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KYAUK PHYU SPECIAL ECONOMIC ZONE Master Plan Report 24 SEPTEMBER 2014


Project Team Financial Planning

Master Planning

Ernst & Young Solutions LLP One Raffles Quay, North Tower, Level 18 Singapore 048583

CPG Consultants Pte Ltd 238B Thomson Road #18-00 Tower B Singapore 307685 Project Director Project Manager Deputy Project Manager Urban Planner Urban Designer Industrial Positioning Tourism

Market Positioning

Andre Toh Stephen Reiter Michelle Teo Anqi Lek

Project Management PM Link Pte Ltd 70 Bendemeer Road, #03-01 Luzerne Singapore 339940

DTZ 100 Beach Road, Shaw Tower #35-00 Singapore 189702 Singapore Project Director Project Manager Senior Associate Senior Associate

Ong Choon Fah Constance Leung John Liu Chong Kah Hsiung

Bangkok Senior Associate Director Associate Director

David George Low Ming Tze

Port Master Planning Global Maritime And Port Services Pte Ltd. 28 Genting Land, #08-06, Platinum 28 Singapore 349585 Project Advisor Project Director/Leader Project Manager Senior Consultant-Port Market Study Senior Consultant-Port Planning, Ops & Development Senior Consultant-Port Planning, Ops & Development Professional Engineer (Reclamation & Dredging Expert) Senior Consultant - Marine Navigation Senior Legal Counsel Senior Consultant - Port Finance Hydrographer (Senior Consultant)

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Project Director Project Manager Senior Associate Senior Associate

Nina Yang Dylan Yee Kar Sein Dr Sabrina Krank Nguyen Do Dung Karthik Karkal Chin Yak Kean Daisy Sun Yiqun

Kyauk Phyu Special Economic Zone Development Plan

Goon Kok Loon Mel Sng Tze Sen Tan Ai Leen Huang Shou Quan Frederick Su Nizam Abdul Ghafar Raja Ram Bawajee Capt. Teoh Woi Koon Gurcharanjit Singh Soon Soon Beng Capt. Wilson Chua

Project Director Alternate Project Director Senior Project Manager Project Manager Project Coordinator Project Secretary

Jonathan Shek Mak Yew Cheong Poon Wai Onn Marcus Mok Michael Mariadass Felicia Foo


List of Abbreviations Asian Development Bank ADB AEC ASEAN Economic Community ASEAN Association of South-East Asian Nations BEAC Bid Evaluation and Awarding Committee BCA Building and Construction Authority of Singapore BIA Biodiversity Impact Assessment CAGR Compound Annual Growth Rate CD Chart Datum dB Decibel DBFL Design, Build, Finance, Lease DBFOT Design, Build, Finance, Operate, Transfer DWT Deadweight Tonnage EIA Environmental Impact Assessments EMMP Environmental Monitoring & Management Plans EPZ Export Processing Zone EY Ernst & Young Solutions LLP FDI Foreign Direct Investment GDP Gross Domestic Product GIS Geographic Information Systems GMS Greater Mekong Sub-region IHLCA Integrated Household Living Conditions Assessment

IHO International Hydrographic Organisation IMF International Monetary Fund IPP Independent Power Producer JV Joint Venture KP SEZ Kyauk Phyu Special Economic Zone Leq Equivalent Continuous Sound Levels LNG Liquefied Natural Gas Lp Ground-bourne noise level MMI Modified Mercalli Intensity MNC Multinational Corporation MOGE Myanmar Oil & Gas Enterprise MPA Myanmar Port Authority OGT Onshore Gas Terminal SEZ Special Economic Zone SIA Social Impact Assessment SME Small and Medium Enterprise TEU Twenty-foot Equivalent Unit UNDP United Nations Development Programme VLCC Very Large Crude Carriers WTO World Trade Organisation YOY Year Over Year

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1 INTRODUCTION

2 BACKGROUND

3 KYAUK PHYU DISTRICT STRATEGIC DEVELOPMENT PLAN

1 Introduction 1.1 Task 1.2 Development Process 1.3 Kyauk Phyu District Planning Area and Existing Conditions 1.4 Contents and Structure of the Report

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2 Background 2.1 Macro Economy 2.2 Kyauk Phyu District and the Myanmar National Economic Development Policies

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3 Kyauk Phyu District Strategic Development Plan 3.1 Vision and Objectives 3.1.1 Kyauk Phyu District Development Principles 3.1.2 The Strategic Framework – Vision and Objectives 3.1.3 Targeted Benefits in the Development of Kyauk Phyu District 3.2 Physical Development Strategies 3.2.1 Designing the Physical Development Plan 3.2.2 Design Principles of Physical Development Strategies 3.2.3 Kyauk Phyu District Physical Development Strategies 3.3 Socio-economic Development Strategies 3.3.1 Macro Economy 3.3.2 Kyauk Phyu District Population 3.3.3 Kyauk Phyu District Economic Structure 3.3.4 Strategic Economic Thrusts 3.3.5 Strategic Social Development Thrusts 3.4 Special Action Plan - Agricultural Development Strategies 3.4.1 Existing Conditions 3.4.2 Agricultural Production 3.4.3 Cooperatives 3.5 Special Action Plan - Tourism Development Strategies 3.5.1 Site Analysis 3.5.2 Tourism Development Recommendations 3.5.3 Strategic Approaches for Tourism Development

