study on the myawaddy hpa-an sez ppp project in the … · study on the myawaddy – hpa-an sez ppp...

Study on Economic Partnership Projects

in Developing Countries in FY2013

Study on the Myawaddy – Hpa-an SEZ PPP Project

in the Union of Myanmar

Final Report

February 2014

Prepared for:

The Ministry of Economy, Trade and Industry

Ernst & Young ShinNihon LLC

Japan External Trade Organization

Prepared by:

Japan Development Institute Ltd.

Nippon Steel & Sumikin Bussan Corporation

Reproduction Prohibited

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Study on Economic Partnership Projects

in Developing Countries in FY2013

Study on the Myawaddy – Hpa-an SEZ PPP Project

in the Union of Myanmar

Final Report

February 2014

Prepared for:

The Ministry of Economy, Trade and Industry

Ernst & Young ShinNihon LLC

Japan External Trade Organization

Prepared by:


Nippon Steel & Sumikin Bussan Corporation

Preface

This report describes the results of the specific study, conducted by the Japan Development Institute Ltd. and

NIPPON STEEL & SUMIKIN BUSSAN CORPORATION, responding to the formal directive-“Study on

Economic Partnership Projects in Developing Countries in FY2013” by the Japanese Ministry of Economy, Trade

and Industry.

In order to solve the chronic unemployment problem in Myanmar, this effort -“The Study on the Myawaddy -

Hpa-an SEZ PPP Project in the Union of Myanmar”- seeks to understand the current status of the Myawaddy

Industrial Zone and the Hpa-an Industrial Zone in Kayin State, and to attract greater Foreign Direct Investment by

bringing industrial zone facilities up to international standards.

We hope that this report contributes to the realization of the project, and, provides useful information and

references to stakeholders in Japan.

February 2014


NIPPON STEEL & SUMIKIN BUSSAN CORPORATION

Project Site Map

Yangon - Myawaddy : 455km Myawaddy - Bangkok ：490km

Myawaddy Industrial Zone

Hpa-an Industrial Zone

Thailand

Bangkok

Yangon

Source: Prepared by the Study Team

List of Abbreviation

Abbreviation Official Name

ADB Asian Development Bank

AFC ASEAN Economic Community

AFTA ASEAN Free Trade Area

AH Asian Highway

ASEAN Association of South-East Asian Nations

BCP Business Continuity Planning

BOI The Board of Investment of Thailand

CBTA Cross Border Transportation Agreement

CDM Clean Development Mechanism

CAPEX Capital Expenditure

CEPT Common Effective Preferential Tariff

CIDKP Committee of Internally Displaced Karen People

CIM Construction Information Modeling

CM Construction Management

DDI Domestic Direct Investment

DFZ Duty Free Zone

DICA Directorate Investment and Company Administration

EGAT Electricity Generating Authority of Thailand

EIA Environmental Impact Assessment

EIRR Economic Internal Rate of Return

EPZ Export Processing Zone

F/S Feasibility Study

FDI Foreign Direct Investment

FIRR Financial Internal Rate of Return

FTZ Free Trade Zone

GDP Gross Domestic Product

GHG Greenhouse Gas

GIS Geographic Information System

GMS Greater Mekong Subregion

GNSS Global Navigation Satellite System

GRDP Gross Regional Domestic Product

IEIA Initial Environmental Impact Assessment

IFC International Finance Corporation

IMF International Monetary Fund

IOM International Organization for Migration

IPP Independent Power Producer

JBIC Japan Bank for International Cooperation

JETRO Japan External Trade Organization

JICA Japan International Cooperation Agency

JV Joint Venture

KNU Karen National Union

LIBOR London Inter-Bank Offered Rate

MIC Myanmar Investment Committee

MIME Ministry of Industry, Mine and Energy

MMK Myanmar Kyat

MNP&ED Ministry of National Planning and Economic Development

MOE Ministry of Environment

MOEP Ministry of Electric Power

MOFA Ministry of Foreign Affairs

MoU Memorandum of Understanding

MP Master Plan

MPD Ministry of Public Works

MPWT Ministry of Public Work and Transportation

MW Megawatt

NCF Net Capital Flow

NGO Non-Governmental Organization

NSDP National Strategic Development Plan

ODA Official Development Assistance

OECD Organization for Economic Co-operation and Development

PEA Provincial Electricity Authority

PP Phnom Penh

PPP Public Private Partnership

SAPI Special Assistance for Project Implementation

SEZ Special Economic Zone

SIBOR Singapore Interbank Offered Rate

SPC Special Purpose Company

STEP Special Terms of Economic Partnership

STS Sub-Township

THB Thai Baht

TS Township

UNEP United Nations Environment Program

USD US Dollar

VAP Vientiane Action Program

WB World Bank

Table of Contents

Preface

Project Site Map

List of Abbreviations

Table of Contents

Executive Summary

(1) Background and Necessities of the Project··········································································· S- 1

(2) Basic policies that determine the details of project ································································· S- 3

(3) Outline of the Project ···································································································· S- 7

(4) Implementation schedule ······························································································· S-13

(5) Feasibility for implementation ························································································· S-15

(6) Advantages of Japanese Companies’ Involvement ································································· S-17

(7) Local area maps of project implementation ·········································································· S-18

Chapter 1 National & Sectoral Overview

(1) Economic and Financial Status of the Nation ········································································ 1- 1

(2) Sectoral Overview ······································································································· 1-12

(3) Present Status of Concerned Area ····················································································· 1-14

Chapter 2 Study Methodology

(1) Study content ············································································································· 2- 1

(2) Methodology and Project team ························································································ 2- 3

(3) Study Schedule ··········································································································· 2- 7

Chapter 3 Justification, Objectives and Technical Feasibility of the Project

(1) Background and Justification of the Project ········································································· 3- 1

1) Project Background ···································································································· 3- 1

2) Project Necessities ····································································································· 3- 2

3) Scope of the Project ··································································································· 3- 2

4) Analysis of the current status, future projection (including demand forecast), and probably negative

consequences if the proposed project is not implemented ····················································· 3- 3

(2) Analysis for the Planning of the Project ·············································································· 3-14

1) Demand Estimation ···································································································· 3-14

2) Creation of employment ······························································································ 3-14

3) Demand for Infrastructure facilities and equipment ······························································ 3-15

4) Analysis of for the planning of the project ········································································· 3-17

(3) Project planning ·········································································································· 3-26

1) Principle of project planning and strategy ·········································································· 3-26

2) Conceptual Design and Specification of Equipment Facilities ·················································· 3-26

3) Project content (project site and investment) ······································································ 3-35

4) The solutions and challenges when adopting the proposed technologies and systems ······················ 3-40

Chapter 4 Evaluation of Environmental and Social Impacts

(1) The Present Status of Environmental and Social Impacts ·························································· 4- 1

(2) Achieving environmental improvement through the project ······················································ 4- 5

(3) Environmental and Social Effectiveness by project implementation ············································· 4- 6

(4) The outlines of regulations regarding environmental and social considerations, and clarification

measures ················································································································· 4-43

(5) The items to realize the project in the country (executing agency and other organizations) ·················· 4-45

Chapter 5 Financial and Economic Evaluation

(1) Estimated project cost ··································································································· 5- 1

(2) Preliminary Summary results of financial and economic analysis ················································ 5- 5

Chapter 6 Planned Project Schedule

Chapter 7 Implementing Organizations

Chapter 8 Technical Advantages of Japanese Companies

(1) Expected participation scheme by Japanese companies (Funding, Supplement of material and machines, and

equipment management, etc.) ································································································· 8- 1

(2) Advantages of Japanese Companies (Technical and economic) ·················································· 8- 5

(3) Necessary measures to promoting participation of Japanese companies········································· 8- 9

Executive Summary

S-1

(1) Background and Necessities of the Project

1) Background

a) Myanmar

While Myanmar attracts the world’s attention to its rapid economic development, liberalization, and

democratization as Asia’s “last frontier,” the effects of the country having suffered through 50 years of economic

sanctions and numerous internal ethnic group conflicts have become equally pronounced. The West’s economic

sanctions prevented not only the development of the country but also any Foreign Direct Investment (FDI).

Chronic unemployment and national poverty grip the country. In addition, due to the government’s neglect in

providing basic infrastructure to the nation, Myanmar has a great shortage of power supply -arguably the most

important component of its or any other countries’ industrial development. The issue of power supply is one of the

most pressing to the country.

b) Thailand

A Thai domestic industry has grown along with the nation’s economic growth in recent years, labor-intensive,

low-cost industry has been forced to operate in low-cost areas remote from the capital city, Bangkok. Due to a 300

baht/d minimum wage, introduced in 2013, labor-intensive industries began to plan low-cost operations by

relocating manufacturing facilities in the neighboring countries outside of Thailand to take advantage of those

countries’ cheap labor. Currently, the Thailand Board of Investment (BOI) is considering a policy that would

encourage the transfer of labor-intensive industries to neighboring countries through a new BOI to be enacted in

2015.

2) Necessities

a) Construction of an Industrial Zone (IZ) on the border with Thailand

Understanding the movement of political decision-making on the Thai side, the Kayin State, sharing a border with

Thailand, has decided to construct an IZ in the border town, Myawaddy, in order to create local employment and

comply with the demand of its neighbor, Thailand.

b) Adopting international standards to attract Japanese investment

Kayin State’s original development plan for the envisaged IZ is not sufficiently unique to attract FDI, due to its

deficient infrastructure facilities, power supply, water supply, and sewerage treatment system, and solid waste

disposal system. This project aims to establish an IZ meeting international standards for both in Myawaddy and

Hpa-an. For the development of Myawaddy IZ, Japanese developers also seek to participate in the operation of the

IZ.

S-2

Figure 1 Background of Project

Source: Study Team

S-3

(2) Basic policies that determine the details of project

1) The purpose of this project

This project aims to create jobs in Myanmar by developing Myawaddy industrial zone with international standard

types of facilities to invite not only DDI (Domestic Direct Investment) but also FDI (Foreign Direct Investment).

Hpa-an industrial zone, already in operation, ; aims to achieve international standards in its facility provisions.

2) Comprehensive long-term project development plan

“Kayin State Job Creation Development Plan for 100,000 people (~2030)”

Figure 2 Kayin State Job Creation Development Plan

Source: Study Team

In comprehensive long-term project development plan, the project team is determined to create jobs for 100,000

people in Kayin state. According to data available in Thailand, the average nunmber of employees in a

labor-intensive factory in an industrial zone is 200 people/ha. Therefore, roughly 500 ha. of land is required to

accommodate 100,000 jobs created in the industrial zone.

The project of this scale will be able to meet requirements for Special Economic Zone (SEZ), resulting in

createing 100,000 jobs for people in Kayin state as the long-term goal. The project also plans to breed a new

middle class as one of its long term targets. In this respect, training suitable candidates to comprise a managers

class as a part of this project objectives will be necessary for bringing up the next generation of managers in

Myanmar.

S-4

3) Medium-term project development plan (2025)

Figure 3 Myawaddy～Hpa-an～Mawlamyine Economy Triangle Concept

Source: Study Team

Figure 4 Requirements for SEZ

Source: Study Team

S-5

a) Electric power

To supplement the deficiency in electric power, the Independent Power Producer (IPP) is planning to build a

power plant in Mawlamyain in Mon state. That plant will be partly completed in 2014, and will generate and

transmit 230 MW of power by the year 2015. Plans call for that plant to supply the power to Hpa-an IZ as well.

b) Establishment of a road network

To improve the distribution networks between Myawaddy and Hpa-an, Kayin State has investigated the present

status of road networks and transportation systems in the region. It is expected that new traffic networks

utilizing Official Development Assistance (ODA) will be established to realize efficient traffic flows.

c) Promotion of Myawaddy industrial zone to an SEZ

After Myawaddy industrial zone expands its activities, and develops trade relationships with Thai-based

companies with its operation as a Duty Free Zone (DFZ) maturing over a certain time, a Special Purpose

Company (SPC), a joint operator of the IZ private developers and public sectors, will apply to the relevant

authorities to realize Myawaddy industrial zone as a regional SEZ, so that IZ operations may enjoy a variety of

privileges in the process of their business activities.

4) Short-term development plan (2018)

Figure 5 Globalization of Hpa-an and Myawaddy industrial zone

Source: Study Team

a) Myawaddy industrial zone

The project developers will establish a Special Purpose Company (SPC) and will purchase the land in

Myawaddy industrial zone after a local contractor finalizes the Phase 1 development works, and SPC provides

the very necessary infrastructure facilities to meet the prevailing international standard. Myawaddy industrial

zone grants some privileges to tenant companies in the Duty Free Zone, because it straddles the border with

Thailand, and as a matter of course they will promote processing trades through export and import businesses.

S-6

b) Hpa-an industrial zone

The Project will promote Domestic Foreign Investment (DFI) and Foreign Direct Investment (FDI) for Hpa-an

industrial park, which is already completed and in operation. Then the Project especially need to focus on

meeting a international standard with attractiveness of an industrial zone, by providing infrastructure such as

water supply and water treatment equipment as part of the project.

c) Duty Free Zone in Myawaddy

Myawaddy industrial zone will establish Duty Free Zone (DFZ) by utilizing the customs house facilities in

existing Myawaddy Trade Zone next to it, after acquisition of the permit by Myanmar Investment Committee

(MIC). A tenant companies can enjoy exemption of the import tax on materials, intermediate-processed goods

through transporting, processing, and goods in bond in the DFZ, even though sales tax is to be charged upon

their products delivery.

The DFZ system in Myawaddy IZ is basically referred to one in Thailand. The flow of this system is as follows:

Figure 6 Flowchart of distribution in Duty Free Zone (DFZ)

Source: Rojana Distribution Center

S-7

(3) Outline of Project

Development plan of Myawaddy industrial zone is shown as follows:

1) Districts of Myawaddy industrial zone

Myawaddy industrial zone is mainly developed to accommodate labor intensive industry, and consists of a north

district and a south district.

Figure7 Myawaddy SEZ Development Area Plan

Source: Study Team

2) Land use of Myawaddy industrial zone

The area and land use of the north district and the south district in Myawaddy industrial zone are separated as

follows:

Industrial use: Profit center of the Industrial park business;

Housing use: Accommodation facilities for the employees and their family of tenant companies,

accommodation facilities for those whose works in the service sectors from distant regions and other

ancillary facilities;

S-8

Commercial/service use: the provision of services and other commercial services for the factory workers,

trading partners, and external workers;

Administration and One-stop service use: the provision of administrative services to the employees and

tenant companies operating in the IZ, the provision of administrative consistency services to the existing

and prospective tenant companies;

Park/ Open space use: Reserve land for environmental protection and future expansion of business;

Dry port use: The dry port is not planned to install as there is already “Myawaddy Trade Zone”

established next to each other. Therefore it aims to be linked with the “Myawaddy Trade Zone” for the

purpose of such port functions as cargo traffic in bond, customs clearance, and container freight station.

Table 1 Myawaddy IZ application of land use area (ha)

Area item

Phase

Total

Area

Ratio

（％）

North District South District

1 2 2N 2S 3

The entire IZ land

57.4 23.9 49.9 73.1 122.2 326.5 100.0

Factory lot 48.8 0.0 26.8 35.3 85.0 195.9 60.0

Same as above, by

district 75.6

120.3

0.0

Non-Factory Land 8.6 23.9 23.1 37.8 37.2 130.6 40.0

Same as above, by

district 55.6

75.0

0.0

Breakdown of the non-industrial land area

Roads 8.6

3.6 9.8 11.8 33.8 10.4

Discharge Drains

5.4 0.8 1.6 7.8 2.4

Retarding pond

6.8 3.5 1.9 12.2 3.7

Housing, parks,

education and

training center

20.7 11.3 10.1 42.1 12.9

Business, Service

4.2 2.5

6.7 2.1

Management. OSS 2.2

2.2 0.7

Public facilities

2.5

2.5 0.8

Water purification

plant 2.3 2.3 0.7

Wastewater

treatment plant 3.0

3.0 0.9

Future reserve land

6.0 2.5 9.5 18.0 5.5

Source: Study Team

S-9

3) Layout plan for land use in Myawaddy industrial zone

Layout plan for land use in Myawaddy industrial zone is as follows:

Figure 8 Layout plan for land use in Myawaddy industrial zone

Source: Study Team

【North district】 Industrial area, Commercial area, Public facilities, Housing area, Management office,

Wastewater treatment area, Retarding pond

【South district】 Industrial area, Commercial area, Public facilities, Housing area, Wastewater treatment

area, Water supply, Retarding pond

【Duty Free Zone】Customs house (Import, Export), Bonded warehouse, Bonded factory

S-10

4）Ground elevation map in Myawaddy industrial zone

Ground elevation map in Myawaddy industrial zone is as follows;

Due to the hilly nature of the land, the ground elevation of the industrial zone and its vicinity are depicted in the

topographical map obtained by the study team.

Figure 9 Ground elevation map in Myawaddy industrial zone

Source: Study Team

S-11

5）Myawaddy IZ Development Cost

The table below represents the project cost for the Myawaddy IZ project. It is to be noted that a potential Phase 4

is excluded here as the project site is not yet determined.

Table 2 Myawaddy IZ Development Cost (Unit: Million US$)

No. Name Summary Phase1 Phase2 Phase3

1 Civil engineering infrastructure 1.67 1.01 1.56

Land Development 2.44 5.33 7.59

In-site road 3.25 1.96 3.03

Drainage 2.44 1.77 1.71

Retarding basin

9.80 10.08 13.89

Direct construction cost total 1.96 2.02 2.78

Indirect construction cost total 1.18 1.21 1.67

General and administrative cost

total 12.94 13.30 18.33

Civil infrastructure costs total 0.00 0.00 0.00

2 Power supply Power company burden 1.65 0.57 1.85

3 Water supply Deep well supply 3.90 1.60 2.34

4 Sewerage treatment Aerated Lagoon System 0.40 0.18 0.45

5 Solid waste processing Includes commission fees to

Myawaddy city 0.00 0.00 0.00

6 Telecommunications Telecommunications

company burden 1.16 0.00 0.00

7 Administration and One stop

service Office furniture 20.04 15.65 22.97

8 Total construction cost 0.00 0.00 0.00

9 Interest during construction 2% of construction cost 0.00 0.00 0.00

10 SPC establishment preparation

expense PS 0.33 0.26 0.26

11 Research, survey and design

costs PS

12 Tax and duties 3.01 2.35 3.44

13 Contingency 10% of construction cost 23.35 18.26 25.57

Total project cost

Item Phase1 Phase2 Phase3

Total IZ area (ha) 131.2 73.1 122.2

Project cost for total IZ area

(US$/ m²) 17.8 25.0 21.8

Source: Study Team

S-12

6）PPP scheme

Figure 10 PPP scheme of Myawaddy industrial zone

Source: Study Team

S-13

(4) Implementation schedule

The short-term implementation schedule of Myawadi IZ is as follow:

Figure11 The short-term implementation schedule of Myawaddy IZ

Item 2015 2016 2017 2018 2019 2020 2021

Milestone Bypass Road Open ( beginning of 2015), IPP 98MW completion @ Mawlamyine end of 2015)

Establishment of

SPC

Design survey

(Common)

Government

agencies related

work

Dry port facility

Phase1 (131.2ha)

Detailed design

Land development

Road, drainage

Water supply and

sewerage, other

infrastructure

facility

Administration and

One Stop Service

office

Phase2 (73.1ha)

Detailed

engineering design

Land development

Road, Drainage

Water supply and

sewerage

Administration and

One stop service

office

Phase3 (122.2ha)

Detailed

engineering design

Land development

Road, drainage

Water supply and

sewerage, other

S-14

infrastructure

facility

Administration,

One stop service

office

Phase4 (173.5ha)

Detailed

engineering design

Land development

Road, drainage

Water supply and

sewerage, other

infrastructure

Administration and

One stop service

office

2015 2016 2017 2018 2019 2020 2021

Source: Study Team

S-15

(5) Feasibility for implementation

1) Financial analysis Assumptions:

The revenue of the IZ is generated primarily; i) land lease income, ii) water supply charge, iii) wastewater

treatment income, and iv) administration service fees.

The following are the assumptions relevant to the conduct of a financial analysis.

a) Premise 1: To obtain the land for Phase 1 (57.4ha) and Phase 2 (49.4 ha excluding the housing facility, business,

and other service areas facilities) for the first year, of the above lands - with saleable industrial lots fixed at

77.9ha.).

b) Premise 2: the table below indicates the revenue price.

Table 3 Premises for the financial analysis

Land price Phase1: US$45/ m²

Phase2: US$50/ m²

Phase3: US$55/ m²

Water supply charge US$0.80/ m²

Wastewater treatment charge US$0.43/ m²

Services fee Phase1: US$0.03/m²

Phase2: US$0.04/ m²

Phase3: US$0.04/m²

Source: Study Team

c) Premise 3:

No leverage (loan) basis, but rather the use of fully owned equity capital.

d) Presume 4:

Construction cost for each phases are as follows:

Table 4 Construction cost

Phase 1 Phase 2 Phase 3

Total area (ha) 131.2 73.1 122.2

Construction cost per unit area (US$/m²) 17.8 25.0 21.8

Source: Study Team

2) The results of the financial analysis

The results of the financial analysis are as follows.

① Financial Internal Rate of Return (FIRR)

Based on the cost estimations and assumptions described above, the internal rate of return (IRR) for the project

period of 20 years is calculated. The FIRR of 13.91% for the total costs was obtained on the Net Cash Flow

basis as a result.

S-16

② Economic Internal Rate of Return (EIRR)

This EIRR has been calculated from the development costs against the total net income of the tenants in the

industrial park in order to evaluate economic effects in Kayin state. If the tenant companies of Myawaddy

industrial park are assumed to be garment enterprises primarily having business relationships with a variety of

Japanese companies, a net profit of US$1.2 billion could be achieved over a 20 year period - representing an

EIRR of 32.1%.

Reaching this projected net profit of US$1.2 billion will produce many jobs that will, contribute greatly to the

Kayin State economy as a result. Therefore, this project is considered to have a significant economic impact to

the State.

S-17

(6) Advantages of Japanese Companies’ Involvement

The advantages of Japanese companies compared with other foreign companies for Myawaddy Industrial Zone

project are as follows:

a) Regarding the design, construction and management of the industrial zone and SEZ developments in Southeast

Asia, and the other developing countries, Japanese companies have extensive experience in contributing to

national economic growth.

b) Japanese companies have established advanced supply chain systems between manufacturers and logistics

service providers who collaborate in utilizing horizontal international specialization, and consequently have

resulted in efficient business performance..

c) Japanese companies have developed BCP (Business Continuity Planning) systems to minimize and even prevent

devastating losses caused by the frequent occurrence of natural disasters, thereby increasing the safety and

reliability of their supply chain. In addition, they have entered into operative stages to verify the BCP system

against actual natural disasters.

d) Japanese companies have much experience in the fields of global warming countermeasures through Clean

Development Mechanisms (CDM) and the bilateral credit projects, which help reduce the greenhouse gas

emissions that cause global warming.

e) Japanese companies possess advanced technology and systems that achieve energy savings.

f) Japanese companies lead foreign companies over the world in renewable energy technology.

g) Japanese companies are remarkably advantageous in the reliability of their product/service delivery and their

high quality construction ventures. In particular, Japanese companies excel in dealing with maintenance issues

after completion of construction.

h) Japanese companies possess soundness in diagnostic and restoration technologies relative to conventional

infrastructure requiring rehabilitation - thereby helping to increase the functional life of that infrastructure in the

world. Such technologies will be able to contribute greatly to the rehabilitation of Myanmar’s dilapidated

infrastructure, due to its lack of regular maintenance, as the realization of the much-needed development of

Myanmar moves ahead in response to the recent opening of the economy to foreign investment.

