session 2.1 status of the myanmar transport sector (adrien)
TRANSCRIPT
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Transport Sector Diagnosticand Overview
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The Presentation Agenda
The current transport sector overview a diagnostic
The change occurring in the transport sector market andthe need for government to implement policy change
Government institutions need to be restructured to facethe new demands
What are the most urgent investments
What are possible short term actions and how do weimplement them
How is the ADB offering to help
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Myanmar Current Overview Diagnostic
Myanmar between 2005 and 2015 investments grew to
1.5% of GDP; Other similar developing countries have typically
invested 35% of their GDP in transport infrastructure;
Despite a lack of funds, achievements have beensignificant
Between 2004 and 2014, the Department of Highways addedmore than 10,000 km of new trunk roads;
Myanma Railways operated a 3,330 km network in 1990, now6,107 km in 2015.
But...
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Investments Targets Need review
Sixty percent of the rail network serves less than 1,000
ppd less than can justify any rail service. Spending on road and rail maintenance has been two to
three times below needs.
A 2014 survey found that 60% of the trunk road network is in
poor or bad condition, requiring urgent maintenance orrehabilitation.
Because of poor track condition, Myanma Railways is forced tooperate at 50% of its potential speed.
Despite large potential, river transport has not receivedany investment.
The main waterways cannot be operated for 3 months a yearbecause of limited draft.
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Railways need rationalization waterwaysneed basic attention
Myanmars trunk rail lines need modernization, but the
tertiary network should be scaled down. The countrys rail network is by far the longest in Southeast Asia,
but part of it is unproductive.
Neither current design standards nor potential demand on over
half of the network enable commercial operations. The waterways connect Myanmars main cities, which is
unique in Southeast Asia but
As of 2015, they are in natural wild state.
Small investments and increased funds for operations would besufficient to enable modern river operations.
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Markets are changing rapidly
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Markets are changing rapidlythe present
The market reforms of 20112015 have transformed the
transport sector and revealed underlying issues: Car and truck ownership has doubled between 2012 and 2015, a
sign of quick economic growth,
A competitive private transport market has appeared. Better
quality trucks reduce freight costs by 20% since 2012 but . Imported car volume has halved traffic speed in Yangon since
2012. Public transport once carried over 80% of passengers butin 2015 only 50% while shrinking annually by 10%,
Fatalities from road crashes have risen from 2,173 in 2009, to4,314 in 2014.
Myanma Railways lost 1/3 of its customers and IWT lost 65% ofits passenger and 83% of its freight turnover since 2009
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Markets are changing rapidlythe future
Vehicle fleets will double every 5 to 7 years. Motorized
vehicle ownership in Yangon is 5 to 8 times lower than inother similar cities but infrastructure cannot handle thatincrease;
Road fatalities will double by 2020 and reach 15,000
annually by 2025;
To become again effective transport modes and providefor a balanced transport system, rail and waterways
require thoughtful policy changes, adequate resources tocreate efficient infrastructure and stronger managementsystems.
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Institutions need to change to keep pace
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Government has recognized that newinstitutions are needed
The coming two or three years will require significant
reallocation of roles and responsibilities among thegovernance units and the service delivery units.
Tools to manage change are lacking - statisticalinformation, performance and strategic plans, policy
statements and of people with appropriate incentivesand skills.
equipment is old and low salaries make the public sector
uncompetitive in attracting staff
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New institutions are needed corporatizingand commercializing SOEs
Myanma National Airways, Inland Water Transport, RoadTransport and Myanma Port Authority were corporatized
but with mixed results
MNA and MPA are financially viable and have a solidpotential revenue stream that can support commercial
viability IWT and RT do not, and are moreover required to carry
heavy legacy costs debt and pensions from beforecorporatization this virtually ensures that they will not
be commercially viable and are likely to eventually fail.
Myanma Rail requires a concentrated modernizationprogram systems, operations and investment strategy
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Immediate investments provide highreturn
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What are the returns from re-investment and
restructuring?
The diagnostic suggests that a focused and affordable
program of transport infrastructure investments andoperational changes launched in the next five yearscould by 2030:
Reduce transport costs by close to 30%
Increase Myanmars annual gross domestic product by ultimately$40 billion.
Provide basic road access to close to 10 million people.
Save 40,000 lives on the roads that would otherwise be lost.
The incremental improvements are highlighted on thefollowing summary chart,
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What are the returns improved long
distance transport costs
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What investment and development is mosturgent?
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Where should attention focus?
The road sector dominates and should receive a larger
share of investments. However, Myanmar cannot depend in the long run
narrowly on just one mode.
Because they have been operating below potential,railway and river transport reforms and improvementscould have a significant beneficial impact.
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Where are improvements needed?