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4 KYAUK PHYU SPECIAL ECONOMIC ZONE POSITIONING

4 Kyauk Phyu Special Economic Zone Positioning 4.1 Review of Previous Master Plans 4.2 Principles for the Development 4.3 What is a SEZ? 4.4 Review Myanmar’s SEZs 4.5 Port Positioning 4.5.1 Myanmar Cargo/ Container Market Review 4.5.2 Myanmar’s Cargo Hinterland Review 4.5.3 Cargo and Container Throughput Potential of New Kyauk Phyu Container Port 4.6 Industrial Positioning 4.6.1 Review Industrial Positioning from the Previous Master Plans 4.6.2 Industrial Development Potential of KP SEZ 4.6.3 The Economic Engine for KP SEZ 4.6.4 Industrial Clusters Recommendation 4.6.5 Industrial Phasing Strategies

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5 Kyauk Phyu Special Economic Zone Master Plan 5.1 Spatial Site Analysis 5.1.1 Natural Disaster Risk 5.1.2 Current Land Use 5.1.3 Topography 5.1.4 Existing Infrastructure 5.1.5 Potential for Port Locations 5.1.6 Suitability Analysis for Industrial Development 5.2 Concept Planning 5.2.1 Port 5.2.2 Industrial Areas 5.2.3 Residential 5.2.4 Water Catchment and Environmentally Sensitive Areas 5.3 Phasing 5.4 Infrastructure 5.4.1 Road Infrastructure 5.4.2 Electricity 5.4.3 Water Supply 5.4.4 Sewage System 5.4.5 Telecommunications 5.4.6 Solid Waste Collection 5.5 Environmental Impact Assessment and Environmental Monitoring & Management Plan 5.5.1 Overview 5.5.2 Potential Environmental Impacts and Mitigation Measures 5.5.3 Environmental Monitoring & Management Plan

54 56 58 60 61 61 64 67 69 75 77 80 81 82 82 83 83 84 84 84 85 85 85 88

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5 KYAUK PHYU SPECIAL ECONOMIC ZONE MASTER PLAN

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6 CONCLUSION

6 Conclusion 6.1 Business Model and Management Structure 6.1.1 Business Model 6.1.2 Proposed Management Structure of KP SEZ 6.1.3 Proposed Organization Structure of KP SEZ Development Corporation 6.2 Implementation Road Map Phase 1

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Kyauk Phyu Special Economic Zone Development Plan


Kyauk Phyu District Strategic Development Plan

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KP SEZ Phase 1 Development Master Plan

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Kyauk Phyu Special Economic Zone Development Plan


KP SEZ Overall Development Master Plan

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Exemplary Layout of Industrial Park

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Kyauk Phyu Special Economic Zone Development Plan


Illustrative Plan of Industrial Park Area

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Exemplary Layout of Residential Area

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Kyauk Phyu Special Economic Zone Development Plan


Illustrative Plan of a Typical Neighbourhood

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Kyauk Phyu Special Economic Zone Development Plan


1 INTRODUCTION


1 Introduction The following Chapter explains the task of developing the Kyauk Phyu District Strategic Development Plan and the Special Economic Zone Master Plan (1.1), their development process (1.2), the site boundaries (1.3), as well as the contents and structure of the report (1.4).

1.1 Task Commitment to develop three SEZs

In line with the National Development Plan, the Government of the Republic of the Union of Myanmar is committed to the development of three Special Economic Zones (SEZs) – Kyauk Phyu, Dawei and Thilawa.

Kyauk Phyu with outstanding location and resources

Strategically located at the geographic centre of three economically vibrant and dynamic markets – China, India and ASEAN – Kyauk Phyu is uniquely positioned to serve as a trade corridor connecting these three economies. Kyauk Phyu is well endowed with a natural deep sea port and abundant natural resources in oil and gas, marine resources, as well as unique scenic landscapes. It also has sufficient land and ample labour for industrial development and for the expansion of residential areas.

Master plan and strategic development plan

The master plan for the Kyauk Phyu Special Economic Zone (KP SEZ) forms the basis for a tender process of Phase 1 development to take place in 2014. In order to fully unleash the potential of the Special Economic Zone (SEZ) it has been looked beyond the boundary of KP SEZ, and the Kyauk Phyu district strategic development plan has been created.

Increasing Kyauk Phyu district’s competitiveness

The strategic development plan aims to formulate a strategic framework for the SEZ and Kyauk Phyu district to grow in the next 50 years. The rise of Myanmar’s economy and the trend of globalisation have urged for the need of a comprehensive development plan for Kyauk Phyu district to increase its competitiveness in the region.

Environmental, social and economic sustainability of Kyauk Phyu district and KP SEZ

The strategic development of Kyauk Phyu district and KP SEZ will create employment opportunities and income generation for the Kyauk Phyu region and beyond. This development will be environmentally sustainable in addition to bringing socio-economic benefits to Kyauk Phyu.