S-18

(7) Local area maps of project implementation

Map 1 Local area map (Myawaddy industrial zone, Hpa-an industrial zone)

Yangon-Myawaddy : 455km Myawaddy – Bangkok : 490km

Myawaddy IZHpa-an IZ

Source: Study Team

Map 2 local area map (Myawaddy industrial zone)

Myawaddy Industrial Zone

Myanmar Thailand

Asian Highway

← Hpa-an

Mae Sot

Myawaddy District

Source: Study Team

FIGURE

Figure 1: Background of Project

Figure 2: Kayin State Job Creation Development Plan

Figure 3: Myawaddy~ Hpa-an~ Mawlamyine Economy Triangle Concept

Figure 4: Requirements for SEZ

Figure 5: Globalization of Hpa-an and Myawaddy industrial zone

Figure 6: Flowchart of distribution in Duty Free Zone (DFZ)

Figure 7: Myawaddy SEZ Development Plan Area

Figure 8: Layout plan for land use in Myawaddy industrial zone

Figure 9: Ground elevation distribution map in Myawaddy industrial zone

Figure 10: PPP scheme of Myawaddy industrial zone

Figure 11: The short-term implementation schedule of Myawaddy IZ

Figure 1-1: Gross Domestic product / GDP gross rate (Burma)

Figure 1-2: Gross Domestic Product (Industry Classified: Burma)

Figure 1-3: Gross Domestic Product and Foreign Direct Investment (Burma)

Figure 1-4: Consumer price inflation in Myanmar

Figure 1-5: Gross Domestic Product / GDP gross rate (Thailand)

Figure 1-6: Gross Domestic Product (Industry Classified: Thailand)

Figure 1-7: Gross Domestic Product and Foreign Direct Investment (Thailand)

Figure 1-8: Price escalation rate (Thailand)

Figure 1-9: Comparison of the populations of Burma and Thailand (Million people)

Figure 1-10: Gross Domestic Product (Burma and Thailand)

Figure 1-11: Comparison of nominal GDP per capita between Myanmar and Thailand

Figure 1-12: Kayin State Counterparts

Figure 1-13: Annual rainfall (Mawlamyain, Hpa-an, Mae Sot)

Figure 1-14: East-West Economic Corridor

Figure 1-15: Yangon- Myawaddy (Thai border) Access Route

Figure 1-16: PPP Scheme (Myawaddy IZ)

Figure 2-1: Methodology

Figure 2-2: The flow of the study

Figure 2-3: Team member and organizational structure

Figure 2-4: Study Schedule (1)





Figure 3-1: Project background

Figure 3-2: Comprehensive long-term project development plan

Figure 3-3: Myawaddy~ Hpa-an~ Mawlamyine Economy Triangle concept

Figure 3-4: Short-term development plans

Figure 3-5: Flowchart of distribution in Duty Free Zone (DFZ)

Figure 3-6: Mawlamyine power plant implementation program

Figure 3-7: Mawlamyine Power distribution plan

Figure 3-8: Myawaddy SEZ Development Plan Area

Figure 3-9: Myawaddy SEZ development planning area planar layout diagram

Figure 3-10: Myawaddy SEZ development planning area ground elevation distribution map

Figure 3-11: Waterway discharge standard cross section

Figure 3-12: The Structure of slope protection of the retarding pond

Figure 6-1: Myawaddy Industrial Zone Construction Schedule

Figure 7-1: Kayin State Organizational Chart

Figure 7-2: Myawaddy Industrial Zone Phase 1 Ground Plan

Figure 7-3: Hpaan Industrial Zone Ground Plan

Figure 8-1: PPP scheme of Myawaddy Industrial Zone

Figure 8-2 Environmental considerations surrounding Myawaddy Industrial Zone (Water supply)

Figure 8-3: Environmental considerations surrounding Myawaddy Industrial Zone (Sewage treatment)

Figure 8-4: Environmental considerations surrounding Myawaddy Industrial Zone (Waste)

TABLE

Table 1: Myawaddy IZ application of land use area (ha)

Table 2: Myawaddy IZ development cost (Unit: Million US$)

Table 3: Premises for the financial analysis

Table 4: Construction cost

Table 1-1: Basic information (Myanmar)

Table 1-2: Foreign Direct Investment

Table 1-3: Basic information (Thailand)

Table 1-4: Kayin State Gross Regional Domestic Production (GRDP) (2010-2011)

Table 1-5: Comparison of Myawaddy IZ and Hpa-an IZ

Table 1-6: Yangon-Myawaddy (National highway) Access route

Table 3-1: Requirements for SEZ

Table 3-2: Comparison of Myawaddy IZ and other projects

Table 3-3: Myawaddy IZ job creation (per unit)

Table 3-4: Job creation in Myawaddy IZ

Table 3-5: Myawaddy Industrial Zone Demand by Industrial Lot Area

Table 3-6: Myawaddy Industrial Zone Infrastructure Area Demand

Table 3-7: Myawaddy Industrial Park North District excavated soil volume

Table 3-8: Myawaddy IZ development soil excavation

Table 3-9: Road specifications of Myawaddy industrial IZ North District Phase1

Table 3-10: Myawaddy Industrial Zone cargo volume forecast

Table 3-11: Myawaddy Industrial Zone Generated traffic volume prediction

Table 3-12: Myawaddy IZ Northern District discharge waterway specifications

Table 3-13: Myawaddy IZ Retarding Basin Specifications

Table 3-14: Myawaddy IZ application of land use area (ha)

Table 3-15: Education and training facilities, residential land area, and parks in Myawaddy IZ

Table 4-1: The present status of the land in Myawaddy district/township (2012)

Table 4-2: The JBIC (Japan Bank for International Cooperation) Guidelines for Confirmation of Environmental

and Social Considerations (Environmental Guidelines)

Table 4-3: JBIC Guidelines for Confirmation of Environmental and Social Considerations (Environmental

Guidelines) (Water supply)


Guidelines) (Sewage treatment)


Guidelines) (Waste management and disposal)

Table 4-6: Household, Families and Population in Kayin State

Table 4-7: Work force at the north area and the south area in Myawaddy industrial zone

Table 5-1: Project implementation Phase (Area unit: ha)

Table 5-2: Project cost estimate

Table 5-3: Premises for the financial analysis

Table 5-4: financial analysis (45, 50, 55)



Table 5-7: financial analysis (EIRR)

Table 8-1: Expected participation of Japanese companies

PHOTO

Photo 1-1: Myawaddy IZ development office

Photo 1-2: Labor intensive factory in Hpa-an IZ

Photo 1-3: National highway (Yangon-Hpa-an: 277km)

Photo 1-4: National Highway (Hpa-an – Kawkareik: 126km)

Photo 1-5: National Road (Kawkareik – Thingannyinaung: 39km)

Photo 1-6: National Road (Thingannyinaung – Myawaddy (National Road): 18km)

Photo 1-7: Second Friendship Bridge

Photo 3-1: IPP Power plant in Mawlamyine (under construction)

MAP

Map 1: Local area map (Myawaddy industrial zone, Hpa-an industrial zone)

Map 2: Local area map (Myawaddy industrial zone)

Map 1-1: Map of Myanmar

Map 1-2: Population density in Myanmar

Map 1-3: Map of Industrial Zone in Myanmar

Map 1-4: Map of Thailand

Map 1-5: Population density in Thailand

Map 1-6: Elevation distribution maps of Kayin State and Mon State

Map 3-1: Logistic Route through Myanmar

Chapter 1 National & Sectoral Overview

1-1

(1) Economic and Financial Status of the Nation

1) Myanmar

a) Basic Information

The Republic of the Union of Myanmar (also known simply as Myanmar) is located in the western part of the

Indochina peninsula. It shares a border with China to the northeast, Laos to the east, Thailand to the southeast,

Bangladesh to the west, and India to the northwest. Myanmar is a multi-ethnic nation with a plethora of ethnic

minorities. Sixty percent (60%) of the total population is Burmese and the following groups are prominent ethnic

minority groups in the country: Karen, Kachin, Kayah, Rakhine, Chin, Mon, and Shan.

Due to its wealth of natural resources and large population exceeding 60 million living on a national territory of

678,330 km² (about 1.8 times the size of Japan), Myanmar attracts global attention as a destination for new

investment. Myanmar has a great potential for large-scale economic development and democratization–a process

that began after the 2010 general election, the first conducted in 20 years.

Map1-1 Map of Myanmar

Source: The Central Intelligence Agency

1-2

Map1-2 Population density in Myanmar

Source: NASA SOCIOECONOMIC DATA AND APPLICATIONS CENTER (SEDAC)

Table1-1 Basic information (Myanmar)

Size of the country 680 thousand km² area (about 1.8 times the size of Japan)

Population 63.67million (2012 IMF)

Capital city Naypyidaw

Ethnic breakdown Burmese (60%)，other numerous ethnic minorities

Language Burmese

Religion Buddhist (90%)，Christian，Muslim etc.

History Myanmar history dates back to the early 11th Century when King Anawrahta unified

the country and founded the First Myanmar Empire in Bagan more than 20 years

before the Norman Conquest of England in 1066(i.e. 1044 A.D.). The Bagan Empire

encompassed the areas of the present day Myanmar and the entire Menam Valley in

Thailand and lasted two centuries.

The Second Myanmar Empire was founded in mid-16th Century by King

Bayinnaung (1551-1581). King Alaungpaya founded the last Myanmar Dynasty in

1752 and it was during the zenith of this Empire that the British moved into

Myanmar. Myanmar became a British colony but only after three Anglo-Myanmar

Wars in 1825, 1852, and 1885. Myanmar achieved national independence on January

4, 1948.

Source: MOFA Homepage, Myanmar embassy Homepage

1-3

b) Economy in Myanmar

While Myanmar was reluctant to deal with other countries during the period of its military regime, which lasted

until 2010, its GDP (gross domestic product) was showing a growth rate of approximately 10%.

Figure 1-1 Gross Domestic product / GDP gross rate

Source: Asian Trend Annual Report 2013

c) Domestic industry in Myanmar

In regard to the existing industrial structure of Myanmar, agriculture alone occupies 30% of the total share.

According to the government statistics 2010-11, the primary industries (agriculture, livestock, fisheries, and

forestry) accounted for 37.93% of the total. The secondary sector (manufacturing and mining) accounted for

19.43%, and tertiary industry (services such as commercial, construction, trade, construction, communications, etc.)

comprised the remaining 42.64%.

Figure 1-2 Gross Domestic Product (Industry Classified: Burma)


1-4

d) Foreign investment in Myanmar

While Myanmar’s gross domestic product has risen in recent years, investment from other countries into Myanmar

has declined since 2009. However, the lifting of economic sanctions by Western countries together with the new

government’s introduction of an open-door policy in 2010 has affected a gradual increase in direct foreign

investment to Myanmar.

Figure 1-3 Gross Domestic Product and Foreign Direct Investment (Burma)


The breakdown of FDI by country and region in Myanmar can be accounted for mainly by China, Thailand, Hong

Kong, and South Korea in recent years. The industry breakdown demonstrates the predominance of power, oil and

gas, mining and mining for fuel in the country.

Table 1-2 Foreign Direct Investment


1-5

e) Consumer prices in Myanmar

Although consumer prices in Myanmar increased rapidly up to mid-2008, there was also global trend in the

increase of food prices and fuel worldwide. The inflation has calmed down post 2009.

Figure 1-4 Consumer price inflation in Myanmar


d) Map of Industrial Zone in Myanmar

The following map demonstrates the location of Industrial Zone in Myanmar.

Map 1-3 Map of Industrial Zone in Myanmar


1-6

2) Thailand

a) Basic information

Map 1-4 Map of Thailand

Source：The Central Intelligence Agency

1-7

Map1-5 Population density in Thailand

Source: NASA SOCIOECONOMIC DATA AND APPLICATIONS CENTER (SEDAC)

Table1-3 Basic information (Thailand)

Size of the country 514 thousand km² area (about 1.4times the size of Japan)

Population 65.93 million (2010 Thai National Census)

Capital city Bangkok

Ethnic breakdown Thai (Majority), Overseas Chinese merchants, Malay, Mountainous Ethnic Minorities

Language Thai

Religion Buddhism 94%, Muslim 5%

History Foundation of the Kingdom of Thailand was established from Sukhothai dynasty in

the 13th century. The nation passed through the Ayutthaya Dynasty (14-18 century)

and the Thonburi Dynasty (1767-1782), leading up to the current Chuck Lee dynasty

(1782 onwards). A constitutional revolution in 1932.

Source：MOFA homepage

1-8

b) Economy in Thailand

In Thailand, since FDI was actively carried out during the period of attractively high exchange rates of the Thai

currency against the Japanese yen particularly after the Plaza Accord in 1985; the national economic growth is

remarkable in comparison with its neighboring countries. This trend has continued even today and the GDP growth

rate is growing at an average rate of 8%.

Figure1-5 Gross Domestic Product / GDP gross rate


c) Sectoral GDP in Thailand

According to the sectorial GDP in Thailand, manufacturing accounts for about 40% of the total followed by

wholesale, retail, services, transportation, and telecommunications. Among the manufacturing sectors, heavy

industry such as automobile manufacturing constitute central production, with the share of labor intensive

industries, such as textiles and electronics parts, are much less.

Figure 1-6 Gross Domestic Product (Industry Classified: Thailand)


1-9

d) FDI in Thailand

GDP, impacted by the Lehman shock, experienced a decrease in 2009, but recovered by 2010. Regarding the FDI,

the latest flood disaster has left major scars upon the total FDI, which has resulted in net-reduction.

Figure 1-7 Gross Domestic Product and Foreign Direct Investment (Thailand)


e) Consumer inflation rate in Thailand

With the exception of the social transformation experienced in 2009, the annual consumer inflation rate has

maintained a steady 3 % average.

Figure 1-8 Price escalation rate (Thailand)


f) Population of Myanmar and Thailand

The populations of Myanmar and Thailand, taken individually, amount to approximately the same market size.

1-10

Figure 1-9 Comparison of the populations of Burma and Thailand (Million people)


g) GDP Comparison between Myanmar and Thailand

In 2006, the GDP of Thailand was 9 times greater than that of Myanmar. However, in recent years, Myanmar’s

economic performance has reduced that comparative gap to approximately 7 times the size.

Figure 1-10 Gross Domestic Product (Burma and Thailand)


h) Nominal GDP comparison per capita between Thailand and Myanmar

By comparing the nominal GDP per capita between Thailand and Myanmar, Thailand’s GDP was 6 times greater

than that of Myanmar as of 2011.

1-11

Figure 1-11 Comparison of nominal GDP per capita between Myanmar and Thailand


1-12

（2）Sectoral Overview

1) Summary of Kayin State

Kayin state is located in the eastern part of Myanmar connecting with the Mon state, which faces the Andaman

Sea and to the west, and Thailand to the east. Kayin state consists of four districts: Hpa-an, Kawkareik, Myawaddy,

and Phapon and it is divided into seven townships and nine sub-townships (Refer to Figure7-1: Kayin State

Organizational Chart). The 2009 population of Kayin state was approximately 1.79 million which accounted for

about 3% of the total population of Myanmar. According to the data from the Kayin State Government, the

population of Hpa-an, the state capital is approximately 97,000 and the population in Myawadi sharing the border

with Thailand is approximately 60,000.

(Source: JICA)

a) Gross Regional Domestic Production (GRDP)

In Kayin State, about 60% of GRDP is comprised of commodity production (manufacturing) with agriculture

making up 30% of that total. The GRDP per capita of Karen State is 375,490 Myanmar Kyat (MMK). This

corresponds to 56.3% of the per capita GDP of Myanmar as whole.

Table 1-4 Kayin State Gross Regional Domestic Production (GRDP) (2010-2011)

Source: JICA

1-13

b) Kayin State Counterpart

The counterpart for the current project is the Kayin State Government since the focus of the project is Myawaddy

IZ and Hpa-an IZ -with their respective development plans supported by Kayin State. However, as the issues

related to the licensing of a Duty Free Zone (DFZ) for the Myawaddy IZ and the future consideration of a Special

Economic Zone (SEZ) supported by the Myanmar Investment Committee (MIC), the Ministry of Industry of the

central government and MIC are also shown in the organization structural chart.

Figure 1-12 Kayin State Counterparts

Source: Study Team

1-14

(3) Present Status of Concerned Area

1) Weather in Myawaddy and Hpa-an

The figure below depicts the annual rainfall in the southeast region of Myanmar. The annual rainfall reaches up to

4,000~5,000 mm in the lower land in Mawlamyain, the state capital of Mon State. In addition, in the southern part

of Mon State, annual precipitation levels are higher. On the other hand, in the eastern part passing through the

mountainous areas of Karen State, precipitation is less than 2,000 mm/y. Relative to the precipitation data for

Myawaddy, the similar data for Mae Sot is the contiguous area next to the border of Thailand and Myanmar is

provided for reference.

Figure 1- 13 Annual rainfall (Mawlamyain, Hpa-an, Mae Sot)

Source: JICA

1-15

2) Altitude and terrain of Kayin State and Mon State

The map below shows the altitude and terrain of Kayin State and Mon State.

Map 1-6 Elevation distribution maps of Kayin State and Mon State

Source: JICA

1-16

3) Current status of the Myawaddy IZ and Hpa-an IZ

The chart below compares the Myawaddy IZ and the Hpa-an IZ

Table 1-5 Comparison of Myawaddy IZ and Hpa-an IZ

Source: JETRO

Map 1-7 Positions of Myawaddy IZ and Hpa-an IZ

Hpa-an IZ

Myawaddy IZ

Source: Study Team

1-17

a) Myawaddy IZ

Photo 1-1 Myawaddy IZ development office

Source: Study Team

Currently the local general contractor (general construction company) is carrying out construction activities for

Phase 1 in response to the government of Kayin State.

b) Hpa-an IZ

Photo 1-2 Labor intensive factory in Hpa-an IZ

Source: Study Team

Construction of IZ has (phase 1) is completed and garment factory has started the operation. There are a few

tenant companies in the IZ.

1-18

4) Ethnic minority issues (Peace agreement)

The Myanmar government and the anti-government armed groups Karen National Union (KNU) have continued

the military conflict for sovereignty over each other, since the independence of the country in 1948. On January 12th

2012, they finally reached a ceasefire agreement. Since the KNU occupies the border between Myanmar and

Thailand as their own Kawthoolei1), entries of foreigners to the region have been banned for many years, however,

the region opened to visits by foreigners again from April 2013.

5) East-West Economic Corridor

The East-West Economic Corridor connecting four countries in Indochina Peninsula (Myanmar, Thailand, Laos,

and Vietnam) is based on an economic development plan with a foundation of the total length of the road up to

1,450 km.

This corridor connects from Da Nang, Vietnam in the east to Mawlamyain, Myanmar in the west. The eastern end

of Myanmar is Myawaddy, the focus of the current study and as the Myawaddy IZ is located on the East-West

Economic Corridor. It is considered to become the significant focal point of future border trade between Myanmar

and Thailand.

Figure 1-14 East-West Economic Corridor

Source: JETRO

1 Kawthoolei is the Karen name for the state that the Karen people of Myanmar. It has double meaning for the land that must be fought for Karen.

1-19

6) Access Road

a) Summary

The road overpass from Yangon to the Thai border via Myawaddy is the national highway, built by the Myawaddy

government, which runs 455km.

Table 1-6 Yangon-Myawaddy (National highway) Access route

Road City Distance Type of pavement Comment

National Highway

No.1

Asian Highway

(AH1)

Yangon

-

Bago

97Km Emulsion pavement +

Asphalt pavement

(Overlay)

Overlaid asphalt directly on the

surface of the emulsion

pavement. The width of

carriageway is 7.0m.

National Highway

No.8

Asian Highway

(AH1)

Bago

-

Thaton

138Km

Emulsion pavement +

Asphalt pavement

(Overlay)

Overlaid asphalt directly on the

surface of the emulsion

pavement. The width of

carriageway is 7.0m.

National Highway

No.85

(Eindu- Myawaddy)

East West Economic

Corridor

Thaton

-

Myawaddy

174Km Emulsion pavement

Un-paved road

(Crossing Dawna mountain)

Asphalt pavement

By Thai government funding

Road conditions have

deteriorated on both the

emulsion pavement and the

un-paved road.

The bypass road, funded by the

Thai Government, is under

construction.

Total 455Km

Source: Study Team

1-20

Figure1-15 Yangon- Myawaddy (Thai border) Access Route

Source: Study Team

b) Current Status of the Access Road

There are 4 different types of observable conditions of the access road existing between Yangon and Mandalay

(455km). Sectoral details appear below.

① Yangon－Hpa-an 272km

Photo 1-3 National highway (Yangon-Hpa-an: 277km)

Source: Study Team

The composition of the pavement of this road is asphalt concrete directly on the emulsion pavement. Although

the width of carriageway is 7.0m, there is no shoulder of the road. Each of the two driving lanes has a 3.5

meter width. The vehicle hired for the study team was possible to run at 60km/h.

1-21

② Hpa-an – Kawkareik: 126km

Photo 1-4: National Highway (Hpa-an – Kawkareik: 126km)

Source: Study Team

Although the road appears adequately paved, damage is evident along its entire length. The road is so narrow,

nearly all vehicles must veer to the shoulder of the road to avoid collision. Since the shoulder of the road is not

paved, it has become, clearly damaged from consistent wear-and-tear and ubiquitous rainfall. The result is a road

that presents any driver with a dangerous situation. Any driver using this road must travel at a very slow speed to

avoid the potential risk of accident.

③ Kawkareik – Thingannyinaung: 39km

Photo 1-5: National Road (Kawkareik – Thingannyinaung: 39km)

Source: Study Team

This section is a mountain road through the Dawna Mountains. Although there is evidence that the road was treated

with the emulsion pavement once, at the time of the survey when the study team visited, the pavement had been

damaged completely due to heavy vehicle traffic and the impact of the rains. In addition, there are places on this

road that are too narrow to construct two lanes. It operates under the daily reality of restricting traffic to one lane

either going up or coming down. To address this predicament through this section of the road, separately from the

1-22

rest of the mountain road, new road construction has commenced that will result in a two-lane asphalt-paved road.

The new access road will be available for public use during the year 2014.

④ Thingannyinaung – Myawaddy (National Road): 18km

Photo 1-6 National Road (Thingannyinaung – Myawaddy: 18km)

Source: Study Team

Using Thai ODA funding, this 18km stretch of road was developed by the Thai government contractors in 2006. It

is an asphalt-paved two-lane road with shoulders. The road was built in accord with the Thai Ministry of

Transport’s Bureau of Road’s regulations governing road construction. This road is suitable to accommodate

high-speed driving of most vehicles regardless of size. This road forms part of the East-West Economic Corridor

passing through Mae Sot across the Thai border. However, there is problem with the foundation of the Friendship

Bridge where this road crosses the Moei River, along the border between Myanmar and Thailand. Currently, a

second Friendship Bridge is planned by the Thai Government.

1-23

Photo 1-7 Second Friendship Bridge

Source: Study Team

7) Public Private Partnership (PPP) Scheme

Although Kayin State Government has initiated the first phase of construction of the Myawaddy IZ (55ha), their

efforts to date to provide an adequate water supply and water treatment system, do not meet international

standards. The project team concluded that because construction began using Burmese national development

standards that do not match international standard, establishment of a Special Purpose Company (SPC) is crucial

to enable operation as the developer and improve the standard of facilities during the first phase of IZ

development. For development continuity, the SPC should take a part in the second phase of the planning and

implementation of Myawaddy IZ.

The SPC will lease the land from the state government under a long-term lease agreement. Kayin State holds the

rights in terms of leasing the land and also holds the equity in accordance with the lease price for the SPC.

Therefore, this project will operate as a public-private partnership (joint investment into the SPC from both the

host state government and Japanese private companies) throughout its existence.

1-24

Figure 1-16 PPP Scheme (Myawaddy IZ)

Land Users

Sponsors(Investors)

SPC(SEZ operation)

Japanese Companies(Sumikin・Shimizu etc.)

Thai Local CompaniesMyanmar

Local Companies

Lender(Debt Finance)

Private financial institution, Banks

(JBIC etc.)

LoanInvestment

(Inc. in-kind contribution)Dividend

Host Country(Myanmar)

Myanmar Government

Kayin State

EquityLand lease

ShareTaxes

Construction Companies(GC / M&E)

Tenant A Tenant B ・・・

Land subleaseService delivery

LeaseAdministrative expense

Order

Source: Study Team

Chapter 2 Study Methodology

2-1

(1) Study content

This study attempts to provide both in-depth analysis and an assessment of the current conditions and submit

proposals for further industrial zone development in the Myawaddy region. With the intent of leading relevant

authorities to implement specific actions designed to achieve both Domestic Direct Investment (DDI) and Foreign

Direct Investment (FDI) to the region. Regarding Hpa-an IZ, whereas the IZ construction is completed already,

the study provides an evaluation of its outcomes and further proposals for Hpa-an IZ so as to attract more FDI in

the future. In regard to Myawaddy IZ, as the construction is under progress, the aims of the study include the need

to establish Special Purpose Companies (SPC) to participate in the further development of the IZ and its

management.

The Myawaddy IZ development plan will target the following six components.

1) Research of Special Economic Zone (SEZ)

・Current status and investigation into suitable construction methods;

・Tax incentives in the SEZ

・Study of an access road and research of the national highway and existing state road;

・Approval and license from the MIC (Myanmar Investment Commission);Training facility for workers;

・Estimation of the construction costs (IZ construction, access roads, worker training facility);

・Financial analysis and cash flow projection;

・Study of the possibility of utilizing ODA (to fund an access road).

2) Study of PPP scheme

・Role of government and the private sector;

・Special Purpose Company (SPC) establishment and funding procedure

・Financial analysis and cash resources

・Loan by financial institutions.

3) Survey of infrastructure requirements

・Investigation into the existing underground water as the source of a potable water supply;

・Study of a water recycling system and sewage treatment

・The power transformer station as it relates to the electricity generating authority of Thailand (EGAT);

・Financial analysis and cash flow;

・Telecommunications infrastructure;

・Calculation of construction costs (water supply and sewage treatment, power supply and transformer station, dry

port, industrial waste facility);

・Applicable ODA use;

・Environmental impact assessment standards.

2-2

4) Investigation of the worker population and nearby existing factories

・The working population and the existing plant in Mae sot;

・Forecasts of working population and employment in the Myawaddy IZ.

5) Survey of logistics capacity in an East-West Economic Corridor from the west and east gate

・The traffic demand in the subject area relative to the East-West Economic Corridor;

・Current condition of bridges over the rivers;

・Current status of roads in the East-West Economic Corridor;

・Comparative study of the cost of logistics;

・Confirmation of laws and regulations regarding transportation from Myanmar to Thailand;

・Research of customs clearance systems under the ASEAN Free Trade Agreement (AFTA) after 2015.

6) Others

・Suggestions regarding financial fund;

・Study of a facility involving rain water capture and drain water usage;

・Electricity;

・Effectiveness of the logistics of an East West Economic Corridor;

・Effectiveness of the utilization of ODA;

・Power development planning.

2-3

(2) Study Team Methodology

The Study team visited the project site in both Myanmar and Thailand in order to collect the most current and

accurate data for the study analysis. The main methodology of the study was to conduct interviews with Kayin

State government representatives, local general contracting companies operating in the Myawaddy IZ

development, and tenant textile factories operating in Hpa-an IZ.

Figure 2-1 Methodology

Study Methodology

Industrial Zone

Job Creations

Regulation, Planning

Design, Construction

Operation（OSS）

Sawing, Textile

Energy, Water Supply &Water Sewerage

Distribution

Listening Survey to Local Government

Mission Trip Survey（BCP）

Listening Survey to Local Companies

Listening Survey to Japanese Companies

Listening Survey to Local Government

Mission Trip Survey & Listening Survey to Japanese Companies

Study Methodology

Survey for Soil Volume & Water Resource by CAD

Listening Survey to UN organization & Institute

Regulation, Planning

Source: Study Team

The details of study methodology are as follows:

1) Study on Myawaddy IZ

a) Development Plan

To inform Myawaddy IZ development, as operated by the Kayin State government, the current master

development plan, the current status of tenant companies, and the overview of the Kayin State’s promotion

schemes were collected from the State Minister of Electricity‘s Industrial Development Bureau and other

related state ministries.

b) Construction status

The detailed information relating to construction master developing plan and work condition were collected

from the local general contractor for Myawaddy IZ.

2-4

c) Power supply

The current status for power supply from Thailand and future plans for power supply to the Kayin State were

confirmed from the Kayin State Electricity’s Industrial Development Bureau.

d) Construction conditions

The detailed information relating to construction procedures were collected from the Kayin State Construction

Bureau.

e) Living Environment of Mae sot

The living conditions and the environment were investigated with a view towards Japanese directors staying in

Mae sot in Thailand and working in Myawaddy in Myanmar, and crossing the border every day.

f) Current road conditions

Study was conducted by inspecting certain specific points along the road from Hpa-an, the state capital of

Kayin, to Myawaddy up to Thai border, Mae sot.

