convenient to transport empty containers by river barge.

Plan

ned

Con

tain

erFl

ow

Unloading (45%:90,000TEU)

Unloading ( 5%:10,000TEU)

Loading (45%:90,000TEU)

Loading ( 5%:10,000TEU)

Container Terminal

Import Full(45%:90,000TEU) Consignee MT (45%:90,000TEU)

De-stuffing

Shipper

Export Full(45%:90,000TEU)

Export MT( 5%:10,000TEU)

ICD(Inland

ContainerDepot)

Pres

entC

onta

iner

Flow

Import Full(45%:90,000TEU)

Unloading (5%:10,000TEU)



Container Terminal

Import Full(45%:90,000TEU ConsigneeDe-stuffing

Shipper

Export Full(35%:70,000TEU)

Export MT(15%:30,000TEU)

ICD(Inland

ContainerDepot)

Reference:

Import Full Export Full Empty (MT)

Fig.I.1.1-1 Container Flow among Terminal, Shipper, Consignee and ICD

(2) Berthing Side of the Calling VesselsBerthing side of the calling vessel is mainly starboard side for the following reasons.

Generally, berthing side depends on tidal stream. Considering the existing tugboat power ofYangon Port, calling vessels come alongside the pier against the tidal stream. As almost allcontainer vessels calling this port have a deeper draft than general cargo vessels, they comeinto the port on the flood tide. Accordingly, they come alongside the pier of ThilawaTerminal on starboard-side in response to the change of current direction. If the current is

2


still flowing in the same direction, they turn round and berth at the pier along the port-side of vessels. Therefore, from the viewpoint of water side, calling vessels will berth both at starboard-side as well as port-side.

From the viewpoint of land transportation, vehicles are obliged to run on the right side of the road while trailers from the hinterland mainly come from the north of the terminal; therefore, the safest and most efficient traffic flow (less intersecting in the terminal traffic road) is for trailers to 1) come into the terminal from the north side, 2) go through the traffic road in the terminal anti-clockwise, 3) enter into the stacking yard from the north side of stacking blocks, and 4) exit from the south side of the terminal. In other words, trailers for vessel operation go round between quayside and stacking yard in a clock-wise direction.

To enhance the safety and efficiency of the vessel operation, introduction of more powerful tugboats is planned in Phase-II of the Thilawa Area Port expansion project. Accordingly, influence of tidal stream on deciding berthing side will be less in the near future. Considering the situation above, land transportation rules and traffic safety in the terminal are given preference over water side requirements, and berthing side of the calling vessel is designed at starboard side.

In case that a calling vessel is moored on portside, trailers in seaside operation can easily turn round by using trailer traffic road constructed between the stacking yard and revetment alongside the river.

(3) Cargo Handling System in the Terminal

1) Cargo handling system at quay-side

QGC (Quay Gantry Crane) system is applied as the quay-side handling system based on the findings of the foregoing feasibility study. Since the terminal operator will introduce 200-Ton MHCs (Mobile Harbor Cranes) in the early stage of the terminal operation to handle heavy weight cargoes such as construction materials and equipment for Thilawa SEZ infrastructure development, structure of quay-side apron is designed to have sufficient bearing force for 200-Ton MHCs in this project.

2) Cargo handling system in the yard

RTG (Rubber Tired Gantry Crane) system is applied for container handling in the yard (full container stacking yard) based on the findings of the foregoing feasibility study. Due to Myanmar’s customs clearance regulations, container terminals are obliged to organize import and export container cargo inspection facilities on the terminal premises. Because of the limited yard space, especially in Phase-1 stage of the project, maximum stacking height of RTG is planned at five tiers (one-over-five) to obtain required yard capacity.

The new Thilawa terminal has a high possibility of being operated as a multi-purpose terminal for handling general cargoes (imported vehicles, steel products, construction materials, machinery and equipment, etc.) rather than a container-dedicated terminal in the early stage of its operation or for a long period depending on the situation. Therefore, the new terminal should be planned flexibly so that it can serve as a multipurpose terminal, even

3


though it will be able to accommodate 200,000 TEUs of containers at the final stage. Considering this requirement, the pavement structure of half the RTG yard is designed to accommodate general cargoes while it will also be possible to store empty containers using reach stackers or forklifts.

(4) Berth Capacity

Construction of two (2) berths and installation of two (2) QGCs are planned in the Phase-I Project. Based on the following preconditions from a) to c) for berth capacity estimation, container handling capacity of the new terminal is estimated at 180,000 TEUs per berth per year with two (2) gantry cranes (See Table I.1.1-2).

To achieve the required terminal capacity (200,000 TEUs) with two berths, 20,000 TEUs of annual capacity (to make up the required capacity) is necessary to be secured by the ship gear operation at berths without QGC operation. Considering that most existing terminals in Yangon Port do not have quay gantry cranes, and more than half of the calling vessels to the port use ship’s gear for loading and unloading operations, 20,000 TEUs of annual capacity can easily be secured at berths without QGC operation, which means the total required berth capacity in Phase-I project (200,000 TEUs) can be attained with two (2) berths with two (2) QGCs.

Table I.1.1-2 Berth Capacity of Thilawa New Terminal (Phase-I)

No. Item Code Unit Handling Lot

1. Parcel Size (a) TEU/Call 1,200 (b) Box/Call 900

2. TEU Factor (c) 1.3333333 Number of Cranes, Handling Productivity, Berthing Time

3. Number of Cranes (d) Set 2

4. Handling Productivity (e) Box/Hr/Set 25

5. Crane Utilization Ratio (f) 0.9

6. Crane Operation Hours per Day (g) Hr/day 21

7. Operation Hours rate in a Day (h) (g)/24Hr 0.875

8. Crane Operation Hours per Call (i) Hr/Call 22.9

9. Average Tide Waiting Time for Sail (Including Preparation Time for Sail)

(j) Hr/Call 12.0

10. Berthing Time of Calling Vessel (k) Hr/Call 34.9 Available Berthing Time

11. Calender Days per Year (l) Day/Year 365

12. Berth Occupancy Ratio (BOR) (m) % 0.5 0.6 0.7 0.8 13. Total Available Berthing Hours per Year (n) = (l)*(m)*24 4,380 5,256 6,132 7,008 Number of Vesseles to call per Year

14. Number of Vesseles to call per Year (Call/Year) (o) = (n)/(k) 126 151 176 201 Berth Capacity for Container Handling 15. Berth Capacity (TEU/Year/Berth) (p) = (a)*(o) 150,787 180,944 211,102 241,259

1) Cargo Handling Lot: Average container handling volume per vessel call (cargo handling

lot) is 1,200 TEUs at present in AWPT which handled 300,000 TEUs in 2012. Cargo handling lot of the new Thilawa terminal is assumed at the same level even though it might

4


handle 200,000 TEUs in the future. Ratio of 20ft to 40ft containers is 2:1. Therefore TEUfactor is 1.333 at present. However, TEU factor might be increased if 40ft containervolume increases in the future; this factor is assumed as the same level in this project (SeeTable I.1.1-2).

2) Container Handling Productivity：In the foregoing feasibility study of Phase 1, containerhandling productivity of QGC is assumed at 25 Boxes/hour/crane. This productivity isattainable on the condition that a private company operates the new terminal. At Yangonriver port, pilotage services are not available at night. Therefore, average tidal waiting timefor de-berthing after completion of container handling operation is assumed at 12 hours.Considering this situation, average berthing time of container vessels is estimated at 35hours/call, where average container handling time is 23 hours/call and tidal waiting time is12 hours/call. As a result, vessel productivity per berthing hours is considered to be 25.7Boxes/berthing hours (See Table I.1.1-2).

3) Available Berthing Hours and Number of Vessels: Total available berthing hours depend onBOR (berth occupancy ratio). To avoid extreme berth congestion and long berth waitingtime of calling vessels, it usually assumed at about sixty percent (60%). Then, totalavailable berthing hours per year is assumed as 5,256 hours, and eventually the number ofcalling container vessels per year is considered to be at about 151 vessels (See TableI.1.1-2).

(5) Yard Capacity and Required Yard Facilities

1) Preconditions for planning① Container dwelling time in the yard：Refer to Table I.1.1-3

Table I.1.1-3 Container Dwelling Time

Type of ContainerAverage Dwelling Time (Day)

Targeted Dwelling Time

Present Dwelling Time

Import Full Container 7 7～12 Empty Container 14 14～15

Export Full Container 7 7～10 Empty Container 14 14～15

Reefer Container 4 4～7

② Yard Utilization Ratio：

i) Import and export full containers: 65%ii) Empty containers: 70%

Category

Stacking

Efficiency of Utilization PeakRatio(d)

Efficiencyof Yard

Utilization(e)(%)

Efficiency ofPlanned Yard

Utilization(%)

EmptySpace

(a)(TEU/Bay)

StorageCapacity

(b)(TEU/Bay)

Charge Fee(c)(%)

(c)=((b)-(a))/(b)

Full Container 1-over-5 4 30 87% 1.3 66.70% 65%1-over-4 3 24 88% 1.3 67.30%

Reefer Container 1-over-3 2 18 89% 1.3 68.40%Empty Container 70%

5


③ RTG Yard Block Size：22Bays×6 Raw×5Tiers (1-over-5)Total Stacking Capacity of RTG Yard：660TEUs

2) Yard capacity and required yard blocks for full containersBased on the above preconditions, annual yard capacity per block for import full containersis estimated to range from 22,000 TEUS to 13,000 TEUs with average dwelling times from7 days to 12 days, and that for export full containers is estimated to range from 22,000 TEUsto 16,000 TEUs with average dwelling times from 7 days to 10 days. Assuming that averagedwelling time is 7 days, required yard blocks for import and export full containers areestimated at 9 blocks (See Table I.1.1-5). However, accounting for the yard capacity ofreefer container block (estimated at about 15,000 TEUs/ year), 8 blocks for full containerswill be sufficient (See Table I.1.1-6). This estimation is based on the assumption that theaverage dwelling time at the new terminal should be in line with the international standardof 7 days.

Table I.1.1-5 Container Yard Capacity and Required Yard BlocksType of Container

Import Fu llCo ntain er (Dry)

Export FullCo ntain er (Dry)

ReeferCo ntain er

Proportion (%) 45% 45% Container Volume (TEU/Year) (a) 90 ,0 00 90 ,0 00 Container Dwelling Time (Day） 7 ～ 12 7 ～ 10 4 ～ 7

Turnover Rate （Times/Year） (b) 52.14 ～ 30.42 52.14 ～ 36.50 91.25 ～ 52.14

Stacking Capacity per Block Number of Bays （TEU) 22 22 17

Rows in a Block （Row) 6 6 6

Number of Ground Slot （TEU) 132 132 102

Maximum Stacking Height (Tier) 5 5 3

Stacking Capacity per Block (TEU) （c） 660 660 306

Yard Utilization Ratio (%) (d) 65% 65% 65%

Yard Capacity per Block (TEU/Year/Block) (e)

(e) = (b) * (c) * (d)22,000 ～ 13,000 22,000 ～ 16,000 18,000 ～ 10,000

Required Number of Blocks (f) Breakdown (f) = (a) / (e) 4.09 ～ 6.92 4.09 ～ 5.63

Required Blocks (Calculated figures） Fu ll Co n tain e r： 8 .1 8 ～ 1 2 .5 5 Reefer Co ntain er:Required Blocks (Round up figures） Fu ll Co n tain e r： 9 ～ 13 1

Table I.1.1-6 Required Yard Blocks for Import and Export Full ContainersType of Container

Import FullContain er (Dry)

Export FullContain er (Dry)

ReeferContain er

Total Volume of Full

Container (TEU/Year)

Full Container (Total) 180 ,000

Breakdown into Dry / Reefer Container (a)

165 ,000

15,000

Container Dwelling Time (Day） 7 4

Turnover Rate （Times/Year） (b) 52.14 91.25

Stacking Capacity per Block (TEU) （c） 660 306

Yard Utilization Ratio (%) (d) 65% 65%

Yard Capacity per Block (TEU/Year/Block) (e)

(e) = (b) * (c) * (d) 22,000 18,000

Required Number of Blocks (f) Required Blocks (f) = (a) / (e) Fu ll Co n tain e r： 7 .5 0 Reefer Contain er:

Required Blocks (Round up figures） Fu ll Co n tain e r： 8 1

6


3) Yard capacity of empty containers and required ground slotsBased on the above preconditions, number of ground slots for empty containers is sufficientat 220 TEUs-GS to accommodate 20,000 TEUs/year, which is 10% of the total annualcontainer handling volume of the terminal (See Table I.1.1-7). However, in the case that theproportion of empty containers continues at the present level, number of ground slots forempty container would have to be increased. For example, 329 TEUs-GS is necessary toaccommodate 30,000 TEU/year of empty containers (15% of the total volume) and 438TEUs-GS is necessary to accommodate 30,000 TEU/year of empty containers (20% of thetotal volume).