1.2 Development Process Singapore-based consortium to develop the master plan

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The Kyauk Phyu strategic development plan and the KP SEZ master plan form the basis for the tender process of Phase 1 development to take place in 2014. They have been developed between March and June 2014 by a Singapore-based consortium of CPG Consultants, Global Maritime and Port Services (GMAPS), DTZ, EY and PM Link and in close cooperation with the Bid Evaluation and Awarding Committee (BEAC) of the KP SEZ, as well as with various governmental institutions. The process has been led by BEAC.

Kyauk Phyu Special Economic Zone Development Plan

Figure 1: Overview townships Rakhine State


Figure 2: Overview study and focused areas for the master plan

Diverse plans and concepts prepared earlier for Kyauk Phyu district and KP SEZ informed the development process. The strategic development plan is derived from the information and data obtained during meetings with Government agencies, desktop studies and research information that has been approved by the Government. The KP SEZ master plan is derived from information and data obtained during meetings with Government agencies and visual site assessments.

Notes on data sources

1.3 Kyauk Phyu Planning Area and Existing Conditions The study area is located in Rakhine State, at the West coast of Myanmar, covering an area of 3,592 km2. Kyauk Phyu district consists of four townships: Kyauk Phyu, Yanbye, Man Aung, as well as Ann township. The strategic development plan consists of three townships under the jurisdiction of Kyauk Phyu district, namely the Kyauk Phyu township (1,757 km2), the Yanbye township (1,312 km2) and the Man Aung township (523 km2)1, “Study area” in the adjacent map. For the KP SEZ master plan, the entire Northern part of Yanbye Island has been considered (“Focused area”). The delineation of the two different parameters is shown in the adjacent maps (figures 1 and 2).

Study area covering three townships: Kyauk Phyu, Yanbye, and Man Aung

Kyauk Phyu township is the most developed township of the three, with a population of over 200,0001. There is an existing airport in the town with flights connecting to Yangon City and other nearby smaller townships. Apart from that, Kyauk Phyu township is also where KP SEZ is to be located. A natural deep sea port is situated within the land of the township. Existing land uses are mainly agricultural use, with numerous scattered villages.

Kyauk Phyu township’s existing condition

Yanbye township is located at the South-East of Kyauk Phyu district, with a population size of nearly 150,0001. The township is relatively underdeveloped as compared to Kyauk Phyu township, and agriculture is the main economic activity in the area. The township occupies hilly terrain in the central area, with flatter land around the edge of the township.

Yanbye township’s existing condition

Man Aung township is located on Man Aung Island, which is physically separated from the other two townships. The island is hilly in the South, and generally flat in the Northern part. Most of the land area in Man Aung township is covered by non-forest land uses, which are either villages or farm land. The current population size of Man Aung township is about 104,0001.

Man Aung township’s existing condition

1.4 Contents and Structure of the Report

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The structure, outline and content of this document is driven by the task of coming up with a conceptual yet comprehensive strategic plan for the development of Kyauk Phyu district, which aims to facilitate KP SEZ development and bring socio-economic benefits to the region in an environmentally sensitive and economically feasible fashion.

Plan facilitates KP SEZ development while bringing socio-economic benefits to local community

The document consists of six chapters. These are, besides this introduction (Chapter 1), an overview on the development background (Chapter 2), the development proposal of Kyauk Phyu District (Chapter 3), as well as the positioning of KP SEZ (Chapter 4). Chapter 5 describes the development proposal of KP SEZ in form of the KP SEZ master plan, before concluding this report by providing an implementation road map, as well as the management structure of KP SEZ (Chapter 6). The plans do not only incorporate the development of Phase 1 to be tendered out in 2014, but also a long-term development proposal over 50 years until Kyauk Phyu reaches its full potential

Structure of this Strategic Development Plan and Master Plan report

Government of Rakhine State

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Kyauk Phyu Special Economic Zone Development Plan


2 BACKGROUND


2 Background

Table 1: Economic growth of Greater Mekong Sub-region

The following Chapter provides an overview on the macro economy of Myanmar and the neighbouring markets (2.1), and outlines in brief the Myanmar national economic development policies (2.2).

2.1 Macro Economy Global and regional economic relations

Myanmar’s global relations started improving as early as 2011. The United States relaxed curbs on foreign aid to Myanmar in November 2011 and resumed diplomatic relations in January 2012. In April 2012, British Prime Minister David Cameron called for the economic sanctions on Myanmar to be suspended. The United States have partially lifted their economic sanctions on Myanmar since May 2012. The partial lifting of sanctions was followed by many state visits of high ranking government officials from Europe, including European Commission President José Manuel Barroso and US President Barack Obama, to Myanmar.

Member of ASEAN

Officially joining the Association of Southeast Asian Nations (ASEAN)2 in 1997, economic benefits that Myanmar enjoys comprise Free Trade Agreements with countries including China, Japan, South Korea, New Zealand and India. Myanmar holds the ASEAN Chair for the first time in 2014 and this is seen as a key milestone.