2) Study on Hpa-an IZ

a) Development Plan

For Hpa-an IZ operated by the Kayin State government, the master developing plan, the current status of tenant

companies, and the overview of the Kayin State’s promotion schemes were collected from the State Minister of

Electricity, Industrial Development Bureau and other related state ministries.

b) Tenant companies

The Project team conducted a factory visit that included interviews with the CEOs and managing directors.

c) Power supply

The Project team visited the facility construction site for Independent Power Producer (IPP) Power plant and

interviewed the Director.

d) Current road conditions

A study was conducted by investigating certain specific points along the road from Yangon to Hpa-an.

2-5

3) The flow of the study

Figure 2-2 the flow of the study

Source: Study Team

2-6

4) Study team

The figure below shows the team members and the organizational structure.

Figure 2-3 Team member and organizational structure

Source: Study Team

2-7

(3) Study Schedule

The field study schedule is shown as follows:

Mission trip period: 4th October, 2013 – 25

th October, 2013

Figure 2-4 Study Schedule (1)

CITY/AIRPORT Time Transportation Summary

1 4-Oct-13 Fri dept. HND 0:20 TG661 Dept. to Bangkok, Thailand

Bangkok 13:00 MTG Field visit

2 5-Oct-13 Sat 9:00 Dept. Hotel

11:00 Site visit Rojana Industrial Park

3 6-Oct-13 Sun dept. BKK 17:50 TG305 Dept. to Yangon, Myanmar

4 7-Oct-13 Mon 9:00 MTG　Myanmar Lighting Manufacturing Co. Ltd. GM Mr. U Htay Min

11:30MTG Mizuho Bank, Ltd. International Corporate Advisory Division Ms.

Obara

13:00 MTG Project team Kickoff Meeting for mission trip

5 8-Oct-13 Tue 5:00 Dept. to Hpa-an, Kayin State

13:00 MTG w/ The Kayin State Government

15:00 Site visit Hpa-an Industrial Zone

6 9-Oct-13 Wed 5:00 Dept. to Myawaddy

11:00Site Visit & MTG Myawaddy Industrial Zone

Mother Construction Co., Ltd. Myanmar General Contractor

13:00 Lunch Kayin State Gust house

14:00Visit Myawaddy Pagoda

w/ State Minister of Electric Power and Industry U Saw Kyi Linn

14:30 Visit Myanmar- Thailand Border Immigration

16:00 Site study　Myawaddy Industrial Zone

18:30Dinner w/ State Minister of Electric Power and Industry Mr. Saw Kyi

Linn

7 10-Oct-13 Thu Myawaddy 5:00 Dept. to Hpa-an, Kayin State

10:00 MTG w/ Ministry of Construction of Kayin State

13:00 Dept. to Yangon

8 11-Oct-13 Fri9:00

Visit & MTG Japanese Embassy Secretary w/ Second Secretary Mr.

Watanabe

11:00 Visit & MTG JICA Myanmar Chief Representative Mr.Tanaka,

14:00 MTG Delotitte Yangon, Mr. Kimura

15:30 MTG Project team

9 12-Oct-13 Sat

10:00

Site Visit UMH Yangon Factory & MTG NIPPON STEEL & SUMIKIN

BUSSAN CORPORATION Textile Planning Department, Textile

Company w/ Manager Mr. Inoue, Technical advisor Mr. Tokusaka

18:00Dinner UMH CO., LTD w/Chairman/CEO Myint Htay, Managing Director

Myat San Wynn

10 13-Oct-13 Sun Yangon Office workday

11 14-Oct-13 Mon 9:00 MTG w/ Project team

11:00

14:00 MTG Design Printing Services Ltd.

17:00 MTG w/ ILO Mr. Than Aung Kyaw

12 15-Oct-13 Tue 8:30 MTG w/ Project team

Bangkok 14:55 TG302 Dept. to Bangkok, Thailand

13 16-Oct-13 Wed 9:00 Train Myanmar Embassy in Thailand apply for entry visa

14:00MTG National Exonomic and Social Development Board International

Coodination Office JICA Expert Dr. Taguchi

14 17-Oct-13 Thu9:00

Train

MTG Japanese Chamber of Commerce, Bangkok (JCCB) w/ Secretary

General Mr. Ishii

14:00 MTG THE NIPPON ROAD Co., Ltd. w/ Chairman Mr. Izumi, Mr. Sato

15:00 Myanmar Embassy in Thailand

15 18-Oct-13 Fri10:00

Train

MTG SUMIKIN BUSSAN INTERNATIONAL THAILAND LTD. (SBIT) Textile

Department R&D Asean Texitile Industries w/ GM Mr. Wada

14:00 MTG JETRO Bangkok w/ Director Mr. Asano

16 19-Oct-13 Sat Bangkok MTG Project team & Office workday

17 20-Oct-13 Sun Bangkok MTG Project team & Office workday

18 21-Oct-13 Mon dept. BKK 10:30 DD8116 Dept. to Mae Sot

arrival Mae Sot 11:45 Dept. to Myawaddy

Mae Sot 12:30 Mae Sot - Myawaddy Border Immigration

13:00Site Visit Myawaddy Bonded warehouse, area study, Myawaddy IZ

area, neibouring rivers

15:00MTG Myawaddy Custom Department, Department of Commerce and

Consumer Affairs w/ GM U. Tin Ye Win

15:30 Visit Local Tranport Company w/ Mr.Nay Lin Myint

16:00 Site visit Mae Sot Hotel&Housing Facilities, Shopping Center

19 22-Oct-13 Tue dept. Mae Sot 16:35 DD8121 Dept. to Bangkok

20 23-Oct-13 Wed Bangkok MTG Project team Office workday

21 24-Oct-13 Thu

10:00

Train

MTG The Overseas Human Resources and Industry Developing

Association (HIDA) w/ Senior Deputy Representative Bangkok Office

Mr. Kubota

15:00Train

MTG IOM Labour Migration & Counter Trafficking Programme

Coordinator Ms.Claudia Natali

23:55 TG302 Dept. to Narita

22 25-Oct-13 Fri NRT 8:10 Arrive to Naria


Vehicle

Vehicle

Myawaddy Hpa-an Field StudyPeriod：　4th Oct. 2013 - 25th Oct. 2013

Hpa-an

Yangon

Bangkok

Bangkok

Yangon

Maeson

Myawaddy

Bangkok

Bangkok

Vehicle

Vehicle

Bangkok

Date

Vehicle

Vehicle

Yangon

Yangon

Hpa-an

Myawaddy

Hpa-an

Vehicle

Vehicle

Source: Study Team

2-8

Mission trip period: 25th November, 2013 – 1

st December, 2013



1 5-Dec-13 Thu dept. Narita 11:45 TG643 Dept. to Bangkok, Thailand

BKK MTG Project team

2 6-Dec-13 Fri 9:00 MTG Project team

11:00Site visit &MTG Rojana Industrial Park Duty Free Zone, Rojana Industrial Park

Public Co., Ltd. w/ Marketing Department General Manager Mr. Hayashi

3 7-Dec-13 Sat BKK 8:00 MTG Project team

9:30 MTG & Office workday Document & Presentation preparation

4 Sun dept. BKK 13:00 TG305 Dept. to Yangon, Myanmar

RNG

5 8-Dec-13 Mon Yangon 5:00 Dept. to Hpa-an, Kayin State


15:00 Site visit Hpa-an IZ

6 9-Dec-13 Tue 8:00 Dept. to Mon State

10:00 Site visit & MTG Myanmar LIGHTING (IPP) Co., LTD.

Yangon 11:30 Dept. to Yangon

Dept. RGN 19:40 TG306 Dept. to BKK

dept. BKK 23:55 TG642 Dept. to NRT

7 10-Dec-13 Wed NRT 8:10 Arrive to NRT


VehicleHpa-an

MonVehicle

Myawaddy Hpa-an Field StudyPeriod：4th Dec.2013 - 10th Dec.2013

Date

BKK Vehicle

Source: Study Team

Mission trip period: 25th November, 2013 – 1

st December, 2013



1 25-Nov-13 Mon dept. NRT 10:50 JL707 Dept. to BKK

2 26-Nov-13 Tue Bangkok 9:00 MTG Project team

3 27-Nov-13 Wed Bangkok 13:00 Dept. to BKK

4 28-Nov-13 Thu dept. RGN 13:00 TG305 Dept. to RGN

5 29-Nov-13 Fri 9:00 MTG Japanese Banks

11:00 MTG General Contractors

6 30-Nov-13 Sat 8:00 MTG Japanese Banks

10:00 MTG Foreign-affiliated firm

dept. RGN 14:45 TG302 Dept. to BKK

dept. BKK 23:15 JL702 Dept. to NRT

7 1-Dec-13 Sun NRA 7:00 Arrival to NRA

Vehicle

Vehicle

Yangon

Yangon

Myawaddy Hpa-an Field StudyPeriod: 25th Nov. 2013 - 1st Dec. 2013

Date

Source: Study Team

2-9

Mission trip period: 28th November, 2013 – 29th November, 2013



1 28-Nov-12 Thu BKK 10:45 DD8118 Dept. to Mae Sot

Mae Sot 12:00 Arrival

Mae Sot/ Myawaddy 14:00 Visit Textile companies

2 29-Nov-12 Fri Mae Sot 9:00 Vehicle Site Visit Mae Sot & Myawaddy Power

dept. Mae Sot 16:50 Dept. to BKK

arrival BKK 18:05

Vehicle

Myawaddy Hpa-an Field StudyPeriod: 28th Nov. 2013 - 29th Nov. 2013

Date

Source: Study Team

Mission trip period: 28th November, 2013 – 29th November, 2013



1 5-Dec-13 Thu dept. Narita 11:45 TG643 Dept. to Bangkok, Thailand

BKK MTG Project team

2 6-Dec-13 Fri 9:00 MTG Project team

11:00

Site visit &MTG Rojana Industrial Park Duty Free Zone, Rojana

Industrial Park Public Co., Ltd. w/ Marketing Department General

Manager Mr. Hayashi

3 7-Dec-13 Sat BKK 8:00 MTG Project team

9:30 MTG & Office workday Document & Presentation preparation

4 Sun dept. BKK 13:00 TG305 Dept. to Yangon, Myanmar

RNG

5 8-Dec-13 Mon Yangon 5:00 Dept. to Hpa-an, Kayin State


15:00 Site visit Hpa-an IZ

6 9-Dec-13 Tue 8:00 Dept. to Mon State

10:00 Site visit & MTG Myanmar LIGHTING (IPP) Co., LTD.

Yangon 11:30 Dept. to Yangon

Dept. RGN 19:40 TG306 Dept. to BKK

dept. BKK 23:55 TG642 Dept. to NRT

7 10-Dec-13 Wed NRT 8:10 Arrive to NRT


VehicleHpa-an

MonVehicle

Myawaddy Hpa-an Field StudyPeriod：4th Dec.2013 - 10th Dec.2013

Date

BKK Vehicle

Source: Study Team

Chapter 3 Justification, Objectives, and Technical

Feasibility of the Project

3-1

(1) Background and Justification of the Project

1) Project Background

a) Myanmar

While Myanmar attracts the world’s attention to its rapid economic development, liberalization, and

democratization as Asia’s “last frontier,” the effects of the country having suffered through 50 years of economic

sanctions and numerous internal ethnic group conflicts have become equally pronounced. The West’s economic

sanctions prevented not only the development of the country but also any Foreign Direct Investment (FDI).

Chronic unemployment and national impecuniousness plague the society. In addition, due to the government’s

neglect in providing basic infrastructure to the nation, Myanmar has a great shortage of power supply-arguably the

most important component of the industrial development. The issue of power supply is one of the most pressing to

the country.

b) Thailand

The domestic industry in Thailand had shown dramatic growth, which resulted in its national economic growth in

recent years. As a consequence, the labor-intensive industry, requiring only modest upfront investment, has been

forced to operate in a low-cost area away, distant from the Thai capital. Furthermore, due to a 300 baht/d

minimum wage, introduced in 2013, labor-intensive industries began to plan low-cost operations by relocating

manufacturing facilities in the neighboring countries outside of Thailand to take advantage of those countries’

cheap labor. Currently, the Thailand Board of Investment (BOI) is considering a policy that would encourage the

transfer of labor-intensive industries to neighboring countries through a new BOI to be enacted in 2015.

2) Project Necessities

a) Construction of IZ on the border with Thailand

Understanding the movement of political decision-making on the Thai side, the Kayin State, sharing a border with

Thailand, has decided to construct the IZ in the border town, Myawaddy, in order to create local employment and

comply with the demand of its neighbor Thailand.

b) Adopting the international standard to receive Japanese investment

Kayin State’s original development plan for an IZ is not sufficiently attractive to attract FDI, due to its deficient

infrastructure facilities - i.e. power supply, water supply, and drainage management system, and solid waste

disposal system. This project aims to establish the IZ to international standards for both in Myawaddy and Hpa-an.

For the development of Myawaddy IZ, developers also seek to participate in the operation of the IZ.

c) Solution through a PPP scheme for finance

The business operation of an IZ requires consideration of selling the plot of land to private companies. It enables

the development of an economically efficient IZ by establishing Special Purpose Companies (SPC), which will

work particularly well in the financial aspect under a PPP scheme.

3-2

Figure 3-1 Project background

Source: Study Team

3) Scope of the Project

The scope of the project comprises the development plan of Myawaddy (IZ) and the Hpa-an IZ. Myawaddy IZ is

located next to the Myawaddy Trade Zone. Hpa-an IZ, already in operation, is located near the state’s capital.

Both are being promoted by the Kayin State government. This project seeks to strengthen the goals of Myawaddy

IZ and Hpa-an IZ through the administrative mechanism of SEZ Public Private Partnerships (PPP).

The study team considers that the following three projects have crucial influence to this project; i) Myawaddy

Trade Zone (located in the part of Myawaddy IZ), ii) IPP power plant in Mawlamyine, and iii) the construction of

the bypass road supported by the Thai government.

4) Analysis of the current status, a future projection (including demand forecast), and probable negative

consequences if the proposed project is not implemented.

a) Current Status

[Myanmar]

Whereas industrial development has stalled during the time that the Myanmar military regime has been in power

in the country, there are chronic unemployment issues in the country and numerous Burmese migrant workers

living in Thailand.

[Thailand]

Since the 300 baht daily minimum wage became effective April 2013, the movement to locate branch factories in

neighboring countries to enjoy the benefit of cheap labor has become prominent among labor-intensive industries.

The majority of workers in the labor-intensive industries in Thailand are from Myanmar.

3-3

b) Future projection

[The need for project]

According to the analysis of theorem status indicated above, it is necessary to establish the agglomerations of

labor-intensive industries in the border between Thailand and Myanmar, which will lead to immediate job creation

and also the development of a new middle class.

The following industries are the types of factories under consideration for inclusion into the IZ by the Government

of Kayin State.

Garment

Food-processing factories

Canned food factories (meat and fish)

Chemical fertilizer

Timber factories

Tire factories

Car parts manufacturing

Battery manufacturing

Electronic products

In terms of the industries mentioned above, garment, food-processing factories, canned food factories, timber

factories, and car parts manufacturing are the focus of the Phase 1 invitation to companies to establish such

plants. Battery manufacturing and electric products industries with added value will be the focus of activity

after Phase 2 development.

In other words, this project will satisfy both social and economic needs - present and future - at the border

through the construction of the proposed Myawaddy IZ.

The following figure demonstrates a phased developing plan: long-term, medium-term, and short-term (see

Figure 3-2, Figure 3-3, and Figure 3-4).

① Comprehensive long-term project development plan

“Kayin State Job Creation Development Plan for 100,000 people (~2030)”

In comprehensive long-term project development plan, project plans to create the jobs for 100,000 people in

Kayin state. According to the data available in Thailand, the average nunmber of employees in a labor-intensive

factory in an industrial zone is 200 people/ha. Therefore, roughly 500 ha. of land is required to accommodate

100,000 jobs created in the industrial zone.

The project plans to create 100,000 jobs for people in Kayin state through the development of an SEZ as the

long-term goal. The Project also plans to breed a new middle class as one of its long term targets. Training

managers as a part of this project plan will be necessary for the next generation in Myanmar.

3-4

Figure 3-2 Comprehensive long-term project development plan

Source: Study Team

② Medium-term project development plan (~2025)

Figure 3-3 Myawaddy - Hpa-an - Mawlamyine Economy Triangle concept

Source: Study Team

Electric power

To supplement the deficiency in electric power, the Independent Power Producer (IPP) is planning to build a

power plant in Mawlamyine in Mon state. That plant will be completed in 2014, and will generate and transmit

230 MW of power by the year 2015. Plans call for that plant to supply the power to Hpa-an IZ as well.

Establishment of a road network

To improve the distribution networks between Myawaddy and Hpa-an, Kayin State has investigated the present

status of road networks and transportation systems in the region. The establishment of new traffic networks may

be considered in order to realize efficient traffic flows through utilizing ODA.

3-5

Promotion of Myawaddy industrial zone to an SEZ

As Myawaddy industrial zone expands its activities overtime, and develops trade relationships with Thai

companies while maturing as a Duty Free Zone (DFZ), its developers will promote Myawaddy industrial zone

as a regional SEZ enjoying a variety of privileges in the process.

In order to obtain the SEZ approval, the following requirements need to be satisfied: the provision of

administrative services and exemption of various taxes, enhancement of ancillary services and infrastructure

facilities, the services related to logistics, business operation, and banking, education and training for workers,

management class professionals, satisfying the required elements for industry as well as the satisfying the needs

of housing, schools, health services, police and fire stations, parks, and amenity facilities etc. Table 3-4

demonstrates the major role of Public and Private sector.

Table3-1 Requirements for SEZ

Source: Study Team

Figure 3-4 Short-term development plans

Source: Study Team

3-6

Myawaddy industrial zone

The project will establish a Special Purpose Company (SPC) and purchase the land in Myawaddy industrial zone

after the local contractor finalizes the Phase 1 development works, and provides the very necessary

infrastructure built to meet the prevailing international standard. Myawaddy industrial zone grants some

privileges in the Duty Free Zone, because it straddles the border with Thailand and will promote many export

and import businesses in its processing trades.

Hpa-an industrial zone

The Project will promote Domestic Foreign Investment (DFI) and Foreign Direct Investment (FDI) for Hpaan

industrial park - which is already completed and in operation. It especially focused on meeting an international

standard of attractiveness of an industrial zone by preparing infrastructure such as water supply and water

treatment equipment as part of the project.

Duty Free Zone in Myawaddy

Myawaddy industrial zone established Duty Free Zone (DFZ) utilizing the customs house adjacent to it. A

vendor can escape the import tax on materials and semi-processed goods when it transports them through, and

keeps them in, the DFZ, even though sales tax is charged upon delivery.

Figure 3-5 Flowchart of distribution in Duty Free Zone (DFZ)

Source: Rojana Distribution Center Co. Ltd.

5) The Advantages of SEZ Development

The following attributes of SEZs constitute the most demonstrative advantages of SEZs for further development

in the future. As of December 2013, a revision of the law governing SEZ development was in progress, under the

authorship of the MIC (Myanmar Investment Commission), and the detailed results are still unknown.

Note: (Myanmar Yellow Pages, http://myanmaryellowpages.jp/modules/business/)

The previous administration had passed a "Special Economic Zone Act (SEZ Act)" comprised of 12 chapters on

January 27, 2011. According to this legislative act, any matters relating to SEZ development will be determined

by the approval of the Myanmar government’s Central Working Body and Management Committee.

a) The purpose of SEZ Development (SEZ authorization acquisition):

3-7

The approval of foreign operational investment must be based on a framework that addresses

the maintenance of national sovereignty, national defense, and national protection;

The establishment and operation of SEZ are to promote the economic development of the

country;

SEZs develop national industry and advanced-technology;

SEZs offer opportunities for training in advanced- technology, transfer of technology, and

higher learning;

SEZs create employment opportunities;

SEZs develop the national infrastructure inventory.

b) Business enterprises in SEZs:

Product processing industries, high-tech production industries, manufacturing industries, agriculture,

livestock and marine nutrient industries, mineral industries, and forest products industry, etc.;

Trade, transportation and logistics, warehousing industries, hotels, tourism, education, health,

housing, infrastructure supply support centers, green industries for natural environmental

conservation, development, service industries for recreational resorts, etc.;

Roads, bridge piers, airports, ports, power generation facilities, telecommunications, water supply,

environmental protection, and waste disposal, etc.;

Other projects approved by central organizations with the approval of the government.

c) The preferential incentive towards participants in SEZs

SEZs enable participating tenant companies to open overseas bank accounts - remitting and

receiving the transfer of foreign currency in transactions approved by the central organization. The

operation of the insurance companies of foreign countries is also possible.

Land use rights of SEZs:

The land use rights apply for a minimum of 30 years with SEZ authorization acquisition. Up to 75

years of land use rights may apply for large-scale business investments, 60 years of land rights for

mid-scale business investments, and 40 years of land rights for smaller business investments. Land

use rights of 40 years duration tend to be the longest.

Income tax:

A tax reduction of 50% for overseas sales would be in effect for the subsequent five year period.

After the tax relief period expires, if the product export value exceeds certain values, the following

tax exemptions for corporate income tax apply: i) 50% of the total production value for large-scale

investment projects, ii) 60% for medium-sized investment business, and, iii) 70% for small

investment business.

3-8

d) Other taxes

Commercial taxes for service industries: certain designated period of time exemption from the first

year of operation. Duty-free export commodity exemption for commercial tax and value added tax

(VAT) for the products produced in the SEZ;

Other taxes and export duties;

Exemption of tax for raw materials imported from abroad, machinery, equipment (particularly for

businesses specializing in export processing);

For automobile, machinery, and equipment used in the business investment, the tax exemption

applies for five years from the start of the first business year. For the subsequent five years, the tax

reduction of 50% applies.

6) Verifying the SEZ authorization acquisition possibilities

① In regard to entering into the Myanmar market for foreign companies for their operation as branch offices

(100% owned or joint capital) - The corporate tax for branch office establishment is 35% and for representative

office establishment is 25%.

There are 3 ways of entry into the Myanmar market for foreign companies, through:

Directorate of Investment and Company Administration (DICA)

Myanmar Investment Commission (MIC)

SEZ tenant company

Any of the above 3 options will result in the formal registration of the established business, and, the acquisition of

a DICA-issued business license.

Furthermore, if foreign companies want to receive tax exemptions and investment protections based on the

enabling measures of the Foreign Investment Act, it is necessary to obtain a permit for investment from the MIC.

In addition, investment within the SEZ requires the permission of the Management Committee. However,

regarding SEZs in the early stages of development, regulations are in the process of receiving legal scrutiny

leading to potential amendment. The national law in Myanmar is still under development and there are numerous

opaque issues outstanding especially in terms of the operational aspects. Therefore, the urgent need to acquire the

latest information is always essential to inform decision-making (Futami, 2013: Nikkei construction issued on

2013.12.9).

With a view towards understanding the current status of the legal system in Myanmar regarding SEZ

establishment, the following summarizes short term development plans.

② Verifying the possibility of SEZ authorization acquisition

Currently, Myawaddy IZ is under development of its Phase 1 (57.4ha) by the Kayin State Government. In order to

establish an SEZ in the Myawaddy area, it is necessary to plan and organize a development area of more than

300ha and to provide a reliable power supply apart from the required components (as shown in Figure 3-4).

However, the future development plan of the government will be crucial in order to satisfy the required stable

power supply. Therefore, SEZ authorization acquisition will be the focus of the government’s medium-term plan,

3-9

while in the short-term development plan, the government aims to develop a bonded processing zone.

7) Study of required incentives in the case of SEZ approval has not been taken

If the approval of an SEZ is obtained only in the medium term but not in the short term, the following incentive

measures can be provided for the tenant companies in Myawaddy IZ:

• The grant of an exemption on customs duties, export and import procedures, trade, and other government

regulations on banking;

· Tax exempt status for one-stop service related to various application procedure costs associated with business

operations;

· Partial tax exemption from the public dues of Kayin State. The SPC will negotiate with the Kayin State

Government for applicable additional incentives;

·Possible discounts for the cost of water supply, sewerage treatment, and solid waste disposal fees.

8) The preferential advantages for a bonded processing zone:

The procedure for obtaining an approval for a bonded processing zone to focus on the short term goal for

Myawaddy IZ is the subject of a separate application to MIC;

It is to be noted that both the "Foreign Investment Law" and the "Company Law" are the laws relating to the

incorporation of Myanmar. However, in order to receive preferential treatment when establishing an enterprise

corporation under the Foreign Investment Law, there is a favorable method more than what can be applied through

the Companies Act.

The purpose of the Union of Myanmar’s Foreign Investment Law, and to expediting the enactment of the law,

meets the purpose of Myawaddy IZ SPC by:

① Promotion of exports and expansion;

② Exploitation of natural resources that require large-scale investment;

③ Acquisition and introduction of advanced technologies (high technology);

④ Production that requires large amounts of capital and protection of support service activities;

⑤ Expansion of employment opportunities;

⑥ The development of business contributes to saving energy consumption;

⑦ Regional development

The main points in the amendment to the Foreign Investment Law, effective January 31, 2013, are as follows.

· Extension of the exemption period of the corporate income tax from 3 to 5 years;

· Extension of the land lease period is from 30-50 years;

· Enabling the mortgaging of land;

· Remittance to foreign companies established by the foreign investment law is under consideration;

· Labor-related regulations: 25% skilled workers employed within 2 years of establishment, 50%

within four years’ time, 75% within six years’ time;

· Non-skilled workers must be 100% Myanmar-nationals;

3-10

· Supplement to Training Obligations;

· Supplement to the obligations of environmentally-friendly development

(Ohara, 2013: “5 provided truth in Myanmar economy”, Gentosha Shinsho)

9) Assumed problem when the proposed project is not implemented (Assumed problems and risk through failure

to implement the project)

a) IZ development

・ If the proposed project is not successfully implemented, there is a risk of failure to reach the objective of the

“Myawaddy IZ” as promoted by the Kayin State government in its comprehensive regional development

plan;

・ As the expansion of the economic corridor is expected to reach the state capital of Mon state, Mawlamyine,

failure to implement the project risks hindering further economic development of Myanmar;

・ The “Myawaddy Trade zone” next to the Myawaddy IZ has begun operations. Failure to implement the

project risks negative impact to effective operation of the trade zone.

b) Logistic

Map 3-1 Logistic Route through Myanmar

Thailand Tak

Thailand, Myanmar, China Route

China Kunming

IndiaImphal

India- Myanmar- Thailand Route

Source: Study Team

3-11

・ The logistic from Kumming, China, and Imphal, India to Thailand via Myanmar will pass through

Myawaddy. Such geographical advantage needs to be well utilized.