Table I.1.1-7 Required Ground Slots for Empty ContainersPreconditions (Empty Container)

Maximum Stacking Height (Tier) (a) 5

Yard Utilization Rate (%) (b) 70%

Container Dwelling Time (Day） (ｃ) 14

Turnover Ratio （Times/Year） (d)=365/(c) (ｄ) 26.1

Required Handling Volume Total Container Throughput (TEU/Year) (e) 200,000

Empty Container Ratio (%) (f) 10% 12% 14% 15% 16% 18% 20% 22%

Empty Container Volume (TEU/Year) (g)=(e)*(f) (g) 20,000 24,000 28,000 30,000 32,000 36,000 40,000 44,000

Required Ground Slot (TEU) (L)=(a2)/(d) (h) 219 263 307 329 351 395 438 482

As the proportion of full containers and that of empty containers is 100% in total, increasingof empty container proportion means decreasing full container proportion. For planning ofthe empty container ground slot capacity, required blocks and ground slots corresponding tothe variation of each proportion (full and empty containers) are shown in Table I.1.1-8. Asshown in the table, when the proportion of empty containers exceeds 15% of the totalvolume (that is to say when the proportion of full container becomes lower than 85% of thetotal volume), seven (7) yard blocks for full containers (dry container) would be sufficientand the remaining one yard block could be used for empty container storage. As a result,number of required ground slots for empty container is settled at 330 TEUs-GS, which canaccommodate 30,000 TEUs of empty containers (15% of the total volume).

7


Table I.1.1-8 Required Yard Blocks and Ground SlotsTotal Container Volume (TEU/Year) 200,000

Bre akdo wn of Co ntainer Volume Proportion of each type of Containers (%)

Full Container 90% 88% 86% 85% 84% 82% 80% 78% Empty Container 10% 12% 14% 15% 16% 18% 20% 22%

Breakdown of Container Volume (TEU/Year) Total Volume of Full Containers 180,000 176,000 172,000 170,000 168,000 164,000 160,000 156,000

Import/ Export Full Containers (a1) 165,000 161,000 157,000 155,000 153,000 149,000 145,000 141,000 Reefer Container 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000

Empty Container (a2) 20,000 24,000 28,000 30,000 32,000 36,000 40,000 44,000

Require d Fu ll Co ntainer Blocks (Dry) Container Dwelling Time (Day）

Full Container 7

Empty Container 14

Turnover Rate （Times/Year） Full Container (b) 52.1

Empty Container 26.1

Required Blocks of Full Containers (Dry) Yard Capacity of Import/ Export Full Containers per Block (TEU/Year/Block) (e) = (b) * (c) * (d)

Stacking Capacity per Block (TEU) （c） 660

Yard Utilization Ratio (%) (d) 65%

Yard Capacity per Block (TEU/Year/Block) (e) 22,369

Required Blocks of Full Containers (Dry) Number of Required Blocks (f) = (a) / (e) 7.38 7.20 7.02 6.93 6.84 6.66 6.48 6.30

Number of Required Blocks (Round up figures) 8 8 8 7 7 7 7 7

Require d Reefer Contain er Blocks 1 1 1 1 1 1 1 1

Require d Empty Container Gro und Slots Preconditions

Maximum Stacking Height (Tier) (g) 5 Yard Utilization Ratio (%) (h) 70%

Container Dwelling Time (Day） (i) 14

Turnover Rate （Times/Year） (j)=365/(i) 26.1

Requir ed Ground Slots (TEU) (k)=(a2)/(j)/{(g)*(h)} 219 263 307 329 351 395 438 482

4) Allocation of yard facilities in the terminalContainer terminal facilities of Yangon Port (Thilawa Area) are planned to be constructed onthe premises of Plot 25 of the Area which extends 212m in the north-south direction and793m in the east-west direction. On the west side of the premises, open-type detached pierand trestles bridges are to be constructed. Facility layout plan (Phase-I) of the terminal isdrawn in Fig.I.1.1-16.

① Allocation of yard facilities in the south-north direction

Allocation of yard facilities in the south-north direction is summarized in Table I.1.1-9.From the south edge of the premises to the south, 1) Border area between Plots 25 and 26, 2)South-side trailer traffic road, 3) South-side RTG crossing lane, 4) Container StackingBlocks, 5) North-side RTG crossing lane, 6) North-side trailer traffic road, and 7) Borderarea between Plots 24 and 25 are allocated.

Table I.1.1-9 Allocation of Yard Facilities (from North to South Direction) Name of Facility Intended Use Dimension (m) Proportion

1 Border area between Plot 25 and 26 Green belt 5.0 2%

2 South-side trailer traffic road Traffic road for trailers （4 Lanes x 3.5m = 14.0m） 14.0 7%

3 RTG Crossing Lane (South-side) RTG crossing lane, Space for safe RTG operation 16.0 8%

4 Container Stacking Block Container Stacking Area

142.5 67% （22 Bays x 6.5m/TEU－Container Clearance(0.5m) = 142.5m)

5 RTG Crossing Lane (North-side) RTG crossing lane, Space for safe RTG operation 14.5 7%

6 North-side trailer traffic road Traffic road for trailers （3 Lanes x 3.5m = 10.5m） 10.5 5%

7 Border area between Plot 24 and 25 Culvert, Pipe line space, Electric power cable space, etc. 9.5 4%

Total 212.0 100%

In this plan, width of trailer road is unified at 3.5 m per lane. A pitch of bay (dry container)in the stacking blocks is designed at 6.5m per TEU in the north-south direction, and a pitch

8


Borde

r betw

een T

railer

Traff

ic Lan

e and

RTG C

rossin

g Lan

e

of row is designed at 2.5 m per lane in the east-west direction. As a result, length of stackingblock becomes 142.5 m (22 TEUs). In the border area between Plots 24 and 25, a culvert,pipe line space, electric power cable space is allocated. Detailed dimensions of the RTGcrossing lanes are summarized in Table I.1.1-10 (South-side of RTG Blocks) and TableI.1.1-11 (North-side of RTG Blocks). Positions of RTG crossing lanes in connection withyard stacking blocks and detailed dimension and position of concrete slabs for wheel travel(in RTG crossing) are drawn in Fig.I.1.1-2 (South-side of RTG Blocks) and Fig.I.1.1-3(North-side of RTG Blocks).

Table I.1.1-10 Dimensions of RTG Crossing Lane (South-side of RTG Blocks) Breakdown of Dimensions of RTG Crossing Lane (South-side) Distance (m)

1 Safety Clearance in RTG Cross Travelling 0.5 2 Outside Dimension of RTG Crossing Lane 10.4 3 Safety Clearance in RTG Cross Travelling 0.5 4 Margin between Cross Travelling RTG and Tractor Head 0.6 5 Distance from Tractor Head to the Southern Edge of Stacking Block 4.0

Total 16.0

In these drawings, outside dimension of RTG crossing lane is designed at 10.4 m, where thefollowing preconditions are assumed; 1) Number of wheels of REG: 8 wheels, 2) RTGwheel base: 6.4 m, 3) Wheel distance in crossing travel: 2.5 m, 4) Width of RTG tire: 0.5m,

5) Safety allowance of RTG in crossing: 0.5m.

17.0 16.5 16.0 15.5 15.0 14.5 14.0 13.5 13.0 12.5 12.0 11.5 11.0 10.5 10.0 9.5 9.0 8.5 8.0 7.5 7.0 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0

16.00（ RTG Crossing Lane (South-side)）

5.70 10.30 11.40

10.40 (Outside Dimension of RTG Crossing Lane)

4.00

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5

0.5

1.50

5.20

4.00 1.00

1.50

2.40 1.20 1.20

5.20 4.00

0.5 0.6

4.0 m （ Distance from Tractor Head to Container Edge）

0.75 0.75 0.5 0.5 0.75 0.751.25 1.25

2.50

1.95

2.70 3.20 3.70

5.20 Wheel Position of RTG in Cross Travel

6.40

3.20 3.20

2.50

N

20’ container

1.25 1.25

1.00 1.00

0.5 0.5

1.70

2.20 4.20 4.70

1.25

1.25

20’ container

0.5 0.5 0.5 0.5

5.25m

5.25m

20’ container

Maximum RTG Width in Cross Traveling ： 10.5 m

0 1 2 3 4 5 6 7 8 9 10

Dist ance fr om T r actor He adto T r ailer K ing-pin ： 5.00m

2.50

1.00

Position of Trailer King-pin

Half of the Maximum Width of RTG in Ope ration (10.5m) =5.25m

Fig. 7.3.1-2 Position of RTG Crossing Lane (South-side of Yard Block)

Dimension of the RTG crossing lane of the south-side of RTG blocks, which is the distancefrom the border of the trailer traffic road to the southern edge of stacking block, is designedat 16.0m. This dimension is based on the distance (4.0m) between nose of the tractor head

9


Bord

er b

etw

een

Trai

ler

Traf

fic La

ne a

nd R

TG C

ross

ing

Lane

and the southern edge of the stacking block (See Fig. I.1.1-2).

Table I.1.1-11 Dimensions of RTG Crossing Lane (North-side of RTG Blocks) Breakdown of Dimensions of RTG Crossing Lane (North-side) Distance (m)

1 Safety Clearance in RTG Cross Travelling 0.5 2 Outside Dimension of RTG Crossing Lane 10.4 3 Safety Clearance in RTG Cross Travelling 0.5 4 Margin between Cross Travelling RTG and RTG in Container Handling 0.6

Distance from the Northern Edge of RTG in Operation to the Northern 5

Edge of Stacking Block 2.5

Total 14.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5 9.0 9.5 10.0 10.5 11.0 11.5 12.0 12.5 13.0 13.5 14.0 14.5 15.0

1.0 1.5 2.0 2.5 3.0

14.50m（ RTG Crossing Lane (North-side)）

8.80 5.70

2.50

2.5 m （ Distance

from the Northern Edge of RTG in Operation

0.6

0.5 4.00

11.40

10.40m (Outside Dimension of RTG Crossing Lane)

5.20 5.20

2.40

4.00

0.5

to Container 1.50 1.00 1.50 1.20 1.20 Edge）

0.75 0.75 0.5 0.5 0.75 0.75

1.25

N

1.25 1.95

2.70 3.20 3.70 5.20

Wheel Position of RTG in Cross Travelling

6.40

20’ container

2.50 1.25 1.25

3.20 3.20

1.25

2.50

1.25

20’ container

20’ container

0.5

0.5 1.00

0.5

1.00

0.5

0.5

0.5

1.70 2.20 4.204.70

Half of the Maximum Wid th of RTG in Operation (10.5m) =5.25m

0 1 2 3 4 5 6

5.25m

5.25m

Maximum RTG Width in Cross Traveling ： 10.5 m

Fig.I.1.1-3 Position of RTG Crossing Lane (North-side of Yard Block)

② Dimension of the RTG crossing lane of north-side of RTG blocks, which is the distancefrom the northern edge of the stacking block to the border of the trailer traffic road, isdesigned at 14.5 m. This dimension is based on the distance (2.5 m) of the northern end ofRTG which is operating at the northernmost container of the stacking block and thenorthern end of the stacking block (See Fig. I.1.1-3).