ASEAN single market by 2015

With integration of the ASEAN Economic Community (AEC), targeted by 31st December 2015, Myanmar will be part of a strong regional economy which will ensure free flow of goods, services, investment, capital and skilled labour. ASEAN is envisioned to become a single market and production base for its population of over 617 million people, larger than the European Union (502 million). This will increase the competitiveness of its member states including Myanmar and ensure that the domestic market remains attractive for foreign investment.

Greater Mekong Sub-region

Myanmar is a member of the Greater Mekong Sub-region (GMS), which comprises Myanmar, China, Cambodia, Lao PDR, Thailand and Vietnam. The GMS Programme, started in 1992, was designed to enhance economic relations among the countries. With support from the Asian Development Bank (ADB), the GMS Programme helps to implement high priority sub-regional projects in transport, energy, telecommunications, environment, human resource development, tourism, trade, private sector investment and agriculture. These projects include construction of the East-West Economic Corridor from Myanmar which will eventually extend from the Andaman Sea to Da Nang (Vietnam). Economic growth for the region is expected to range from 6.8% - 10.1% between 2014 and 2018 (table 1).

Macro-economic performance of Myanmar

Myanmar is an emerging economy endowed with rich natural resources such as natural gas to power economic development. In 2011, the Government of Myanmar has initiated a series of economic reforms such as: • • • • • • • •

Unify the exchange rate Improve monetary policy Increase tax collection Reorient public expenditure toward social and physical infrastructure Improve the business and investment climate Develop the financial sector Liberalise agriculture and trade Passing of a new central bank law which grants the central bank greater operational autonomy

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ASEAN comprises Brunei, Cambodia. Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam IMF, DTZ Consulting, May 2014 4 Ministry of Immigration and Population (August 2014) 3

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Kyauk Phyu Special Economic Zone Development Plan

4

3


Table 2: Myanmar key economic indicators

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Supported by the series of Government policy reforms, economic liberalisation, inflows of Foreign Direct Investment (FDI) in recent years and the reinstatement of Myanmar in the European Union’s Generalised System of Preferences for duty-free and quota-free market access, Myanmar’s economy is on track to grow by an average of 7.8% per year over the last three years (2011-2013) rising to USD 52.38 billion in 2013.

Recent Government policy reforms

The country enjoys strong Asian cooperation with neighbouring countries. Foreign investments to Myanmar are mainly from China, India, Japan, the Philippines, Singapore, South Korea, and Thailand. FIC Law Investment has risen from USD 4.6 billion in 2011 to reach USD 4.9 billion in 2013 reflecting the improvement of foreign investor’s confidence in Myanmar economy. ADB reported that business confidence has continued to improve over the last two years as reflected in an increase in new business registrations in 2013. The domestic consumer market has expanded over the last two years, with growing per capita income from USD 1,136 in 2011 to reach USD 1140 in 20137. Total foreign trade grew strongly from USD 18.2 billion in 2011 to reach USD 25.0 billion in 2013(table 2).

Strong Asian cooperation

GDP growth is mainly contributed by the agricultural and manufacturing sectors, contributing more than 50% of total GDP over the last twelve years. According to the Myanmar Economic Planning Department, 46% of the FDI have been channeled into the manufacturing sector, mainly the Oil & Gas Industry, over the past few years. Large domestic consumer market supported by a large population size with growing per capita income. The combined population size of 1.9 billion people in the South- and North-East Asian countries has formed a large regional market to support Myanmar export goods.

Key drivers for Myanmar economic growth

According to IMF, Myanmar economy is expected to post a positive average growth of 7% per year for the period 2014 to 2018. The key factors driving the good economic growth during the forecast period are highlighted as follows: •

• •

Myanmar economic outlook

The economic reforms undertaken by Myanmar Government have further liberalised the private sector to play a key role in modernising Myanmar’s agricultural, industrial and service sectors. This will create more opportunity for many of the Myanmar exportoriented industries to be integrated into the world supply chain and provide a more accessible market by increasing its trading partners in Europe and North America. The emerging markets in Europe and North America will be the important driver to further power Myanmar’s economic growth during the forecast period and beyond. The Government will continue to provide pro-investment policies to attract FDI. More FDI will be brought in by foreign investors to further expand the export oriented industries. The projected growth for Myanmar economy will be supported by the growing domestic and regional market for Myanmar export goods.

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Myanmar Economic Planning Department 2013 and IMF (Deleted) 7 BEAC 8 Ministry of Immigration and Population (August 2014) 6

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2.2 Kyauk Phyu District and the Myanmar National Economic Development Policies Myanmar’s two-pole development strategy

Myanmar’s National Comprehensive Development Plan has identified a two-pole development strategy. Yangon City is to be developed as the commercial and financial gateway of the country, while Mandalay will focus on industrial development to propel the economic development in the hinterland areas.

Commencement of SEZ development in Myanmar in 2011

Also, in year 2011, Myanmar established the Central Body for the Myanmar Special Economic Zone and passed the Myanmar SEZ law and the Dawei SEZ Law in the same year. Three SEZs are then established to encourage economic growth and foreign investment in the country, one of them is identified as KP SEZ (see figure 3). With KP SEZ as the catalyst of economic growth, Kyauk Phyu district has the potential to be developed as gateway connecting the Myanmar hinterland to the world.