・ While bypass road construction between Thigannynaung and Kawkareik, and improvement of the

access road to Myawaddy IZ have been carried out under this funding, if the project is not implemented,

these investments will be denied the anticipated economic impact, and may result in an adverse reaction

between the two countries.

・ It will negatively affect the economic integration of ASEAN in 2015.

③ Power supply

As the Myawaddy IZ development plan is completely dependent on a continuous power supply from Thailand

during its first stage of development, if the implementation of the project fails, it may become necessary to revise

the power supply agreement.

d) Effectiveness and impact when implementing the project

① Labor intensive industry

・ Upgrading the Myawaddy IZ enables it to receive the businesses and factories that have been forced to

withdraw from Thailand due to the increase in minimum wages there.

・ In Myanmar, labor-intensive industry would contribute to regional economic development and a reduction in

unemployment which leads to national economic development.

② High-tech industry (Thailand)

・ Thailand, the productive hub of ASEAN, which has grown into a middle-income economy country, can

present a pivotal opportunity to grow through technological innovation.

③ Japanese enterprises

・ In Japan, national domestic demand has reached its saturation point and overseas markets are necessary for

Japanese economic health. It is crucial for Japanese enterprises to enter into the Myanmar market in order to

mitigate the China risk. This view is also compatible with the particular aspect of the Thai-plus-one strategy

that entails a definite response to external economic challenges.

④ Kayin State

・ The prominent characteristic of Myawaddy IZ development plan is the comprehensive regional development

plan incorporating the advantage of geographical proximity to Thailand.

⑤ Logistics

・ The distance between both Yangon and Bangkok, as large consumer markets, is approximately 450km from

Myawaddy respectively. The major advantage of the route through the Asian highway is that industrial goods

and raw materials produced in Myawaddy IZ are not required to pass the Straits of Malacca across the Malay

Peninsula in order to reach to the logistics port of those cities. Therefore, the logistic lead time required to

3-12

transfer the products will shorten considerably.

e) Comparative analysis between the project alternatives

As described above, Myawaddy IZ has great potential for economic development as it has the characteristic

favorable to both economic and geographic location.

The following table shows the comparative analysis among the three major SEZ projects in Myanmar and Mae

Sot in Thailand - located near Myawaddy.

Table 3-2 Comparison of Myawaddy IZ and other projects

Choices Land

Approval

Central

Gov.

Priority

SEZ

Approval

SPC

Establishment

Funding

prospects

Stable

Power

Supply

Stable

Potable

Water

Supply

Difficulty of

Construction

Work

Myawaddy ○ △ －－－ △ △ △

Dawei △ ○ ○ ○

Thilawa ○ ○

○ △ ○ ○ ○ ○

Mae Sot － ○ ○ － △ △ －－

(Explanatory notes) ○：High probability △：Possible －：Unknown

Source: Study Team

3-13

(2) Analysis for the Planning of the Project

1) Demand estimation

The demand estimation for this study will focus only Myawaddy IZ for the following reasons:

・ As shown in Figure 3-3, in the Myawaddy- Hpa-an- Mawlamyine economy triangle concept, while the

demand forecast is already completed as the development precedes in Hpa-an, the study team considers

that the Myawaddy IZ project needs immediate further market study;

・ Although it is necessary to revise the demand forecast for Hpa-an, due to time constraints in the current

study, substantial research is not possible;

・ From the viewpoint of industrial development and the perspective of the economic partnership with

Thailand, the study team recommends focusing on “Myawaddy First, Hpa-an Second.”

2) Job creation

Myawaddy industrial park is divided into north and south districts across the national highway No.85. The

development of Northern district is divided into Phase1, Phase2, and Phase 2N. The development of Southern

District is divided into Phase 2S, Phase 3, and Phase 4 for gradual sequential development. The size of the total

development for both Northern and Southern districts is 500ha (See Figure 3-9 Myawaddy SEZ development

planning area layout plan).

The forecast of job creation is calculated based on a unit of land area per plant. The study team utilized the Phnom

Penh SEZ data and the actual results of other SEZs. The numbers of the original unit are shown as below:

Table 3-3 Myawaddy IZ job creation (per unit)

Garment

Consumer

Goods

Auto & Electric

Parts Agro-Food

Employment(person/ha) 300 300 200 300

Source: Study Team

The numbers of non-manufacturing employees are principally workers for commercial and other tertiary industry

service sectors. The study team considered that the numbers of factory workers in Phase 2N of the North District

and Phase 2S of the South District are equivalent accounting for the half of total factory workers.

The following table shows the job creation of phase-specific and industry of Myawaddy IZ.

3-14

Table 3-4 Job creation in Myawaddy IZ

Item Unit North district South district Total

1 2 2N 2S 3 4~5

Industrial Zone Total Area ha 57.4 23.9 49.9 73.1 122.2 173.5

Industrial Zone Sectional

Area

131.2 368.8 500

Factory Area ha 48.8 0 26.8 34.6 85.0 104.8

Factory Area per Sectional

Area

75.6 224.4 300

Infrastructure, Housing,

Service, other non- factory

area

ha 8.6 23.9 23.1 38.5 37.2 68.7

Same as above, per district ha 55.6 144.4 200

Number of industrial

employees

Person 21,300 70,200 91,503

Number of non-industrial

employees

Person 10,650 70,200 80,850

Total number of employees

person 31,950 140,400 172,350

Source: Study Team

3) Demand for Infrastructure facilities and equipment

The team has identified the project infrastructure requirements in the areas of electric power, water supply, and a

sewerage network. The proposal for a solid waste disposal system will not be included in the current study for the

following reasons:

In general, the types of industrial waste are in wide ranges such as: miscellaneous garbage, wood waste,

organic sludge, inorganic sludge, waste plastic, and metal scraps, etc.;

For the case of the labor-intensive industries, depending upon the industry, the types of waste material varies

substantially in the expected total amount of waste material, types of materials, form, and quality, etc.;

In the short term including the construction phase, the waste will be transported to municipal disposal sites in

Myawaddy. In the medium to long term, the waste disposal issues will be handled at the policy level in the

Kayin State Government.

① Demand basis per Industrial Lot Area

The forecast of infrastructure demand upon land is based on a calculation per unit of land area per plant. In

addition, the team utilized the Phnom Penh SEZ data and other SEZs as references.

3-15

Table 3-5 Myawaddy Industrial Zone Demand by Industrial Lot Area

Demand Garment Consumer

Goods

Auto & Elect.

Parts Agro-Food

Water (m³/ha) 50 50 40 100

Waste water (m³/ha) 40 40 32 80

Electric power

(MW/ha) 0.080 0.080 0.100 0.075

Source: Study Team

② Infrastructure Area Demand

The table below shows infrastructure land-demand by phase and industry.

Table 3-6 Myawaddy Industrial Zone Infrastructure Area Demand (/ha)

Item Unit North district South district Total

1 2 2N 2S 3 4~5

Industrial Zone

Total Area

ha 57.4 23.9 49.9 73.1 122.2 173.5

Industrial Zone

Sectional Area

131.2 368.8 500

Factory Area ha 48.8 0 26.8 34.6 85.0 104.8

Factory Area per

Sectional Area

75.6 224.4 300

Infrastructure,

Housing, Service,

other non- factory

land use

ha 8.6 23.9 23.1 38.5 37.2 68.7

Same as above,

per district

ha 55.6 144.4 200

Water Supply m³/d 6,173 20,520 26,693

Sewerage m³/d 4,938 16,416 21,354

Power supply MW

6.7

23.6 30.3

Telecommunicatio

ns

Solid Waste t/d

Source: Study Team

3-16

4) Analysis of the necessary issues

a) Electric Power supply

The most important component for the Myawaddy development plan is securing a reliable and continuous

stable power supply. Below are the findings from the first mission trip regarding power supply:

① EGAT: Ten (10) MW of power at 8 baht/kwh are to be supplied from Thailand until 2016.

The revision of the terms and conditions, such as expansion of the power supply and extension of the period

that will be required depending on the power demand of tenant companies and the projected type of

industries.

② An Independent Power Producer (IPP) is constructing fully self- funded Combined Cycle Power Plant to

supply reliable power. According to the construction plan (see figure 3-6), the following is the power supply

schedule.

43.5MW: January, 2014 ~

98MW: November, 2014 ~

230MW: October, 2015

③ Although there is no confirmation that Myawaddy is included in the IPP power distribution subject area, it is

necessary to inquire about this subject to both Kayin State and the central government so that the implementation

of power transmission can be secured by the national grid in this area.

④ Kawkareik power station construction: 2016 completion

The study team estimates that the Myawaddy IZ can manage the power demand by adequately combining

those power supplies through monitoring the project progress by improvising and improving upon the plan

overtime.

It should be noted that in the case of Hpa-an IZ, the authorities have already installed a substation 66kv/11kv and

20MVA capacity.

Figure 3-6 Mawlamyine power plant implementation program

Source: Myanmar Lighting (IPP) Co,, Ltd.

3-17

Photo 3-1 IPP Power plant in Mawlamyine (under construction)

Source: Study Team

Map 3-7 Mawlamyine Power distribution plan

Source: Study Team

3-18

b) Water supply

① Kayin State

In Kayin State, there are no any water purification plants using surface water, except for the spring water

distribution facility in plateau areas for military camp use, and those water supply facilities are undeveloped. In

the mountainous areas, people use spring water, and in the plains areas, people use underground well water.

(See Chapter 4: Evaluation of environmental and social aspect)

② Myawaddy IZ

As there is no water supply facility in Myawaddy IZ, both water supply for domestic use and water supply for

construction activity are extracted from the aquifer stratum at 200ft down from the ground level; 40,000 liters/d is

used by the North district Phase 1 construction site.

c) Sewerage

① Kayin State (Hpa-an IZ)

There is no public sewerage system for waste water. Although the partially-operating Hpa-an IZ has plans to

build a waste water treatment plant in the future, currently un-treated waste water is discharged to the

surrounded area.

② Myawaddy IZ

While phase 1 construction of this IZ is under operation, there is no sewerage system development plan

currently under consideration. As a general rule of infrastructure planning for underground installation, it is

necessary to complete construction of a sewerage system prior to road construction. Therefore, it is important

to complete the development plan for a sewerage system as soon as possible.

d) Waste disposal

The IZ master developer does not have a waste disposal treatment system plan for both Myawaddy IZ and

Hpa-an IZ.

e) Telecommunications

An advanced telecommunications system plan such as a fixed landline telephone network, a satellite

communications base station, a mobile cellular telephone base station, and an advanced Information and

Communication Technology (ICT) system development plan will be necessary telecommunications infrastructure

to attract FDI in the future. The current development plan for a telecommunications system is uncertain in regard

to the details and quality of its requirements.

f) The Access Road

The government has funded US$140 million to develop the road infrastructure in order to vitalize Tak province in

Thailand. The following are the identified projects:

① Rehabilitation of the Thailand – Myanmar Friendship Bridge

② Improvement of the Thigannynaung – Myawaddy Road

3-19

③ New construction of bypass road Thigannynaung – Kawkareik

④ Myawaddy – Kawkareik road open in 2015.

(It will shorten the duration for two hours connecting two cities)

As of March, 2013, the border of Myawaddy is open and there are numerous large trucks Vehicles are passing the

one way mountainous road through Dawna Mountain. It is highly expected The study team expects that the

implementation of road infrastructure funded by Thai government as described above will improve dramatically

the access road from Thailand to Hpa-an, Myawaddy, and to Yangon.

g) Housing facility

① When the development goal of “job creation for 100,000 people” is achieved through the Myawaddy IZ

development plan, the population will increase in size to 300,000 including the families of the factory

workers and those employed in the service sector;

② As the current population in Myawaddy is only approximately 60,000, housing will be in short supply with

such a drastic increase in population;

③ A housing development policy is a crucial part of the successful implementation of the Myawaddy IZ

development plan.

5) Study of technical method

a) Regional development plan

① The Kayin Sate government nominates the Myawaddy IZ development plan area and the land of

Myawaddy Trade zone as the “greater” “Myawaddy Industrial Zone”. (The east-west 5km, the south-north

4km)

② Although the study team could not receive the details of the regional master development plan as of

today, the study team understand the basic infrastructure development plan and the housing facilities

development plan are to include as part of the plan.

③ It is crucial to coordinate the Myawaddy IZ development plan with the regional master plan. In addition,

the revised plan and its proposal will also be significant when proceeding with the project in order to avoid

implementation delays.

b) Regional Climate Condition

① The main characteristic of climate in Myawaddy, Hpa-an, and Mawlamyine is described in the

publication, “Nature and application of land in South east Asia” (Takaya, 1985). The following is cited

from the above publication:

The land features of Southeast Asia can be characterized by two different features: a mountainous region

and a flat plain region;

The area on the equator is the annual tropical rainforest zone and the other area is the monsoon climatic

zone;

The land area is comprised of hills and flat land without large undulation;

In terms of the climate, the dry season continues through a longer period of months. It is similar to the

3-20

climate in India;

In general, on flat land area there is little water resources available;

The reason there are numerous huge retarding ponds in Myanmar is for the purpose of irrigation in

applying agriculture technology and techniques used in India 1,000 years ago;

The Indian method of land application is adopted particularly for the flat land management, especially

where there is insufficient underground water;

There are five major rivers in the south, from the west, the Ayeyarwaddy, the Thanlwin, the Chao Phraya,

the Mekong, and the Hongshui He.

③ The observed types of stones are as follows: sandstone, shale, limestone, and sedimentary rock on the surface

(Dawna Mountain range).

④ There are cement factories using limestone as a primary material from nearby Hpa-an city.

c) Topography

According to the topography map (1:12,000) obtained during the first mission trip, the main land features are as

follows:

① North district: the overall tendency is that the land slopes toward the northwest from the southeast. The range

of altitude is in between 180m above the sea level to 210m above sea level;

② The Thingyan River located in the northwest at the limit of Phase 2N, runs meandering towards northeast

direction.

③ The South district located next to the national highway root 85, which also refers to Asian Highway 1, the

altitude changes from 195m to 230m above sea level within a distance of 2km.

④ The main characteristic of the South district is that the altitude varies randomly from 185m to 230m above

sea level.

From the findings mentioned above, it is expected that there are numerous stream and small rivers with complex

watercourses in both south and north districts.

d) Soil and geology

① It will be necessary to study the characteristics of the soil, and, the mechanical and physical characteristics

of the geology by taking boring samples in the future.

② The well adjacent to the site management office of Kayin State in the North District indicates that the

aquifers distribute from a depth of 200ft (about 60m).

e) Weather

① There is no observation data for the weather except for the monthly average rainfall record of the last two

years .

② There was a flood report for the Moei, the border river, due to the heavy rains from 29th July to 22nd

August, 2013.

③ There are numerous large and small rivers meandering through the area in a complicated pattern. The

study team expects that there were flood damages in the lowland.

3-21

④ The annual rainfall of 2011 and 2012 in Myawaddy was 1,796 mm and 2,264 mm respectively, the most

of which was concentrated during the three months from June to August. The monthly average of rainfall is in

the range of 300 ~ 650mm/ month.

⑤ The annual rainfall In Yangon is approximately 2,400 mm. The rainy season runs for a period of 6

months (May to October) and the monthly average of the water accumulation is in the range of 150mm ~

550mm.

f) Seismicity

Regarding earthquake activity, seismic intensity of M7.3 has been recorded in 1930 in near Yangon; however, the

damage caused by that earthquake is not confirmed.

① It is widely believed that intensive seismic activity occurs in the mountainous areas of northern Myanmar.

Although the amount of frequency in the occurrence of seismic activity in the plain area around the Salween

River is not very high, it is necessary to conduct further survey in the future to collect necessary data to

inform structural design works etc.

The earthquake records of Myawaddy and Hpa-an have never been kept and are, therefore, unconfirmed.

g) Water Resources

① In general, it is difficult to rely on the water resource from the rain water since there is the difference in

availability between the dry season and the rainy season;

② In an overview of the Myawaddy IZ planning area, the catchment area is assumed to have quite large scale

even in the small to medium river basin. Although the amount of underwater intake differs depending on

the depth of the groundwater table, there appears to be enough potential reserve;

③ In regard to river water intake, although more data is necessary to determine river flow fluctuations over a

longer period, the study team does not consider there is major problems;

④ In regard to the raw water intake from the river, the width of the river and its current change significantly

between the rainy season and the dry season. The construction of a reservoir or dam is necessary for

year-round stable water intake. Further survey of terrain and geology is required for the optimum site

selection, particularly dam and soil surveys.

⑤ Although it is believed that the use of the Moei River, straddling the border between Thailand and

Myanmar, official meetings with Thailand are required for the development of water resources.

h) Zoning on Myawaddy IZ

The zoning on Hpa-an IZ is already determined and some factories are in operation. Some of the points of

consideration for zoning on Myawaddy IZ in light of the nature of the above conditions are:

① The planning area of Myawaddy IZ, as currently determined by the Kayin State government, is total of

326.4ha; north district, 131.2ha across from the national road No. 85 and from the south district 195.2ha.

(The total hectare area is based on the calculation from the topography map, as obtained by the project

team);

② The defined area is comprised of Phase1 (141.6 acres) from the north district and Phase2 (59.9 acres);

3-22

(See Figure 3-8 Myawaddy SEZ Development Plan Area, General Plan, and Figure 3-9 General

Arrangement Plan)

③ The rest of the proposed total area of 500ha of IZ has not been cleared in the first survey point. Therefore,

the survey will focus the targeted area of 326.4ha.

The elements and function of the IZ and land use considerations for zoning purposes are:

Industrial use: For IZ use;

Housing use: Accommodation facilities for the employees and their family of tenant companies,

accommodation facilities for those whose works in the service sectors from distant regions and other

facilities;

Commercial/service use: the provision of services and other commercial services for the factory workers,

trading partners, and external workers;

Administration and One-stop service use: the provision of administrative services to the employees and

companies operating in the IZ, the provision of administrative consistency services to the existing and

future tenant companies;

Park/ Open space use: Reserve land for environmental protection and future expansion of business;

Dry port use: The dry port is not planned to install as there is already established “Myawaddy Trade

Zone” next to each other. However it aims to link with the “Myawaddy Trade Zone” for the purpose of

cargo traffic in bond, customs clearance, and container freight station.

3-23

Figure 3-8 Myawaddy SEZ Development Plan Area

No

rth

Are

a

Mya

wad

dy

Trad

e Zo

ne

Sou

th A

rea

Source: Study Team

3-24

Figure 3-9 Myawaddy SEZ development planning area planar layout diagram

Source: Study Team

3-25

(3) Project planning

1) Principle of project planning and strategy

According to the functional use of Myawaddy IZ, the fore mentioned, the principles of project planning and

strategy particularly from the aspect of reasonable use are:.

a) As the operational earning is created by the rental factory leasing of the land, it i preferable to make the ratio

higher particularly for the factory use. However, there are constraints from the existing infrastructure and the

need to maintain an international standard. The IZ plan intends to reserve 60% of the total land available for

regular upgrades to infrastructure for the future development of Myawaddy IZ into a Special Economic Zone

(SEZ).

b) The IZ project is expected to create employment for 10,000 people when it reaches its targeted number of

total tenant companies. It is impossible to provide the housing facilities to all the employees. Therefore, the

accommodation facilities will be provided only for the targeted new middle class and also for the manager

class of employees from Myanmar and overseas.

c) It is expected that the population will increase approximately to the size of 300,000 by the time Myanmar

SEZ starts operations. It is necessary to develop a Comprehensive Regional Development Plan in order to

accept the increase of population.

d) It is required to secure adequate size of the land particularly for the One Stop Service (OSS) to provide

business support for operations and management in order for tenant companies to operate their businesses

smoothly and also to provide a variety of support services for the employees. The service offered by the OSS

center is crucial in order to support the return and resettlement of migrant Burmese workers in Thailand.

e) If there is any natural forest conservation area within the targeted development area of 500ha, additional

survey will be necessary to consider the most appropriate method to manage that forest.

f) The development procedure for the Myawaddy IZ will be as follows; development commences on the project

starts with the north area (1, 2, 2N), as identified by the state government, and brought to its completion. It

will be followed by development of the south area (2S, 3) as suggested by the state government. In

compliance with the Myawaddy IZ development plan, the project clarifies the specifications and standards of

the land development by addressing the current status of the areas as follows:

・ The predominant geographical feature of the land is flat. The specific points of high ground above sea

level are irregularly distributed from EL (Elevation Level) 210m to EL 180m in the north area, and from

EL 230m to 195m in the south area.

・ The predominant land use is agricultural made up of indigenous types of plantation.

・ Vegetation consists of a few tall trees, and a mixture of thick bushes and green fields.

・ The soil conditions and the geographic features are the next research objectives to be addressed.

・ Considering the existing geographic features, the project presumes that there are small water routes and

small rivers, which have many congested channels in the north and south areas, requiring intervention in

the construction stage.

・ The civil work will be unavoidably suspended from July to September during the rainy season.

3-26

2) Conceptual Design and Specification of Facilities

There are three major components of necessary conceptual plan and design as shown below.

The factory lots of the IZ

The on-site roads of the IZ

The storm water drainage

a) Land Development Plan for an industrial park

① Northern District

Based on the topographic map that has become available during the second survey (first official survey),

earthwork quantity is estimated for the north district based on ground mass. The following figure illustrates the

results.

(See Figure 3-9 Myawaddy SEZ development planning area layout)

Table 3-7 Myawaddy Industrial Park North District excavated soil volume

Phase

Construction

height

Excavation

amount

Enbankment

amount Excavation -

Enbankment

Purpose

（FL+m）（m³) (m³)

1 196.5 931,750 752,625 179,125

Factories,

Management, OSS

center

2 193.5 187,875 487,000 (299,125)

Accommodation facilities,

Park, Business Service

facilities

2N 195.0 650,000 465,500 184,500

Factories,

Infrastructure

Facilities, Retarding

basin

Total 1,769,625 1,705,125 64,500

Source: Study Team

The excavated soil volume is calculated as a measure of what will be needed for use given the anticipated

construction scale - the necessary amount of cut volume, and the fill amount in order to ensure that the height of

such a large land development as the IZ will be uniform throughout the developed area.

According to the actual demands of investors in the Myawaddy IZ, detailed development planning: specifying

small lot sizes, conforming with existing geographical features, water courses and meteorological conditions, all

leading to appropriate construction costs - will be needed.

To improve and maintain the precision of the land developments, new survey and information management

technologies will be introduced into the construction method to be used during implementation of the project - for

3-27

example, the total station system developed and generally used for the high-accuracy surveying of narrow areas,

the Global Navigation Satellite System (GNSS) which is a kind of Global Positioning System (GPS), and

Construction Information Modeling (CIM) which manages the total construction process through combined

information.

In terms of land grading calculation, it is possible to raise 1.5m to make it 195m above sea level by applying the

soil from the road sub-grade construction and excavation of the soil from the retarding pond;

Approximately 1.8 million m³ excavation is the depth of the total area 131ha per average 1.35m of North

District. The height difference occurs in the IZ and outside of the IZ is finished with a slope of 1:2

protected by vegetation.

② Southern District

The total area of southern district is about 195ha, but the altitude is higher overall with fluctuation in comparison

to the north district. From this, soil excavation will be 1.5m depth per unit area in average depth of cut and fill in

the North District. The table below shows the amount of soil excavation and its distribution area allocated to

Phase3 and Phase2S.

(See Table3-11 Myawaddy Industrial Zone Generated traffic volume prediction)

Table3-8 Myawaddy IZ development soil excavation

C

(ha)

Construction

height

(FL+ m)

Excavation

amount

（m³）

Purposes

2S 79.1 200~205 1,186,500 Factories, Management Business Service facilities, Public

facility, accommodation facilities, Park, School, Training

facilities, Retarding pond

3 122.2 215~225 1,833,000 Factories, Accommodation facilities, Park, Water treatment

facilities, Future development area, etc.

合計 195.2 3,019,500

Source: Study Team

3-28

Figure 3-10 Myawaddy SEZ development planning area ground elevation distribution map

Source: Study team

3-29

b) Myawaddy IZ insight road

The insight road (campus road) will be adopted from the development plan of the local contractor as a

cross-sectional structure of the 48Ft Span Main Road and 32Ft Span Secondary Road for the Northern District of

Phase1.

The pavement, including the roadbed of reinforced concrete 22.9cm (9inch), is 61cm (24 inch) for total thickness

for both classes. The summary of the road structure elements is as follows.

Tale 3-9 Road specifications of Myawaddy industrial IZ North District Phase1

Type Unit ROW #Lanes Lane

Width

Road

width

Median

strip

Shoulder

edge

Drainage

mat

Cross

Slope

(%)

Main feet 60.0 4.0 12.0 48.0 None 5.0 5.0 2.0

meter 18.3 3.7 14.6 1.5 1.5

Secondary Feet 43.0 32.0 None 3.5 2.0 2.0

Meter 13.1 9.8 1.1 0.6

Source: Study team

In accordance with the development progress of Myawaddy IZ, the volume of industrial shipping will increase

gradually.

In the case that tenant companies are filled in both the South and North districts from Phase 1 to Phase 3, the

predicted volume of the incoming shipments of IZ are shown in the following table.

Table 3-10 Myawaddy Industrial Zone cargo volume forecast

Phase Area of

IZ (ha)

Annual

cargo

volume

(1000 /ha)

Annual

cargo

volume per

phase

(1000ton)

Annual total

cargo

volume

(1000ton)

Cargo

Growth

rate (%)

Total Cargo

Volume per

hour (ton)

1 48.8 30 1,464 1,464 100 254

2 0 30 0 1,464 100 254

2N 26.8 30 804 2,268 155 394

2S 34.6 30 1,038 3,306 226 574

3 85 30 2,550 5,856 400 1,017

Total 335.6 5,856

Source: Study Team

Note:

1. The cargo weight = volume of arrival + volume of shipment + volume of waste.

3-30

2. The total cargo volume per hour refers to:

1year = 12 x 30 days/ month x 16 hours/d = 5,760 hours

The table below shows the forecast of traffic volume in accordance with the cargo volume forecast as shown

above.

