Oct 28, 2012

Myanmar - ADB Targets Crumbling Transport Systems as It Plans Myanmar Return

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The Asian Development Bank is planning a return to Myanmar after a two-decade absence with the goal of improving the long-isolated country’s decrepit transport system.

The regional financing body is one of several multilateral lenders coming back to the Southeast Asian nation since a nominally civilian government took power last year and began implementing a political and economic overhaul. The ADB and other international financial-aid organizations gave Myanmar a wide berth after its former military regime began cracking down on its pro-democracy opponents in 1988, and this re-engagement reflects Myanmar’s improved standing in the world under the leadership of reform-minded President Thein Sein.

Now the ADB is assessing where it can make the most impact, and has flagged the country’s crumbling transportation infrastructure as a top priority.

While Myanmar’s natural resources and vast pool of low-cost labor make it ripe for rapid economic growth, the underdevelopment of the nation’s transport systems poses a major impediment to advancement. Passenger-rail and road networks both in the urban and rural areas are serviced by decades-old fleets of trains and buses that run on equally fragile rails and roads.

Similarly, while tracts of coastal land have been earmarked for major port development, existing infrastructure is unable to handle the sorts of trade volumes required to boost growth to the levels the government sees as necessary for its grand plans for economic and political modernization.

In its initial assessment, the ADB said the “challenges and opportunities facing Myanmar’s transport sector are immense” and that it plans to offer technical assistance and then financing to address some of the critical infrastructure bottlenecks.

The ADB also released a report Friday outlining a wide-ranging, two-year interim strategy for its role in the country. The bank, which currently shares an office with the World Bank in Yangon, earlier this year began a survey of Myanmar’s existing political and economic systems. It expects to have narrowed down its priorities by 2014, though it could launch new funding projects before that.

“There’s really a lot of excitement and also very high expectations on the part of the people to a new era … yet because of decades of isolation and lack of investment practically it’s quite limited,” ADB’s head of extended mission in Myanmar, Putu Kamayana, said in a telephone interview. “It’s one thing for the leader to promote reforms; it’s another to bring up the whole system—the bureaucracy is expected to do things differently from before whereas it used to be a very top-down, centralized government.”
The ADB sees strong prospects for the economy, and forecasts economic growth will accelerate from about 5.5% in 2012 to about 6.3% in 2013 and then 6.5% in 2014.

While many of the Manila-based bank’s member states in Asia maintained full economic and political relations with Myanmar, nations that support the ADB from outside the region, such as the U.S. and European countries, did not. The bank maintained some indirect ties through the Greater Mekong Sub-region economic forum and provided on-the-ground assistance after Cyclone Nargis tore through southern Myanmar in 2008, killing some 80,000 people and laying waste to the rice-growing Irrawaddy delta.

But now that the U.S. and European Union have lifted many of their economic sanctions against the country, the ADB hopes to make up for lost time. There are obstacles, though, including the matter of clearing the Myanmar government’s arrears to the bank, accrued from loans issued between 1973 and 1988. The latest estimates put the sum at about $520 million. The ADB will take part in a multilateral effort to help Myanmar deal with some its crippling debt obligations to various creditors, which also include the International Monetary Fund, the World Bank and the Paris Club of sovereign creditors.

According to Japanese officials, about 95% of Myanmar’s arrears on its foreign debt are with Japan, the World Bank and the ADB. No comprehensive agreement has been reached; stakeholders will meet in January to discuss potential solutions.

Sam Holmes

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