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Kyauk Phyu Special Economic Zone Development Plan

Figure 3: Two-pole development strategy and three SEZs in Myanmar


Site visits during planning process

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Kyauk Phyu Special Economic Zone Development Plan


3 KYAUK PHYU DISTRICT STRATEGIC DEVELOPMENT PLAN


3 Kyauk Phyu District Strategic Development Plan The following Chapter outlines the Kyauk Phyu district strategic development plan. The vision and objectives of the plan are introduced (3.1) and the physical (3.2), as well as socioeconomic (3.3) development strategies are outlined. A special action plan for Kyauk Phyu district is subsequently formulated. This action plan includes the agricultural (3.4) and tourism (3.5) development strategies.

3.1 Vision and Objectives 3.1.1 Kyauk Phyu District Development Principles Principles of the development framework

In order for the development framework to achieve economic and social development objectives, the strategic development plan outlines and highlights a number of principles that are able to create dynamic economic growth yet ensuring integration and balanced development in the district. These principles are: •

Inclusive and balanced development process – A development process that has taken into consideration the needs of various parties – the Government, the local community, the natural environment and private sector investors.

Environmental protection and conservation – An environmentally sensitive development that emphasises the importance of environmental protection and conservation, recognises the co-existence of natural environment and economic development.

A good quality of life for the community – Access to infrastructure and social amenities e.g. schools, hospitals, etc. for the residents in the district, and equal employment opportunities that ensure the community is economically healthy.

3.1.2 The Strategic Framework – Vision and Objectives Strategic framework for Kyauk Phyu district

The development of Kyauk Phyu district offers great opportunity for Myanmar to test bed its innovative and reformative policies in various fields including economic development, city planning, infrastructure and utilities development, environmental protection etc. The strategic framework of Kyauk Phyu district strategic development plan is encapsulated as shown in figure 4. The vision of Kyauk Phyu district is defined as: “An Environmentally and Economically Sustainable District of International Standards” The vision statement implies and underlines Kyauk Phyu district’s aspirations of being a strong, sustainable and competitive district within the region from economic and environmental perspectives.

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Kyauk Phyu Special Economic Zone Development Plan

Figure 4: Strategic framework for Kyauk Phyu district


On the other hand, four strategic pillars anchored by three foundations have been identified in order to achieve the Vision. These three foundations, which have been discussed in the previous section, are the guiding principles for Kyauk Phyu district in its future development. The four strategic pillars of the framework are defined as follows: •

Regional positioning – Creating a competitive district that is able to tap into regional and international development trends. Kyauk Phyu district should be positioned as an efficient and innovative centre within the region.

Economic drivers – In order to jump start the development, economic drivers in the form of industry and catalyst projects should be identified. This helps to spur the economic activities within the district and thus contributing to the region’s economy.

Hard & soft infrastructure enablers – Hard infrastructure, such as roads, ports and public utilities, and soft infrastructure including security, human capital etc. should be in place to create the enabling environment for economic growth.

Socio-economic equity and local participation – The strategic development plan should benefit the local community by ensuring that they are participating in the process and growth of the district. Employment opportunities and economic benefits should be provided.

Four strategic pillars for Kyauk Phyu district

3.1.3 Targeted Benefits in the Development of Kyauk Phyu District With the implementation of Kyauk Phyu district strategic development plan, a series of impacts and outcomes are anticipated in the context of economy, community and environment. By carefully positioning Kyauk Phyu district as the regional growth node of Myanmar’s West coast, the district is anticipated to be more competitive and thus helps to increase its GDP exponentially. Apart from that, the economic structure of the district will experience changes, from an agriculture-oriented economy to a manufacturing-based economic structure. The plan helps to prevent negative competition within the region by defining different industrial clusters in each of the townships. Synergies are anticipated among the townships to create momentum for the economic growth.

Targeted economic benefits

From the social perspective, the internationally competitive labour costs in the district are able to attract investors, thus creating more jobs. This helps to improve the locals’ quality of life as a stable income makes commercial facilities and amenities more affordable. Also, upgrading and improvement of hard and soft infrastructure contributes towards connecting the local population to a broader field of knowledge and experience, which is important to improve their living quality.

Targeted social benefits

Apart from socio-economic benefits, the framework is anticipating improvement of the natural environment of Kyauk Phyu district. Through careful land use planning in next stage of the plan, forest reserves and other natural protection areas should be identified. Policies need to be formulated and actions need to be taken to preserve the natural environment, also to conserve environmentally sensitive areas.