Table3-11 Myawaddy Industrial Zone Generated traffic volume prediction

Phase

Annual

cargo

volume

(1000 tons)

Average

cargo

volume/d

(tons)

Total Average

cargo volume/d

(tons)

Average

Daily traffic

(Vehicles/d)

Average

daily

Total traffic

volume

(vehicles/d)

Traffic volume

for a set time

(vehicles/h)

1 1464 4,067 4,270 407 407 61

2 0 0 0 0 407 61

2N 804 2,233 223 630 95

2S 1038 2,883 288 918 138

3 2550 7,083 7,438 708 1,627 244

Total 9,790 16,267 11,708 1,627

Source: Study Team

Note:

1. The total average amount of cargo is described as an additional 5% of the average cargo volume.

2. Average daily traffic volume is a conversion from the loading capacity of 10t truck.

3. The hourly traffic volume is described as 50% more on average from the daily traffic.

The volume of cargo and the traffic its movement creates is stated in round trip terms. It is assumed that half the

volume can be calculated for as a one-way trip.

With respect to the traffic volume, examination of the widening of the intersection of National Highway No.85,

campus roads, and widening national highway No.85 itself should be determined in the process of further

investigation of future results.

Classification of the premises of the roads is as follows:

Phase1: Determined by the local general contractor

Phase 2: It is planned to include “residential and park", "commercial and service facilities" as entire site

developing plan;

Phase2N: It is considered that Phase2N is the extension of Phase1, the standard of “48Ft Span Main

Road” will apply;

Phase2S and Phase 3:

(See Figure 3-8 Layout plan of Myawaddy SEZ development plan)

* 48Ft Span Main Road: The three roads directly connected to the Asian Highway running from the northwest and

also the most eastern road which curves in the middle towards the south and curves from the direction of the

3-31

northwest (NW) to southeast (SE).

* 32Ft Span Secondary Road: Another one road from NS+NW-SE and six East West (EW) line and 6 roads from

North East (NE) – South West (SW).

c) Stormwater drainage

The rainwater runoff drainage can be classified into two systems: 1) waterways that can be processed through

drainage and discharge facilities in the IZ, and, 2) the waterway that flows in and out from areas outside the IZ.

Judging from the last 10 years of rainfall probability (per hour), a facility that would systematically eliminate

accumulated rainwater would be the rational course of action as in the former case mentioned above. However, in

order to prevent exogenous flooding disasters from occurring in the IZ as in the latter case, the study team

considers it only prudent to carefully survey the path random flowing water takes by producing a river

improvement plan.

In a situation whereby the statistics for rainfall intensity per hour is approaching 100mm/h (last 10 years of

rainfall probability time-series data), the team is compelled to plan for and implement a system that will mitigate

the effects of huge amounts of accumulating water.

In terms of the conceptual design, it will be limited to the purpose of elimination of storm water from accumulated

rain pooling inside the IZ area. The stormwater drainage system relative to water from outside of the IZ will be the

focus of future investigation.

・ The discharge waterway, receiving water drained from the roadside ditch, is intended to minimize any

flooding inside the IZ complex coming from heavy rains overflowing the drainage system along the Main

Road;

・ The discharge waterway is an open channel, and the water will be discharged via a retarding basin to the

river. The open channel will be built as a reinforced concrete structure.

Northern district: According to the condition stated above, the table below indicates the specifications of the cross

section of the waterway discharge of the Northern District.

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Table 3-12 Myawaddy IZ Northern District discharge waterway specifications (unit: m)

Discharge groove type

Inner dimensions

(Width x Height)

side wall thickness

platform

Extension

DD1 2.0 x1.0 0.20 0.25 320

DD2 2.5 x1.8 0.30 0.35 230

DD3 4.0 x2.5 0.35 0.40 440

DD4 4.0 x2.5 0.35 0.40 440

DD5 4.5 x2.8 0.40 0.50 240

DD6 2.0 x1.0 0.20 0.25 330

DD7 2.5 x1.8 0.30 0.35 460

DD8 4.0 x2.5 0.35 0.40 440

DD9 4.5 x2.8 0.40 0.50 240

Source: Study Team

・ To manage the rain water accumulation, the Myawaddy IZ road and construction plans will call for

installation of a gravity draining system which does not use the pump and gate system because the land is

overly hilly with its sloping terrain.

The retarding pond always releases the rain water through the orifice of the dam; however, it holds the surplus

discharge water generated in the development stage, at the end of the water routes for approximately 30

minutes.

① Discharge waterway

Discharge waterway standard cross-section is shown below.

Figure 3-11 Waterway discharge standard cross section

Inside measurement width

Sidewall

Inside measurement height

Bottom plate

Source: Study Team

The drainage other than that depicted above (gutter) will be the one designed by a local contracting company and

3-33

the rainwater of each site within the drainage will be discharged through these waterways. All effluents will be

discharged into rivers via the retarding basin.

South District

The rainwater drainage system in the South district will follow the guidelines similar to those of the North

district.

The construction cost of the discharge water channel is similar to the cost per unit area in the Northern

district.

Retarding basin

・ The scale of the stormwater retarding basin is 0.8 average runoff coefficients for the development area. It is

planned to enable the reception of all the runoff water first, in the retarding basin, once for a 30 minute

period;

・ It is possible to regulate the amount of increased runoff water. When the impact of development activities

towards discharging the stormwater on the downstream rivers is not certain, the retarding basin will receive the

all the discharged water, taking consideration of the flood control safety.

② Retarding Basin

The structure of slope protection of the retarding basin is as follows.

Figure 3-12 The Structure of slope protection of the retarding pond

Width of road management 6m

Vegetation protection surface1:2、

Stone pitching and concrete protection engineering Spillway

Source: Study Team

• The inlet portion of the discharge from the waterway is to be protected from erosion by slope stone pitching and

by a concrete base at the bottom.

• The width of the slope stone reaches 15m at 7.5m respectively to the left and right of the discharge waterway.

• The thickness at the bottom of the concrete-clad is 50cm for a size of 15m x 15m.

• The spillway is concrete and 10m wide gravity dam structure with the pond side vertical top width of 1m at its

crown, a bottom width of 8m, and a depth of 10m in the transverse width depending on the ground condition at

the foundation level, but the basic height will be 10m.

• The slope of both sides will be 5m of surplus water-discharge and will have a stone-clad protection.

• The bottom of the downstream side will be coated with 50cm thick concrete for the same width of the depth

from above to protect from damage.

For the off-site waterway discharge away from the downstream of the retarding basin, it is necessary to conduct

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further study of the detailed geological land feature to understand the pathway of the narrowed river and its flow

path.

The capacity and ground surface area of the retarding basin of each district are as follows.

Table 3-13 Myawaddy IZ Retarding Basin Specifications m²

Area Retarding

ponds

Surface

Width

x

Length

(m)

Retarding

basin

area (m²)

Depth

(m)

Reservoir

Capacity

(m³)

Summary

Northern

District

200

x300

60,000 5.5 300,000 Depth of sedimentation:

0.5m/10years

Southern

District

1 125

x210

26,250 5.5 131,250 Do.

2 100

x100

10,000 5.5 50,000 Do.

3 200

x200

40,000 5.5 200,000 Do.

Source: Study Team

3) Project content (project site and investment)

a) Myawaddy IZ land area

According to the content of the Myawaddy IZ project as described above, the area and its land use will be

determined for the specific application.

The summary of land use for the north and the south district by development phase is shown in the table below.

However, it is to be noted that while the total development area of Myawaddy IZ at the completion phase is 500

ha, the plan is necessarily restricted to a development area of 326.4ha particularly for Phase 3 to Phase 4

excluding Phase 4 and Phase 5 for the current survey.

Development of the ultimate area of Myawaddy IZ is 500ha, as outlined with the exception of 4 ~ 5 Phases of the

South District. The operative development area for Phases 1-3 of this study is 326.4ha.

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Table 3-14 Myawaddy IZ application of land use area (ha) for Non-Factory Area

Area item

Phase

Total

Area

Ratio

(%)

North District

South District

1 2 2N 2S 3

The entire IZ land 57.4 23.9 49.9 73.1 122.2 326.5 100.0

Factory Lot 48.8 0.0 26.8 35.3 85.0 195.9 60.0

Factory Lot by

district 75.6 120.3 0.0

Non-Factory Land 8.6 23.9 23.1 37.8 37.2 130.6 40.0

Non-Factory Land

by district 55.6 75.0 0.0

Breakdown of the non-industrial land area

Roads 8.6 3.6 9.8 11.8 33.8 10.4

Discharge Drains 5.4 0.8 1.6 7.8 2.4

Retarding basin 6.8 3.5 1.9 12.2 3.7

Housing, parks,

education and

training center

20.7 11.3 10.1 42.1 12.9

Business, Service 4.2 2.5 6.7 2.1

Management.

OSS 2.2 2.2 0.7

Public facilities 2.5 2.5 0.8

Water purification

plant 2.3 2.3 0.7

Wastewater

treatment plant 3.0 3.0 0.9

Future reservation 6.0 2.5 9.5 18.0 5.5

Source: Study Team

b) Myawaddy IZ land use plan

The following is a summary of the Myawaddy IZ’s land application

① Factory Lot

・ Due to the focus of labor-intensive factories, 0.5ha ~ 1.0ha can be considered as the unit scale for each

factory lot.

・ For the tenant companies who will require larger factory lots, IZ managers will enable the combining of

adjacent factory lots to accommodate demand.

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② On-site Road:

・ In the North district, in general, the intention is to adopt a 14.63m (48Ft) Span Main Road of four-lanes

from Phase1, and a cross-sectional structure of a 9.75m (32Ft) Span Secondary Road of two-lanes.

・ In the south district, to the plan will accommodate any increases in road width expanding or contracting

according to the total number of tenant companies so as to satisfy the traffic demand.

③ Discharge drain

・ The in-site discharge waterway is planned to handle the rainfall intensity per hour of 100mm/h. (given the

probability rainfall of the past 10 years). The bed slope is designed 2/1000 considering the height of land

development and ground formation level.

④ Retarding basin:

・ The scale of the stormwater retarding basin is 0.8 average runoff coefficients for the development area.

The retarding basin is planned to receive all the initial runoff water in a 30 minute period.

⑤ The housing, parks, education and training center:

・ The housing, parks, education and training center should be treated differently from IZ development.

However, for the purpose of planning the allocation of land, those facilities are placed in the same

district.

・ Although further study is necessary for the detailed design and size, the site area and building floor area,

roads, parking areas are indicated in the table below.

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Table 3-15 Education and training facilities, residential land area, and parks in Myawaddy IZ

District Phase Land

area

(ha)

Housing

area

(ha)

Road, Park

area

(ha)

Education and Training facilities

Land area

(ha)

Building floor area

(m²)

North 2 23.9 13.2 10.7 0.0

South 2S 11.3 4.8 2.5 4.0 5,000

3 12.6 8.2 4.4 0.0

Source: Study Team

・ The rationale behind the calculation is based on the dwelling unit ratio by high, middle, and low income

residents - 10: 30: 60m and the average land area requirement for the housing ratio is 70: 20: 10m² per person

respectively.

・ The dwelling population in the north district is approximately 6,000, and approximately 9,000 in south

district, and the remaining 170,000 on-site workers will travel from the neighboring towns and villages

including Myawaddy City in the short term. Over the middle – long terms, when the development of a new

town is implemented, the commuting route will change in accord with the completion of the town.

⑥ Commercial Services:

・ For the commercial and service facilities, the private sector will be the principal developer of the buildings

and their operation.

・ Considering the land area for non-industrial use necessary to accommodate 80,000 employees, 6.7 ha is

allocated - creating a density of 1.2 people/m².

・ Therefore, there is a need to integrate these services supplied to the "Myawaddy Trade Zone" next to

Myawaddy IZ.

・ The business services such as restaurants, cafeterias, and supermarkets fall into such categories.

⑦ Administration Management and OSS center:

・ The new facility will be constructed next to the current management office of Kayin State.

・ Total floor area of the building is set to be 5,000 m².

・ The building contains administrative services, a one-stop service, office management, a fire station, a police

headquarters office, a post office, and also medical facilities such as clinics.

・ Meeting rooms and convention center to function as public facilities such as a community center will be

established.

⑧ Public Utility Services

・ In terms of the utility infrastructure, a power plant, telecommunications system, and a water supply system

are to be installed. A centralized heat supply system fueled by gas and steam are also considered for

installation - if in-house power generation equipment for the SEZ is established in the future.

⑨ Water Purification Plant

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・ Due to the use of groundwater in the short term, water supply facilities are placed separately.

・ While there is no need for a water treatment plant in the short term, when demand for stable water supply

increases in the medium-long term, water will be taken from the river.

・ The planned site has been secured in the southeast end of the south district on the assumption that

construction of a dam or reservoir will be needed. Further investigation will be needed in relation to the

water source for the projected site.

⑩ Wastewater Treatment Plant

・ While a wastewater treatment plant is a public utility, due to the need to dissipate effluvium, that process

needs to be separated from other public facilities, such as other waste disposal facilities (i.e. industrial waste

disposal facility).

・ In the short term, establishing a basic facility for an aerated lagoon system to process medium effluent levels

of Biochemical Oxygen Demand (BOD) load etc. in the north district, in the future, it will become necessary

to install more advanced methods such as activated sludge process system etc.

⑪ Reserved Future Area:

・ In the short term, the study team does not expect to have to plan the processing of any disposal material

within the IZ site but rather processing is planned, particularly for the waste disposal and various by-products

in the medium to long term – and sufficient land is secured within the site of IZ for that purpose.

⑫ Training facility

・ A training facility is planned to be built during phase 2 of the project. It will be installed in the area allocated

for residences, park, and educational facilities in the South area.

・ The training facility for the mid-level laborers, managers, specialists, and supervisors, is to be developed as

follows:

・ At the first stage of Phase 1, the laborers and mid-level managers will receive on the job training (OJT) at

each factory and company in the development, similar to the garment factories in the Hpa-an IZ.

・ At the midpoint of Phase 1, training sessions will take place in the meeting rooms, or the community center,

or in the operation office, as some companies will conduct systematic in-house training.

・ When certain labor-intensive companies begin operating in the Myawaddy IZ as part of the clustering of

operators, a Special Purpose Company (SPC) will establish the basic planning for the training of laborers and

mid-level managers.

・ At a certain stage of phase 2, that SPC will suggest an Official Development Assistance (ODA) scheme which

will be to build a training facility in Myawaddy IZ for the Myanmar government.

・ As part of the preparations to build such a training facility, the SPC will plan the training curricula, introduce

qualified experienced trainers, and plan the construction works.

・ After the completion of construction, the SPC will oversee all aspects of the training process, and operate the

training business.

・ Estimation: The training facility (Steel construction, 1 floor, 3,000m²)

US$/300 m² × 3,000m² ＝ US$900,000

・ This training facility is not included in the current estimated project cost, because would be built under ODA

support at a later date.

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⑬ Access road

・ The Myawaddy IZ sets back 100m spaces on both of the areas away from the access road so as to install a new

road to respond to anticipated future traffic demand. The purposes of these spaces are as follows:

・ The access road is widened from what had previously been a 2 lane-road to a 4 lane-road, raising the grade of

the road system so as to separate the roadway and the sidewalk, and install a media strip and lighting systems.

・ Signals are to be installed at the crossroads to prevent the traffic accidents.

・ The draining system is improved to prevent the overflow of water as it drains along the road.

・ Public and environmental conservation facilities are developed according to the progress of Myawaddy IZ.

・ These facilities should be funded by the public aid, however, the burden of funds needed for the project will be

considered by the Myanmar Government, the dedicated SPC, and ODA.

4) The solutions and challenges when adopting the proposed technologies and systems

While the advent of a singular system for Myawaddy IZ is regarded as a technological advance, up to the

operational phase of survey design stage, there will be various problems. Further, possible solutions for these

problems could be:

a) Survey and Design Stage

・ In view of the fact that construction is underway, Phase1 research and design is necessary to in preparation

for the establishment of the company SPC.

The main studies required will be as follows:

① Terrain survey

② River survey

③ Soil and geological survey

④ Groundwater survey

⑤ Adequate compensation survey

⑥ Environmental preservation research

These studies should be undertaken as soon as possible.

・ When the topographical survey can conducted with the resolution of S=1/5000, the accuracy of the land

development will increase. That means that despite the increased cost of the topographical survey itself, the

actual land development plan will benefit greatly.

・ The detailed facilities designed for the SPC preparatory organization is not included in the Phase1 design. The

design work can be initiated post establishment of the SPC from Phase 2 onward.

b) Procurement and Construction phase

・ According to the observation of the project site, the key operating organization for the development of

Myawaddy IZ is not yet clear. The role of the main organization in promoting the business needs

clarification.

・ Whereas civil work precedes E&M work, the management process, particularly the very precise construction

management technology, is integral to improving the financial feasibility of the project.

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・ In addition, despite the limited period of the survey, the study team concluded that both the project operator

and local contractors lack the sufficient engineering expertise to design and build either the infrastructure or

the planned facilities of this development.

・ That results in two consequences: either, i) they proceed in doing what they are capable of yet without

sufficient experience, and/or ii) what they do not have enough experience to accomplish themselves, they

leave aside and postpone to a later date.

・ Therefore, in order to achieve the global standard for SEZs in both Myawaddy IZ and Hpa-an IZ in the future,

it is necessary to support and strengthen the engineering capability through the guidance provided by an SPC.

c) Operation and Maintenance Stage

・ To start operations at the outset, in anticipation of demand it is important to prepare for changes in the

economic environment of Myawaddy IZ.

・ For the SPC operators, it is necessary to supply advanced technological equipment for information and

communication with the downstream sector to produce a stable supply of electric power, water supply,

sewerage treatment, and solid waste disposal in the medium to long term consistent with the international

standard of SEZ development.

・ Regarding the development of infrastructure, examining the cost-benefit and time according to the business

requirements, optimal public private partnership appears to be the optimal method for the development to

succeed - such as combining ODA resources with those of a select SPC.

・ For this reason, orienting implementation in this direction with the relevant government agencies is

important.

d) Implementation Process of the Development

・ For Phase 1 of the North District, whereas the local contractors have already begun construction, immediate

engineering support is necessary as described above.

・ The implementation process of the detailed project will be covered in Chapter 6.

e) Suggestion to the Hpa-an IZ

・ The present status of the Hpa-an IZ is assumed to be at the same stage of development as that of the phase 1

in the north area of the Myawaddy IZ - installation of the retarding pond and the management office, with

installation of the non-residential facilities, i.e. for water supply, water treatment, water courses, residents,

park, and training still forthcoming.

・ As the Hpa-an IZ is located near the harbor facility in Mawlamyine; it can utilize the existing water

distribution system. Completing the East West Economic Corridor will expand the distribution areas to

Yangon but also into Thailand.

・ Therefore the Hpa-an IZ should build-out the non-residential facilities, similar to the Myawaddy IZ, after

Phase 2N in the north area as soon as possible, and invite Domestic Direct Investment (DDI) and Foreign

Direct Investment (FDI).

Chapter 4 Evaluation of Environmental and Social Impacts

4-1

This project intends to analyze the present status, grasp the problems and seek the solutions for accomplishing

goals of the Myawaddy Industrial area, part of „The Myawaddy Industrial Zone (IZ)‟ developed by Kayin State in

Myanmar, and the Hpa-an Industrial Zone, already in partial operation.

The Hpa-an Industrial Zone (IZ) is exempt from the project‟s environmental and social impacts, because a certain

governmental task force for environment impact assessments is in charge.

The Myawaddy Industrial area has undertaken an evaluation of environmental and social impacts by the project,

because the north area called „Phase 1‟ has begun to develop. However almost all the area including the south area

of the Root 85 is in its natural state as the sparse woods are in the large plain.

(1) The Present Status of Environmental and Social Impacts

1) The present status

a) Outline of the Myawaddy industrial zone

The ground condition of Malady industrial zone is raw and undeveloped forest land. The detailed condition is as

follows:

① The north area:

The north area slopes from the southeast to the northwest, and the height is EL 180-210m from sea level. The

Thingyan River, in the north-west direction of the border of Phase 2N, flows to the Northeast area

② The south area:

The south area has a long and thin shape to it and is located south of the National Highway (NH) 85 (commonly

referred to as the Asian Highway (AH) 1). The height is EL195-230m from sea level and the length is

approximately 2km, and its area has topographical irregularities. It has an irregular slope with ups and downs as

EL185-230m from the southwest to the northeast.

Considering these topographical features, the project team presumes that there are many small tributaries and

other water resources in the south and north areas.

b) The features regarding water resources

The features regarding water resources are as follows:

① Generally it is difficult to utilize the water resource areas, due to the vastly different conditions between the

dry and rainy seasons.

② The project team anticipates no major problem in taking water from the underground aquifer and/or the river

water, because there is plenty in the catchment area in some medium-sized and small rivers in the Myawaddy

IZ.

③ Additional survey is necessary because the amount of water taken from the river depends on the construction

sites of the neighboring dam and retention pond.

④ It is necessary to consult with the Thai government regarding the development of the water resources in

Myawaddy IZ, although the Moei river on the border of the two countries possesses promising resources for

use.

4-2

c) Present status of the land

The present status of the land in Myawaddy district/township is as follows:

Table 4-1 the present status of the land in Myawaddy district/township (2012)

Item Area Percentage

Net Area sown 33,359 4.30

Paddy 10,190

Maize, Peanut, Sesame, and etc. 23,169

Conserved forest 525,583 67.8

Fallow Land 207,202 26.7

Other lands8804 8,804 1.1

(Unit: Acre)

Source：Regional development facts and figures, Myawaddy District, Kayin State Government

This table indicates that approximately 68% of Myawaddy district/township is natural forest, and the sown area is

approximately 4% despite the fact that approximately 27% of the land is fallow.

d) Effects of the river upon the neighboring residents

In the rainy season, almost all areas are covered with water because some rivers run in a meandering pattern and

are flooded. However few farmers in Myawaddy district/township have extensive farm-damage, because the ratio

of the lower area for farmers is very small. Therefore damage to farms in Myawaddy district/township is very

limited.

Generally the development of the industrial zone changes its topography. It is possible to minimize the effect of

the development in Myawaddy IZ by planning a regulating pond with sufficient capacity to withstand the increase

of flowing water in river.

The seed bed for a „Nursery for Greening and Environmental conservation‟ is in Hpa-an IZ - young plants have

been cultivated. These young plants can strengthen the environmental countermeasures, because their existence

contributes to the increase in the ratio of green coverage in the factory area, road and park, etc..

e) Water supply

Kayin State has no water supply facility using surface water except a spring system for military use. Residents in

the mountainous areas use underground water, and residents in the plain area purchase water and transport it in

18-20L bottles.

In the Myawaddy industrial zone, 4 wells work efficiently to supply water, and they have the ability to supply

180m3/d. However, the water from wells is not suitable for drinking, because it is unfiltered and muddy. When

4-3

factories use water, it requires special treatment relative to each type of industry. To achieve a more detailed

assessment of water elements, experts analyze underground water for arsenic and heavy metal content.

From the west side to the north of industrial zone, there is a small river presenting a source of surface water. Some

additional survey would be necessary to measure the volume of water in that river during the rainy and dry season,

because it is as narrow as 5m in certain spots and quite shallow.

The Moei River, located east of Myawaddy IZ and flowing along the border between Myawaddy district/township

and Thailand, is approximately 30m wide and is considered a future water resource..

f) Sewage treatment

Myawaddy IZ will require a sewage treatment plant in the future, but it has not yet begun to be built. It will be a

suitable facility for sewage treatment according to the industrial needs of relevant investors (tenants). The

combined sewage treatment system would not distinguish between rain water and industrial water. This is an issue

of concern because discharging sewage sludge and waste water from a combined sewage/water treatment system

into the river during the rainy season presents a risk - the system controls the inflow of water coming from

inclined collection pipes.

The river into which the Myawaddy IZ community will discharge the sewage water will be used as a source from

which to draw water as well, and it flows in a small volume of water outside the rainy season. In the

implementation stage, the environmental effect is evaluated and it is necessary to verify compliance with not only

the waste water treatment standard but also the environmental standard. And, it is needed to process the sludge

coming from the sewage treatment plant. A comprehensive treatment system regarding sewage treatment and

waste treatment is needed.

g) Waste (Municipal and Industrial)

Myawaddy IZ plans to bury the construction materials and the municipal waste within its land and not to dispose

of the waste. After development is complete, Myawaddy Development Committee will take responsibility for

collecting and disposing of municipal and industrial waste. In the future, it is probable that the project team will

consider a different method of waste processing and biomass-to-fuel conversion within the project site.

2) Social environment

This project site (Myawaddy IZ) is owned by the Myawaddy Development Committee organized in Kayin State

by the Kayin State Government. Interview results indicate that there are no on-site residents and therefore no need

to resettle anyone in this site. At this stage, the project team is postponing direct communication with neighboring

residents, because there are many cases in which such contact results in the difficulties to implement the projects.

For example, one case focuses on a lack of regulations regarding real estate registration in a developing country

and the persons concerned controlling sales prices intentionally; the other focuses on illegal occupation. Therefore,

in the implementation stage, the project team must discuss with the Myanmar central government and Kayin State

about the expropriation and resident settlement. Then the team will peruse the latest regulations and take action in

compliance with international standards.

4-4

(2) Achieving environmental improvement through the project

1) Improvement of the water supply and water treatment system

Myawaddy IZ can spread the service area of water supply and sewage treatment so that it improves general

regional sanitary conditions and prevents diseases in neighboring residential communities.

As a public service, a guaranteed potable water supply enables neighboring residences to enjoy the consumption

of potable water on a constant basis.

2) Biomass power generation system

The industry in the surrounding area is mainly agriculture, and the waste farm products and the sludge from

residential septic tanks can be utilized for biomass generated electric power. The current power is expected to be

expensive, because the loss of power in transmitting power generated in Thailand or Mawlamyaing in Myanmar to

Myawaddy. Therefore, producing energy from a renewable source, i.e. a biomass power generation system, would

realize a reduction in both municipal waste disposal and negative impact to the environment in Myawaddy

district/township.

4-5

(3) Environmental and Social Effectiveness by project implementation

The JBIC (Japan Bank for International Cooperation) Guidelines for Confirmation of Environmental and Social

Considerations (Environmental Guidelines)," are presented below.

1) Dam and reservoirs

Table 4-2 The JBIC (Japan Bank for International Cooperation) Guidelines for Confirmation of Environmental

and Social Considerations (Environmental Guidelines) (Dam and reservoirs)

Category Environmental

Items

Main Check Items Confirmation of

Environmental

Considerations

1 Permits

and

Explanation

(1) EIA and

Environmental

Permits

① Have EIA reports been officially

completed?