③ Allocation of yard facilities in the east-west directionAllocation of yard facilities in the east-west direction is summarized in Table I.1.1-12.From the west (river side) to the east (public road side) edge of the premises, 1) Detachedpier and trestles (106.6 m), 2) Revetment, traffic road and container stacking yard (459.2m), 3) Customs inspection area and traffic road (111.5 m), 4) CFS, gate, administrationbuilding and utility facilities (175.5 m), and 5) Border area beside public road (46.6 m) are

10


12 Space beside CFS Parking area 8.513 CFS and main gate CFS and main gate 104.014 Passing road beside CFS Passing road for outside trucks to CFS 18.5

2 Trestle Bridge106.6 12%

Connecting bridge 66.6 7%Container stacking yard, Traffic road, Revetment

3 Traffic road Traffic road, Revetment, Storage of DG containers 28.8 3% 4 Full Container Yard (RTG Yard) Container storage (Full / Reefer) 272.0 30% 5 Passing way beside maintenance area Passing way for trailers 4.5 1% 6 Equipment maintenance area Equipment maintenance, Container repairing,

Storage for heavy cargoes60.0 459.2 7% 51%

7

Passing way beside MT Yard

8 Emptycontainer yard (MT)

allocated. Allocation of yard facilities in the east-west direction is summarized in TableI.1.1-12. Allocation of the full container yard blocks (RTG Blocks) and ground slotallocation in empty container yard are addressed in more detail in the following sections.

Table I.1.1-12 Allocation of Yard Facilities from West to East DirectionName of Facility

Detached Pier and TrestleIntended Use Distance* (m) Proportion

1 Berth and Apron Sea-side container handling operation 40.0 4%

Passing way for trailers and equipment

Emptycontainer yard, Second gate8.0

1% 74.4 8%

9 South-North main traffic road (2) Traffic road for trailers （3 Lanes） 11.5 1%

Customs inspection area, Traffic road Installation area for X-ray inspection machines,

10 Customs inspection yard Trailer parking space related to the customs 96.5 11%inspection 111.5 12%

11 South-North main traffic road (1) Traffic road for trailers （4 Lanes） 15.0 2%CFS, Gate, Administration building and Utility facilities

175.5

1%12%2%

20%

15 Administration building, Cooling tower, Water supply facilities, Power station, etc.Border area beside public road

44.5 5%

16 Border area, etc. Green belt, Passage, others 46.6 5% 5%

合計 899.4 100%Note: * Figures represent the dimensions at the northern edge of Plot 25

③ Allocation of full container yard blocks (RTG Blocks)Full container yard (RTG yard) has eight (8) dry container stacking blocks and one (1) reefercontainer stacking block, each with a width of 26.0m (total 234.0m), eight passing lanes,each with a width of 4.0m (total 32.0m), which are allocated between one dry containerblock and another, and two (2) utility lanes, each with a width of 3.0m (total 6.0m).Therefore, total width of full container yard is 272.0m (See Table I.1.1-9-12). Each dry orreefer container block and passing lane composes one module of which width is 30.0m(26.0m+4.0m=30.0m). Each module is allocated in the east-west direction (See Fig.I.1.1-4).

11


1.5m1.5m 5.0m 22.0m 1.5m5.0m22.0m1.5m 5.0m

Fig. I.1.1-4 Allocation of RTG Blocks

Dimensions and allocation of each module and RTG traffic lanes are illustrated in Fig. I.1.1-5.Dimension of RTG traffic lane is designed to be 1.5m in width, where the followingpreconditions are assumed; 1) Number of wheels of REG: 8 wheels, 2) RTG standard span:23.5m, 3) Width of RTG tire: 0.5m, 4) Safety allowance of RTG in travelling: 0.5m.

Maximum Width 26.0m Passing Lane 4.0m

Maximum Width 26.0m

1.1m Span 23.5m

1.4m 6.5m

1.1m

Span 23.5m

1.4m

22.0m 1.5m 5.0m

1.5m 22.0m

23.5m 6.5m 23.5m

Fig.I.1.1-5 Dimensions and Allocation of RTG traffic Lanes

④ Ground slot allocation in empty container yardNumber of ground slots of empty container is planned at 330TEU-GS. As empty containerground slot allocation is flexible, terminal operator may change the slot arrangement asnecessary in the stage of actual operation. Allocation model of the ground slots is shown inFig. I.1.1-6.

12


Fig.I.1.1-6 Allocation of Empty Container Ground Slots

(6) Required Gate Facilities and Lane Allocation

1) Preconditions of Gate Planning（See Table I.1.1-4-2）

① Annual container terminal capacity：200,000 TEU ② TEU Factor：1.33 ③ Gate operation days per year：287 days ④ Gate operation hours per day：12 hours ⑤ Peak Ratio：1.4 ⑥ Gate productivity per hour：15 transactions/ hour ⑦ Gate productivity per day：180 transactions/day

2) Required lanes

Required lanes at the gate of the new terminal, which is based on the containers and trucks to be handled at the gate (Boxes per year) and operational conditions described in the Table I.1.1-13, are estimated as below.

A) Regarding import full (laden) containers, four (4) lanes are required for registration of

import full container delivery (two (2) lanes) and for delivery of import full containers (two (2) lanes).

B) Regarding export full (laden) containers, two (2) lanes are required for reception of export full containers.

C) Regarding empty containers, three (3) lanes are required for registration of empty containers to be picked up (one (1) lane), for delivery of empty containers (one (1) lane) and for reception of empty containers for loading (one (1) lane).

Number of required lanes at the gate of the new terminal is summarized in Table I.1.1-13. In total, nine (9) lanes are required.

However, there are some lanes which can be used commonly and thus the number of required lanes could be reduced by effective re-allocation of each gate function to the lanes. Specifically, registration of empty chassis at the in-gate (for registration of import full container delivery (2 lanes) and for registration of empty containers pick-up (1 lane)) can be carried out using two (2) common-use lanes. Gate registration time of import full container delivery will be shortened because cargo document assessment process is conducted by the customs in the terminal rather than at the gate. As a result, eight (8) lanes in total will be

13


sufficient.

The estimated number of lanes and result of re-allocation of each gate function issummarized in Table I.1.1-14.

Table I.1.1-13 Required Lanes at the Gate (Phase-I) Prese nt Proportions Targe ted Proportions

Preconditions Container Terminal Capacity （TEU/Year） 200 ,000 200 ,000

Proportions of each type of containers

Import Full Containers 45% 45% Import Empty Containers 5% 5% Export Full Containers 35% 45% Export Empty Containers 15% 5%

TEU Factor 1.33 1.33 Gate Operation Days per Year (Day） *1 287 287 Gate Operation Hours per Day (Hour） 12 12 Gate Operation Efficiency （Transaction/Hr/Lane) 15 15 Gate Productivity per Day （Transaction/Day/Lane) 180 180 Gate Productivity per Year （Transaction/Year/Lane) (a) 51,660 51,660 Peak Factor (b) 1.4 1.4

Co n tain e rs to be h an dle d ( B o x/ Ye ar） 150 ,000 150 ,000 Containers to be handled at the Gate (Box/Year) 225 ,000 225 ,000

Imported

Containers (Discharged)

Impo rt re late d Gate Operatio ns 150 ,000 150 ,000 Registration of Import Full Container Delivery (In-gate) 67,500 67,500 Delivery of Import Full Containers (Out-gate) 67,500 67,500 Registration of Empty Container pick-up (In-gate) 7,500 7,500 Delivery of Empty Container for Export Cargo Stuffing (Out-gate)

7,500 7,500

Export Containers (Loading)

Export re late d Gate Operatio ns 75,000 75,000 Reception of Export Full Containers (In-gate) 52,500 67,500 Leaving Empty Chassis after Releasing Export Full Containers (-)

- - Reception of Empty Containers for Loading (In-gate) 22,500 7,500 Leaving Empty Chassis after Releasing Empty Containers for Loading (-)

- -

Containers to be handled by In/Out-gate (Box/Year or Hour) (c) Box per Year Box per Hour

Box per Year Box per Hour

Containers to be handled at the In -gate 150 ,000 61 150 ,000 61Empty Chassis Registration of Import Full Container Delivery (In-gate) 67,500 27 67,500 27

Empty Chassis Registration of Empty Container pick-up (In-gate) 7,500 3 7,500 3

Full Cont. Reception of Export Full Containers (In-gate) 52,500 21 67,500 27

Empty Cont. Reception of Empty Containers for Loading (In-gate) 22,500 9 7,500 3

Containers to be handled at the Out-gate 75,000 30 75,000 30Full Cont. Delivery of Import Full Containers (Out-gate) 67,500 27 67,500 27

Empty Cont. Delivery of Empty Container for Export Cargo Stuffing (Out-gate)

7,500 3 7,500 3

Total Contain ers to be han dled at the Gate 225 ,000 91 225 ,000 91

Re qu ire d N u mbe r o f Gate Lan e s （ Re late d to th e Co n tain e rs） Required Lanes Required Lanes((c)*(a)/(b)) Round-up ((c)*(a)/(b)) Round-up

Total (In-gate and Out-Gate) 6.10 9 6.10 9In-gate Total 4.07 6 4.07 6Empty Chassis Registration of Import Full Container Delivery (In-gate) 1.83 2 1.83 2Empty Chassis Registration of Empty Container pick-up (In-gate) 0.20 1 0.20 1

Full Cont. Reception of Export Full Containers (In-gate) 1.42 2 1.83 2Empty Cont. Reception of Empty Containers for Loading (In-gate) 0.61 1 0.20 1

Out-gate Total 2.03 3 2.03 3Full Cont. Delivery of Import Full Containers (Out-gate) 1.83 2 1.83 2

Empty Cont. Delivery of Empty Container for Export Cargo Stuffing (Out-gate)

0.20 1 0.20 1

Note＊１ Gate Operation Days per Year＝365Days－52Weeks x１．５（Sunday and Saturday）＝２８７Days

14


船積み空コンテナ搬入(In) 輸入実

入りコンテナ搬出受付 (In) 輸出貨

物用空コンテナ搬出受付(In) 輸出実入り搬入 (In)

輸入実入りコンテナ搬出 (Out)

輸出貨物用空コン搬出(Out) 空シャーシ退出(Out)

Table I.1.1-14 Planned Number of Gate Lanes and Lane Allocation Present Proportions Targeted Proportions

Allo

cate

dG

ate

Num

ber

Number of Planned Gates (for Containers)

Numbe r of Requ ire dLan e s

Numbe r of Requ ire dLan e s

Plan ned Ro u n d- u pFigu res Plan ned Ro u n d- u p

Figu res Total (In-gate and Out-Gate) 6.10 8 6.10 8

In-gate Total 4.07 5 4.07 5 Empty Chassis Registration of Import Full Container Delivery (In-gate) 1.83 2 1.83

0.20 2 6,7

Empty Chassis Registration of Empty Container pick-up (In-gate) 0.20 Full Cont. Reception of Export Full Containers (In-gate) 1.42 2 1.83 2 4,5 Empty Container Reception of Empty Containers for Loading (In-gate) 0.61 1 0.20 1 8

Out-gate Total 2.03 3 2.03 3 Full Cont. Delivery of Import Full Containers (Out-gate) 1.83 2 1.83 2 2,3

Empty Container Delivery of Empty Container for Export Cargo Stuffing (Out-gate)

0.20 1 0.20 1 1

Empty Chassis Leaving Empty Chassis - - - - 0

Based on the estimated number of gate lanes and lane allocation summarized in Table I.1.1-14above, gate layout and truck flow lines around the gate, as well as lane allocation of the gate(allocation of each gate functions to each lane) is illustrated in the following figures, Fig.I.1.1-7 and Fig. I.1.1-8.

