Japan to Provide Over $1 Billion in Loans to Myanmar for Development Projects
By Nan Lwin 22 January 2020
YANGON—Myanmar and Japan have signed four loan agreements worth about US$1.1 billion (120.915 billion yen, or 1.61 trillion kyats) to fund sewerage, urban development, power distribution and infrastructure improvement projects in seven regions and states in Myanmar.
The four Official Development Assistance (ODA) loan agreements were signed on Tuesday between Japanese Ambassador Maruyama Ichiro and U Maung Maung Win, Myanmar’s deputy minister for planning, finance and industry, with the aim of improving living standards and economic and social development in Myanmar, the Japanese Embassy in Yangon said in a statement.
About 45.9 billion yen will go towards developing Yangon’s sewerage system. The funds will be used to renovate and expand wastewater treatment plants, lay sewer pipes and improve living standards in the central business district of Yangon.
Currently, much of Yangon’s human waste and domestic and industrial wastewater flows into the Yangon River untreated, resulting in poor water quality.
The project will result in a seven-fold increase in the city’s capacity to treat wastewater by 2030 (two years after the project’s scheduled completion), with the total volume of wastewater treated increasing by about 130 times, the embassy said
An estimated 24.085 billion yen will go towards an urban development project to reduce traffic congestion and repair damage caused by flooding in Yangon. The project will improve about one-third of the region’s main drainage channels and introduce measures to reduce congestion and improve safety on Yangon’s main roads. It will also reduce traffic congestion at level crossings where main roads intersect with the Yangon Circular Railway.
According the embassy, rapid economic growth in recent years has brought with it a dramatic increase in the number of registered motor vehicles in the Yangon metropolitan area, and traffic congestion has been severe for a long time. Moreover, the poor capacity of existing drainage channels results in flooding during the rainy season, exacerbating the traffic problem and posing a threat to public safety.
Japan also committed about 12.288 billion yen to a power distribution improvement project, which aims to repair and expand the electricity distribution network to improve the power supply in Yangon and Mandalay.
Myanmar has Southeast Asia’s lowest rate of access to electricity, and power demand is increasing rapidly as investment in development projects increases. According to the Ministry of Electricity and Energy (MOEE), power demand is expected to increase to 1,588 MW by 2020.
In May last year, the Myanmar government announced plans to buy 1,000 MW of electricity from a Chinese state-owned enterprise to cover an expected electricity shortage over the next two years.
The project will lower the power distribution loss rate in each city and reduce the number of power outages caused by the insufficient capacity of the distribution facilities, according to the statement.
The embassy will also fund a project to improve regional infrastructure in Chin, Rakhine, Mon and Kayin states and in Tanintharyi Region. An estimated 38.642 billion yen will be provided for construction, renovation and installation of basic infrastructure such as roads, bridges, and power and water supply in rural areas of the states and region.
A total of 70 sub-projects (35 road/bridge projects; 25 electricity projects and 10 water supply projects) will be implemented in the states and region, the embassy said.
The poverty rates in Chin (73.8 percent) and Rakhine (43.5 percent) are the highest in Myanmar. The majority of the states’ residents are unable to access electricity or adequate water supply.
Mon and Kayin states and Tanintharyi Region are situated along Japan’s East-West Economic Corridor and Southern Economic Corridor, and this should assist in their development, the embassy said.
Under Japan’s grand plan for the region, Myanmar sits on two major economic corridors: the East-West Economic Corridor connecting Vietnam’s Dong Ha City with Yangon’s Thilawa Special Economic Zone (SEZ) via Cambodia and Thailand, and the Southern Economic Corridor connecting central Vietnam, Cambodia and Thailand to the Dawei SEZ in southeastern Myanmar.
The economic development of regions and states is emphasized in the Ayeyarwady, Chao Phraya and Mekong Economic Cooperation Strategy (ACMECS), and the establishment of basic infrastructure is important to the promotion of steady economic development in rural areas, the embassy said. ACMECS is a sub-regional initiative grouping Myanmar, Thailand, Laos, Cambodia and Vietnam.
According to the statement, the projects are part of the 800 billion yen in private-public assistance that Japanese Prime Minister Shinzo Abe pledged to provide within five years during a meeting with State Counselor Daw Aung San Suu Kyi in November 2016.
In October 2018, the State Counselor made a six-day visit to Japan to attend the Mekong-Japan Summit. At the bilateral meeting, Abe promised more than 70 billion yen in low-interest loans for development projects to improve sewage, drainage, traffic, roads and sidewalks in Yangon. The two leaders also discussed the ongoing distribution of the 800 billion yen in assistance agreed in 2016.
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