② Have EIA reports been approved by

authorities of the host country‟s

government?

③ Have EIA reports been unconditionally

approved? If conditions are imposed on

the approval of EIA reports, are the

conditions satisfied?

④ In addition to the above approvals, have

other required environmental permits been

obtained from the appropriate regulatory

authorities of the host country‟s

government?

① Central government is

drafting EIA regulation. EIA

is implemented at the next

F/S stage.

② Central government is

drafting EIA regulation .EIA


F/S stage.

③ Central government is


is implemented at the F/S

stage.

④ Central government is



F/S stage.

(2) Explanation

to the Public

① Are contents of the project and the

potential impacts adequately explained to

the public based on appropriate procedures,

including information disclosure? Is

understanding obtained from the public?

② Are proper responses made to comments

from the public and regulatory authorities?

① There are no residents in

the Myawaddy IZ (IZ),

because the land is owned by

Myawaddy Development

Committee (MDC).

Explanatory meetings for the

benefit of neighborhood

residents will be held in

advance and people‟s

opinions and responses will

4-6

be incorporated into the

project.

② The comments of

neighborhood residents will

be discussed with MDC.

2 Mitigation

Measures

(1)Water Quality ① Do water quality of dam pond/reservoir

comply with the country‟s ambient water

quality standards? Is there a possibility

that proliferation of phytoplankton and

zooplankton will occur?

② Does the quality of water discharged

from the dam pond/reservoir comply with

the country‟s ambient water quality

standards?

③ Are adequate measures, such as

clearance of woody vegetation from the

inundation zone prior to flooding planned to

prevent water quality degradation in the dam

pond/reservoir?

④ Is there a possibility that reduced the

river flow downstream will cause water

quality degradation resulting in areas that do

not comply with the country‟s ambient water

quality standards?

⑤ Is the discharge of water from the lower

portion of the dam pond/reservoir (the water

temperature of the lower portion is generally

lower than the water temperature of the

upper portion) planned by considering the

impacts to downstream areas?

① IZ has no plan to build

dam and reservoirs in the

short term.

② The quality of water

discharged from the dam

pond/reservoir is measured at

the next F/S stage.

③ The quality of water



the next F/S stage.

④ The quality of water



the next F/S stage.

⑤ The quality of water



the next F/S stage.

(2) Wastes ① Are earth and sand generated by

excavation properly treated and disposed of

in accordance with the country‟s standards?

① The earth and sand

generated by excavation is

properly treated and disposed

of at the MDC disposal site.

3 Natural

Environment

(1)Conservation

Areas

① Is the project site located in conservation

areas designated by the country‟s laws or

international treaties and conventions? Is

there a possibility that the project will affect

the protected areas?

① There is no designated

conservation area.

4-7

3 Natural

Environment

(2) Ecosystem

and biota

① Does the project site encompass

primeval forests, tropical rain forests,

ecologically valuable habitats (e.g. coral

reefs, mangroves, or tidal flats)?

② Does the project site encompass the

protected habitats of endangered species

designated by the country‟s laws or

international treaties and conventions?

③ Is there a possibility that the project will

adversely affect downstream aquatic

organisms, animals, plants, and ecosystems?

Are adequate protection measures taken to

reduce the impacts on the ecosystem?

④ Is there a possibility that installation of

structures, such as dams will block the

movement of the migratory fish species

(such as salmon, trout and eel that move

between rivers and sea for spawning)? Are

adequate measures taken to reduce the

impacts on these species?

① There are no primeval

forests in the project area,

that the MDC is developing.

② The effects are identified

by the knowledge of the

people at the next F/S stage.

③The effects are identified



④ The effects are identified



(3) Topography

and Geology

① Is there a possibility that reductions in

sediment loads downstream due to settling

of suspended particles in the reservoir will

cause impacts, such as scouring of the

downstream riverbeds and soil erosion? Is

there a possibility that sedimentation of the

reservoir will cause loss of storage capacity,

water logging upstream, and formation of

sediment deposits at the reservoir entrance?

Are the possibilities of the impacts studied,

and adequate prevention measures taken?

① The effects are identified


people at the next F/S stage

4-8

4 Social

Environment

(1) Resettlement ① Is involuntary resettlement caused by

project implementation? If involuntary

resettlement is caused, are efforts made to

minimize the impacts caused by the

resettlement?

② Is adequate explanation on relocation

and compensation given to affected persons

prior to resettlement?

③ Is the resettlement plan, including proper

compensation, restoration of livelihoods and

living standards developed based on

socioeconomic studies on resettlement?

④ Does the resettlement plan pay particular

attention to vulnerable groups or persons,

including women, children, the elderly,

people below the poverty line, ethnic

minorities, and indigenous peoples?

⑤ Are agreements with the affected

persons obtained prior to resettlement?

⑥ Is the organizational framework

established to properly implement

resettlement? Are the capacity and budget

secured to implement the plan?

⑦ Is a plan developed to monitor the

impacts of resettlement?

① The project team

confirmed that the project

area (300ha) is forested field,

and MDC confirmed the

absence of residents.

② If the project team

identifies the presence of

residents in the planned area,

it will hold explanatory

meetings.

③ If the project team

identifies residents in the

planned area, it will prepare a

resettlement plan.

④ If the project team


planned area, it will consider

paying particular attention to

ethnic minorities.

⑤ If the project team


planned area, the project

team and MDC will obtain

the necessary agreements

with the affected persons

prior to resettlement.

⑥ If the project team


planned area, the project

team and MDC will prepare a

resettlement plan.

⑦ The impacts of

resettlement will be

monitored during the

implementation of the

project, and the affected

people, methods used, and

intervals of resettlement

actions will be decided in the

monitoring plan.

4-9

4 Social

Environment

(2) Living and

Livelihood

① Is there a possibility that the project will

adversely affect the living conditions of

inhabitants? Are adequate measures

considered to reduce the impacts, if

necessary?

② Is there a possibility that the project will

adversely affect the downstream land uses?

In particular, is there a possibility that

reductions in the supply of fertile soils to

downstream areas will adversely affect

agricultural production? ③ Is sufficient

infrastructure (e.g. hospitals, schools, roads)

available for project implementation? If

existing infrastructure is insufficient, is a

plan developed to construct new

infrastructure or improve existing

infrastructure?

④ Is there a possibility that diseases,

including communicable diseases, such as

HIV will be introduced due to immigration

of workers associated with the project?

Are adequate considerations given to public

health, if necessary?

⑤ Is there a possibility that the existence of

the dam will cause impacts on water

navigation, such as limitations of vessel

traffic and water area uses by local

inhabitants? ⑥ Is the minimum flow

required for maintaining downstream water

uses secured?

⑦ Is there a possibility that reductions in

water flow downstream or seawater

intrusion will cause impacts on downstream

water uses and land uses?

⑧ Is there a possibility that water-borne or

water-related diseases (e.g. schistosomiasis,

malaria, filariasis) will be introduced?

① The project confirmed

that the project area (300ha)

is forested field, and MDC

verified that there are no

residents. However, the

explanatory meetings and

hearings with neighborhood

residents in attendance will

be carried out during the F/S

stage, and the opinions of

relevant people will be

considered.

② Any and all adverse

effects will be discussed with

MDC during the next F/S

stage.

③ Access road has been

rehabilitated by the Thai

government. And, housing is

planned for workers.

④ Not only a hospital but

also clinics are planned.

⑤ The effects are identified



⑥ The effects are identified



⑦ The effects are identified



⑧ The effects are identified



(3) Heritage ① Is there a possibility that the project will

damage the local archeological, historical,

cultural, and religious heritage sites? Are



area (300ha) is forested field,

4-10

adequate measures considered to protect

these sites in accordance with the country‟s

laws?

and MDC verified that there

are no heritage sites.

(4) Landscape ① Is there a possibility that the project will

adversely affect the local landscape? Are

necessary measures taken?

① The project confirmed

that the project area (300ha)

is forested field, and MDC

answered that there will be

no effect to the landscape.

(5) Ethnic

Minorities and

Indigenous

Peoples

① Does the project comply with the

country‟s laws for rights of ethnic minorities

and indigenous peoples?

② Are considerations given to reduce

impacts on the culture and lifestyle of ethnic

minorities and indigenous peoples?

① In 2011, Kayin minority

groups made an agreement

with the Myanmar central

government for peaceful

coexistence without further

dispute.

② The project team felt the

cooperative relationship

between Kayin state and

minorities was a respectful

relationship. The explanatory

meetings and hearings with

neighborhood residents in

attendance will be carried out

during the next F/S stage,

and the opinions collected

will be considered

4 Social

Environment

(6) working

conditions

① Is the project proponent not violating

any laws and ordinances associated with the

working conditions of the country which the

project proponent should observe in the

project?

② Are tangible safety considerations in

place for individuals involved in the project,

such as the installation of safety equipment

which prevents industrial accidents, and

management of hazardous materials?

③ Are intangible measures being planned

and implemented for individuals involved in

the project, such as the establishment of a

safety and health program, and safety

training (including traffic safety and public

① No violation of laws

② The project team will

have tangible safety

measures.

③ The project team will

prepare and conduct safety

training.

④ The project team will

prepare and conduct safety

training.

4-11

sanitation) for workers etc. ?

④ Are appropriate measures being taken to

ensure that security guards involved in the

project do not violate safety of other

individuals involved, or local residents?

Noise, vibrations, dust, exhaust, and wastes

might be generated during the development

works.

5 Others (1) Impacts

during

Construction

① Are adequate measures considered to

reduce impacts during construction (e.g.

noise, vibrations, turbid water, dust, exhaust

gases, and wastes)?

② If construction activities adversely affect

the natural environment (ecosystem), are

adequate measures considered to reduce

impacts?

③ If construction activities adversely affect

the social environment, are adequate

measures considered to reduce impacts?

④ In the case of the projects including

borrow sites, if construction activities

adversely affect the natural environment

(ecosystem), are adequate measures

considered to reduce impacts?

① Noise, vibrations, dust,

exhaust, and wastes might be

generated during the

development works. And no

residents are confirmed to be

at risk of impact at present;

however, if the project team

identifies any residents in the

project area, it and MDC will

prepare appropriate

countermeasures to mitigate

the problem.

②Given the present status

and most current information

from MDC, the project team

has concluded that there will

be no adverse effects on the

natural environment

(ecosystem) from the advent

of the project. However, the

project team intends to

confirm that information in

detail during next F/S stage.

③ Given the present status

and most current information

from MDC, the project team

has concluded that there will

be no adverse effects on the

natural environment

(ecosystem) from the advent

of the project. However, the

project team intends to

4-12

confirm that information in

detail during the next F/S

stage.

④ In case of necessary earth

and sand collection works,

the project will borrow earth

and sand from the sites of the

MDC, however, the details

will be decided at the F/S

stage.

(2) Accident

Prevention

Measures

① Are adequate contingency plans and

mitigation measures developed to cover both

the soft and hard aspects of the project, such

as accident prevention programs, installation

of prevention facilities and equipment, and

safety education for workers? Are

adequate measures for emergency response

to accidental events considered?

② Is a warning system established to alert

the inhabitants to water discharge from the

dam?

① Project will consider such

measures in its construction

plan.

② Not covered

(3) Monitoring ① Does the proponent develop and

implement monitoring program for the

environmental items that are considered to

have potential impacts?

② Are the items, methods and frequencies

included in the monitoring program judged

to be appropriate?

③ Does the proponent establish an

adequate monitoring framework

(organization, personnel, equipment, and

adequate budget to sustain the monitoring

framework)?

④ Are any regulatory requirements

pertaining to the monitoring report system

identified, such as the format and frequency

of reports from the proponent to the

regulatory authorities?

① Project will include a

monitoring program during

implementation.

② Project will include a


implementation.

③ Project will include a


implementation.

④ Project will include a


implementation.

4-13

6 Special

notes

Reference to

Checklist of

Other Sectors

① Where necessary, pertinent items

described in the Forestry Projects checklist

should also be checked (e.g. projects in the

mountains including large areas of

deforestation).

② In the case of dams and reservoirs, such

as irrigation, water supply, and industrial

water purposes, where necessary, pertinent

items described in the Irrigation Projects,

and Water Supply checklists should also be

checked.

③ Where necessary, pertinent items

described in the Power Transmission and

Distribution Lines checklist should also be

checked (e.g. projects including installation

of electric transmission lines and/or electric

distribution facilities).

Special notes on

Using

Environmental

Checklist

① If necessary, the impacts to trans

boundary or global issues should be

confirmed (e.g. The project includes factors

that may cause problems, such as trans

boundary waste treatment, acid rain,

destruction of the ozone layer, or global

warming).

1) Regarding the term “Country‟s Standards” mentioned in the above table, in the event that environmental

standards in the country, where the project is located, diverge significantly from the World Bank Safeguard

Policy as a general rule, or the International Finance Corporation Performance Standards for private sector

limited or non-recourse project finance cases, or other standards established by other international financial

institutions, or other internationally recognized standards or good practices established by developed countries

such as Japan regarding environmental and social considerations, the background and rationale for this

deviation, and the measures to rectify it if necessary, are to be confirmed. In cases where local environmental

regulations are yet to be established in some areas, considerations should be based on comparisons with

international standards such as the World Bank Safeguard Policy, and appropriate standards of other countries

(including Japan).

2) Environmental checklist provides general environmental items to be checked. It may be necessary to add or

delete an item taking into account the characteristics of the project and the particular circumstances of the

country and area in which it is located.

Source: JBIC

4-14

2) Water supply

Table 4-3 JBIC Guidelines for Confirmation of Environmental and Social Considerations (Environmental

Guidelines) (Water supply)

Category Environmental Item Main Check Items Confirmation of Environmental

Considerations

1 Permits

and

Explanation

(1) EIA and

Environmental Permits

① Have EIA reports been

officially completed?

② Have EIA reports been

approved by authorities of the

host country‟s government?

③ Have EIA reports been

unconditionally approved? If

conditions are imposed on the

approval of EIA reports, are the


④ In addition to the above

approvals, have other required

environmental permits been

obtained from the appropriate

regulatory authorities of the


① The Central government is

drafting an EIA regulation. An EIA

will be implemented during the

next F/S stage.

② The Central government is



next F/S stage.

③ The Central government is



next F/S stage.

④ The Central government is



next F/S stage.

(2) Explanation to the

Public

① Are contents of the project

and the potential impacts

adequately explained to the

public based on appropriate

procedures, including

information disclosure? Is

understanding obtained from

the public?

② Are proper responses made

to comments from the public

and regulatory authorities?

① There are no residents in the

Myawaddy IZ site area because the

land is owned by the Myawaddy

Development Committee (MDC)

and that agency has kept the land

available for development.

Explanatory meetings will be held

to benefit neighborhood residents in

advance, and the people‟s opinions

will be incorporated into the

project.

② Comments received from

neighborhood residents will be

discussed with MDC.

2 Mitigation

Measures

(1) Air Quality ① Do air pollutants, such as

sulfur oxides (SOx), nitrogen

oxides (NOx), and soot and

① IZ has no effect to air, because

almost all factories in IZ will be

labor intensive industries.

4-15

dust, and dioxins emitted from

various sources, such as

incinerators, and vehicles used

for waste collection and

transportation comply with the

country‟s emission standards

and ambient air quality

standards?

(2) Water Quality ① Do effluents from various

facilities comply with the

country‟s effluent standards and

ambient water quality

standards?

② Does the water quality of

leachates from the waste

disposal sites comply with the



standards?

③ Are adequate measures

taken to prevent contamination

of surface water and

groundwater by these effluents

and leachates?

①There are no quality standards

for effluent discharge into

waterways or ambient water quality

standards in Myanmar. Project

developers will apply the standards

prevailing in the Phnom Penh SEZ

considering all applicable

circumstances in the process.

②There are no quality standards








③There are no quality standards








(3) Wastes ① Are wastes, such as

treatment residues, cinder, and

fly ash generated from crushing

and segregation processes, and

diverted wastes from

composting process properly

treated and disposed of in

accordance with the country‟s

①There are no quality standards








4-16

standards?

② Are hazardous and

dangerous wastes properly

segregated from other wastes,

stabilized, treated, and disposed

of in accordance with the

country‟s standards?









(4) Soil Contamination ① Are adequate measures


of soil and groundwater by

leachates from the waste

disposal sites?

①The project will discuss adequate

measures to prevent soil

contamination with MDC and

decide appropriate procedures to

take to intervene.

(5) Noise and Vibration ① Do noise and vibrations

generated by the facility

operations (especially

incinerators, waste segregation

and crushing facilities), and

vehicle traffic for waste

collection and transportation

comply with the country‟s

standards?

①There are no standards regarding

noise and vibrations stemming from

industrial activity in Myanmar. The

project team will apply the

standards used in the Phnom Penh

SEZ and consider the applicability

of those standards in detail.

(6) Odor ① Are there any odor sources?

Are adequate odor control

measures taken?

① There are no standards for

mitigating odors emanating from

industrial facilities in Myanmar.

Project developers will apply the

standards prevailing in the Phnom

Penh SEZ considering all

applicable circumstances in the

process.

3 Natural

Environment

(1) Conservation Areas ① Is the project site located in

conservation areas designated

by the country‟s laws or

international treaties and

conventions? Is there a

possibility that the project will

affect the conservation areas?


conservation area.

4-17

(2) Ecosystem and

biota

① Does the project site

encompass primeval forests,

tropical rain forests,

ecologically valuable habitats

(e.g. coral reefs, mangroves, or

tidal flats)?

② Does the project site

encompass the protected

habitats of endangered species

designated by the country's

laws or international treaties

and conventions?

③ If significant ecological

impacts are anticipated, are

adequate protection measures

taken to reduce the impacts on

the ecosystem?

④ Is there a possibility that the

project will adversely affect

aquatic organisms? If impacts

are anticipated, are adequate

measures taken to reduce the

impacts on aquatic organisms?

⑤ Is there a possibility that the


vegetation and wildlife? If


adequate measures taken to

reduce the impacts on

vegetation and wildlife?

① There are primeval forests in

the project area where MDC is

focusing its development attention.

However, benefitting from the

knowledge of local cooperative

inhabitants, the project developers

will be able to protect sensitive

habitats in the area during next F/S

stage.

②The project team will become

informed with regard to protected

habitats through concerted

interaction with local

knowledgeable people during the

next F/S stage.

③ The project team will become





next F/S stage.

④ The project team will become





next F/S stage.

⑤ The project team will become





next F/S stage.

(3) Management of

Dumping grounds

①Are environmental protection

and restoration plans (such as

landfill gas and leachate

collection and treatment

systems, prevention of illegal

dumping, and reforestation)

① The project team will discuss

and coordinate an environmental

protection and restoration plan with

MDC.

② The project team will discuss

the formulation of a sustainable

4-18

after facility closure

considered?

②Is a sustainable management

framework for the abandoned

dumping ground sites

established?

③ Are adequate financial

provisions secured to manage

the abandoned sites?

management framework with MDC

for any dumping ground.

③ The project team will discuss

appropriate financial provisions to

manage any dumping grounds

with MD

4 Social

Environment

(1) Resettlement ① Is involuntary resettlement

caused by project

implementation? If

involuntary resettlement is

caused, are efforts made to

minimize the impacts caused by

the resettlement?

② Is adequate explanation on

relocation and compensation

given to affected persons prior

to resettlement?

③ Is the resettlement plan,

including proper compensation,

restoration of livelihoods and

living standards developed

based on socioeconomic studies

on resettlement?

④ Does the resettlement plan

pay particular attention to

vulnerable groups or persons,

including women, children, the

elderly, people below the

poverty line, ethnic minorities,

and indigenous peoples?

⑤ Are agreements with the

affected persons obtained prior

to resettlement?

⑥ Is the organizational

framework established to

properly implement

resettlement? Are the

① The project team confirmed

that the planned area (300ha) is

forested field, and MDC verified

that there are no residents.

② If the project team identifies the

existence of residents in the

planned area, it and MDC will

conduct explanatory meetings.

③ If the project team identifies

the existence of residents in the

planned area, it and MDC will

prepare resettlement plans.

④ If the project team identifies


planned area, it and MDC will pay

particular attention to the welfare of

ethnic minorities.

⑤ If the project team identifies


planned area, together with MDC

input, together with MDC, it will

obtain the necessary agreements

with the affected persons prior to

taking resettlement action.

⑥ If the project team identifies


planned area, together with the

MDC, it will prepare resettlement

plans.

⑦ The impacts of resettlement

will be monitored during the

4-19

capacity and budget secured to

implement the plan?

⑦ Is a plan developed to

monitor the impacts of

resettlement?

implementation of the project, and

the items, methods, and frequencies

will be memorialized in the

monitoring plan.

4 Social

Environment

(2) Living and

Livelihood

① Is there a possibility that the

project will adversely affect the

living conditions of

inhabitants? Are adequate

measures considered to reduce

the impacts, if necessary?

② Are considerations given to

the existing recovery systems,

including waste pickers?

③ Is there a possibility that

waste transportation will

adversely affect the regional

traffic?

④ Is there a possibility that

effluents from the project and

leachates form the waste

disposal sites will adversely

affect fisheries and other water

uses by local inhabitants

(especially drinking water)?

⑤ Is there a possibility that

pathologic insects or other

disease vectors will breed as a

result of the project?

① The project team confirmed that

the project area (300ha) is forested

field, and the MDC verified that

there are no residents. However,


“town-hall” style hearings with


carried out during the next F/S

stage to collect the opinions of

impacted neighbors.

② The project team will consider

appropriate recovery systems

during the next F/S stage.

③ Any adverse effects of that

nature will be discussed with the

MDC during the next F/S stage.

④ The project team will discuss

any potential ill effects upon

existing water uses and fisheries

with the MDC during the next F/S

stage.

⑤ The project team will discuss

any possible impact of pathologic

insects or associated disease vectors

caused by the development with the

MDC during the next F/S stage.

(3) Heritage ① Is there a possibility that the

project will damage the local

archeological, historical,

cultural, and religious heritage

sites? Are adequate measures

considered to protect these sites

in accordance with the

country‟s laws?

① The project confirmed that the

project area - 300ha - is forested

field, and MDC has verified that

there are no archeological,

historical, cultural, or religious

heritage sites.

4-20

(4) Landscape ① Is there a possibility that the


local landscape? Are

necessary measures taken?



field, and MDC has verified that

forthcoming development will have

no effect upon the landscape.

(5) Ethnic Minorities

and Indigenous People

① Does the project comply

with the country‟s laws for

rights of ethnic minorities and

indigenous people?


reduce the impacts on culture

and lifestyle of ethnic

minorities and indigenous

people?

① In 2011, Kayin minority groups

have an agreement with the

Myanmar central government for

peaceful coexistence and no

disputes.


implement both the spirit and the

conclusions reached at that

explanatory meeting and hearing

during the next F/S stage, and will

discuss with MDC the timing and

scope of any countermeasures that

may become necessary to act upon

at some later date.

(6) working conditions ① Is the project proponent not

violating any laws and

ordinances associated with the

working conditions of the

country which the project

proponent should observe in the

project?

② Are tangible safety

considerations in place for

individuals involved in the

project, such as the installation

of safety equipment which

prevents industrial accidents,

and management of hazardous

materials?

③ Are intangible measures

being planned and implemented

for individuals involved in the

project, such as the

establishment of a safety and

health program, and safety

① Noise, vibrations, dust, exhaust,

and other wastes might be

generated during the development

works. While no residents are

confirmed at present, if the project

team does identify any residents in

the planned area during

implementation of the project,

together with the MDC, it will

prepare measures to mitigate them.

② Given the present status and

most current information from

MDC, the project team has

concluded that there will be no

adverse effects on the natural

environment (ecosystem) from the

advent of the project. However, the

project team intends to confirm that

information in detail during the

next F/S stage.

③ Given the present status and

4-21

training (including traffic safety

and public sanitation) for

workers etc.?

④ Are appropriate measures

being taken to ensure that

security guards involved in the

project do not violate safety of

other individuals involved, or

local residents?




adverse effects on the social

environment from the advent of the

project. However, the project team

intends to confirm that information

in detail during the next F/S stage.

④ The project will conduct safety

training courses.

5 Others (1) Impacts during

Construction

① Are adequate measures

considered to reduce impacts

during construction (e.g. noise,

vibrations, turbid water, dust,

exhaust gases, and wastes)?

② If construction activities

adversely affect the natural

environment (ecosystem), are

adequate measures considered

to reduce impacts?

③ If construction activities

adversely affect the social

environment, are adequate


impacts?

① Noise, vibrations, dust, exhaust,

and other wastes might be


works. While no residents are

confirmed at present, if the project

team does identify any residents in

the project area during

implementation of the project,


prepare measures to mitigate them.





adverse effects on the natural

environment (ecosystem) from the

advent of the project. However, the

project team intends to confirm that

information in detail during the

next F/S stage.





adverse effects on the social

environment from the advent of the

project. However, the project team

intends to confirm that information

in detail during the next F/S stage.

4-22

(2) Monitoring ① Does the proponent develop

and implement monitoring

program for the environmental

items that are considered to

have potential impacts?

② Are the items, methods and

frequencies included in the

monitoring program judged to

be appropriate?

③ Does the proponent

establish an adequate

monitoring framework

(organization, personnel,

equipment, and adequate

budget to sustain the

monitoring framework)?

④ Are any regulatory

requirements pertaining to the

monitoring report system

identified, such as the format

and frequency of reports from

the proponent to the regulatory

authorities?

① Project will produce a


implementation.

② Project will produce a


implementation.

③ Project will produce a


implementation.

④ Project will produce a


implementation.

6 Special

notes

Reference to Checklist

of Other Sectors

① Where necessary, pertinent

items described in the Forestry

Projects checklist should also

be checked (e.g. projects

including large areas of

deforestation).

Special notes on Using

Environmental Checklist

① If necessary, the impacts to

transboundary or global issues

should be confirmed (e.g. the

project includes factors that

may cause problems, such as

transboundary waste treatment,

acid rain, destruction of the

ozone layer, or global

warming).


4-23









(including Japan).



country and locality area in which it is located.

Source: JBIC

3) Sewage treatment


Guidelines) (Sewage treatment)

Category Environmental Item Main Check Items Confirmation of

Environmental

Considerations

1 Permits and

Explanation

(1) EIA and Environmental

Permits















regulatory authorities of the host

country‟s government?

① Central government is

drafting EIA regulations.