Targeted environmental benefits

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3.2 Physical Development Strategies 3.2.1 Designing the Physical Development Plan Physical development plan as road map to guide various parties

The physical development plan should be a developmental road map derived from this strategic development plan to guide the various parties involved in developing the district, to ensure the spatial development context of the district is in line with the overall development framework. 3.2.2 Design Principles of Physical Development Strategies

Four design principles for the physical development strategies

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Sustainability and liveability are the fundamental ideas of the development framework. They can be further defined by three main elements: economic development, environmental preservation, and community & social development (see figure 5). The following principles are derived to guide policy makers, city planners or designers in the coming years to ensure that decisions are made in consistency with the overall plan: •

Inclusive – Kyauk Phyu district is committed to providing equal opportunities to the local population to participate in the transformation and to share its liveability in the forms of economic growth, adequate housing, environmental conservation and protection, public health and amenities, as well as recreation.

Preserve Natural Environment – Kyauk Phyu district must preserve its natural environment and resources that provide foundations of a high living standard and overall sustainability.

Quality of Life – Kyauk Phyu district defines quality of life as the way in which its residents can live in a safe and comfortable, as well as economically healthy environment. This can be achieved by introducing appropriate types of economic activities to create employment opportunities.

Partnership – Kyauk Phyu district must be developed with strong collaborative efforts between various parties including the Government, non-governmental organisations, the local community and the private sector.

Kyauk Phyu Special Economic Zone Development Plan

Figure 5: Sustainable and liveable development integrating three main elements


Figure 6: Overall physical development concept of Kyauk Phyu district

3.2.3 Kyauk Phyu District Physical Development Strategies i. Overall Physical Development Concept of Kyauk Phyu District The Kyauk Phyu district strategic development plan covers three major townships in the district, namely Kyauk Phyu township, Yanbye township and Man Aung township. The district thus will be developed into three focused zones, namely Kyauk Phyu Special Economic Zone (KP SEZ), Yanbye Agricultural Zone, and Man Aung Eco-Tourism Zone. These three zones are self-sustaining, focusing each on different economic activities.

Three development zones in Kyauk Phyu district

KP SEZ is focusing on industrial development, which is an environmentally friendly SEZ. It is also the test-bed of the country for new economic policies. Yanbye Agricultural Zone is the “food hub� of Kyauk Phyu district where modern agricultural activities with new technologies and techniques, R&D activities, organised & cooperative farming can take place. The third zone is Man Aung Eco-Tourism Zone, which is located remotely from the mainland of Kyauk Phyu district. The zone is to be preserved and promoted as an international eco-tourism destination due to its untouched natural assets and unique location. Apart from these zones, three major centres within Kyauk Phyu district are identified. The existing Kyauk Phyu town is upgraded to be the regional centre that serves the whole district. It is developed into the administrative, cultural, as well as regional business and commercial centre of Kyauk Phyu district. As a regional centre, it should have the highest population density in the region. Two sub-regional centres have been identified to serve as the second-tier commercial centre in the district, namely Yanbye sub-regional centre and Man Aung sub-regional centre. The two centres provide the respective zones with basic financial, business, cultural and government administrative services. These two sub-regional centres are serving as urban growth areas for the population catchment area of Yanbye and Man Aung township, respectively.

Regional and sub-regional centres

There are two major corridors within the district, namely the coastal preservation corridor and the infrastructure corridor. The former is located along the Western coast of Yanbye Island and is preserved from heavy development. The proposed activities along this corridor include low-impact tourism, natural environment-related study and research activities. The latter is a corridor that connects the deep sea port and the mainland of Kyauk Phyu district. It provides co-location of common infrastructure in the district. Roads, a railway line, major pipelines and electricity high tension cables should be aligned and constructed along this corridor to minimise disturbance of other land uses (see figure 6).

Two corridors in Kyauk Phyu district: the coastal preservation corridor and the infrastructure corridor

ii. Infrastructure Development Strategies of Kyauk Phyu District The road system in Kyauk Phyu district is upgraded to complement the economic development. The hierarchy of roads is divided into two main types - the 40 metres-wide road that connects to the NH2 Highway, and the internal circulation road of 30 metres width. A bridge is proposed near Kin Myauk County in Yanbye township to complete the ring road system of the township, to increase accessibility and connectivity. Also, ferry terminals are proposed in Yanbye township and Man Aung town to connect the island to the mainland and to facilitate the tourism development of the island (see figures 7 and 8). In addition, the existing Kyauk Phyu and Man Aung airports should be upgraded to international standards to cater for future needs.

Major road network and ferry services

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iii. Utilities Development Strategies of Kyauk Phyu District

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Power supply in Yangbye and Man Aung Islands

The power supply of Kyauk Phyu district is ensured through the connection to Myanmar’s national power grid. A 66kV high tension cable is extended to Yanbye township in the South to ensure power supply for the region. Power supply in Man Aung Island should be provided by upgrading the existing power generator on the island. A sustainable energy source is recommended to protect the natural environment of the island, especially the use of biomass should be explored (see figure 9).

Three potential water catchment areas in Yanbye and Man Aung Islands

Three potential water catchment areas are identified to secure the future water supply requirements of the district. The Northern water catchment area in Kyauk Phyu township is estimated to be 41 km2 large and should be preserved to cater the needs of the SEZ. The water catchment area in Yanbye township is approximately 140 km2 in size, which is sufficient to fulfil the water supply demands of the district. The third water catchment area, which is 85 km2 large, is located on Man Aung Island. This catchment area will be sufficient to support local communities and future eco-tourism development on the island.

