Myanmar Industry Overview

Road & Rail

Overview

Compared to the peers in the ASEAN, Myanmar’s infrastructure has been lagging due to low government spending on road and rail infrastructures resulting in high transport costs and limited access to locations. Twenty million people still live in villages without access to all season roads. The state-owned enterprise, Myanma Railway/MR cannot meet the demands of the rapidly expanding transportation demands. The automotive/road sector is experiencing significant growth with the number of passenger and registered vehicles. As of 2015, Myanma Railway’s market share is only 10% for passengers and 1.5% for commercial freight. (Source: Myanmar Transport Sector Policy Note by Asia Development Bank). The increased fuel price and inefficient management have been affecting the profits of Ministries of Road and Rail and annual operating subsidies are required. The number of people using its passenger services has been declining since the peak of 76 million passengers in FY2007. Even though intercity travel by rail is still cheaper than travel by bus or car, many passengers use the road transports due to better road conditions and services. A 2014 survey found that 60% of the track road network is in poor or bad condition, requiring urgent maintenance or rehabilitation. Yangon still remains as the commercial city in need of the best public transport system in the whole country. In 2016, Yangon Transport Authority was formed 358 bus companies into one public company and by consolidating into 100 lines as an initial step. Yangon transport Authority was formed with road transport experts and water transport experts under the leadership of the Yangon Region government. Water transport on the river is considered as a profitable business and a solution to solve the traffic congestion.

Opportunities and Barriers

Liberalization of vehicle imports is rapidly changing the transport market and these trends are likely to continue. According to projections prepared by the Japan International Cooperation Agency (JICA), the future market for intercity passenger travel by rail is growing. With strategic investments, Myanma Railway ’s share of this market could be increased to 20% by 2025 and to as much as 30% by 2030. The challenge to achieve this would mainly be an efficient handling of passenger capacities. The government needs to raise Finance investments by raising road and transport budgets initially and seeking larger private sector and development partner investments. Then raise user charges; introduce new fees, such as a fuel levy; and create a special transport account to ensure long-term financing. These are recommendations made by Asia Development Bank’s Policy note on Transport sector.

Legal & Regulatory Framework

The upcoming Comprehensive Transportation Law and motor vehicle law aiming to regulate motor vehicle related issues and make the roads more convenient for people, will regulate the transportation. The comprehensive Transportation Law is also expected to connect the supply chain for SMEs from raw materials to products. Small and medium enterprises (SME) from Myanmar can boost their businesses with the implementation of the upcoming Comprehensive Transportation Law. Currently, the law is being discussed in the parliament. The bill states that the authority should connect the supply chain for SMEs from raw materials to products.

Allowed Types of Investment

Investment businesses permitted with recommendation of Ministry of Transportation and Communications are

  1. Vehicle license inspection business
  2. Driving training school business
  3. Building new railways/train station
  4. Operating train transportation
  5. Building and production, maintain of train Engine/passenger car/ cargo car and spare parts; maintaining railways
  6. Generating electricity to be used for training production
  7. Dry port business to be operated in connection with training operation
  8. Post office service
  9. Communication service
  10. Production and distribution of satellite communication devices
  11. Production and distribution of radar communication devices and related tools
  12. Production and distribution of radio communication devices
  13. Production and domestic distribution of mobile handset
  14. Establishing and operating maritime training schools
  15. Shipyard dock to build and repair vessels
  16. Coastal and inland waterway passenger transportation
  17. Coastal and inland waterway cargo transportation
  18. Service supporting water transport
  19. International shipping
  20. Charter vessel without crew or with crew
  21. Boat tugging business
  22. Vessel dismantling service
  23. Vessel brokerage service
  24. Service of assessment of conformity of vessel
  25. Building docking path, dockyard, wet dock, dry dock, pier, floating jetty riverside, bankside, jetty side, channel for berthing
  26. Building container yard and warehouse on bankside and jetty side
  27. Building pier on river
  28. Conserving, maintaining and development of waterway
  29. Expending jetty land
  30. Jetty and waterway service
  31. Salvaging shipwreck
  32. Shipping agency

Sources

Myanmar Transport Sector Policy Note, ADB, 2016

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