An EIA will be undertaken


② Central government is




③ Central government is




④ Central government is




4-24


Public





procedures, including

information disclosure? Is

understanding obtained from the

public?

② Are proper responses made to

comments from the public and


① Due to the fact that the


Committee (MDC) owns the

land upon which the

developers plan to build the

project, and they have kept

the land vacant pending

development intervention,

MDC has verified that there

are no residents living on the

land However, explanatory

hearings will be held to

inform neighboring residents

about the project, solicit

opinions and responses to the

forthcoming development,

and incorporate those

viewpoints into the plans for

the project.

② Any and all comments

and opinions of local


be shared with MDC.

2 Mitigation

Measures

(1) Water Quality ① Do pollutants, such as SS,

BOD, COD, pH contained in

treated effluent from a sewage

treatment plant comply with the

country‟s effluent standards?

① There are no quality

standards for effluent

discharge into waterways or


standards in Myanmar.

Project developers will apply

the standards prevailing in the

Phnom Penh SEZ considering

all applicable circumstances

in the process.

(2) Wastes ① Are wastes, such as sludge


operations properly treated and

disposed of in accordance with

the country‟s standards?

① There are no standards

regarding the treatment and

disposal of wastes in

Myanmar. The project team

will discuss the applicability

of certain sets of relevant

standards and implementation

4-25

procedures with MDC and

reach a decision.

(3) Soil Contamination ① If wastes, such as sludge, are

suspected to contain heavy

metals, are adequate measures


of soil and groundwater by

leachates from the wastes?

① The project will discuss

adequate measures to prevent

soil contamination with MDC

and decide appropriate

procedures to take to

intervene.

(4) Noise and Vibration ① Do noise and vibrations

generated from the facilities,

such as sludge treatment

facilities and pumping stations


standards?


mitigating noise and

vibrations caused by the

operations of industrial

facilities such as treatment

plants or pumping stations in

Myanmar. Project developers

will apply the standards

prevailing in the Phnom Penh

SEZ considering all

applicable circumstances in

the process.

(5) Odor ① Are adequate control

measures taken for odor sources,

such as sludge treatment

facilities?


mitigating odors emanating

from industrial facilities in

Myanmar. Project developers

will apply the standards

prevailing in the Phnom Penh

SEZ considering all

applicable circumstances in

the process.

3 Natural

Environment

(1) Conservation Areas ① Is the project site or

discharge area located in

conservation areas designated by

the country‟s laws or




affect the protected areas?


conservation area.

4-26

(2) Ecosystem and biota ① Does the project site or

discharge area encompass

primeval forests, tropical rain

forests, ecologically valuable

habitats (e.g. coral reefs,

mangroves, or tidal flats)?


encompass the protected habitats

of endangered species designated

by the country‟s laws or


conventions?





the ecosystem?



aquatic environments, such as

rivers? Are adequate measures


aquatic environments, such as

aquatic organisms?

① As MDC is developing

there, the presence of

primeval forests in the

planned area, is well known

to MDC. The project team

will collect all necessary and

sufficient information about

protected habitats from local

knowledgeable people during

the next F/S stage.


become informed with regard

to protected habitats through

concerted interaction with

local knowledge people








Thereafter, the project team

will consider appropriate

countermeasures as

necessary.







Thereafter, the project team

will consider appropriate

countermeasures as

necessary.

4-27

4 Social

Environment


caused by project

implementation? If involuntary

resettlement is caused, are efforts

made to minimize the impacts

caused by the resettlement?



given to affected persons prior to

resettlement?




living standards developed based

on socioeconomic studies on

resettlement?





elderly, people below the poverty

line, ethnic minorities, and

indigenous peoples?


affected persons obtained prior to

resettlement?



properly implement

resettlement? Are the capacity

and budget secured to implement

the plan?



resettlement?

① The project team has


area - 300ha - is forested

field, and, MDC has verified

that there are no residents

living on the land designated

for the project.

② When and if the project

identifies any residents living

in the planned area, together

with the MDC, it will conduct

explanatory public meetings

to discuss the implications

with relevant individuals.

③ When and if the project

team identifies any residents

living in the project area,


prepare a resettlement plan.

④ When and if the project


living in the planned area,


consider paying particular

attention to ethnic minorities.

⑤ When and if the project



together with MDC, it will

obtain all necessary

agreements with the affected

persons prior to resettlement.

⑥ When and if the project




prepare a resettlement plan.

⑦ All items, implementation

methods, and action intervals

would be made explicit in a

4-28

resettlement monitoring plan,

and, all impacts of

resettlement activity would be


implementation of the project.

(2) Living and Livelihood ① Is there a possibility that

changes in land uses and water

uses due to the project will

adversely affect the living

conditions of inhabitants?

② Is there a possibility that the


living conditions of inhabitants?

Are adequate measures

considered to reduce the impacts,

if necessary?

①The project team confirmed

that the project area - 300ha -

is forested field, and, MDC

verified that there are no

residents living on the project

land. However, the


hearings involving


be conducted during the next

F/S stage, and all opinions

collected will be incorporated

into the project plans.

② Any adverse effects of

development will be

discussed with MDC during

the next F/S stage.



archeological, historical, cultural,

and religious heritage sites?


considered to protect these sites

in accordance with the country‟s

laws?




field, and, MDC verified that

there are no archeological,

historical, cultural, or

religious heritage sites.



local landscape? Are necessary

measures taken?





there will be no ill effect to

the landscape.

(5) Ethnic Minorities and

Indigenous Peoples

① Does the project comply with

the country‟s laws for rights of

ethnic minorities and indigenous


group made an agreement

with the Myanmar central

4-29

peoples?


reduce the impacts on culture and

lifestyle of ethnic minorities and

indigenous peoples?

government for peaceful

coexistence without further

dispute.


conduct explanatory meetings

and hearings during the next

F/S stage, and discuss with

MDC if it becomes necessary

to consider appropriate

countermeasures.

4 Social

Environment

(6) working conditions ① Is the project proponent not

violating any laws and

ordinances associated with the

working conditions of the

country which the project

proponent should observe in the

project?




project, such as the installation of

safety equipment which prevents

industrial accidents, and

management of hazardous

materials?




project, such as the establishment

of a safety and health program,

and safety training (including

traffic safety and public

sanitation) for workers etc.?






local residents?

① The project team will






countermeasures.







countermeasures.







countermeasures.







countermeasures.

4-30


Construction









adequate measures considered to

reduce impacts?





impacts?


exhaust, and other wastes

might be generated during the

development works. No

residents have been

confirmed to be living on the

land at present. However, if

the project identifies any

residents living in the project

area during the course of

work on the project, together

with the MDC, it will take all

appropriate measures to

reduce and/or eliminate these

types of impacts to residents.

② At present, given the

information received from

MDC, the project team

concludes that there will be

no adverse effects on the

natural environment

(ecosystem). However the

project team and MDC will

confirm any and all updated

information received in detail


③ At present, given the

information received from

MDC, the project team

concludes that there will be

no adverse effects on the

social environment. However

the project team and MDC

will confirm any and all

updated information received

in detail during the next F/S

stage.

4-31


and implement a monitoring


items that are considered to have

potential impacts?

② Are the items, methods, and

action intervals included in the

monitoring program determined

to be appropriate?

③ Does the proponent establish

an adequate monitoring

framework (organization,

personnel, equipment, and

adequate budget to sustain the





identified, such as the format and

frequency of reports from the

proponent to the regulatory

authorities?



implementation.



implementation.



implementation.



implementation.

6 Special

notes

Special notes on Using

Environmental Checklist


transboundary or global issues

should be confirmed (e.g. The

project includes factors that may

cause problems, such as

transboundary waste treatment,

acid rain, destruction of the

ozone layer, or global warming).










4-32

(including Japan).



country and area in which it is located.

Source: JBIC

4) Waste management and disposal


Guidelines) (Waste management and disposal)

Category Environmental Item Main Check Items Confirmation of Environmental

Considerations

1 Permits

and

Explanation

(1) EIA and

Environmental

Permits















regulatory authorities of the host

country‟s government?

① Central government is drafting

EIA regulation.

An EIA will be undertaken during

the next F/S stage.

② Central government is drafting

EIA regulation.


the next F/S stage.

③ Central government is drafting

EIA regulation.


the next F/S stage.

④ Central government is drafting

EIA regulation.


the next F/S stage.


Public





procedures, including information

disclosure? Is understanding

obtained from the public?

② Are proper responses made to

comments from the public and


① There are no residents living

on the land designated as the site

for Myawaddy IZ (IZ). This has

been verified by the owner -


Committee (MDC). Explanatory

meetings with neighborhood

residents will be held in advance

of development, and all opinions

solicited will be incorporated into

the project.

4-33

② All comments received from


shared with MDC.

2 Mitigation

Measures

(1) Air Quality ① Do air pollutants, such as

sulfur oxides (SOx), nitrogen

oxides (NOx), and soot and dust,

and dioxins emitted from various

sources, such as incinerators, and

vehicles used for waste collection

and transportation comply with

the country‟s emission standards

and ambient air quality

standards?

① IZ will have no effect upon air

quality because almost all

factories in IZ will be labor

intensive.

(2) Water Quality ① Do effluents from various

facilities comply with the


ambient water quality standards?

② Does the water quality of

leachates from the waste disposal

sites comply with the country‟s

effluent standards and ambient

water quality standards?

③ Are adequate measures taken

to prevent contamination of

surface water and groundwater by

these effluents and leachates?

① There are no quality standards

for effluent discharge or ambient

water in waterways in Myanmar.

The project team will apply

appropriate standards in place on

the Phnom Penh SEZ considering

all relevant and applicable details

in the process.








in the process.

③ There are no quality standards







in the process.

4-34

(3) Wastes ① Are wastes, such as treatment

residues, cinder, and fly ash

generated from crushing and

segregation processes, and

diverted wastes from composting

process properly treated and

disposed of in accordance with

the country‟s standards?

② Are hazardous and dangerous

wastes properly segregated from

other wastes, stabilized, treated,

and disposed of in accordance

with the country‟s standards?

① There are no quality standards

regarding the treatment and

disposal of wastes in Myanmar.

The project team will discuss

alternative measures with MDC

and decide what procedures may

be appropriate under the

circumstances of the project.


the potential need to segregate and

dispose of hazardous and

dangerous waste with MDC and

decide what actions and

procedures to take to reduce their

impact.

(4) Soil

Contamination

① Are adequate measures taken

to prevent contamination of soil

and groundwater by leachates

from the waste disposal sites?

① The project will discuss

adequate measures to prevent soil

contamination with MDC and

decide appropriate procedures to

take to intervene.

(5) Noise and

Vibration

① Do noise and vibrations


operations (especially

incinerators, waste segregation

and crushing facilities), and

vehicle traffic for waste

collection and transportation


standards?


regarding noise and vibrations

stemming from industrial activity

in Myanmar. The project team

will apply the standards used in

the Phnom Penh SEZ and

consider the applicability of those

standards in detail.

(6) Odor ① Are there any odor sources?

Are adequate odor control

measures taken?


regarding the mitigation of

industrial-produced odors in

Myanmar. The project team will

apply the standards of dealing

with such public nuisances in the

case of the Phnom Penh SEZ

considering the applicable

circumstances in detail.

3 Natural

Environment

(1) Conservation

Areas

① Is the project site located in

conservation areas designated by

① There are no designated

conservation areas.

4-35

the country‟s laws or




affect the protected areas?

(2) Ecosystem and

biota

① Does the project site

encompass primeval forests,

tropical rain forests, ecologically

valuable habitats (e.g. coral reefs,

mangroves, or tidal flats)?


encompass the protected habitats

of endangered species designated

by the country's laws or


conventions?




taken to reduce the impacts on the

ecosystem?



aquatic organisms? If impacts are

anticipated, are adequate

measures taken to reduce the

impacts on aquatic organisms?

⑤ Is there a possibility that the


vegetation and wildlife? If


adequate measures taken to

reduce the impacts on vegetation

and wildlife?

① MDC, the owner and

developer of the land, is quite

knowledgeable of the fact of

primeval forests existing in the

planned area. Detailed

information about the protected

habitats will be shared by


next F/S stage.

② Detailed information about the

protected habitats will be shared

by knowledgeable people during

the next F/S stage.

③ During the next F/S stage, the

project team will address the

potential for the development to

have significant impacts to the

local ecosystem. The project team

will consider measures to counter

such impacts on an as needed

basis.

④ During the next F/S stage, the



have adverse effects upon aquatic

organisms. The project team will

consider measures to counter such

impacts on an as needed basis.

⑤ During the next F/S stage, the



have adverse effects upon

vegetation and wildlife. The

project team will consider

measures to counter such impacts

4-36

on an as needed basis.

(3) Management of

Dumping grounds

① Are environmental protection

and restoration plans (such as

landfill gas and leachate

collection and treatment systems,

prevention of illegal dumping,

and reforestation) after facility

closure considered?

② Is a sustainable management

framework for dumping grounds

established?

③ Are adequate financial


dumping grounds

① The project team will discuss

with MDC regarding the necessity

of an environmental protection

procedure and restoration plan in

place during the project.


with MDC regarding the necessity

of having a sustainable

management framework for

dumping grounds during the

course of the project.

③ The project team will discuss

with MDC the need for financial


dumping grounds.

4 Social

Environment


caused by project

implementation? If involuntary

resettlement is caused, are efforts

made to minimize the impacts

caused by the resettlement?



given to affected persons prior to

resettlement?




living standards developed based

on socioeconomic studies on

resettlement?





there are no residents.

② When and if the project team

identifies the presence of residents



conduct explanatory meetings to

determine optimal ways of

dealing with the discovered

circumstances.

③ When and if the project team



together with the MDC, it will pay

particularly careful attention to

4-37




elderly, people below the poverty

line, ethnic minorities, and

indigenous peoples?


affected persons obtained prior to

resettlement?



properly implement resettlement?

Are the capacity and budget

secured to implement the plan?



resettlement?

ethnic minorities.

④ When and if the project team



together with the MDC, it will pay

particularly careful attention to

ethnic minorities.

⑤ When and if the project team



together with the MDC, the team

will obtain the necessary

agreements with all affected

persons prior to any resettlement

action.

⑥ When and if the project team



together with the MDC, the team

will obtain the necessary

agreements with all affected

persons prior to any resettlement

action.

⑦ The impacts of any

resettlement activity will be


implementation of the project. All

items, implementation methods,

and action intervals will be

explicit in the monitoring plan.

4 Social

Environment

(2) Living and

Livelihood

① Is there a possibility that the


living conditions of inhabitants?


considered to reduce the impacts,

if necessary?


the existing recovery systems,

including waste pickers?

③ Is there a possibility that

① The project has confirmed that

the project area - 300ha - is

forested field, and, the MDC has

verified that there are no residents

on the designated project site.

However, explanatory meetings

and hearings with neighborhood

residents will be conducted during

the next F/S stage, and the

opinions collected will be

4-38

waste transportation will

adversely affect the regional

traffic?

④ Is there a possibility that

effluents from the project and

leachates form the waste disposal

sites will adversely affect

fisheries and other water uses by

local inhabitants (especially

drinking water)?

⑤ Is there a possibility that

pathologic insects or other

disease vectors will breed as a

result of the project?

incorporated into the project

plans.

② Potential adverse effects will

be discussed with MDC during

the next F/S stage.

③ Potential adverse effects will


the next F/S stage.

④ Potential adverse effects will


the next F/S stage. The project

team will discuss with the most

appropriately knowledge people

regarding the needs.

⑤ Potential adverse effects will


the next F/S stage. The project

team will discuss with the most

appropriately knowledge people

regarding the needs.




and religious heritage sites? Are


protect these sites in accordance

with the country‟s laws?


that the project area - 300ha - is

forested field, and, the MDC

verified that there are no local


and religious heritage sites.



local landscape? Are necessary

measures taken?


that the project area - 300ha - is

forested field, and, the MDC

answered that there will be no

effect to the local landscape.

(5) Ethnic Minorities

and Indigenous

People

① Does the project comply with

the country‟s laws for rights of

ethnic minorities and indigenous

people?


reduce the impacts on culture and

lifestyle of ethnic minorities and

indigenous people?


groups made an agreement with

the Myanmar central government

for peaceful coexistence without

further dispute.

② The project team will conduct

explanatory meetings and public

hearings during the next F/S

4-39

stage, and discuss all relevant

issues related to this subject with

the MDC as the two parties

consider the situation.

(6) working

conditions

① Is the project proponent not

violating any laws and ordinances

associated with the working

conditions of the country which

the project proponent should

observe in the project?




project, such as the installation of

safety equipment which prevents

industrial accidents, and

management of hazardous

materials?




project, such as the establishment

of a safety and health program,

and safety training (including

traffic safety and public

sanitation) for workers etc.?






local residents?


exhaust, and wastes might be


works. While no residents living

on the land have been confirmed

to date, if the project identifies the

presence of residents living in the

planned area, it will prepare

measures to mitigate the situation.


information from MDC, the

project team concludes that

there will be no adverse effects of

the project on the natural

environment (ecosystem).

However, the team will seek to

confirm that in detail during the

next F/S stage.


information from MDC, the

project team concludes that

there will be no adverse effects of

the project on the social

environment. However, the team

will seek to confirm that in detail


④ The project will prepare a

safety training program


Construction










exhaust, and other wastes might

be generated during the

development works. No residents

have been confirmed to be living

on the land at present. However, if

the project identifies any residents

living in the project area during

4-40


reduce impacts?





impacts?

the course of work on the project,

the project team together with the

MDC will take all appropriate

measures to reduce and/or

eliminate these types of impacts to

residents.

② At present, given the

information received from MDC,

the project team concludes that

there will be no adverse effects on

the natural environment

(ecosystem). However, together

with the MDC, it will confirm

any and all updated information

received in detail during the next

F/S stage.

③ At present, given the

information received from MDC,

the project team concludes that

there will be no adverse effects on

the social environment. However,

the project team, together with the

MDC, will confirm any and all

updated information received in

detail during the next stage.


and implement monitoring


items that are considered to have

potential impacts?

② Are the items, methods and

frequencies included in the

monitoring program judged to be

appropriate?

③ Does the proponent establish

an adequate monitoring

framework (organization,

personnel, equipment, and

adequate budget to sustain the




implementation.



implementation.



implementation.



implementation.

4-41




identified, such as the format and

frequency of reports from the

proponent to the regulatory

authorities?

6 Special

notes

Reference to

Checklist of Other

Sectors

① Where necessary, pertinent

items described in the Forestry

Projects checklist should also be

checked (e.g. projects including

large areas of deforestation).

Special notes on

Using Environmental

Checklist


trans boundary or global issues

should be confirmed (e.g. the

project includes factors that may

cause problems, such as trans

boundary waste treatment, acid

rain, destruction of the ozone

layer, or global warming).

1) Regarding the term “Country‟s Standards” mentioned in the above table, in the event of significant

divergence from the World Bank Safeguard Policy as a general rule, or the International Finance

Corporation Performance Standards for private sector limited or non-recourse project finance cases, or other

standards established by other international financial institutions, or other internationally recognized

standards or good practices established by developed countries, such as Japan, regarding environmental and

social considerations, the background and rationale for this deviation, and the measures to rectify it if

necessary, are to be confirmed. In cases where local environmental regulations are yet to be established in

some areas, considerations should be based on comparisons with international standards such as the World

Bank Safeguard Policy, and appropriate standards of other countries (including Japan).

2) Environmental checklist provides general environmental items to be checked. It may be necessary to add

or delete an item taking into account the characteristics of the project and the particular circumstances of

the country and locality area in which it is located.

Source: JBIC

4-42

(4) The outlines of regulations regarding environmental and social

considerations, and clarification measures

1) The regulations for Environmental Impact Assessment (EIA)

The regulations regarding EIA in Myanmar are as follows;

・Forestry Law (1992)

・Protection of Wildlife and Wild Plants and Conservation of Natural Areas Law (1994)

・Factory Act（1951）

・Territorial Sea and maritime Zone Law（1977）

・National Environment Policy（1994）

・Mines Law（1994）

・Freshwater Fisheries Law（1991）

・Marine Fisheries Law（1990）

・Law on Aquaculture（1989）

・Irrigation Laws and Regulations（1982）

・The Conservation of Water Resources and Rivers Law（2006）

・Environmental Conservation Law（2012）

・Environmental Conservation Rules（2013, February Diet passed the bill）

・EIA Procedures（currently drafting）

① Environmental articles in the Constitution of the Republic of the Union of Myanmar (2008)

Constitution of the Republic of the Union of Myanmar (2008) obliges the government to conduct the protection of

environment (Chapter 1. Article 45). However, this needs clarification because it appears to accept the

environmental destruction occurring and allows restoration of the natural environment (Chapter 4. Article 96). It

requires the people to cooperate in the protection of the environment (Chapter 8. Article 390). However it does not

include a clause guaranteeing a healthy environment. It does not include clauses addressing sustainable

development or information enjoyment, participation in managing environmental resources, conventional

ownership, social communication with the traditional language, and distribution of social wealth.

② The Protection of Wildlife And Conservation Of Natural Areas Law (1994)

It does not include the concrete standards regarding wild animals and the protection of the environment, but rather

the policies and conduct of research development by the government, because it regulates only the Ministry of

Environment and Forestry as the responsible organization.

③ The Conservation of Water Resources and Rivers Law (2006)

It regulates not only the protection of the water resource and the rivers, but also the system of the water resources

4-43

and the contributions to national economic development. However it regulates the Ministry of Transportation as

the responsible organization, because it focuses the safety water traffic and its development as well. Additionally

it does not describe the numerical criteria for environmental conservation.

④ Environmental Conservation Law (2012)

This Environmental Conservation Law was enacted in March 2012 and was responsible for the Ministry of

Environment and Forestry established in September 2011. It consists of 14 Chapters, regulating rights, division of

duties, environmental standards, preservation of environment, preservation of natural resources and cultural

heritage, urban environmental management, permission and authorization of business entities affecting the

environment, and the infringement of rule and penal provisions.

The Environmental Conservation Law will enforce Environmental Conservation Rules approved by the Ministry

of Environment and Forests in February 2013, subject to Parliamentary approval for enforcement.

2) Environment Impact Assessment (EIA) system in Myanmar

In Myanmar EIA Procedures are being drafted, because the fields of investment requiring EIA were put into place

by the detailed regulation of the Foreign Investment Law. (As of February 2012)

4-44

(5) The items to realize the project in the country (executing agency

and other organizations)

1) Securing the distribution roots

As the previous chapter explained, the Myawaddy industrial zone will develop an area of 326.4 ha in its third

phase of implementation and handle the cargos of 6,000,000 t/y. When it develops the last of its total area of 500

ha, the scale will be 1.5 times as large as its phase 3 scale, processing cargos of 10,000,000 t/y. These cargos are

only for materials, distribution, and manufacturing wastes, however, the other cargos and nonmanufacturing

wastes for nonmanufacturing should be counted.

It is difficult to estimate the ratio of waste in cargos because the type of waste and the amounts vary by industry.

The separation of waste into categories will affect the volume of cargos as well.

Assuming the basic units of the waste are 250 tons/ha/year in manufacturing waste and 0.25 tons/person/year in

commercial and residential waste, the north area will generate approximately 20,000 tons/year of waste after

completion. When the scale of the industrial zone is developed to the full build-out of 500 ha and all areas are

fully occupied by tenants, the total volume of the north and the south area will become approximately 100,000

tons of waste /y.

Kayin State needs the basic waste management countermeasure of a Regional Development Plan because it is

impossible to consider that Myawaddy district/township is capable of disposing of all its waste including the

waste from the Myawaddy industrial zone.

From the distribution viewpoint, and, that of environmental and social considerations, garbage collection during

daytime hours with vehicles using local roads is undesirable.

2) Procurement of work force Population statistics by Industrial Zone Report in Kayin State are as follows;

Table 4-6 Household, Families and Population in Kayin State

District Household Families population Total (people)

Male Female

Hpa-an 118,391 125,746 476,855 493,267 970,122

Kawkareik 64,901 70,045 279,407 281,787 561,194

Mywaddy 12,428 12,744 29,759 30,277 60,036

Hpa-pon 14,219 14,478 79,543 77,552 157,095

Total 219,939 223,013 865,564 882,883 1,748,447

Source: Government of Kayin State, Industrial Zone Report

4-45

Work force at the north area and the south area in Myawaddy industrial zone are as follows;

Table 4-7 Work force at the north area and the south area in Myawaddy industrial zone

area North South

Total (people) Phase1~2N Phase2S～5

Manufacturing 21,303 70,200 91,503

Non-manufacturing 10,652 70,200 80,852

Total 31,955 140,400 172,355

Source: Study Team

Population Pyramid of Myanmar for 2010 indicates that the population of working age (15 - 64) is approximately

70% of the total population. There are approximately 42,000 workers (total population 60,000 x 70%) in

Myawaddy district/township. Myawaddy district/township has not disclosed its unemployment rate. Assuming it

is 35%, the unemployed population is 15,000. However, additional research is needed to estimate the number of

factory workers.

The report says that the number of Kayin migrants in Thailand is approximately 1,130,000. (Job Creation by

Border Area Development between Thailand and Myanmar; Dr. Kitti Limskul, Dr. Hiroyuki Taguchi,

Chulalongkorn University funded by JICA Thailand Office, Dec.2012) There are approximately 400 factories in

Mae Sot in Thailand adjacent to Myawaddy; and approximately 20,000 migrants from Kayin are working there.

Assuming the north area opens in 2016 and the south area opens 2015, the work force will reach 170,000 workers.

Approximately 10,000 workers will move to Myawaddy; increasing 20,000 – 30,000 inclusive of accompanying

family members. While it is possible to estimate the workforce as the north area once lot sales are underway, it

will be difficult to estimate the workforce after that, because the demand and supply will not be balanced. Finally,

Myawaddy industrial zone have to attract Kayin migrants in Thailand by 2018 or 2019 when the south area opens.

It is impossible for Myawaddy district/township to accommodate a job creation level of 170,000 jobs and a

population increase of 300,000 people by 2030. Therefore Kayin State needs to commission a new township

development plan based on a long term vision, and come up with the strategy and tactics that will encourage the

smooth return home of oversea workers

Chapter 5 Financial and Economic Evaluation

5-1

(1) Estimated project cost

As explained earlier regarding current project targets, concerning Myawaddy IZ and Hpa-an IZ, the Hpa-an IZ is

already in operation, leaded by Kayin State Government. Therefore, in this project the financial and economic

analysis for Hpa-an IZ will not be included. On the other hand, the Myawaddy IZ with the exception of the Phase1

construction on north district already underway, most of the planning area is in an undeveloped condition. This

study will focus on the Myawaddy IZ.