#0 #1 #2 #3 #4 #5 #6 #7 #8 #9

Registration of Import Full Container Delivery (In-gate)Registration of Empty Container pick-up (In-gate)Reception of Export Full Containers (In-gate)

Reception of Empty Containers for Loading (In-gate)

Delivery of Import Full Containers (Out-gate)Delivery of Empty Container for Export Cargo Stuffing (Out-gate)

Leaving Empty Chassis

↑Figure I.1.1-8 Lane Allocation at the Gate←Figure I.1.1-7 Gate Layout and Truck FlowLine around the Gate

(7) X-Ray Inspection and Customs Facilities

1) Cargo inspections in the PortBefore transporting export containers to the terminal or extracting import containers fromthe terminal, exporter or importer have to declare cargoes for clearance at the customs office(central office) in Yangon. After obtaining the required permission at the customs head office,container cargoes must clear inspection by the customs officer at the terminal (CFS customs)for shipping or withdrawal of the cargo.

15


Preventive Group Staff Officer

C.E.O.

E.O.

Preventive Group

C.E.O.

Cargo Owner

Preventive Group

Staff Officer

C.E.O. E.O.

Cargo Owner

Preventive Group

C.E.O

Cargo Owner

Preventive Group

C.E.O.

Preventive Group

C.E.O

No Assessment Group

A.D.

(Officer In charge)

a) Customs procedures for export container cargoes At the time of export container stacking in the yard, exporter (shipper) applies for container cargo inspection with the relevant documents, including permission of the customs head office, to the CFS customs at the terminal. After assessment of the documents, CFS customs instruct the exporter on the inspection procedures to be followed. There are three categories in the procedures;

① Green Category: The container cargoes are cleared without any additional inspection or

examination (cleared only by document assessment). ② Yellow Category: Container cargoes are obliged to undergo an X-ray inspection.

(cleared by document assessment and X-ray inspection) ③ Red Category: Container cargoes are obliged to undergo a physical examination at the

CFS. (cleared by document assessment and physical examination)

After completion of the procedures in each category, containers are sealed by the CFS customs and sent to the stacking yard. The customs seal is checked by customs at the time of loading. At present, about ninety percent (90%) of the export containers fall under the Yellow Category, while the remaining ten (10%) of the export containers either fall under the Red or Green Categories. The customs procedures of export container cargo inspection at the terminal are illustrated in Fig. I.1.1-9.

Export Container Clearing Process

Head Office (Cash/Check)

export Declaration Form (Cusdec-1)

Attached with Necessary Documents

Tru c k En te rin g & Parkin g at Te rmin al Parkin g Are a Are a

Assessment Group Application

A.D. Checking Documents

(Officer In charge) Examination Order or Inspection Order

Red (Physical Examination)

( < 1 0 % )

Assessment

Result

( 9 0 % )

Green （Cleared by Document Checking)

( < 1 0 % )

Ph ysic al Examin atio n

Yellow (X-Ray Inspection)

X- Ray I n spe c tio n Note down Contents Note down Contents

Report Back Report Back

Note: AD: Assistant Director

CEO: Chief Examination Officer

DG: Director General

DDG: Deputy Director General

Assessment Group

Appraisers(鑑定）

Found Correct

Re-assessment compared with examination data

Report to Higher

Authorized Persons

Yes

Wharf Approval

D.G.

D.D.G

Director (Export & Import Div.)

Order to take Action

Se al su c h Co n tain e r Re le ase f ro m Cu sto ms Se al su c h Co n tain e r

Re le ase f ro m Cu sto ms

Carryin g Co n tain e r in to Te rmin al Yard Stac k Co n tain e r in Te rmin al Yard

Ch e c k Cu sto ms Se al o n B o ard Ch e c k Cu sto ms Se al o n B o ard

Fig I.1.1-9 Procedures of Export Container Cargo Inspection

Truck flows in the terminal for customs inspection, including terminal gate, X-ray inspection, and physical examination in CFS, as well as parking areas for the trucks arranged by the exporters, are shown in Fig. I.1.1-10.

16


(100

%)

(100

%)

Truck & Container Flow Chart for Customs Inspection

【Export Container】

Seal is checked on Board

(100%) Container Stacking Yard

(Releasing)

(10%)(90%)

(Parking area for application of export)

Parking(for Application,

(Parking area for permission)

Parking for

DocumentChecking &

gettingInstruction)

Yellow(90%) X-Ray

Inspection

(10%)

Re-assessmet& Permission

(Seal)

Red or Green (Green)Customs Office

Gate

Note:Empty ChassisLaden Chassis

CFS

(10%)

Physical Examination &Permission

(Seal)

Fig. I.1.1-10 Container and Truck Flow for Customs Inspection（Export）

b) Customs procedures for import container cargoesAt the time of extracting an export container from the terminal, importer (consignee) appliesfor container cargo inspection with the relevant documents, including permission of thecustoms head office, to the CFS customs at the terminal. After assessment of the documents,CFS customs instruct the exporter on the inspection procedures to be followed. There arethree categories in the procedures which are the same as export procedures described above.After completion of the procedures in each category, importer can proceed to the next step.

The customs procedures of import container cargo inspection at the terminal are illustratedin Fig. I.1.1-11. Truck flows in the terminal for customs inspection, including terminal gate,X-ray inspection, and physical examination in CFS, as well as parking areas for the trucksarranged by the importers, are shown in Fig. I.1.1-12.

17


Preventive Group

Staff Officer C.E.O. E.O.

Picking up Containers from Container Yard

Preventive Group (Customs Officer)

Terminal Gate Clerk

Picking up Containers from Container Yard

No Assessment Group A.D.

(Officer In charge)

Import Container Clearing Process (Port Customs)

(Container Terminal)

Head Office Cash

Import Declaration Form (Cusdec-1) Attached with Necessary Documents

Assessment Group Application A.D. Checking Documents

(Officer In charge) Examination Order or Inspection Order

Assessment Result

Green （Cleared by Document Checking)

( 7 0 % ) (X- Ray I n spe c tion: 2 0 % , Ph ysic al Examin ation: 1 0 % )

Yellow (X-Ray Inspection: 20%) or Red (Physical Examination:10%)

X- Ray In spe c tio n Ph ysic al Examin atio n Note down Contents Report Back

Assessment Group Appraisers(鑑定）

Re-assessment compared with examination data

Found Correct Report to Higher Authorized Persons

Note: AD: Assistant Director

Yes

Wharf Approval

D.G. D.D.G

Director (Export & Import Div.)

Order to take Action

CEO: Chief Examination Officer DG: Director General DDG: Deputy Director General

Preventive Group C.E.O.

Cargo Owner

Se al su c h Co n tain e r De live ry f ro m Cu sto ms

(Terminal Gate)

Check Customs Seal at Gate

Fig. I.1.1-11 Procedures of Import Container Cargo Inspection

Check S.L Seal

At present, more than fifty per cent (50%) of import containers fall under the Red Category. However, Myanmar customs are planning to reduce the proportion of this category to ten percent (10%) by introducing NACCS in 2016. The proportion of each category of import containers are expected to become as follows in the near future;

① Green Category: seventy percent (70%) ② Yellow Category: twenty percent (20%) ③ Red Category: ten percent (10%)

18


(70%

) (2

0%)

Truck & Container Flow Chart for Customs Inspection

【 Import Container】

(Green: 70%) CY

(Picking up import Container)

(20%) (Parking area for permission (for import))

Parking area for X-ray inspection (for import) Parking for (Yellow:20%)

(Red: 10%)

Parking (for

X-Ray)

(20%) X-Ray Inspection

Appraisal & Permission

(Seal)

(Parking area for import/ MT Chassis)

Parking (for Application,

Document Checking &

(Green: 70%, Yellow: 20%, Red: 10%)

Customs Office

(10%)

getting Instruction) Red

(10%)

CFS

Gate Physical Examination & getting Wharf Approval

(Seal)

Note:

Empty Chassis

Laden Chassis

Fig. I.1.1-12 Container and Truck Flow for Customs Inspection（Import）

Capacity and Required Facilities for Container Cargo Inspection According to the customs inspection procedures described above, required facilities for container cargo inspection and their capacity are estimated in this section, which include X-ray inspection, physical inspection and parking slots for trailers arranged by the exporters and importers.

2) Preconditions for facility planning ① Container volume and breakdown of each type of container: Refer to Section I.1.1.1 (1)

「Preconditions for Phase-I Facility Plan」) ② Customs operation days per year: 287 days/year ③ Customs operation hours per day: Normal days:7.5 hours/day (9:00-16:30）、Peak

days:10 hour/day（9:00-19:00） ④ TEU Factor：1.33 ⑤ Peak Ratio：1.3 ⑥ Daily container volume to be handled：Refer to Table I.1.1-15 「Daily Container Flow」

⑦ Inspection Rate by each category ： Refer to Table I.1.1-16 「 Inspection Rate by Category」

19


Table I.1.1-15 Daily Container Flow

Preconditions

TEU/Year

Box/Year Box/Day(average)

1. Terminal Capacity 200,000 150,000 5232. TEU Factor 1.33 3. Customs Operation Day (Days/Year) Full Time Bases 287 4. Customs Operation Hour (Hours/Day) (9:00-

16:30 (7.5Hour))Monday-Friday 7.5 Saturday Half of Mon-Fri 5. Peak Ratio 1.3 6. Proportion Import Full 45% 90,000 67,500 235Import Empty 5% 10,000 7,500 26Export Full 45% 90,000 67,500 235Export Empty 5% 10,000 7,500 26Total 100% 200,000 150,000 523

Table 7.3.1-16 Inspection Rate by Category Import Container Export Container(1) Green : Document Check 70% 0%(2) Yellow : X-Ray Inspection 20% 90%(3) Red : Physical Examination 10% 10%

3) Required number of X-ray machines：（Refer to Table I.1.1-17)① Required number of containers to be inspected：Average:259 Boxes/day（336 Boxes/day

on peak days） ② Operating hours of X-ray inspection：7.5 hours/day（10 hours/day on peak days）

③ X-ray inspection efficiency (per hour)：12 Boxes/hour④ X-ray inspection efficiency (per day)： 90 Boxes/day（120 Boxes/day on peak days）

⑤ Required number of X-ray machines (Phase1)：3 Sets

Table I.1.1-17 Required number of X-ray machines (Phase-I) Average Inspection Capacity Inspection Capacity at peak time

Import Export Import Export(1) DailyThroughput (Full Container) 235 235 235 235(2) Inspection Ratio 20% 90% 20% 90%(3) Number of Containers (Average: Box/Day) 47 212 47 212(4) Number of Inspection Container at peak 61 275(5) Peak Ratio 1.3 1.3(6) Total Number of Containers to be Inspected 259 336(7) Operation Hour (Hours/Day) 7.5 10.0(9:00-16:30) (at peak: 9:00-19:00)(8) Hourly Inspection Capacity (Boxes/Hour) 12 12(9) Daily Inspection Capacity (Boxes/Day) 90 120(10) Required Inspection Machines 2.9 2.8

4) Required physical examination facilities：（Refer to Table I.1.1-18）

① Required number of containers to be inspected：Average:48 Boxes/day（61 Boxes/day onpeak days）

② Operating hours of physical examination：Normal days:7.5hours/day, Peak days: 10hours /day）

③ Average Examination hour：1hour/ Box/ (Examination group)④ Capacity of physical examination per day：Average:7.5 Boxes/ day/(Examination group)

（Peak days: 10 Boxes/ day/(Examination group)⑤ Required number of examination groups：７Group⑥ Bay occupation hours in physical examination：3～4 hours/Box（2 cycles/bay/day）

⑦ Required number of examination bays：30 Bays（15 Bays for import containers、15 Baysfor export containers）

Physical examination bays are installed on the apron of CFS. Inspected cargoes arede-stuffed and some cargoes are stored in the bonded area in CFS.

