Japan completes feasibility study of Myanmar rail project

Japan completes feasibility study 

of Myanmar rail project

Japan has completed a feasibility study on the proposed $1.7 billion modernization of the Yangon-Mandalay railway link—a major attempt towards developing Myanmar’s railway transport infrastructure.

The rehabilitation contract for the 640km link will be given to Japanese companies because the study was funded by a grant from Japan, said Thura U Thaung Lwin, deputy minister in Myanmar’s rail transportation ministry.

Japan is also expected to provide a loan to fund the project.

In another development, the Myanmar government plans to set up manufacturing facilities for diesel locomotives and rolling stock such as coaches and wagons in the country by 2015 with China’s help.

“The twin facilities will be operational within three years. The tender has been completed and the contract will be awarded to a Chinese company,” U Thaung Lwin said in an interview. He didn’t name the Chinese firm.

These facilities will require an investment of $100 million. While 90% of the investment will be covered through the Chinese loan, 10% will be contributed from Myanmar’s annual budget. The diesel engines will be manufactured in Nay Pyi Taw, the Myanmar capital, and the coaches and wagons will be built in Mandalay.

Myanmar’s attempt to improve its creaky infrastructure hold out the promise of lucrative contracts for foreign companies as governments such as Japan try to leverage their aid and loan programmes to step up their economic engagement with the South-East Asian economy.

According to a report by consulting firm McKinsey and Co., Myanmar needs $650 billion of investment by 2030 to support economic growth. Of this, $320 billion is required in infrastructure.

Myanmar has a railway network length of 4,000km of tracks, with 926 stations and a fleet of 436 locomotives. The state-run system’s 412 trains lug 1,281 passenger coaches and 3,204 wagons.

Much of the railway network is old and in urgent need of modernization.

A planned Trans-Asian Railway link aims to connect the railway systems of 28 countries in Asia, and Europe.

There is also a plan to establish a rail link between India and Myanmar, which will join Jiribam, Assam in India with Kalay in Myanmar.

India is also a part of the road project that seeks to help establish connectivity from Moreh in India to Mae Sot in Thailand via Myanmar.

“Transporting by rail instead of truck from Myanmar to Shanghai would reduce the cost to four times that of sea freight compared with ten times,” said the McKinsey report.

“Our estimates of freight costs from Chennai to Shanghai via Myanmar by ship and by overland routes consist of the following elements: sea shipment from Chennai to Yangon at a rate of $0.003 per km per tonne, and land transport from Yangon to Shanghai by way of the Muse/Ruili border crossing at a rate of $0.05 for trucking and $0.02 for rail,” the report added.

Such connectivity will also help in the economic integration of the Association of Southeast Asian Nations (Asean), comprising Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Trade between India and Asean was $76.3 billion in 2012-13 and is expected to increase to $100 billion by 2015.

“In the initial period during the development of our country, the rail network will be developed within our country. Going ahead in future, when our economy is developed, we will link up to neighbouring countries such as India, China and Thailand,” U Thaung Lwin said.

India has been involved in strengthening Myanmar’s railway infrastructure. Of a $500 million credit line extended to the Myanmar government by India, $155 million has been earmarked for developing railway infrastructure.

In a related development, a survey team from state-owned RITES Ltd has already conducted a feasibility study for the 250km link between India and Myanmar.

“This will be followed by a detailed feasibility report that will indicate the investment required for this project. What I have heard is that on the India side the terrain is very mountainous, so first you have to search for an appropriate rail alignment,” U Thaung Lwin said.

“On our side, it is much easier as most of the area is plain. The project’s execution depends on the funding for it. While we will put some investments from our side, the main funding will have to come from India,” he added.

This comes in the backdrop of joint working groups set up by Myanmar and India to determine the technical and commercial feasibility of cross-border rail links and shipping links. State-owned Shipping Corporation of India Ltd has already completed a feasibility study on a liner between the two countries. According to the study, running this service would result in a yearly loss of Rs.28 crore.

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