Myanmar Hires German Firm to Oversee Bidding in Initial Phase of China-Backed New Yangon City

By Nan Lwin 7 September 2020

YANGON—The Myanmar government has awarded a contract to German consulting firm Roland Berger to oversee a so-called “Swiss challenge” tendering process for a new industrial park and related infrastructure in Myanmar’s commercial capital, Yangon. The tender process for the development, which is part of China’s huge New Yangon City project, is likely to be conducted after the November general election, based on the review period cited by the company.

New Yangon City is one of the local backbone projects for Chinese President Xi Jinping’s vast Belt and Road Initiative (BRI) to construct an international infrastructure network. Xi has pushed for the implementation of the New City project, branding it a pillar of the China-Myanmar Economic Corridor (CMEC), a key component of the BRI.

The Ministry of Investment and Foreign Economic Relations (MIFER) announced on Saturday that the government had signed an agreement with Roland Berger Co. Ltd. to provide consulting services to finalize a Swiss challenge tendering process for the “new industrial park and essential ancillary infrastructure.”

Under the Swiss challenge process, the initial development proposal put forward by Beijing-based China Communications Construction Co. Ltd. (CCCC) will be made public to allow qualified firms to challenge it with better terms, on the basis that they strictly adhere to the terms and conditions of the tender assessment criteria. According to the government’s regulations, CCCC’s proposal will have to pass the “Swiss Challenge” before it can proceed.

MIFER said Roland Berger’s consultancy services would cover end-to-end preparation and execution of the Swiss challenge process, including support for communicating the outcome of the process to external stakeholders, and for the negotiation, preparation, revision and signing of the concession agreement.

Yangon Region Minister for Planning and Finance U Ye Min Oo told The Irrawaddy that the German company would study the entire process of the project, including the CCCC’s proposal, progress made by the Yangon government and the details of the agreements that have been signed between both sides.

“They will also analyze whether the cost [calculated by CCCC] makes sense. After that they will decide how the Swiss challenge can be carried out,” U Ye Min Oo said.

“The review period will take at least two months. After they have finalized all of the details, we will officially call for the tender,” the minister added, meaning that it would be possible only after the general election. Myanmar is set to hold a general election in November.

The Yangon regional government-owned New Yangon Development Company (NYDC) signed an agreement with CCCC in 2018 to draw up a proposal for the first phase of the project, worth US$1.5 billion (about 2 trillion kyats). It includes two bridges, roads, power plants, water and wastewater treatment plants and a 10-square-kilometer industrial estate, and is expected to generate 2 million jobs.

However, the project has been a source of controversy due to its flood-prone location, as well as accusations against CCCC of engaging in corruption and bribery relating to development deals in at least 10 countries in Africa and Asia.

Recently, Myanmar’s government decided to unbundle the project, including reducing the size and cost of the industrial estate project, and looking for other potential firms to join the challenge. The decision followed criticism that the huge initial investment required under the project’s original plan would deter other investors.

U Ye Min Oo confirmed to The Irrawaddy that the project’s initial phase would be worth $800 million.

According to the MIFER, under the new terms, key projects to be developed will include an industrial park, low-cost housing estates, water supply and sanitation systems, waste management and other essential infrastructure.

Union Minister for MIFER U Thaung Tun said Myanmar had decided to begin with the industrial zone to ensure the project’s commercial viability. He promised that the government would open a competitive international tendering process for the construction of the project.

“We will focus on fairness and competitiveness [in the tender process],” U Thaung Tun said.

“In keeping with the times and the need to create more quality jobs to mitigate the adverse effects of the COVID-19 pandemic on the country’s economy, we have decided to focus first on setting up the industrial zone,” U Thaung Tun said.

Despite constant pressure from China to move forward with its BRI backbone infrastructure projects in the country, the Myanmar government has on several occasions subjected projects to extra scrutiny to ensure their details are in line with international standards. In particular, it has studied the commercial viability of the projects.

In June, the government also revealed that it has been receiving help from a Swiss company to scrutinize a China-backed feasibility study for a railway project that would connect Mandalay with Kunming, the capital of Yunnan Province in southwestern China.

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