20


Table I.1.1-18 Required Capacity of Physical Examination Facilities Inspection Capacity at peak time

Import Export(1) Daily Throughput (Full Container) 235 235(2) Inspection Ratio 10% 10%(3) Number of Containers (Average: Box/Day) 24 24(4) Number of Inspection Container at peak 31 31(5) Peak Ratio 1.3 1.3(6) Total Number of Containers to be Inspected 61(7) Operation Hour (Hours/Day) 7.5

(9:00-16:30) (at peak: 9:00-19:00)(8) Cycle Time of Berth (Hours/ Cycle) 3(9) Bay Utilization (Cycles /Day) 2(10) Required CFS Inspection Bays (Slots) 30.6

5) Required parking slots for customs inspection in the terminal：(Refer to Table I.1.1-19)As described in container and truck flow for customs inspection（Fig. I.1.1-10 (for export)and Fig. I.1.1-12 (for Import), three types of parking areas are required for trailers in thecustoms inspection area in the terminal as follows;

① Parking area for empty trailers (chassis) which are parked in the area waiting for

application of cargo inspection (import), document assessment and receivinginstructions by CFS customs. After receiving instructions pertaining to the inspectioncategory, these trailers enter the yard to pick-up import containers and proceed to thenext process according to the instruction.

② Parking area for trailers with export full containers which are waiting for applicationof cargo inspection (export), document assessment and receiving instructions by CFScustoms (in most cases they will be instructed to move to the X-ray inspection area).After the X-ray inspection, these trailers go to the next parking area and wait forpermission of export.

③ Parking area for trailers with full containers which have undergone the X-rayinspection and are waiting for final approval of yard stacking (in the case of exportcontainers) and withdrawal from the terminal gate (in the case of import containers).

Traffic volume of trailers in each parking area, estimated average parking hours andrequired parking slots of each type of parking area is summarized in Table I.1.1-19.

Table I.1.1-19 Required Trailer Parking Capacity Import Container Export Container

(for picking upcontainers)

(for X-ray) (after X-Ray) (for X-Ray) (after X-Ray)

(1) Daily Container Volume for Customs Clearance 235 235(2) Parking Truck Ratio 100% 20% 20% 100% 90%(3) Traffic Volume (Boxes/Day) 235 47 47 235 212(4) Traffic Volume at peak (Boxes/Day) 306 61 61 306 275(5) Peak Ratio 1.3 1.3 1.3 1.3 1.3(6) Operation Hour (Hours/Day) 8.0 7.5 7.5 8.0 7.5

(first arrival 8:30-final arrival16:30) (7) Average Parking Hour (Hours/Truck) 0.5 0.5 0.4 0.5 0.4(8) Rotation per day (1/Day) 16 15 18.75 16 18.75(9) Required Parking Bays 19.1 4.1 3.3 19.1 14.7

(a) EmptyChassis for picking up Import Containers 19(b) Trucks with Export Containers for stacking and Import Containers for X-Ray 23(c) Trucks with Import & Export Containers after X-Ray 18

Total Number of Slots 60

21


6) Required space and layout plan of CFS There are two main functions required for CFS in the new terminal. One is ordinary CFS functions such as stuffing or de-stuffing LCL cargoes into or from containers. The other is physical examination of import or export container cargoes by CFS customs. Therefore, CFS should have special structures (aprons) for the physical examination. The main features of CFS planned to be installed in the customs area of the new terminal are as follows.

a) Planning preconditions and main specifications of CFS 1. Cargoes to be handled in CFS：Import LCL cargoes 2. Cargo volume：4,500 TEU/year（5% of import full container）

3. Storage capacity：86.5 TEU（Dwelling time: 7 days、Warehouse operation (storage) days：365 days/year, Turnover rate 52 times/year）

4. Number of container de-stuffed per day：（De-stuffing operation days per year：287 days、

TEU factor：1.333、Peak ratio：1.3） (1) Average：11.8 Boxes/day（Gang operation hours: 8 hours/day）

(2) Peak days：15.3 Boxes/day（Gang operation hours: 12 hours/day）

(3) De-stuffing hours per box：2.0 hours/Box (4) Number of required gangs：3 gangs（for de-stuffing）

(Note：Three (3) gangs are necessary for loading operation on consignees’ trucks.) (5) Turnover rate of parking bays：4 times/day on average ～5 times/day on peak days (6) Number of required parking bays：3～４Bays（Actually 10 bays are planned for

safety）

5. Cargo volume per TEU：26.4 ㎥/TEU（2.35m(W)x 5.90m(L)x 2.38m(H)x 80%） 6. Pallet dimensions:

(1) EU VMF Pallet (2 Pallets/ Rack) ① Dimensions：1,200(W)x 1,000(D)x 1,200( H)= 1.44 ㎥

② Pallets/TEU：18.33 ③ Number of required pallets：1,586 Pallets ④ Number of required ground slots (４tierｘ 2 Pallet/module)＝198.25 GSs

(2) ISO International Container Pallet (2 Pallets/ Rack) ① Dimensions：1,100(W)x 1,1000(D)x 1,200( H)= 1.45 ㎥

② Pallets/TEU：18.2 ③ Number of required pallets：1,574 Pallets ④ Number of required ground slots (4 tiersｘ2 Pallet/module)＝196.75Gs

(3) Japanese Standard Pallet (1 Pallet/Rack）

① Dimensions：1,500(W)x 1,200(D)x 1,200( H)= 2.16 ㎥

② Pallets/TEU：12.2 ③ Number of required pallets：1,056Pallets ④ Number of required ground slots (4 tiers ｘ1 Pallet/module)＝264Gs

7. Number of required ground slots in CFS： (1) Assuming that 50% are EU Type Pallet and 50% are Japanese Standard Pallet (2) Number of required ground slots：232 GS (264x 0.5 +198.25 x 0.5= 231.125)

8. Standard rack module and block size：

(1) Dimensions of module：Width 2.5m x Depth 1.25m x Height 1.5m (2) Number of module in each block（12 modules x 2 rows）＝24 GSs = 96 Modules (3) Dimensions of Block：30m (L) x 2.5m (D) x 6m (H)

22


9. Number of required blocks：9.66 Blocks（232/24=9.66）

(1) Number of planned blocks ：10 Blocks

b) Layout plan of CFSLayout plan of CFS is drawn in Fig. I.1.1-13.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

1 Roof 2

3 1

Roof

1

Trailer (Container)

4

5

6

7 28

9

10 311

12

13

14 415

16

17 518

19

20

21 622

23

24 725

26

27

28 829

30

31 932 Parking Slot: : 3.5m (Pitch)33

34

1035

36

37

38 1139

40

41

1242

43

44

45 1346

47

48

1449

50

51

52

53

54

55

Parking Slot ：4.0m (Pitch)

7m

Roof

（CFS Customs Office）＋（Terminal Delivery Section）

LCL Cargo Bonded Area (720 ㎡）

Electric Reach Stacker Working Area (Width：3.0m)

20

19 LCL Cargo Storage Rack (2.5mx 30.0m)


18 1 2 3 4 5 6 7 8 9 10 11 12 17


16

LCL Cargo Storage Rack (2.5mx 30.0m)

7m

2 Trailer (Container)

Trailer (Container) 3

Trailer (Container) 4


Trailer (Container)

6


5m

Trailer (Container)

8 Parking Slot：3.5m (Pitch)


10Trailer (Container)


12Trailer (Container)


Trailer (Container)

14

Border

Truck-side operatio n under the Roof

56

157

10 Parking Slots 58

59

60

261

62

63

64

365

66

67

68

469

70

71

72

573

74

75

76 6

Working Space for Container Stuffing & De-

stuffing (Inspection,

Tally)

Working Space for Container Stuffing & De-

stuffing (Inspection,

Tally)

15


14 1 2 3 4 5 6 7 8 9 10 11 12 13


12

11 LCL Cargo Storage Rack (2.5mx 30.0m)


10 1 2 3 4 5 6 7 8 9 10 11 12 9


Working Space 1for Truck Loading & Unloading (Inspection,

Tally) 2

3

4

Working Space 5for Truck Loading & Unloading

(Inspection, Tally) 6

Parking Slot：3.5m (pitch)

12 Parking Slots

77 8

78 7

79

7LCL Cargo Storage Rack (2.5mx 30.0m)

80 7 Electric Reach Stacker Working Area (Width：3.0m)

81 882

83 6 1 2 3 4 5 6 7 8 9 10 11 12 84 5

885

Working Space 9for Truck

86

87

88 4

Electric Reach Stacker Working Area (Width：3.0m) Loading & Unloading (Inspection,

Tally) 109 Working Space

89 for Container 3 90 Stuffing & De- 91 stuffing 92 (Inspection,

10 Tally) 93

LCL Cargo Storage Rack (2.5mx 30.0m)

ElectricReach Stacker Working Area (Width：3.0m) 11

94 2 1 95 1

96

97

2 3 4 5 6 7 8 9 10 11 12 12


98

99

100 Border

Battery

Stand

5m 7m 3m 30m 3m 7m

Lampway

(Tentative)

10m

16m 22m

Apron Dimension of Warehouse(36m) Apron

Dimension of CFS Building (50m)

Fig. I.1.1-13 Layout Plan of CFS

23


I.1.1.2 Layout Plan of the Terminal Facilities (Phase-I)

Layout Plan of the Terminal Facilities (Phase-I) based on the aforementioned study result (refer to Section I.1.1.1 “Required Port Facilities and Operation Plan”) is shown in Fig.I.1.1-16. Basic operational conditions to be considered for facility allocation planning are summarized as follows;

1) To utilize empty space between revetment alongside the river and stacking yard;

Development of four (4) berths with a total length of 800m from Plot23 to Plot26 is the basic requirement for Thilawa area port expansion project. At the same time, as the face line of the quay wall of each berth is located not alongside a curved river bank but follows a straight line, the distance between the quay-wall face and river bank differs depending on the Plot. From the viewpoint of terminal planning, quay-wall face line and RTG yard block are usually located in parallel. According to the result of berth allocation plan of the project, the distance between the revetment of the river bank and the western edge line of the RTG block is 28m at the northern end of Plot 25 and 42m at the southern end of Plot 25. In the Phase-I project the vacant lot between revetment and RTG stacking yard is utilized for trailer traffic (north-south direction) and special container storage yard. This road will be important as it can be used by seaside trailers to turn around when container vessels are berthed along her portside, and it connects the berth in Plot 26 and RTG yard in Plot 25.

2) Location of Reefer Container Yard Adjacent to the Maintenance Yard；

Operation and maintenance of reefer containers’ electric power system is likely to be managed by the same technical department as that of equipment maintenance facilities. Therefore, it would be better for both facilities to be located adjacent to each other.

3) Location of Container Cargo Inspection Facilities in the Terminal；

Under Myanmar customs regulations, all the import and export container cargoes are required to be inspected by a customs officer dispatched to the terminal. The related facilities such as X-ray inspection facilities and CFS for physical examination are required to be located in the terminal. Cargo inspection for import and export containers is performed between gate and stacking yard. Technical basis of the required customs inspection facilities and their locations are addressed in Section I.1.1.1 (7).

