More PPP Projects Needed to Develop Myanmar’s Infrastructure
Published on May 15, 2017 AT MyanmarTimes Newspaper
Written by Tin (Rubynar) Yadanar Tun
Increased Public-Private Partnership (PPP) projects are essential to boosting infrastructure across Asia-Pacific countries, including Myanmar, according to U Pyi Soe Htin, Executive Director of the International Banking Division at Asia Green Development (AGD) Bank.
"During AGD Bank’s recent 50th anniversary, we discussed supporting further development in the Asia-Pacific region," he said. "While the region has developed significantly over the last decade, there is still a pressing need for more PPP projects."
U Pyi Soe Htin noted that PPPs are necessary even for countries with more developed infrastructure, such as Thailand and Malaysia. He emphasized that AGD Bank would provide not only funding but also technical support for such initiatives.
"Although Asia has clearly progressed, the daily income for some residents remains under $1.50 USD. We need more PPP projects to develop regional infrastructure, and AGD aims to provide financial support for these communities," he added.
Prioritizing Electricity and Transportation
Speaking to the Myanmar Times, U Pyi Soe Htin highlighted that while PPPs cover transportation, electricity, and general infrastructure, Myanmar’s current priority should be power and transit.
"While there is a need for more low-cost housing and the construction sector is already booming, we should prioritize PPP projects in electricity and transportation," he explained. "A country cannot develop without a stable power supply. Myanmar is currently an import-oriented country; to become export-oriented, we need reliable electricity for our industrial zones so we can export value-added materials instead of just raw materials."
He noted that the current government has initiated very few PPP projects. Because these are long-term plans rather than short-term fixes, it is difficult to evaluate their performance yet.
"PPP projects began during U Thein Sein’s administration, with more than two projects implemented. We cannot yet judge their success because of their long-term nature. However, countries like Thailand and the Philippines—which are more developed than Myanmar—continue to push for PPPs, whereas Myanmar is still in its infancy."
The Roadmap to Success
Mr. Atty Jaime Raphael, team leader of the Asian Infrastructure Center of Excellence at the Asian Development Bank (ADB), stated that political support, market sounding, transparency, monitoring facilities, and appropriate government criteria are essential for a successful PPP program.
"Political support is vital, as is the creation of a centralized project development and monitoring facility," Raphael said. "Without a stable political situation, the government cannot successfully implement transparent projects in cooperation with the local sector."
He cited the Philippines as a success story within ASEAN, having launched multiple tenders worth approximately $18 billion USD under a framework of good governance. In 2010, the Philippine PPP program was launched as a centerpiece of economic development, aiming to increase infrastructure spending from 2% to 5% of GDP.
The Need for Intermediaries and Transparency
U Pyi Soe Htin argued that a "middleman" and good governance are required to bridge the gap between private investors and public implementers.
"The private sector provides the capital and the public sector implements the project, but the question remains: who takes the investment risk? We need a reliable intermediary, like the ADB, to negotiate between the two sectors," he said. He added that 100% transparency and political stability are non-negotiable requirements.
Currently, Myanmar lags behind other Asian nations, including Mongolia, in PPP implementation. While local banks cannot yet provide long-term investment for these projects, their role as facilitators remains crucial.
"If the government creates a stable political environment and ensures total transparency, more PPPs can be implemented as win-win situations for both developers and investors. Investors would choose PPPs over traditional stocks and bonds," he added.
Current Initiatives in Myanmar
U Pyi Soe Htin remarked that Myanmar’s track record is currently too sparse to be a major part of the ASEAN PPP conversation. "We had no PPP projects under the military government, and the few started during the first democratic government under U Thein Sein have yet to turn a profit or show clear success."
One notable example of a recent PPP is the Yangon Bus Public Company, launched early this year to address the transportation sector.
Additionally, Yangon Chief Minister U Phyo Min Thein stated during a March meeting at the UMFCCI that the Yangon Region Government is working to establish a public company under a special act. This company, formed in cooperation with the Myanmar Construction Entrepreneur Association, will focus on housing development.
The government is also seeking cooperation with foreign governments, including Japan, China, and Korea. "We are trying to cooperate at the government-to-government level to implement major projects as models for PPPs. These will be funded by the public rather than the government budget; relying solely on the government budget would delay development in the housing sector," the Chief Minister said.
Finally, Planning and Finance Minister U Myint Thaung confirmed that a regional project draft law was submitted to the Yangon Region Hluttaw in late March. This law focuses on urban development and transportation, incorporating the Yangon Urban Development Master Plan (developed with JICA), the Yangon-Hantharwaddy-Bago development plan, and the Southwest development master plan (developed with KOICA).