Myanmar’s Rickety Railways Poised for a Revamp

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YANGON — As they pass Insein Station, a farmer and her fellow workers drag five huge bundles of vegetables to the front aisle of a railway car on the notoriously inefficient Yangon Circular Railway Line, forcing passengers to climb over the fresh produce if they want to enter or leave the carriage. The group appears content as they sit chopping and sorting the vegetables and throwing unwanted stems out the window until they reach Yangon Central Station.

The 46km-long train line, which was completed by the British in the former colonial capital in 1880, is notorious for being dirty, crowded and late. But that may all change by 2020.

Myanmar’s infrastructure was largely neglected during the five decades of military rule. That situation is now haunting the country as it opens up to foreign investment and pushes through sweeping economic reforms following the removal of crippling Western sanctions.

Myanmar is raring to go, but its takeoff is being bogged down by dilapidated infrastructure. Among the worst aspects are the lack of electricity, with only 25% of the population having access to electric power, and limited public transport, with some 20 million of the country’s 54.3 million people unable to access even basicroads. The 157,000km of existing roads are mostly dirt, and the paved ones are congested and increasingly dangerous. In 2015, Myanmar suffered 4,233 traffic fatalities, well below Thailand’s 30,000 but twice as many as in 2009. Yangon’s traffic jams are now rivaling those of Bangkok.

Planners warn that if Myanmar wants to avoid the soaring road fatality statistics of Thailand, with its 400,000km of roads, it should focus on rebuilding its railways, which are not only safer but also cheaper to operate and easier on the environment. Thanks to a mixed colonial and military legacy, Myanmar has a head start in that regard. While Thailand has largely ignored railway expansion in favor of highway construction over the past 50 years (it has only 4,040km of railway tracks), Myanmar has the largest rail network in Southeast Asia. It has been continuously expanding the network, nearly doubling the length from 3,330km in 1990 to 6,107km in 2015. Unfortunately, much of that expansion was guided by military rather than commercial considerations.

“When the military government led the country, the army was concerned with the ethnic minority groups, so to reach the remote areas, roads and rails were important,” said Htaung Sian Kan, deputy general manager of planning and administration at the state-run Myanma Railways. “That’s why they spent a lot of money and built a lot in a short time. And no feasibility studies were done.”

Tracks to the future

A recent report by the Asian Development Bank concludes that previous government infrastructure investment was both insufficient and inefficient. “Sixty percent of the rail network serves fewer than 1,000 passengers a day, a level too low to justify even maintaining rail services,” the report said. The ADB has advised the country’s new National League for Democracy government to spend more on efficient transportation. According to the report, “The main recommendation is to increase transport sector investments to 3.0% to 4.0% of gross domestic product, up from 1.0% to 1.5%, in line with other countries at similar stages of development.”

Over the last several years of economic reforms, Myanmar’s public transportation systems — buses, railways and waterways — have been losing out to the expansion of highways, where the private sector is swiftly filling the demand gap, according to the ADB. Private car and truck ownership doubled between 2012 and 2015 after restrictions on secondhand vehicle purchases were lifted.

“The market share of public transport was once over 80%, but in 2015 it registered only 50%, and it is shrinking 10% each year,” the ADB report noted. Myanma Railways lost one-third of its passengers and freight customers between 2009 and 2014. Road transport now claims 90% of freight traffic and 86% of passenger traffic, according to official data.

But the national rail company has not been idle. In recent years, it has received large amounts of overseas development assistance, especially from Japan. In 2014 and 2015, Japan signed two loan agreements with Myanmar, including a 20 billion yen ($176.4 million) deal in 2014 to finance the Phase 1 modernization of the Yangon-Mandalay double track line and another loan of nearly 25 billion yen this year to upgrade the Yangon Circular Railway Line. The improved Yangon service is meant to increase daily usage from 850,000 passengers now to 2.14 million by 2022, while cutting the time needed to travel the circuit from 3 hours to 1.8 hours. Rail currently accounts for just 1% of the city’s public transport services.

The Yangon-Mandalay line is deemed vital for the country’s transportation, especially for freight, as it links Myanmar’s two biggest commercial cities, as well as connects them to the national capital of Naypyitaw en route. The Japan International Cooperation Agency initially planned to refurbish the line in three phases, but it has since agreed to accelerate the project in two phases, with the first phase linking Yangon and Taunggoo and the second connecting Taunggoo and Mandalay.

“Since this is a very important project, the new government — especially the new minister — was really interested in upgrading the Yangon-Mandalay line as soon as possible,” said Ayumi Kiko, the JICA representative responsible for rail projects in Myanmar. Myanmar’s minister of transport and communications, Thant Sin Maung, is a former general manager at Myanma Railways. “He has a very strong intention to improve the railways, which is very lucky for us,” Kiko said. Bidding on Phase I work is expected to start next year, as soon as the company announces the name of its project consultant, which is likely to be a Japanese company.

Upgrading the Yangon-Mandalay line will involve completely replacing the 620km dual track and using new locomotives, carriages, rails, track beds, civil works and signal systems. When completed — scheduled for 2022 at the earliest — the track will be able to accommodate a 20-ton axle load, compared with the current 12.5 tons, and allow trains to travel at 100kph instead of the current maximum of 70kph.

“Myanma Railways has traditionally been passenger-oriented, but with the competition from the highways, our passenger service is less and less,” said Aung Win, general manager of the company’s technical department. “We think we have room to improve our freight service on the Yangon-Mandalay line, so we are increasing the speed for passengers and the axle load for freight.” The railway operator has also initiated talks with the Export-Import Bank of Korea for a $100 million loan to start improving the Mandalay-Myitkyina line, which would complete the central rail corridor.

Business opportunities

The upgrading of the Yangon-Mandalay rail corridor is also attracting interest from other parties. In January, Hong Kong-based Kerry Logistics Group was awarded concessions to construct and operate two dry ports in Mandalay and the Ywarthargyi district of Yangon, near the port and Japanese-built special economic zone of Thilawa. A final agreement is expected to be signed by the end of the year.

The dry ports are projected to be in operation within two years, four years ahead of the scheduled completion of the upgraded Yangon-Mandalay rail link. In the meantime, Kerry Logistics will rely on trucks to transport freight between the two dry ports, having recently launched Kerry Road Transport in Myanmar with a fleet of imported trucks.

“It is part of our responsibility to try to utilize Ywarthargyi and Thilawa ports to try to unchoke the economy in Myanmar,” said Kledchai Benjaathonsirikul, managing director of the greater Mekong region at Kerry Logistics. “We will work with Myanma Railways to try to put Ywarthargyi to work ahead of the completion of the port by utilizing our skills in land truck transportation.” Kerry Logistics is benefiting from the fact that the railway company has a single-track line linking Ywarthargyi and the port of Thilawa.

Some question whether Myanma Railways can manage all these projects, given its current losses and debts. The ADB advised the government to reform the company by making it an autonomous entity or privatizing it. The bank warned that the railway operator is in danger of losing whatever market share it still has to road transportation before any of its modernization projects have been completed. Company officials, however, argue that now is not the time for reforms but for infrastructure improvements.

“We have a 6,000km rail network, but only 1,000km of it can run at 70kph. In other areas it’s only 20kph,” said Aung Win. “How can we compete with the highways or buses or even motorcycles?”

He continued: “We will improve our infrastructure first, and after that we will reform or maybe privatize. If we called on the private sector to operate Myanma Railways now, they would not be interested.”

 

Source: Nikkei Asian Review
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