4) Installation of the Second Gate and Security Area responding to SOLAS Convention；

Due to the container cargo inspection conducted between the in-gate and stacking yard, instruction of yard location (destination) to the truck driver at the in-gate and operation order to the RTG operator on a real time basis, which is important for effective terminal operation, would be difficult. Therefore, at the time of completion of customs inspection or at the time of a truck entering into the stacking yard, instructions to the driver will be necessary. For this purpose, installation of a second gate is planned at the entrance of the stacking yard. Security Area responding to SOLAS Convention (the International Convention for the Safety of Life at Sea) is established on the extending line (in the south and west line) of the

24


second gate.

5) Container and Truck Flow in the Terminal

Generally, a standardized handling system is adopted at container terminals and the cargo flow is simple. However, due to the import and export cargo clearance rule that cargo must be inspected in the terminal, container cargo flow in the new terminal is somewhat complicated. There are three categories of inspection, i.e., 1) Green Category where container cargo is cleared only by assessment of declared documents by CFS customs, 2) Yellow category where X-ray inspection is necessary in addition the to document assessment, and 3) Red category where physical examination is necessary in addition to the document assessment. Proportions of containers by inspection category adopted as the operational conditions for facility planning in the Phase-I project are summarized in Table I.1.1-16. In particular, although about fifty percent (50%) of import containers fall under the Red category at present. Myanmar Customs Office is aiming to reduce this figure to ten percent (10%) in the future to simplify cargo inspection procedures and to facilitate foreign trade. Considering this situation, targeted proportions of containers by inspection category for Phase-I layout planning are shown in Table I.1.1-16.

Import and export container and truck flow in the terminal are illustrated in Fig.I.1.1-14 (import) and Fig.I.1.1-15 (Export).

25


輸入コンテフロー

200,000 TEUs per year (Phase2)

200,000 TEUs per year (Phas1)

輸出コンテフロー

200,000 TEUs per year (Phase2)

200,000 TEUs per year (Phas1)

1

1

2 2

3 3

100%

4 4

5 5

6 6

100%

7

8

9 Reefer Container Yard

7

8

9 Reefer Container Yard

100%

Bulk Yard

Maintenance Area

100%

###

Bulk Yard Maintenance Area

90% 10%

MT Container Stacking Yard

30% 30%

100% 100%

2nd Gate

MT Container Stacking Yard

10% 10%

2nd Gate

20%

Customs Inspection Area

20%

100%

X-Ray

20%

10%

Customs Inspection Area

100%

X-Ray

90%

10%

70%

+

30%

10%

100%

10%

100%

10%

10

10%

10%

0 1 2

3 4 5

6 7 8 9

10%

CFS

0 1 2 3 4 5

6 7 8 9 CFS

10%

輸入実入搬出

輸入実入引取受付

海側シャーシー

空シャーシー

実シャーシー

輸出用空コン搬出

輸出実入搬入

海側シャーシー

空シャーシー

実シャーシー

Fig.I.1.1-14 Import Container Flowin the Terminal (Phase-I)

Fig.I.1.1-15 Export Container Flowin the Terminal (Phase-I)

26


Fig.I.1.1-16 Facility Layout Plan of the Thilawa Area New Terminal (Phase-I)

27


I.1.2 Design Review of Berth and Facilities

This involves the review of design conditions for the berth and facilities of Yangon Port Plot 25 and 26 in the Urgent Development Plan of Thilawa Area (Phase-I).

1) Review

This design review of port facilities covers berth, trestle, revetment, ground improvement, yard, and lighting facilities.

2) Standards and Codes ① Design Standards for Port Facilities

Since no technical standards on port facilities or the like are yet available in Myanmar, the design of port facilities is based on the Technical Standards and Commentaries for Port and Harbor Facilities in Japan. Beyond that, international standards such as the British Standards (BS), PIANC Guidelines, or the Euro Code are also referred to if needed.

② Industrial Standard : The Japanese Industrial Standards (JIS) are applied.

3) Design Confirmation ① Design Conditions

Depth of Berth D.L. -10.0 m

Design Depth D.L. -11.0 m Over dredging 1.00 m

Deck Height D.L. +7.50 m

Width 40 m

Slope 0%

Length 400 m 1 berth @ 200 m×2

② Berth Planning Conditions a) Design Vessel

Type of Vessel Container Vessel

(Max.20,000 DWT) Barge

(Non-self Propelled ) Pusher Barge

(100 GT)

Length overall (Loa) 177 m 60 m 30 m

Length between perpendiculars (Lpp)

165 m

Molded breadth (B) 27.1 m 14 m 7 m

Depth 14.2 m 2.43～3.05 m 3.5 m

Full load draft (d) 9.0 m

(Full load: 1,000 TEU) 1.50～2.00 m

Container carrying capacity

1,000 TEU

Berthing velocity (V) 0.10 m/s

28


b) Cargo-handling Equipment on Berth 1. Gantry Crane

The gantry crane shall have a rated lifting capacity of 40.6 t, outreach of 35 m, and crane rail span of 16 m. It shall be of the seismic isolator type.

Figure I.1.2-1 Example of Gantry Crane for 20,000 DWT Container Ship

2. All-terrain Crane

For loading and unloading of general cargo in the yard and on the berth, the all-terrain crane shall consider a maximum lifting load of 200 t.

1st Axis 2nd 3rd 4th 5th 6th

Figure I.1.2-2 Example of All-Terrain Crane for 200 t

29


Maximum Lifting Load on the Berth Deck The maximum lifting work will be on the 18,000 DWT class cargo ship, estimated from the design berth depth. The load condition will be as shown in the following Figure I.1.2-3. ・Working radius： 16.0 m ・Maximum loading： 41.3 t

Figure I.1.2-3 Working Plan

3. Cargo-handling Equipment (Truck, Tractor Trailer, Reach Stacker, Rubber Tired Gantry) (i) Truck

The truck, which assumes the T25 load, shall have the loading shown in Figure I.1.2-4. It will have a gross vehicle weight of 25 t (250 kN) and will be classified as “heavy trucks” based on the specifications for highways and bridges.

Contact Area

Figure I.1.2-4 Truck Load

30


(ii) Tractor Trailer The loads of the tractor trailer were set as shown in Figure I.1.2-5 with reference to the sketches in the technical standards of port facilities.

33.33kN/Axis 145.81kN/Axis 118.73kN/Axis 118.73kN/Axis

Contact Area

Figure I.1.2-5 Tractor Trailer Load

Figure I.1.2-6 Tractor Trailer Coupling (H19 Port Standard, p. 420)

31


Table I.1.2-1 Specifications of the Tractor Trailer (H19 Port Standard, p. 421) Parameter

M

axim

um L

oadi

ng

G

ross

Wei

ght

Load Distribution

Fron

t Ove

rhan

g

Trac

tor W

heel

base

Off

set

Trai

ler W

heel

base

Ta

ndem

Whe

elba

se

Rea

r Ove

rhan

g

Trea

d

Wid

th

Le

ngth

5t

h W

heel

R

ear W

heel

Target Container (A) m

(B) m

(C) m

(D) m

(E) m

(F) m

(G) m

(H) m

(L) m

t t kN kN

20ft (standard)

1.40 3.18 0.54 9.95 1.55 0.82 1.85 2.49 14.87 24.00 6.54 87.60 186.00 27.90

20ft (ISO fully loading)

1.40 3.18 0.54 9.51 1.32 x 2 0.74 1.85 2.49 14.32 30.48 6.54 107.80 237.10 35.17

40ft (standard)

1.40 3.18 0.54 9.66 1.55 2.29 1.85 2.49 16.03 24.00 6.54

87.10 182.30 27.47

40ft (ISO fully loading)

1.40 3.18 0.54 9.52 1.32 x 2 1.99 1.85 2.49 15.60 30.48 6.54

107.50 236.90 35.12

20ft cum 40ft (standard)

1.40 3.18 0.54 9.53 1.55 2.44 1.85 2.49 16.01 23.60 6.54

87.60 185.10 27.80

20ft cum 40ft (ISO fully loading)

1.40 4.37 0.18 9.51 1.31 1.96 1.85 2.49 16.45 30.48 8.21 111.70 237.10 1.32 x 2 35.57

(iii) Reach Stacker

The reach stacker shall have a lifting capacity of 45 t and be of a 5-stacking height type .

Figure I.1.2-7 General Arrangement of Reach Stacker

32


(iv) Rubber Tired Gantry (RTG) The RTG will have a rated lifting capacity of 40.6 t and of the six rows with 5-stacking height type

Figure I.1.2-8 General Arrangement of RTG

4) Design Conditions of Berth ① Site Conditions a) Mounting Load ・Normal Condition： 20 kN/m2

・Berthing Condition： 10 kN/m2

・Working Condition： 10 kN/m2

・Seismic Condition： 10 kN/m2

b) Geographical Condition The geographical condition is the same as that in the overall plan.

c) Design Working Period and Corrosion Prevention ・Design service life : 50 years ・Corrosion prevention

Anticorrosion paint protection : The steel jacket and steel pipe pile above LWL -1.0 m shall have anticorrosion paint protection.

Cathodic protection : The steel pipe pile below LWL -1.0 m shall have cathodic protection. The service life shall be 50 years.

d) Design Section Plan The designs of the yard and berth are calculated for two areas in order to carry out the design section planned as shown in Figure I.1.2-9 in consideration of port planning, berth

33


line, design depth, bathymetry survey data and soil conditions.

Berth Design Section Area I (Shallow area : downstream river and central berth): four blocks (A,B,C,D) Area II (Deep area : upstream river berth): one block (E)

Figure I.1.2-9 Area Block Plan and Bathymetry Condition

② Berth Design Summary

The berth structure (length: 400 m, width: 40 m) has a jacket structure composed of steel beam members and bearing pile made of steel pipe pile with diameter of 1,300 mm. The berth line is located in the riverfront section of Plot 25 and Plot 26.

It has become a steel jacket structure that consists of four units (20 m × 40 m). One block will have an 80 m unit, which was considered due to the uniformity of the bearing capacity, the less number of support steel pipe piles, and the advantages of a jacket structure in construction work. There are crane rails on the bearing piles.

a) Deck Slab

The deck slab will be of precast concrete with fixing crane accessory anchoring. b) Crane Rail

Design Crane rail spacing will be 16 m. c) Width of Berth

Berth apron width is estimated from typical area requirements as summarized below. ・Clearance between the side rail of the gantry crane and the berth edge: 2.5 m ・Gantry crane rail span: 16.0 m ・Clearance between the landside rail and hatch cover placing area: 3.5 m ・Maximum width of hatch cover area: 12.2 m ・Rear side passage: 4.0 m ・Clearance behind the rear side passage: 1.8 m

From the above, the required width of berth is determined to be 40 m.

34


Figure I.1.2-10 Berth Widths

5) Design Conditions of Berth Attachment

① Ship External Force Conditions

a) Design of Fender 1. Ship Berthing Force

It was identified that 20,000 DWT class container ship is the largest vessel.

2. Use of Rubber Fender and Calculation of Performance (i) Landing of Vessel

Figure I.1.2-11 shows the vessel landing at the berth.

35


Container Ship

Fender 800H

Barge

* D：Depth df：

Full load draft

Figure I.1.2-11 General Vessel Landing Drawings

(ii) Clearance

As the superstructure is jacket type, it will be mounted at same spacing on the position of the bearing pile.

② Design of Bollard

a) Traction Under the technical standards of port facilities, traction of the vessel is set according to its gross tonnage.

b) Bollard Spacing The 700kN Type bollard installation layout considering 20 m spacing is shown in Figure I.1.2-12.

36


Figure I.1.2-12 Bollard Layout

③ Design of Ladder

Three ladders, in total, are installed in front of the upstream, downstream, and center of berth.

④ Design of Berth Utility

The water pits are designed in eight places, in total, with 50 m spacing in front of the berth.