Solid waste management

A solid waste management system both on Yanbye and Man Aung Islands is to be provided by the Government. Waste heat recovery power plants can both support the need for electricity and for waste management in the area, especially given the large amount of biomass waste in the rural areas. Waste collectors might be included in an organized recycling scheme provided by the Government to extract valuable materials before combustion. Once a critical mass of waste is reached, it is recommended to include third parties in the process of enhancing the waste management in Kyauk Phyu district.

Centralized and decentralized sewage treatment system

Sewage treatment facilities are required to be established throughout Kyauk Phyu district. Depending on the density of the development of specific areas, centralized or decentralized sewage treatment plants should be established. Centralized sewage treatment plants are recommended e.g. for the areas of Kyauk Phyu town, Yanbye town and Man Aung town. Smaller villages should be equipped with decentralized sewage treatment systems. Sewage treatment systems can be provided in a joint effort between the Government and international organizations. The development of comprehensive sewage treatment solutions is especially important since contaminated water from inadequate wastewater management provides one the greatest health challenges restricting development.

Full coverage of telecommunication network

Telecommunication infrastructure includes both land line communication (incl. internet access) and a cellular phone system. Kyauk Phyu district is required to be provided with access to the national land line communication network; as a minimum, at least at one point of each village access should be provided. After the government has provided the initial infrastructure and a critical density in certain areas is reached, a third party telecommunication provider can be invited to provide a fibre-optic connection and land line (outsourcing). Land line infrastructure should be aligned along the existing and new road network.

Kyauk Phyu Special Economic Zone Development Plan

Figure 7: Proposed ferry terminal connecting Man Aung Island to Kin Myauk


Figure 8: Infrastructure development strategies of Kyauk Phyu district

Figure 9: The utilities development strategies of Kyauk Phyu district

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3.3 Socio-economic Development Strategies

Table 3: Myanmar key economic indicators9

3.3.1 Macro Economy Global and regional economic relations

Myanmar’s global relations started improving as early as 2011. The United States relaxed curbs on foreign aid to Myanmar in November 2011 and resumed diplomatic relations in January 2012. In April 2012, British Prime Minister David Cameron called for the economic sanctions on Myanmar to be suspended. The United States have partially lifted their economic sanctions on Myanmar since May 2012. The partial lifting of sanctions was followed by many state visits of high ranking government officials from Europe, including European Commission President José Manuel Barroso and US President Barack Obama, to Myanmar.

Macro-economic performance of Myanmar

Myanmar is an emerging economy endowed with rich natural resources such as natural gas to power economic development. In 2011, the Government of Myanmar has initiated a series of economic reforms such as: • • • • • • • •

Recent Government policy reforms

Unify the exchange rate Improve monetary policy Increase tax collection Reorient public expenditure toward social and physical infrastructure Improve the business and investment climate Develop the financial sector Liberalise agriculture and trade Passing of a new central bank law which grants the central bank greater operational autonomy

Supported by the series of Government policy reforms, economic liberalisation, inflows of FDI in recent years and the reinstatement of Myanmar in the European Union’s Generalised System of Preferences for duty-free and quota-free market access, Myanmar’s economy is on track to grow by an average of 7.8% per year over the last three years (2011-2013) rising to USD 52.38 billion in 2013.

Key drivers for Myanmar economic growth

GDP growth is mainly contributed by the agricultural and manufacturing sectors, contributing more than 50% of total GDP over the last twelve years. Inflow of FIC Law Investment has increased from USD 4.6 billion in 2011 to reach USD 4.9 billion in 2013. About 46% of the FDI have been channelled into the manufacturing sector, mainly the Oil & Gas Industry, over the past few years. The domestic consumer market supported by a population size of 51.4 million in 2013 is large, with growing per capita income. The combined population size of 1.9 billion people in the South- and North-East Asian countries has formed a large regional market to support Myanmar export goods.

Myanmar economic outlook

According to IMF, Myanmar economy is expected to post a positive average growth of 7% per year for the period 2014 to 2018. The key factors driving the good economic growth during the forecast period are high- lighted as follows: •

9

The economic reforms undertaken by Myanmar Government have further liberalised the private sector to play a key role in modernising Myanmar’s agricultural, industrial and service sectors. This will create more opportunity for many of the Myanmar export-oriented industries to be integrated into the world supply chain and provide a more accessible market by increasing its trading partners in Europe and North America. The emerging markets in Europe and North America will be the important driver to further power Myanmar’s economic growth during the forecast period and beyond.

Myanmar Economic Planning Department 2013 and IMF Ministry of Immigration and Population (August 2014)

10

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Kyauk Phyu Special Economic Zone Development Plan

10


Figure 10: Population size and land area of the three townships in Kyauk Phyu distict11

• •

The Government will continue to provide pro-investment policies to attract FDI. More FDI will be brought in by foreign investors to further expand the export oriented industries. The projected growth for Myanmar economy will be supported by the growing domestic and regional market for Myanmar export goods.

