Lawmakers Complain of Loopholes in Conditions of Korean Loan
By Nan Lwin 5 September 2018
YANGON—Myanmar lawmakers have criticized loopholes in the president’s message regarding infrastructure loans from the EXIM Bank of Korea which would be a major element to the implementation of the Korean-backed industrial complex project in Hlegu Township, Yangon Region.
On Tuesday, nine lawmakers discussed the president’s message given in the Union Parliament regarding the decision to take $61.8 million in loans from the EXIM Bank of Korea for the Korea-Myanmar Industrial Complex (KMIC) infrastructure project.
According to lawmakers, the loans will be used for three infrastructure projects which would support the KMIC project: the upgrading of highway roads; building a new power plant for electricity; and constructing a new channel for a water supply. The infrastructure projects will start this year and are expected to be finished in 2021.
One lawmaker pointed out that despite the president’s message revealing broad project plans and expectations, it did not include standard procedures or details on the implementation of the projects. It is difficult to make a decision about whether to take the loans, the lawmakers said.
“It missed all the crucial information. I don’t see complete information for the road upgrade project or the electricity project. It is a huge amount of money. The outcome should benefit our people,” said Daw Yin Min Hlaing, a lawmaker in the Lower House.
“As the lawmakers pointed out in the previous discussion, we can see clearly…there are many weaknesses [in the message],” she said.
The president’s message also mentioned that the industrial complex will create between 50,000 and 100,000 job opportunities, but Daw Yin Min Hlaing wants assurances from the developer on the actual number.
She pointed out that lawmakers need to know how many years Korea, the main investor in the project, will operate the industrial complex for.
In 2017, the Korea Land & Housing Corporation (LH) and Myanmar’s Ministry of Construction signed a memorandum of agreement for the project located approximately one hour away from Yangon.
The project will be built over 558 acres and is to be an export production-based complex. The project which will cost a total $110 million, is expected to include small and medium enterprises, heavy industry and a vocational school. Around 200 Korean companies are expected to invest in the production companies which are projected to generate $10 million in taxes annually.
The first feasibility test for the project was done in 2015 and the Myanmar government approved LH’s letter of intent of business for the project in 2016. The project ideas came about after the Joint Committee on Economic Cooperation of Myanmar and South Korea agreed to extend trade between the two countries in June 2013.
The industrial complex is to be established near the village of Nyaung Hna Pin—including the venue where the military regime held the National Convention at which they drafted the 2008 Constitution.
Lawmakers wanted to know whether the KMIC project would involve demolishing existing buildings in the compound of Nyaung Hna Pin’s National Convention venue which have been deserted for many years.
A Lower House lawmaker U Nay Kyaw said, “There are 54 buildings including the main hall in the compound. We want to know clearly whether the existing buildings in Nyaung Hna Pin will be destroyed or not.”
U Aung Min, also a lawmaker at the Lower House, said KMIC failed to provide information on the capacity of water storage, detailed costs of upgrading the road or consideration for logistics and transport operations.
He pointed out, “The big thing is the taxes. KMIC said we will get $10 million annually but according to the Myanmar Investment Law, the project is to be exempt from paying taxes for five years. If we also calculate the construction period, we will need to wait at least eight years to get taxes from that project.”
“There is still a need to confirm: when will we get the taxes? It also didn’t explain how we will share the profits between the Korean and Myanmar governments,” U Aung Min said.
“The loans cannot be approved based on the president’s message. We need more details. If we get the details…we will have clarity. We can then make the right decision on whether to take the loans,” he added.
According to lawmakers, Korea and Myanmar will invest 60 percent and 40 percent respectively for the overall project which is slated for completion in 2023.
Lawmaker U Khin Cho said his fellow lawmakers found a lot of vague information in the message.
The interest rate is 0.1 percent and the repayment period 40 years, including a suspension period for the infrastructure loan, according to the lawmakers.
“The related ministries need to explain the consequences of the loans, including financial calculations. The [relative ministries] have to have accountability with transparency,” U Aung Min said.
The related ministries will answer lawmakers’ questions regarding the infrastructure loans in the Union Parliament on Sept. 6.