6) Design Conditions of Trestle

① Design Conditions a) Load Design ・Normal Condition: 20 kN/m2

・Seismic Condition: 10 kN/m2


c) Design Life and Anti-corrosion ・Design life : 50 years ・Anti-corrosion : Anti-corrosion paint and all steel pipe piles above LWL -1.0 m are applied

with anti-corrosion paint. ② Cargo-handling Equipment Load Conditions of the Trestle

The trestle design conditions are based on the following vehicular traffic: ・200 t all-terrain crane ・Truck ・Tractor trailer ・45 t reach stacker

37


③ Outline of Design The reinforced concrete structure at the upstream and downstream section comprising a bottom plate member, concrete pile cap, and beams are situated in the central portion. Three bridges will be established as follows: Trestle No. 1 at the upstream portion with length of 54 m and width of 15 m; Trestle No. 3 at the downstream portion with length of 60 m and width of 15 m, and Trestle No. 2 at the central part with length of 66 m and width of 20 m. For the trestle, the yard revetment reference height connecting to the quay structure considers a berth design level of DL = 7.5 m and quay design level of DL = 8.0 m.

7) Design Conditions of Quay Wall Structure ① Design Conditions a) Load Design ・Normal Condition: 20 kN/m2



c) Design Life and Anti-corrosion ・Design Life : 50 years ・Anti-corrosion : Anti-corrosion Paint and all steel pipe piles and steel sheet piles are

applied with anti-corrosion paint at above LWL -1.0 m. d) Cargo-handling Equipment Load Conditions of the Quay Wall

The quay wall design conditions are considered as the following vehicular traffic: ・200 t all-terrain crane ・Truck ・Tractor trailer ・45 t reach stacker

② Outline of Design

The quay structure is connecting the steel sheet piles at the upper capping concrete. Behind the trestle part, the road for passing vehicles is a concrete slab structure, which is configured in the steel pipe pile and sheet pile. Yard height is D.L. +8.0 m. Seawall protection is designed as concrete blocks with weight of 0.5 t and local panels from a height of D.L. +6.0 m is designed as seawall front.

8) Design Conditions of Ground Improvement ① Methodology of Ground Improvement and Ground Condition

The soil in the project area has more than 20 m thick soft clay layer. Subsidence due to construction of embankment on soft ground has been a concern in the district. Without ground improvement, the subsidence associated with the fill load generated over time will result in significant residual settlement amount at the time of the opening of the port. The proven accelerating consolidation construction methods are adapted.

38


② Ground Improvement Design Conditions a) Ground Improvement Design Criteria

The design conditions and design criteria are shown in Table I.1.2-2.

Table I.1.2-2 Summary of Design Conditions and Design Criteria

Item Design Conditions and Design Criteria 1. Acceptable Factor of

Safety

Short-term stability: Fsa≧1.10 (During construction) Long-term stability: Fsa≧1.30 (Compression)

2. Horizontal Coefficient of Consolidation

Horizontal coefficient of consolidation, Ch = 1×Cv (Cv: vertical coefficient of consolidation)

3. Allowable Residual

Settlement

Compaction degree of 90% or more in primary compaction. 20% or less residual settlement 20 years after the start of operation (including secondary consolidation). Acceptable residual settlement amount of 30 cm or less 20 years after the start of operation.

4. Design Load

Container yard area (including the bulk yards): q＝50 kN/m2 Building area: q＝20 kN/m2

5. Design Level Design Level: CDL +9.00 m(Sub base level CDL +8.50 m, and pavement thickness 50 cm)

6. Consolidation Period Six months 7. Effective Area by

Surcharge Settlement Effective area by surcharge settlement: clay layer thickness (45°)

b) Load Conditions and Construction Area

Phase 1 is divided into two areas in terms of land use. The following is the configuration of the load conditions in each area: ・Area-1: Five Full-stack Container Area (Including Bulk Yards)

This area includes the outdoor store containers. The container load is set at 50 kN/m2 (Full Container Storage Yard Area in Figure 7.3.2-21).

・Area-2: Building Area The building load, with the exception of the pile foundation, is assumed at 20 kN/m2 (Building Area in Figure 7.3.2-21).

c) Geographical Condition The geographical condition is the same as that in the overall plan.

d) Design Working Period Design service life ： 50 years

9) Yard Pavement Design Conditions

① Ground Improvement Design Conditions a) Load Design ・Normal Condition： 20 kN/m2

・Seismic Condition： 10 kN/m2

39



c) Use Conditions The design service life of port facilities is 50 years.

d) Cargo-handling Equipment Loading Conditions of the Yard The following vehicular types are used for the yard design conditions: ・200 t all-terrain crane ・Truck ・Tractor trailer ・45 t hanging reach stacker ・40.6 t RTG

② Design Conditions of Pavement

The pavement section of the yard has been determined using the yard plan below. Pavement Classification Container Yard ・RTG Yard Work

Running and moving lane / (concrete pavement) ・Container Storage

Stacking plate + crushed stone pavement Stacking plate + concrete pavement

・General Cargo Yard : Concrete pavement ・Tractor-trailer Traffic Zone :

Traveling road / (ICB pavement) Class C; 3,000 or fewer traffic frequency Traveling road / (ICB pavement) Class E; 5,000 or fewer traffic frequency Traveling road / (ICB pavement) Class D; 5,000 or more traffic frequency

・Empty Container Storage Concrete pavement (Class E)

・Pedestrian Passage Interlocking block pavement (Class L)

Each pavement structure is as shown in Figure I.1.2-13.

40


Figure I.1.2-13 Pavement Structure

41


10) Design Conditions of Yard Drainage ① Ground Improvement Design Conditions

a) Load Design ・Normal Condition: 20 kN/m2


b) Geographical Condition The geographical condition is the same as that in the overall plan. Rainfall is assumed to be up to 200 mm/hour.

c) Use Conditions The design service life of port facilities is 50 years.

d) Cargo-handling Equipment Loading Conditions The following vehicular types are used for the yard design conditions. The catch basin and ditch cover will involve a T-25 type of grating cover. ・200 t all-terrain crane ・Truck ・Tractor trailer ・45 t hanging reach stacker ・40.6 t RTG

② Yard Drainage Overview ・Drainage area: 15.5 ha ・Main Drainage: Large U-shaped drainage ditch ・Sub-Drainage: U-shaped drainage ditch ・Pipe and drain: PC pipe ・Catch basin: RC structure

I.1.3 General of port architectural facility

General of port architectural facilities in the Urgent Development Plan of Thilawa Area (Phase-I): plot 25 and 26 are shown as following.

1) Buildings a) Codes and Standards

Applicable codes, regulations and standards for architectural works are as follows; Myanmar National Building Code 2012 (Draft) : MNBC 2012 Building Code of Japan ・Japanese Industrial Standards (JIS)

The structures of buildings are designed and calculated and the structural materials are applied in accordance with the following standards.

・Standard Building Law of Japan (SBL) for the main buildings (No.1 to5 &. 8). ・Uniform Building Law 1993 (UBC93) for the other buildings. ・Japanese Industrial Standards (JIS)

b) Design Concepts About design concepts of building, the following have been taken into consideration for

42


building design. ・Simple plan of the buildings ・Simple shape of the buildings ・Simple structure of the buildings ・To shorten the construction period ・Corrosion proof and maintenance free ・Intake of natural day-light and natural ventilation c) Architectural

The following buildings are included in building works of the Terminal.

Table I.1.3-1 List of Buildings in the Terminal

No Building Floor Area (m2) Number of Workers Story

1 Administration Building 3,436 115 (139) 5

2 Container Freight Station (CFS) 6,606 60 1+M

3 Terminal gate 1,538.5 18 (x 2shift) 1

4 2nd gate 476.5 4 (x 2shift) 1

5

Maintenance Shop (1) 720 16

1+M

Maintenance Shop (2) 576 1

6 Container Repair Shop 630 10 1

7 Fuel Station 156.5 2 1

8 Marine Workers’ Lounge 450 3 (x 2shift) 2

9 Security Post 69 4 (x 2shift) 2

10 Power Supply Facility 720 - 1

11 Water Supply Facility 500 - 1

12 Water Supply Tower 20 - - Refer Substation, AMP Substation - - (Equipment) Total 15,898.5 264 (349) -

(Note) M: Mezzanine, RC: Reinforced Concrete, S: Steel, RC+S: RC Column or Superstructure + Steel Roof Structure

d) Structural

The classification of the building works, structural and foundation types for this project are shown in Table I.1.3-2 below:

43


Table I.1.3- 2 Structural Outline of Buildings Designed in the Project.

No. Building Structure Foundation Type

1 Administration Building SC PHC pile foundation

2 Container Freight Station (CFS) Building SC PHC pile foundation

3 Terminal Gate RC+SC Spread direct foundation

4 2nd Gate RC+SC Spread direct foundation

5 Maintenance Shop (1) Maintenance Shop (2)

SC

PHC pile foundation

6 Container Repair Shop SC PHC pile foundation

7 Fuel Station

RC+SC

Spread (continuous ) direct foundation

8 Marine Worker Lounge RC+S Steel Pipe pile foundation

9 Security Post

RC

Spread (mat) direct foundation

10 Power Supply Facility SC PHC pile foundation

11 Water Supply Facility SC PHC pile foundation

12 Water Supply Tower SC PHC pile foundation 13

Refer Substation, AMP Substation

RC, foundation

Spread (mat) direct foundation

i) Administration Building

Administration Building shall have the function of administrative and operational center of the terminal, and various offices shall be located inside the building. Administration building is located at the entrance near the main road and is planned to look out in both direction over the access roads and the terminal beyond the stacked containers. The height of stacked containers are 12m in case of 5 layers of 8 feet container. The control & planning office is situated on 3rd floor at floor level, 12.85m above GL±0 . Banquet & observation is situated on 4th floor at floor level, 16.8m above GL±0.

ii) Container Freight Station

Container Freight Station (CFS) consists of 2 separate spaces, one is Bonded Cargo Warehouse managed by Customs and the other is Domestic Cargo Store managed by Operator. The ground floor of Domestic Cargo Store and Bonded Cargo Warehouse is elevated by 1.5m to deliver freight easily from container/ truck to apron.

iii) Terminal Gate and 2nd Gate

Terminal Gate is planned for checking all incoming and outgoing container traffic. Total of 8 lanes with 5 lanes for incoming traffic and 3 lanes for outgoing traffic are allocated at the Gate. Besides these 8 lanes, 2 truck lanes are allocated for bulk cargo traffic at both far sides

44


of the Gate. 2nd Gate is planned for checking all incoming traffic to the port terminal yard whether the trucks have passed the appropriate inspection and/or documentation procedure or not. 3 lanes for container truck and 1truck lane for bulk cargo are allocated.

iv) Indoor Maintenance Shop & Covered Maintenance shop

Maintenance shop consists of 2 buildings, Maintenance Shop (1) and Maintenance Shop (2). These 2 buildings locate parallel with circulation space in between. Maintenance Shop (1) is provided for the repairing of small equipment, such as electrical circuits of the parts, tractors, forklifts, etc. in indoor workshop. In order to provide large span open space for working area, steel superstructure system is adopted. Maintenance Shop (2) is provided for the repairing of large size machines, such as reach stacker, empty container lift, chasses, etc. The building has almost the same structure as Maintenance Shop (1), however it has covered roof only and no wall is provided.

v) Marine Workers Lounge

This is a two storied building constructed at the river shore. The steel structure is employed to the roof to reduce weight and to cover the long span.

vi) Other Buildings

Security post is a small building. The structure is designed of RC structure and the foundation is of direct mat foundation. Fuel Station is a building without external walls and the roof is light. The structure is designed in the same manner as Terminal Gate. Water Supply Facility, Power Supply Facility and Container Repair Shop are designed in structures taking into consideration for long span, eave height, sloped roof and/or construction period. The foundation are designed as pile foundation because of heavy equipment except Container Repair Shop foundation, which is a direct mat foundation because of small live load.

e) Structural Design of Superstructure

The superstructure of the almost buildings are designed of steel structure by the following reasons. ・The almost buildings have the large space of long span of 36m in CFS, 20m in Terminal

gates, 18m in Maintenance Shops, etc. and eaves height are comparatively large, ・Administration Building is of 5-stories, middle rise.

f ) Design of foundation The buildings are planned mainly at the east side of Plot No.25, while Marine Worker Lounge is situated near the west side of trestle. As shown in the soil profile below, the four different soil layers are observed from top to bottom at the building site. The thickness of 3RD soil layer, Silty SAND is decreased at the center area, while increased at west site area, where MARIN WORKER LOUNGE is planned.