① Pre-conditions on Project Cost Estimate

Considering land acquisition costs and the compensation necessary to relocate residents from the proposed site to

enable development, where indicated by the Kayin State Government, those costs are excluded from the overall

project cost estimation.

The project cost estimation in Phase 1 includes the electric power distribution, on-site road, and the road side

drains. However, the cost of design, construction, operation, and maintenance regarding other infrastructure

facilities are not included in the project cost estimation.

1) The Cost Items Out of the Project Scope

Although it is linked to the development of Myawaddy, the indirect cost for survey, design, and construction, are

necessary to be executed separately from the project. Those costs should be handled separately under the scope of

the regional economic development process.

・ The following is a list of the short to medium term cost items out of the project scope.

・ Planning and review of a “New Town Master Plan for the Myawaddy Industrial Zone Development” and its

related survey;

・ Topographical Map for the Myawaddy Industrial Zone Development;

・ River survey, meteorological observation, geological/soil property/ aquifer exploration,

compensation/dilapidation survey;

・ Environmental conservation area survey;

・ Improvement and implementation plan for the discharge channel and downstream river;

・ Sectional improvement of National Road (NR) No.85, along with the crossings and diversions included for

in-flowing rivers and watercourses;

・ Preparation for dry port facilities within Myawaddy Trade Zone for Myawaddy IZ;

・ Survey and design for a dam facility, reservoir facility, and water supply facility as part of a regional water

supply master plan;

・ Survey and design for power plant, substation, and power transmission as part of a regional power supply

master plan.

2) Project Implementation Phase and Schedule

The project implementation process is in accord with the Chapter 8 Implementation Schedule. The

5-2

implementation phase of the project is divided into two parts - North district and South district. The north district

will be carried out in a single phase, and, the undeveloped south district will be carried out in four phases.

Table 5-1 Project implementation Phase (Area unit: ha)

Item

Project cost by phases Total

North district South district

Phase 1 Phase 2 Phase 3 Phase 4

1 2 2N 2S 3 4~5

The entire area of the

Industrial Zone 57.4 23.9 49.9 73.1 122.2 173.5 500.0

Same as above by Phase

131.2 73.1 122.2 173.5 500.0

Industrial site 48.8 0 26.8 34.6 85.0 104.8 300.0

Same as above by phase

75.6 34.6 85.0 104.8 300.0

Same as above by Ratio

(%) 25.2 11.5 28.4 34.9 100.0

Road site 8.6 3.6 10.5 11.8 17.4 51.9

Same as above by Phase 12.2 10.5 11.8 17.4 51.9

Same as above by ratio

(%) 9.3 14.4 9.7 10.0

Utilities/ housing/

services/ other land 0 23.9 19.5 28.0 25.4 51.3 148.1

Same as above by phase

43.4 28.0 25.4 51.3 148.1

Source: Study Team

3) Basic items in the cost estimate

a) Three cases of possible construction contracts

There are three possible cases of construction contract as follow:

① The local consultant and the local contractor will carry out overall survey, design, procurement, and

construction;

② The Thai consultant and Thai contractors will carry out survey, design, procurement, and construction; or,

③ The local consultant and the local contractors, in cooperation with Japanese contractors, will carry out

survey, design, procurement, and construction.

In the case of ① operation by local contractors, only they might exclude the area throughout survey and design,

5-3

procurement, and construction works just in the North District Phase 1.

In the case that ② Thai contractors act as the main operator - they have a proven track record in bypass-road

construction, described above. However, the construction of the IZ will be extensive, it is necessary to verify the

licensed design and construction area in Myanmar and to investigate the approval process including the necessary

taxation expenses and other required costs.

In the case of ③ operation by a mixed group of contractors including Japanese contractors - a joint venture and a

construction management (CM) sub-contract is one practical approach. It is necessary to investigate all applicable

taxation expenses and other required costs as mentioned above in the case of operation by Thai contractors.

b) Quantity and unit cost / Price

The quantity and unit cost/price are calculated based on the preliminary design for “Chapter 3 Justification,

Objectives, and Technical Feasibility of the Project” and the performance of the Phnom Penh SEZ (PPSEZ).

While the civil work, particularly for the cut and embankment volume, is to be balanced throughout the

phases in principle, the unsuitable soil and excavated surplus soil will be disposed of in an area 3km away.

The unit cost for construction equipment, Energy & Machine (EM) facility equipment, and the labor cost

quotations are based on an interview conducted with the local general contractor in October to November

2013, the unit cost survey for feasibility study on PPSEZ, and others.

c) Construction Cost

・ The direct construction cost for the civil engineering work is based on the construction process productivity

standard in Japan and the outline design quantity as mentioned above.

・ The indirect cost and general and administrative expenses (home office overhead) are calculated for the

pro-rata costs from the direct construction costs stemming from the above assumptions.

d) Tax and duties

・ The taxation system of the central government and the state government of Kayin State, and, the tax

exemption and subsidy tax incentives of that state government as the operator of Myawaddy IZ were

unknown during the survey period at the time.

・ In general, although it is required to record the expense that reflects the taxes of future policy for the project,

the tax and the duty cost are not reported in the calculation due to the fact that this project will be carried out

in the PPP scheme lead by Kayin State.

4) Myawaddy IZ Development Project Cost

The table below represents the project cost for Myawaddy IZ development

It is to be noted that a potential Phase 4 is excluded here as the project site is not yet determined.

5-4

Table 5-2 Project cost estimate (M US$)

No. Name Summary Phase1 Phase2 Phase3

1 Civil engineering infrastructure 1.67 1.01 1.56

Land Development 2.44 5.33 7.59

In-site road 3.25 1.96 3.03

Drainage 2.44 1.77 1.71

Retarding basin

9.80 10.08 13.89

Direct construction cost total 1.96 2.02 2.78

Indirect construction cost total 1.18 1.21 1.67

General and administrative cost

total 12.94 13.30 18.33

Civil infrastructure costs total 0.00 0.00 0.00

2 Power supply Power company burden 1.65 0.57 1.85

3 Water supply Deep well supply 3.90 1.60 2.34

4 Sewerage treatment Aerated Lagoon System 0.40 0.18 0.45

5 Solid waste processing Includes commission fees to

Myawaddy city 0.00 0.00 0.00

6 Telecommunications Telecommunications company

burden 1.16 0.00 0.00

7 Administration and One stop

service Office furniture 20.04 15.65 22.97

8 Total construction cost 0.00 0.00 0.00

9 Interest during construction 2% of construction cost 0.00 0.00 0.00

10

SPC establishment

preparation expense

PS 0.33 0.26 0.26

11 Research, survey and design

costs PS

12 Tax and duties 3.01 2.35 3.44

13 Contingency 10% of construction cost 23.35 18.26 25.57

Total project cost

Item Phase1 Phase2 Phase3

Total IZ area (ha) 131.2 73.1 122.2

Project cost for total IZ area

(US$/ m²) 17.8 25.0 21.8

Source: Study Team

5-5

(2) Preliminary Summary results of financial and economic analysis

1) Financial analysis Assumptions:

The revenue of the IZ is generated primarily i) land lease income, ii) water supply fee, iii) wastewater treatment

income, and, iv) service fees.

The following are assumptions relevant to the conduct of financial analysis.

a) Premise 1: To obtain the land for Phase 1 (57.4ha) and Phase 2 (49.4 ha excluding the housing facility, business,

and other service areas) for the first year (among them, the 77.9ha will be up for sale as the IZ).

b) Premise 2: the table below indicates the selling price.

Table 5-3 Premises for the financial analysis

Land price Phase1:US$45/m², Phase2:US$50/m², Phase3: US$55/m²

Water supply fee US$0.80/m²

Drainage fee US$0.43/m²

Service fees Phase1: US$0.03/m², Phase2: US$0.04/m², Phase3: US$0.04/m²

Source: Study Team

c) Premise 3: No use of bank financing, but rather the use of fully owned capital.

2) The results of the financial analysis

a) Financial analysis

In order to conduct a proper financial analysis, the land sales price from each phase is set at US$45/m² for

Phase 1, US $50/m² for Phase 2, and US$55/ m² for phase 3 respectively as a basis for the calculation. These

base figures were determined based on the comparison among the unit of land cost of a particular IZ in

Thailand and another IZ in Cambodia. Furthermore, on the basis of the selling land price per square meter, the

Financial Internal Rate of Return (FIRR) and Economic Internal Rate of Return (EIRR) are estimated for each

phase with a margin for difference of (±) US$5/m².

b) Financial Internal Rate of Return (FIRR)

With regard to revenue management, the IZ is anticipated to be independently and fully operating income from

the project’s third year, with 10% of total revenue devoted to general operational expenses.

The inflation rate is expected to be set at 5% year-on-year plus versus the previous year. According to the

Internal Rate of Return (IRR) calculation, from the condition mentioned above for the Net Cash Flow (NCF) for

the period of 20 years, the base case suggested 13.91% without a leveraged loan. This equation suggests great

potential success in the profit-making business f realizing this project. It is to be noted that this relatively simple

financial projection does not include a calculation of CAPEX (Capital Expenditure) or the analysis of exit price.

5-6

c) Economic Internal Rate of Return (EIRR)

① The net income per square meter of Myanmar companies:

・ One informative example of the annual net income per square meter of Myanmar local enterprises is

US$ 15.34/m²/y.

・ It is to be noted that the above figure was provided from one of the related factories in the project team’s

analysis.

② The total factory area (building) within Myawaddy IZ.

・ The building-to-land coverage ratio is set at approximately 60%. (This percentage refers to the prevailing

building/land ratio of general tenant companies in Rojana Industrial Park, which has no plan for future

expansion)

・ The total building floor area in Myawaddy industrial park: the total salable area * 60% = 1,629,600 m²

③ This EIRR is calculated from the industrial park development costs against the net income of the all tenant

companies in order to evaluate the economic effects in the Kayin state. .

・ The development cost is $69,630,000.

④ EIRR Conclusion:

If the tenant companies of Myawaddy industrial park are assumed to be primarily garment enterprises having

business relationships with a variety of Japanese companies, a net profit of US$1.2 billion could be achieved

over a 20 year period – representing an EIRR of 32.1%. Reaching this projected net profit of US$1.2 billion

will produce many jobs that will, contribute greatly to the Kayin State economy as a result. Therefore this

project is considered to have a significant economic impact to the State.

5-7

① Projection: Phase 1, 2, 3: (Base) US $ 45 /m² · US $ 50 /m² · US $ 55 /m²

Table 5-4 financial analysis (45, 50, 55)

Source: Study Team

・ Financial Internal Rate of Return (FIRR): 13.91%

・ Net Present Value (NPV): US$ 95,180,000

5-8

② Conservative case: Phase 1, 2, 3: (Base) US $ 40/ m² · US $ 50/ m² · US $ 55/ m²


Source: Study Team



5-9

③ Optimism case: Phase 1, 2, 3: (Base) US $ 50/ m² · US $ 50/ m² · US $ 55/ m²


Source: Study Team



5-10

④ EIRR

Table 5-7 Economic Analysis (EIRR)

Source: Study Team

・ EIRR:32.1%

・ NPV: US$1,182,082,000

Chapter 6 Planned Project Schedule

6-1

(1) Myawaddy Industrial Zone Construction Schedule

The short-term implementation schedule of Myawady IZ is as follows:

1) Myawady industrial park development plan

a) Overview:

The implementation schedule is set based on the area ratio putting 57.4ha as a standard measure for the

Phase 1/I as determined by the local construction company (Mother Construction Co., Ltd. (MC)).

The earth work will be suspended during the three months of the rainy season.

Phase1, 2, and 3 are divided into two sections, Phase 4 has an additional contact part, making three

contacts in total.

There are common and particular matters regarding survey and design works. Those must be handled

separately.

The survey and design for the common issues will take 12 months while addressing specific issues will

take 6 months.

The survey and design work includes preparation of tender documents and also evaluation of tender

appraisal.

The design for operator SPC (Enterpriser SPC) is up to basic design, while the construction will be a

Design-Build contract, including the detailed design by MC.

Electric and Machinery (E&M) works procurement and installation will be managed in the manner

similar to that of the civil infrastructure construction work.

Figure 6-1 Myawaddy Industrial Zone Construction Schedule

Item 2015 2016 2017 2018 2019 2020 2021

Milestone Bypass road will open (early 2015), IPP 98MW will be completed @ Mawlamyain (late

2015)

Establishment of

SPC

Design survey

(Common)

Government

agencies related

work

Dry port facility

Phase1(131.2ha)

Detailed design

Land

development

Road, drainage

6-2

Water supply and

sewerage

infrastructure

facility

Administration

and One Stop

Service facility

Phase 2 (73.1ha)

Detailed design

Land

development

Road, Drainage

Water supply and

sewerage

Administration

and One stop

service facility

Phase 3

(122.2ha)

Detailed design

Land

development

Road, drainage

Water supply and

sewerage

infrastructure

facility

Administration,

One stop service

facility

Phase 4

(173.5ha)

Detailed design

Land

development

Road, drainage

Water supply and

sewerage

infrastructure

Administration

and One stop

service facility

2015 2016 2017 2018 2019 2020 2021

Source: Study Team

Chapter 7 Implementing Organizations

7-1

1) Kayin State Organizational Chart

The following is the Kayin State organizational chart

Figure 7-1 Kayin State Organizational Chart

State Parliament

State High Court

State GovernmentOffice

(Deputy Director)

Parliament Office(Deputy Director)

General AdministrationOffice

(Deputy Director)

General Administration Department of the State(Deputy Director General w/ Deputy Director)

70 Department Level Entities

Townships

Districts

Sub-Townships

Essential Service Departments (18)

Necessary Service Departments (18)

Coordination Admin Management

Coordination

Kyainsekkyi(Asst Director)

Kawkareik(Asst Director)

Hpa-an(Asst Director)

Hlaingbwe(Asst Director)

Kyaikdo

n

Payath

onezu

Sukali

Walle

y Myain

g

Thadaunggy(Asst Director)

Hpa-an(Deputy Director)

Kawkareik(Deputy Diretor)

Myawaddy(Deputy Director)

Pa-pun(Deputy Director)

Myawaddy(Asst Director)

Pa-pun(Asst Director)

Shan

ywath

it

Baw

gali

Leikth

o

Kam

amau

ng

Payin

gkyon

Ele

ctric

ity & In

dustry

Social A

ffair

City D

eve

lopm

ent

Fore

st & M

inin

g

Tran

sportatio

n

Agric

ultu

re &

Live

stock

Fin

ance &

Reve

nue

Plan

nin

g & E

conom

ic D

eve

lopm

ent

Security &

Borde

r Affairs

9 Ministers

Chief Minister

Audito

r General

Advo

cate

General

Min

isters fo

r Eth

nic

Min

oritie

s

Union Goverment

Source: JICA

The Kayin State Government appoints a Chief Minister who is the decision maker together with nine subordinate

ministers responsible for distinct portfolios. The Kayin State Government has the ability to develop industrial

zones, because they already have 2 large-scale industrial zone development projects well exceeding 300ha of total

area, - Hpa-an Industrial Zone and Myawaddy Industrial Zone.

Hpa-an Industrial Zone is currently in development, with its Phase 1 already complete; some of its planned

factories have commenced operations.

Myawaddy Industrial Zone is also under development, with its Phase 1 scheduled for completion in April 2015.

However, with regard to planned Duty Free Zones (DFZ) and Special Economic Zones (SEZ), Kayin State needs

additional approval from the Myanmar Investment Committee (MIC).

7-2

2) Myawaddy Industrial Zone

(Owner) Kayin State

(Design) Local contractor (Mother Construction Co., Ltd.: MC)

(Construction) Local contractor (MC)

【Present status】Local contractor is under consideration.

【Problems】Potential power supply shortages: Lacking the necessary equipment to guarantee a consistent water

supply, water treatment, and waste treatment systems.

Figure 7-2 Myawaddy Industrial Zone Phase 1 Ground Plan

Source: Mother Construction Co., Ltd.

7-3

3) Hpa-an Industrial Zone

(Owner) Hpa-an Industrial Zone Company

(Design) Local general contractor

(Construction) Local general contractor

【Present status】 Some labor-intensive factories are under operation.

【Problems】 Potential power shortages: Lacking the necessary equipment to guarantee a consistent water

supply, water treatment, and waste management systems.

Figure 7-3 Hpa-an Industrial Zone Ground Plan

Source: JETRO

Chapter 8 Technical Advantages of Japanese Companies

8-1

(1) Expected participation scheme by Japanese companies (Funding,

Engineering/Procurement/Construction, Supply, and Management/

Operation, etc.)

1) PPP scheme of Myawaddy Industrial Zone

Figure 8-1 PPP scheme of Myawaddy Industrial Zone

Source: Study Team

2) Expected participation scheme of Japanese companies (Funding, Engineering/Procurement/Construction (EPC),

Supply, and Management/Operation, etc.)

According to the development time span for the Myawaddy Industrial Zone, the possibility of the expected

participation by Japanese companies is as follows;

8-2

Table 8-1 Expected participation of Japanese companies

Phase Field/Items Type Time Span In charge Remarks

Plan Produce a comprehensive regional

development master plan

Study ○ ○ △ Need review

current plan

Review industrial standards Same as above ○ ○ Need

current

situation

survey

Introduction of an international

units system

Same as above ○ ○ Present:

yard/

Pound

system

Survey Make topographic maps Survey ○ △ ○ Aerial/

satellite

surveying

Set Observatory station

(river, watercourse system)

Construction

Operation

○ ○ ○ Need

current

situation

survey

Set Meteorological observatory

station

Same as above ○ ○ Same as

above

Study EIA standard Study ○ ○ Same as

above

Design Develop design software and

application

Supply/

Operation

○ ○ Need

current

situation

survey

(Private

companies

initiative)

Set Design standard/specification Study ○ ○ Need

current

situation

study with

Mid

termm

mm

Sh

ort T

erm

Kay

in

inin

Ce

ntral G

ov.

inin

8-3

support by

academy

institute

Procurement/

Construction

Application software for

procurement, scheduling and

quality control etc.)

Study, Supply, and

Management

○ ○ ○ Applicable

to the

Project

Materials Supply/

Finance

○ ○ ○ ○ Same as

above

Machinery

Same as above

○ ○ ○ ○ Machinery

to IT

technology

developmen

t

Construction/

Management/

Maintenance

Water supply plant Supply/

Finance/

Management

○ △ ○ ○ Apply to the

Project

Advanced wastewater treatment

plant

Same as above ○ ○ ○ Same as

above

Solid waste incineration plant Same as above /

Management

Same as

above

Solid waste disposal management

manifest system

Same as above /

Management

○ △ ○ Same as

above

Biomass thermal generation plant Same as above /

Management

○ ○ △ ○ Same as

above /

Pilot plant

operation

Photovoltaic and/or solar thermal

power generation plant

Same as above /

Management

Same as

above /

Pilot plant

operation

Medium/Small hydroelectric power

generation plant

Same as above ○ ○ ○ ○ Same as

above

Machinery of power

generation/transformation/transmiss

ion/distribution

Same as above/


above

Regional telecommunications

center

Same as above

○ △ △ ○ EPC and

finance,

operation

8-4

managemen

t

Materials for information and

telecommunications

Supply/Finance ○ ○ △ ○ Same as

above

Machinery for information and

telecommunications

Same as above

Management


above

Gas supply plants Same as above /

Management

○ △ △ ○ Same as

above

Materials for gas supply plants Supply/

Finance

○ ○ ○ ○ Included

above

Machinery for gas supply plants Supply/

Finance


above

Container handling vehicles Same as above /

Management

○ ○ ○ △ Applicable

to the

Project

Crane, lifter

etc.

CFS system EPC/

Management

○ ○ ○ △ Same as

above ,

machinery

and the

system

Customs processing system Same as above /

Management


above

Cargo transport vehicles Supply/Finance ○ ○ ○ △ Same as

above ,

private

company

initiative

Special cargo vehicles with

cooling/heating equipment)

Same as above /

Management

○ △ ○ △ Same as

above

Mass transit buses Same as above ○ △ ○ △ Same as

above ,

trans.

company

Mass transit bus system Same as above /

Management

○ △ ○ △ Same as

above

(Legend) ○：Leading role, △：Supporting role

Source: Study Team

8-5

(2) Advantages of Japanese Companies (Technical and economic)

The Project Team categorizes the advantage enjoyed by Japanese companies into three areas: industrial zone

development, training by private sector practitioners and the social and environment aspect with main items as

follows:

1) Technical

The advantages of Japanese companies compared with other foreign companies in Myawaddy Industrial Zone

project are as follows:

a) Regarding the design, construction and management of the industrial zone and SEZ developments in

Southeast Asia, and other developing countries, Japanese companies have extensive experience in contributing to

national economic growth.

b) Japanese companies have established advanced supply chain systems between manufacturers and logistics

service providers that collaborate in utilizing horizontal international specialization, resulting in highly efficient

and effective business performance.

c) Japanese companies have developed Business Continuity Planning (BCP) systems to minimize and even

prevent devastating losses caused by the frequent occurrence of natural disasters; thereby increasing the safety

and reliability of their supply chains. In addition, they have entered into operative stages to verify the BCP

system against actual natural disasters.

d) Japanese companies have much experience in the fields of global warming countermeasures through Clean

Development Mechanisms (CDM) and bilateral credit projects and which help reduce the greenhouse gas

emissions that cause global warming.

e) Japanese companies possess advanced technology and systems that achieve energy savings.

f) Japanese companies lead the world in renewable energy technology.

g) Japanese companies are remarkably advantageous in their reliable product delivery and high quality

undertaking in construction ventures. In particular, Japanese companies excel in dealing with maintenance issues

after completion of construction.

h) Japanese companies possess sound diagnostic and restoration technologies relative to conventional

infrastructure requiring rehabilitation - thereby helping to lengthen the functional life of that infrastructure in the

world. Such technology will be able to contribute greatly to the rehabilitation of Myanmar’s dilapidated

infrastructure inventory that has resulted from a lack of regular maintenance. as the realization of Myanmar’s

development moves ahead in response to the recent opening of the economy to Western investment.

8-6

2) Environmental considerations

Environmental considerations relative to this project by Japanese companies are as follows:

Figure 8-2 Environmental considerations surrounding Myawaddy Industrial Zone (Water supply)

Source: Study Team

8-7

Figure 8-3Environmental considerations surrounding Myawaddy Industrial Zone (Sewage treatment)

Source: Study Team

8-8

Figure 8-4 Environmental considerations surrounding Myawaddy Industrial Zone (Waste)

Note: Phase division and the area shown in this figure are indicative ones, so these differ from those in both

Chapter3 and Chapter5.

Source: Study Team

8-9

(3) Necessary measures to promoting participation of Japanese

companies

1) Measures by public and private sectors

The measures taken by public and private sectors to promote participation of Japanese companies are as follows;

【Public sector】

① Establishment of privileges in Duty free Zones

② Administration of One Stop Service provision

③ Renewal of logistics network infrastructure

④ Collaboration with educational organizations

⑤ Comprehensive Development of New Towns

⑥ Establishment of a streamlined immigration system in border areas

⑦ Protective countermeasures against water flooding

⑧ Establishment of a security system

【Private sector】

① Development of infrastructure (water supply, water treatment, waste water treatment and solid waste disposal

management)

② Stable power supply

③ Rental factories provision

④ Human resource development and worker employment diversification policy such as part-time, dispatched,

fixed term

For the purpose of promoting the involvement of Japanese companies, SPC or Pre-SPC organization should take

place seeking assistances from both governments - Japan and Myanmar - so as to encourage Japanese company

participation.

2) Suggestion to Kayin State

The competitive power of Japanese companies has decreased in terms of pricing, in the face of strong Chinese and

Korean companies that have developed competitive pricing power in recent years. Thus, it has become difficult

for Japanese companies to maintain or improve their market share of commodity goods in the international market.

To overcome this situation, Japanese companies have to increase their competitiveness by specializing in:

Quality reliability

Punctual delivery times

Reliability of performance over product/service life time

Faithful after care for goods and performance

New measures for sales promotion by integrating the above specialties relative to the international

competition

8-10

Since the following measures are considered effective in order to ensure Japanese company participation, it will

be important that the Japanese Government extend advice, suggestions, guidance on legislation, and regulation,

responding to requests from the Myanmar Central Government and the Kayin State Government.

① To enhance the involvement of Japanese companies, the state and central governments would need to consider

adoption of the concept of a tendering system including total evaluation being introduced in any competitive

tendering. This would be a system that would reward the punctuality and high quality of Japanese companies’

performance, and offering a high tendering price. This tender evaluation system would also overcome excessive

total costs brought by high interest rates under the progressing inflation-prone economies of development

countries.

・ Tenderers would be able to propose project finance as well as conventional criteria of technical and tender

pricing matters.

・ Tenderers would be able to propose life cycle cost over project life of operation and maintenance in addition

to construction cost.

・ Tender evaluations can accept alternative technical proposals as well as a specific owner’s technical

requirements.

② To enhance FDI in industrial zones in Myanmar, industrial zone developers or SPCs need not only receive

technical assistance on an ODA basis, but also the international financial support of JICA and/or JBIC to develop

infrastructure in industrial zones,

In this regard, it is necessary for companies who plan to participate in industrial zone development projects to

establish SPCs in an early stage of their project, and partner with the counterpart authorities of Kayin State. Both

players can collaborate to form PPP schemes to receive technical and financial support on an ODA basis.

Thus, PPP scheme will produce a variety of incentives that will create an environment conducive to the

introduction of foreign investment.

③ To promote the Myawaddy Industrial Zone, and become a Special Economic Zone (SEZ) of international

quality standard in the future, anxiety about the deficiency of a stable power supply in Myanmar must be resolved.

The investment in electric power generation sector is a matter of urgency. JBIC has introduced a Special Terms for

Economic Partnership (STEP) loan system for ODA focusing on the use of Japanese companies’ advantageous

technology. It is an important institutional policy that the terms of eligibility for STEP loans would be extended to

urge the general adoption of Japanese companies’ unique technology.

While there is very limited knowledge available of the topographical, meteorological, and hydrological conditions

in Myawaddy district, a combined system of solar thermal power generation with appropriately scaled hydro

power generation is worth studying and investigating.

study on the myawaddy hpa-an sez ppp project in the … · study on the myawaddy – hpa-an sez ppp...

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