Highways
These projects involve improving the operations,
maintenance, and rehabilitation of the most highlyutilized road corridors - projects that have the highesteconomic returns.
As of 2015, only few roads require capacity expansion,
so major improvements should be reserved for thecritical links to countries with which Myanmar tradesmost.
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Where are improvements needed?
Railways Myanma Railways needs to be reformed and take a
resolutely more commercial focus.
Plans are proceeding to upgrade the YangonMandalayCorridor, where demand is the highest.
There, railways could provide a low-cost alternative of equal orbetter quality than road transport and capture a large market.However, this will take several years, possibly a decade.
Myanma Railway needs flexibility to reallocate assets,staff and resources from unproductive uses to uses with
higher impact and commercial return.
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Where are improvements needed?
Waterways
Developing river portsPriority areas are in Mandalay,
Pyay, Magway, Pakokku, and Monywa. The issue here is to find an institutional model: river
ports are a regional government responsibility, but theMinistry of Transport oversees the river and river
frontage. Improving the Ayeyarwaddy waterway up to Mandalayto
a minimum 1.52 meters draft, with more modern
navigation aids would enable 500 ton vessels to operatewith faster turn around, 24 hour daily, year round
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Where are improvements needed?
Rural Access
The exceptionally low levels of rural access in Myanmar
and its consequences on poverty ought to make ruralaccessibility a nationwide priority. The government couldlaunch a Nationwide Rural Access ImprovementProgram.
to achieve gradually higher all-season road access in ruralareas, with targets raised periodically.
focus on establishing a core village road network ensuring basicaccess with central management but bottom up planning.
Union government grants, donor funds, and possibly earmarkedtaxes (e.g. India earmarks a tax on diesel) would finance it.
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Where are improvements needed?
Yangon
Yangon is a special case and requires consideration as
the major commercial centre as well as its potential to bea major regional city in the future
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Policy changes are essential for leadingreform
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Policy Changes to Guide the Future
A clear transport sector policy statement: the principles that guide both sector wide governance as well as
delivery of transport services to the user public;
Scaled up transport financing is essential: high-priority investment program identified above is in the range
of $68 billion over five years
Users could increasingly finance transport investments
Focus on high return investments EIRR above XX%
Create a new public body with transport planning andpolicymaking functions
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Unlocking private sector growth The government should announce a policy to quickly
shift to 100% outsourcing of public-financed civil works
The gradual transfer of several government functionsand units to the private sector: road vehicle inspection,road construction units, and non-core rail services
Public private partnerships should be pursued, but in amore prudent way than in the past
Restructure many of the Ministry of Constructions build-operatetransfer (BOT) contracts.
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Restructuring Transport SOEs:Rail, Road, Inland Water Transport and PortsBusinesses
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Restructuring transport state-owned
enterprises
Undertake separation of responsibilities policy,
regulation and service delivery; Focus on Service Delivery on a commercial basis
whether offered by the government or by the privatesector must be competitive
people with strong business sense should be put in managingpositions
Governance must have a clear objective and target, andbe based on OECD Standards autonomy, independentboard, financial control and properly capitaized
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Implementing a new ministry structure
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To be completed once we know how many
ministries we have
Just talk about what has been done now. Unitary
Ministry discussion may not be productive
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Short term actions
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The Approach and Some Quick Initiatives Actions will be presented later in this workshop for each
transport sector
Present a revised 2016 budget strategy: budgets toincrease road, rail and waterway maintenance.
To generate leeway for new initiatives, the government
should audit and rationalize long-term commitments. government-financed road or rail infrastructure projects started
or to be started,
ongoing bidding procedures for public-private partnerships, and
long-term concessions.
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Focused Implementation Teams
Form small teams in charge of piloting institutional and
policy reforms and investment plans. This team couldidentify a list of major reforms achievable in the next 24years.
Teams would be composed of civil servant staff and
external people. These teams would directly report to theMinister(s).
Revise State Owned Company management skills:bring in commercial skills quickly
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Show Commitment to reforms
Signal commitment to market reforms, sound planningand efficient management: Issue a National TransportSector Policy Statement leading to a new andconsolidated Transport Law.
After a review, the government could confirm its general
adherence to the National Transport Master Plan and theArterial Roads Master Plan, prepared respectively withJICA and KOICA support. It should then requestagencies to prepare a first medium-term investment
program.
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Show Commitment to reforms
The government should also quickly decide upon thefuture of state-owned enterprises and other transportservice delivery units. It could mandate each transportstate-owned enterprise to identify its financial needs,draw a plan towards restructuring; and prepare corporate
plans. On its basis, the minister(s) could negotiatecommon terms regarding debt, pensions and staff withthe Ministry of Finance.
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What The ADB Can provide
Put in material about a policy loan and investment loans
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Thank you!