45


Table I.1.3-3. Sample of Typical Soil Profile of Boring Record

Elevation Soil Layer Thickness of

Layer

N-value

Relative density Consistency

DL+6.26m DL-14.84m

CLAY

21.10 m

1 to 4

Very soft to soft

DL-18.34 Silty CLAY 3.50 m 14 to 19 Very stiff to stiff

DL-19.09 Silty SAND 0.75 m 13 to 25 Medium dense

(DL-23.24) SAND ≧4.15 28 to 40 Medium dense to dense

2) Utilities a) Water Supply System

Incoming water from the public water network will be once stored in the above ground water storage tank. Thereafter the water storage tank, two (2) potable water distribution pipe networks; one for buildings use and one for ship water supply will be utilized due to its different operational requirements. Potable water for the building occupants and sanitary use will be distributed by a gravity piping system through an elevated water tank to the sanitary fixtures, pantries, kitchens, washing areas and etc., in the various building and areas as per the overall site layout and architectural plans. A dedicated water supply pipe for ship will separately be provided by pressure pipe system for supply potable water directly to ship from the water storage tank by dedicated water supply pumps.

・Water Storage Tank (requirement of water storage are 480 m3 and 160 m3) ・Elevated Water Tank (capacity of 40 m3) ・Water Supply Pumps (Two sets of the water supply pump; one set for water supply to the

elevated tank and one set for ship water supply) ・Water Distribution Mains (Two potable water distribution mains; one for building use and

one for ship water supply)

b) Sewage and Wastewater System

Sewage and wastewater from the sanitary equipment at the various buildings will be collected by the gravity flow sewage piping system and discharged into the storm water drainage system after treatment by the sewage treatment plant(s).

Sewage and wastewater discharged from the various buildings will be collected by the gravity piping system. A central sewage treatment plant requires long horizontal pipe run since each facilities are widely spread in all-over the site area, therefore, it is recommended to utilize decentralized sewage treatment plant system. The utilization of three (3) sewage treatment plants are proposed with the treatment capacity:

3) Electronic System a) Concept i) Dual Incoming To realize the redundancy, two (2) incomings with respective transformer will be provided

46


as a back-up for possible trouble on one of them. Each of the incomings is separated strictly to make them independent.

ii) Back Up

For essential loads such as gantry cranes, reefer container and port security systems, diesel generators are provided them. Load shedding scheme is applied to minimize the generator capacity using magnetic contactors and timers.

iii) Switchgears

The switchgears are provided with proper use as the following and specified based on the short circuit calculation and JIS standard strictly. VCB for 33 KV, VCB for 6.6 KV, ACB for LV main and MCCB for LV branch.

iv) Protection Relay

Such relays as over current, low voltage, over voltage to protect the electrical facilities are basically switchgear built-in or multi-function combined type. Coordination among the relays are considered.

v) Main Transformer Capacity

Two sets of main transformer’s capacity are able to supply power for both of phase I and II. The capacity of phase I is decided to totalize individual loads with considering each category of demand factor.

vi) Generator Capacity

Generator capacities are calculated with totalizing individual loads and their operation. Such factors as engine bearing and voltage drop at the starting time are not considered.

vii) Power Factor Correction

Power factor of the 6.6KV BUS is controlled by static capacitor with serial reactor to keep it 0.95 and suppress the harmonic distortion with protecting the capacitor itself.

viii) Electrical Power

Power receiving could be expected from Tanglin S/S (230KV/33KV).

b) Load Calculation

Total of load calculation is estimated at 5,000 KVA for buildings, reefer, STS Crane and safety system. Transfers are installed at 3 locations in Power Supply Facility, around Reefer Container Yard and around Trestle. Generator is set in Power Supply Facility for Phase I.

47


I.1.4 Terminal facility

1) Design and Basic Policy

To ensure the safety of the terminal, it is designed to be enclosed in a fence-restricted area, and will involve management at the gate. Mechanical monitoring using camera and human monitoring by security personnel shall be carried out to monitor the inside and outside of the restricted areas.

2) Basic Design

The equipment corresponding to the security measures are shown in Table I.1.4-1 below.

Table I.1.4-1 Security Equipment and Design Policy

Measure Security Equipment ① Limiting access to the port facility Fence and gate ② Monitoring of access to the port facility CCTV surveillance camera monitoring system ③ Monitoring of port area CCTV surveillance camera monitoring system ④ Suspicious person and car monitoring CCTV surveillance camera monitoring system ⑤ Emergency announcement Announcement and communication system ⑥ Power failure, data saving during blackout Uninterruptible power supply (UPS), backup generator ⑦ Inspection of container cargo X-ray system

3) Concept of Each Security Equipment ① Fence and Gate ・Gate control is necessary to determine who enters and exits the port. In addition, a

surrounding fence shall demarcate the restricted area. ・The fence shall be 2,400 mm high, and the outrigger shall be 450 mm long. ・Spikes shall not be installed on the fence after the control gate to avoid psychological

repression. ・The fence will be installed along the existing roadside in order to block the sight of

outsiders.

Figure I.1.4-1 Net Fence and Block Wall (Reference)

48


② CCTV Camera Surveillance System and Public Announcement System It is not possible to monitor all suspicious persons or intruders from the fence since there may be many possible blind spots especially when the containers are loaded. Thus, these spots shall be monitored by CCTV along the fence of the restricted zone in the yard. This monitoring system will ensure the security of the restricted area. The CCTV camera will automatically locate and record the behavior of persons coming in and out of the fence. ・It shall be installed in the terminal speaker in preparation for emergency. ・The monitor to be used for monitoring, recording device, and microphone shall be placed

in the administration building.

Figure I.1.4-2 CCTV System (Reference)

Figure I.1.4-3 Public Announcement System (Reference)

③ Lighting Equipment

Lighting system is designed based on the layout, installation method, and type of lighting to satisfy the minimum average illumination levels to be applied in each area. Referring to Japanese standards, the minimum average illumination level for each area is as shown in Table I.1.4-2.

49


Table I.1.4-2 Illumination of Each Facility Facility Illumination (lx)

Apron Lighting 50

Container Yard 20

Access in the Yard 20

Security Fence 3

a) Lighting Quantity

Table I.1.4-3 Lighting Quantity Container Yard Security Fence Access in the Yard Height 30 m 12 m 8 m Quantity 8 units 33 units 8 units

Apron lighting will be installed for the gantry cranes.

Figure I.1.4-4 Lighting Equipment (Reference)

50


I.1.5 Cost Estimate Summary

Outline of the cost estimation of the Urgent Development Plan of Thilawa Area, which is to be financed by a yen loan, is summarized in the below. Explanations in regard to tax and price escalation are added after the summary table.

1) Outline of Facilities

Outline of the port facilities are shown in the below.

Table I.1.5-1 Outline of facilities

Package Work Item Quantity Civil and Buildings

Jetty Length 400m, Width 40m

Trestle length = about 70m, width = 20m,

3 units

Land preparation: (reclamation and soil improvement)

17ha

Pavement and drainage 14ha

Buildings (Administration Building, CFS etc.)

L.s.

X-ray Inspection Facility 2 units

Utilities (Security, electronic, water supply etc.)

L.s.

Cargo Handling Equipment Procurement

STS Crane 2 units

RTG 6 units

Reach stacker 3 units

Forklift 2 units

Trailer and Chassis 6 units

2) Outline of Cost Estimate ① Basic Policy

This project is financed by a yen loan, and the contractor will be selected through international competitive bidding. It is assumed that the contractor is an international contractor.

② Cost Estimate Item

The total cost is calculated direct cost of civil & Buildings Construction Work and Cargo Handling Equipment Procurement and contingency, tax and consultant fee for the construction estimate.

51


③ Payment of Tax Many taxes were revised in April 2012, and many more revisions are expected to come.

④ Currency

Exchange rate for local and forign is 1 US$ = 83.64JPY and 1US$ = 858Kyat. Procurement of Kyat items in domestic is exchanged to USD for cost estimation.

⑤ Time of Cost Estimation

January 2013

3) Project Cost Total project cost including contingency is estimated at 17.1 billion Japanese Yen (equivalent to 200 million USD). However results of the addition study by JICA study team, the total project cost will be increased.

I.1.6 Comments on Phase 1 Port Planning

The following are the comments on Phase 1 facilities planning:

1) Terminal Yard

Visual operation of the container yard and berthing work at berth confirmation is difficult because there is no height and distance away from the administration building. JICA Survey Team propose to install a monitoring camera tower in the container yard near the center of the berth and yard side for the purpose of controlling and monitoring the container yard from the administration building. This is because the management of the container yard would become more complicated due to the expected increase of container and bulk materials in the future.

2) Terminal facility

The lighting system of LED lamps can reduce the cost given their lifetime cost. JICA Survey Team propose that LED lamps will be equipped for they are alternatives replacement of low energy equipment being used worldwide.

3) Administration Building a) Control room is placed on the 4th floor. This elevation is not enough if the Operator wants to

get eye observation of all container yards because the height of stacked container is over his eye’s level from this control room when 5 containers stack on. There is one possibility that the Operator shift this control room to the 5th floor of Penthouse in order to get eye observation.

b) When both container yards of Phase-I and Phase-II are managed by same operator, all information such as gate information and yards security information by CCTV have to be sent to this Control room for correctively control.

4) Container Freight Station a) At the Domestic Cargo Store also the Bonded Cargo Warehouse, the handling work is

52


planned to manage both way of import cargoes and export cargoes inside of limited store space. When volume of handling cargo increased in future, both way handling becomes complicate to manage.

b) The planed CFS is located on the east-west axis in order to check by one gate for in-coming and out-going at the truck side also trailer side. Contrary, if CFS is located on the north-south axis, truck side and trailer side could access one way easing any traffic accident.

5) Terminal Gate a) Terminal Gate is planned with 8 lanes, 5 lanes of in-gate and 3 lanes of out-gate. Checkers

Booth or Clerk Booth which are 2m width is provided on each island 3m width. When the Operator introduces full automatic Gate Inspection System, any booth on island are not necessary but one Control room is provided beside of the Terminal Gate. In this case, the width of one lane is reduced to 5 m width approximately, 3.5m of lane and 1.5m of island. This berth is not only for container cargo, but also for handling general cargo including overweight and oversized materials in the future. JICA Survey Team propose straight traffic line from the berth to the gate, and appropriate gate design for oversized vehicles.

6) 2nd Terminal Gate

The additional gate is planned with 3 lanes second in-gate for secondary check point. If the Operator manages to control at once in the first Terminal Gate, this 2nd Terminal Gate might be not used in future.

7) Security Post

The Security Post is located in front of Administration Building. There is access control for entry and exit people to the terminal. Another security post will be accommodated in/ near the distribution center for people access control of Phase II

8) Power supply and Water supply Facilities

Power supply facility and Water supply facilities are located at north-east of the Phase-1 site and designed expected demands for Phase-2. Emergency power supply for phase-2 demand is not included at phase-1 facility, so individual Generator need to provide for Phase-2.

53