The International Finance Corporation (IFC), the World Bank’s financing arm, has announced that it will fund the expansion of the Myanmar Industrial Port (MIP). Htet Tayza reviews.
Myanmar is fast becoming a major South-East Asian trading power, with its emerging container ports proving particularly lucrative. Data suggests that over the past three years, Myanmar’s container volumes have increased by an estimated 90%. This can be largely attributed to governmental political and economic reforms which have spurred a boost in imports and exports.
Servings as one of Myanmar’s key trade gateways, MIP is one of the country’s two major container ports. MIP handles 40% of Myanmar’s container traffic, according to the IFC, who have recently announced that they will provide US$40 million (m) to expand the facility. Along with planned efficiency improvement, this will allow MIP to increase its annual handling capacity to 500,000 twenty-foot equivalent units (TEUs), up from 300,000 TEUs at present.
IFC stated that this US$40m is the first phase of a larger US$200m financing package. Nation Multimedia reports that this funding facility will see the IFC and other international lenders provide Myanmar with US$160m in long-term senior loans. IFC noted that this finance package is designed to make doing business in Myanmar easier and more efficient, facilitating increased international trade so the country can expand economic development.
Commenting on the announcement of the funding, MIP Chairman Captain Ko Ko Htoo said: “Thanks to IFC’s investment, we will be able to further modernise our port operations and respond to the increasing demands of international shipping lines and local traders… We are also keen on IFC’s advice on bringing our environmental, social and governance practices in line with international standards.”
Speaking out on this news, Hyun-Chan Cho, the IFC’s Head of Infrastructure and Natural Resources for Asia, commented: “IFC’s financing for MIP comes at a critical time in Myanmar’s development when transport infrastructure is urgently needed to realize the country’s growth potential… The MIP loans will also help to catalyse investment by other private developers and financiers in Myanmar’s infrastructure sector for which long-term US dollar funding has not been readily available.”
Reforming transport infrastructure
According to the International Monetary Fund (IMF), Myanmar needs to upgrade “infrastructure, particularly in the area of electricity and transport” to improve its business environment. By cultivating a stronger business environment, the IMF said, the South-East Asian nation can capitalise on its strategic location in a dynamic location to boost trade, encourage foreign direct investment and promote economic growth.
The Asian Development Bank (ADB) recently said that potentially, Myanmar’s economic growth could reach new heights in this fiscal year. However, ADB added that it is essential that Myanmar upgrades transport infrastructure to achieve the same standards as other nations at a similar stage of development. ADB indicated that Myanmar should invest US$60 billion in upgrading transport infrastructure (bn) by 2030. With the IFC’s funding, Myanmar is attracting the capital it requires to implement the necessary transport infrastructure upgrades needed to promote economic growth.