YANGON—The CEO of the New Yangon City project said he believed the controversial project on the western bank of the Yangon River will be “a success” if Myanmar is able to take advantage of trade tensions between the U.S. and China and lure more foreign investors.
“I believe we will succeed; now is the right time [to attract investors]. I’m only worried that it may be getting too late,” Serge Pun said.
The New Yangon City project is currently in the initial stage of development. During a roundtable discussion on the project with local engineers on Sunday, Serge Pun said nine out of every 10 factories in China were thinking about leaving to avoid the impact of U.S tariffs, which impose a 25-percent tax on goods made in the country.
The property mogul described the situation as “an opportunity” that the government needed to take advantage of before other countries like Vietnam, Cambodia and Bangladesh did. “We have to do the same,” he said.
New Yangon Development Company (NYDC) has already received the blessing of the Yangon government to proceed with the project, which the company says will generate 2 million jobs. NYDC is currently looking for international investors for the project. The recent socio-economic master plan for the development states that it will include factories producing goods including garments, processed foods and automotive parts.
“There will be zero tax on goods made in Myanmar. It will be beneficial for them [the Chinese] if they move in here,” said Serge Pun, who also serves as NYDC’s vice chairman.
NYDC plans to develop 20,000 acres of land in the first phase of the project. This will include five village townships, two bridges, power plants, water and wastewater treatment plants and a 10-square-kilometer industrial estate. The company says the cost of initial infrastructure work in the first phase is expected to exceed USD1.5 billion.
But the project has been under criticism due to the low-lying topography of the area, which is prone to flooding as it has a maximum elevation of just 5 meters above sea level. The company said it had kick-started a flood-risk assessment (FRA) for the New Yangon City project with Royal HaskoningDHV, a Dutch FRA consultant.
NYDC signed a framework agreement in May with Hong Kong-listed China Communications Construction Co. Ltd (CCCC) to provide infrastructure for the first phase of the development. NYDC said the agreement marked the first stage of the NYDC Challenge Model, an adaptation of the global model of the Swiss Challenge for fair competition and transparency.
Serge Pun said at the time that the framework agreement itself doesn’t give CCCC the right to carry out infrastructure work. Rather, the firm agreed to submit a set of Pre-Project Documents (PPDs) including technical specifications, a financial proposal and a business model for NYDC to review, as part of the first stage of a fair competition.
As part of the NYDC Challenge, should a second party challenge with a lower bid, CCCC will be allowed to match the offer or forgo. If CCCC chooses to forgo, the second party will be awarded the contract and will have the obligation to reimburse all costs incurred in connection with the preparation and submission of the PPD. Those costs will be agreed between NYDC and CCCC prior to the initiation of the tender process.
“The commercial dealings with CCCC are ongoing,” Serge Pun said on Sunday.
But he said the PPD would likely be approved in October, with the NYDC Challenge expected in November while the winner will be decided in December. After the tenders for infrastructure, those for transportation, connectivity and other features of the project will follow.
“If so, we hope to have a solution for the bridges, village towns and artery roads in Phase One by the end of 2020 or in early 2021,” he said.
U Saw Htwe Zaw, the joint secretary of the Myanmar Engineer Society as well as a member of the Myanmar Earthquake Committee, urged NYDC to consider the project holistically and in a long-term context. He told The Irrawaddy that he was concerned about the cost, as the area’s low-lying topography and soft soil—both of which will leave the project vulnerable to flooding and quakes—will demand a huge amount of investment to make the site fit for development.
“Even though there are solutions for those issues, it could be extremely costly. I am afraid the project will go nowhere due to the expenditure. I just want to see it turn out as a good project, free of criticism,” he said.
