Pyidaungsu Hluttaw approves loan proposals for Bago-Kyaikto highway construction

30 July 2020

On the seventh day of Second Pyidaungsu Hluttaw’s 17th regular session, the Hluttaw approved to get $483.8 million loan from Asia Development Bank (ADB) for Bago-Kyaikto Highway Section as well as to get the loan of 27.779 billion yen from Japan International Cooperation Agency (JICA) for Bago-Kyaikto new road section development project.

The Ministry of Construction responded to the presentations and the suggestions of Hluttaw representatives, and concerning the issue of the amount of loan being high mentioned by some Hluttaw representatives, Dr. Kyaw Lin, Deputy Minister for Construction, explained the required amount of expense and detailed project.

“Along the new Bago-Kyaikto highway section, there are 351 box culverts and underpasses, and 4 interchanges, the costs of which are included in the total cost of the project. The road is averagely 4.5 meters high, and in some areas, it can reach 11 meters height. So, the residents can be kept on it if the emergency of flood occurs. For the feasibility study, we have to hire the international consultant because any project implemented by ADB loan needs to be assessed by international consultation in line with the safeguards of ADB. The loan is quite a great amount compared to the previous highway roads implemented with the ADB loan. This is because this new Bago-Kyaikto has to be newly constructed instead of expanding the old road and it is also the four-lane road with 21.5 meters width,” he said.

The estimated budget is $483.8 million including $87.77 million for contingency budget. The amount of contingency budget is related to risk management. The more the risk is, the more the contingency budget is. For the risks of the project, it is to perform in line with the recommendations of Public Finance Management System 2020.

Economic Internal Rate of Return (EIRR) is 17.8% but it is not benefiting financially. After the construction of the road, transportation will be smoother, which reduces expense in trade and the livelihood of the residents will be improved. Since EIRR is calculated based on socio-economic benefits and impacts, the project is to be done by the government instead of private-public-partnership (PPP) system.

“Besides the asphalt, iron beams and gasoline, other related materials will be bought from sub-contractors as well as the machines will be hired from the local companies. For the already-constructed Pyapon-Maubin road, and Eindu-Kawkareik road done by ADB loan, the flow of 80% of the project costs was within the local economy since most of the materials were bought from local sub-contractors. It can support the country’s economy as well as Covid-19 Economic Relief Plan in terms of employment,” said Deputy Minister Dr. Kyaw Lin.

As part of the Bago-Kyaikto highway project, a new bridge over Sittaung River, Sittaung Bridge (Kyaikto) is also to be constructed with the loan from JICA under Bago-Kyaikto new road section development project. The estimated cost for the bridge is 6.82 million kyats per square meter, which is calculated in accordance with the international standard.

Concerning the loan, the Ministry of Planning, Finance and Industry also presented to Hluttaw. “When the Union Ministries get international loan, Development Assistance Coordination Unit (DACU) gives accreditation in line with Myanmar Development Assistance Policy (DAP) and Myanmar Sustainable Development Plan (MSDP). The ministry will use this loan effectively minimizing waste and losses in the necessary circumstances,” said Deputy Minister U Maung Maung Win.

Although some Hluttaw representatives expressed opposed perspectives, with the agreement of the majority of Hluttaw representatives, both loans were approved by the Pyidaungsu Hluttaw.

The projects are aimed to enhance the development of Yangon Eastern Economic Corridor through Greater Mekong Sub-region Highway Modernization Project and under Greater Mekong Sub-region East–West Economic Corridor.

Thaw Tar Swe Zin
Photo Credit - Google Map and Pyidaungsu Hluttaw