Feb 10, 2016

Singapore-Japan Consortium Signs New $1.5-b International Airport Deal

A consortium comprising Japanese and Singaporean companies has signed a framework agreement with the Department of Civil Aviation (DCA) to build a new international airport in Bago.

The signing is seen as an important step toward the eventual inking of the Hanthawaddy International Airport concession agreement.

In October 2014, the consortium – comprising Japan’s JGC Corporation, and Singapore-based Yongnam Holdings Limited and Changi Airports International – was named by DCA as the tenderer for the design, construction and management of the project on the basis of a public-private partnership.

JGC holds the largest interest of 55 percent in the consortium, while Yongnam and Changi Airports International hold 25 percent and 20 percent respectively.

“We need to discuss more details of the project and discussions will take more than one year. The consortium expects to start construction in 2017 when the discussions are over,” U Kyaw Soe, a director at the DCA, told Myanmar Business Today.

A major drawback for the project is the lack of supporting infrastructure including a connecting road between Bago and Yangon. The government, in cooperation with the Korean International Cooperation Agency (KOICA), is planning to build a road connecting the new airport, Mingaladon Airport in Yangon and the Yangon Central Railway Station, U Kyaw Soe said.

“We are working together on the project with KOICA. They will provide $5 million to build the related infrastructure. KOICA is now assessing if the road is going to be build underground or above the ground,” he said.

Located on a site of about 9,000 acres, 80 kilometres northeast of Yangon near Bago, the new airport is expected to have an initial capacity of 12 million passengers per year, making it the largest airport in Myanmar. Once operational, the airport is expected to become the main international gateway into Myanmar, particularly the Yangon metropolitan area.

The idea of the new airport was first proposed in the early 1990s. The project started in 2001 but was halted suddenly in 2004. It was put back on the table in 2012 with an estimated completion date of 2016 was proposed. After that, the deadline kept moving – up to 2019.

In a joint statement, the companies of the consortium said the project is now planned for completion by 2022. An estimated $1.5 billion in investment is needed for the project.

A portion of the project cost will be supported by an Official Development Assistance (ODA) loan from the Japanese government, to which the Myanmar government plans to apply for, following the signing of the agreement. Further discussions will be held between the consortium and DCA upon the signing of the agreement.

Given its capacity, the new airport is expected to boost the flow of business and leisure travellers as the country sees growth in trade and tourism. Also, the development of related public infrastructure, is expected to increase commercial and industrial activities around Bago.

Source: Myanmar Business Today