3.3.2 Kyauk Phyu District Population The current population of Kyauk Phyu district is estimated at 475,000 persons, which is formed by three townships within the planning area: Kyauk Phyu township with 215,000, Yanbye township with 155,000, and Man Aung with 105,00011. According to a study done by Integrated Household Living Conditions Assessment (IHLCA) Project Unit of Myanmar in 2010, the labour force participation rate of Rakhine State was reported to be 58.4%12. Assuming that the rate remained unchanged due to the low economic activity in Rakhine State for the past four years, there is a tremendous potential for additional labour forces.

Population of Kyauk Phyu district

According to the household survey done by the IHLCA in 2010, the population size of Rakhine State remained unchanged between 2005 and 2010. Assuming that implementing the Strategic Development Plan will encourage economic growth in Kyauk Phyu district, and the district’s population growth rate will be catching up to the Myanmar national growth rate of close to 2%, thus by 206413, Kyauk Phyu district is anticipating a population size of 1.1 million.

Kyauk Phyu district population projection by year 2064

3.3.3 Kyauk Phyu District Economic Structure Currently, the economic structure of Kyauk Phyu district is very much agriculture-oriented. Farming is the major economic activity in the district. According to information provided by the Rakhine State Government, there are nine major crops being planted in Kyauk Phyu district, and ground nut is the major agriculture product of the district. Other than crop farming, livestock, fish and prawn breeding is another major economic activity in Kyauk Phyu district. There is currently only a few factories in the district, mostly ice mills and cold storages to support the fishery activities (see tables 4-6).

Existing economic structure of Kyauk Phyu district

3.3.4 Strategic Economic Thrusts Five strategic economic thrusts are introduced to support and accelerate the economic growth of Kyauk Phyu district. These thrusts are as follows: •

Strengthen the existing main economic drivers and diversify the economic sectors to create a new growth pole – Economic diversification shall be achieved by introducing new industries to the district. To realise this, KP SEZ is focusing on growing the manufacturing industries in this region, while modern farming knowledge/ technologies should be introduced to Yanbye to improve and strengthen the agriculture activities.

Strengthen supporting industries by introducing new sectors – While manufacturing and agriculture remain as the core economic activities in the district, new supporting industries, such as logistics services, can be introduced to the district. Apart from that, rich natural assets of the district, especially on Man Aung Island, should be utilised by promoting and developing tourism industries in the region.

Create international linkages for business to grow – Industries within Kyauk Phyu district need to be strengthened by connecting to the global value chain in order to obtain market access, benefits from the economies of scale, and also encourage knowledge and technologies inflow to the district.

Five strategic economic thrusts formulated for Kyauk Phyu district

11

Data obtained from the Government of Rakhine State IHLCA Project Technical Unit (2011): Integrated Household Living Conditions Survey in Myanmar (2009-2010). MDG Data Report 13 Carl Haub, 2012 12

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Adopt the cluster approach – Cluster can be defined as a geographic concentration of interconnected businesses, suppliers and associated institutions in a particular field. It is important to be implemented in the district, to encourage synergies between industries of the same field, and also to prevent negative competition within the district itself.

Provide the right type of incentives and support – Given the strong competition from nearby economic zones, generous incentives and support shall be made available within Kyauk Phyu district. These incentives and support can be in various forms, from tax holiday to skill upgrading incentives, to automation funds or industrial adjustment funds.

Table 4: Main crops, Kyauk Phyu district14

3.3.5 Strategic Social Development Thrusts Four strategic social development thrusts for Kyauk Phyu district

The strategic social development thrusts of Kyauk Phyu district strategic development plan aim to fulfil the basic social needs of the local community to ensure that the district is being developed in a balanced and harmonious way. The following are the proposed thrusts: 1. I mprove coordination between all government and non-government agencies involved in social development 2. Increase women’s participation in the development process of the district 3. Improve access to basic social infrastructure and amenities such as healthcare centres, school etc. 4. E nhance cluster linkages among Multinational Corporations (MNCs) and research institute with the local companies, especially Small and Medium Enterprises (SMEs).

Table 5: Livestock breeding14

3.4 Special Action Plan - Agricultural Development Strategies 3.4.1 Existing Conditions Large potential for further agricultural cultivation

The study area covers Kyauk Phyu, Yanbye and Man Aung townships, totalling 359,265 ha. Cultivated land for these three townships totals 57,277 ha. There is still large potential for further agricultural cultivation, around 60% of current cultivation acreage, without having to touch the protected forest land. The average size of each village is around 750 residents for Yanbye and Man Aung, and about 820 for Kyauk Phyu14. Table 6: Fish and prawns breeding14

14

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Government of Rakhine State

Kyauk Phyu Special Economic Zone Development Plan


3.4.2 Agricultural Production

Table 7: Imports, Myanmar15

Main crops produced in Kyauk Phyu district are groundnuts, green gam, sesame, pulses, sunflower, pigeon peas, and sugarcane, in order of production by weight (see table 4). Maize and cotton are also in the list of main crops, but not in the cultivation lists for 20122014. In terms of livestock, the higest productions are chickens, cows, followed by pigs and ducks (see table 5), while for aquaculture (see table 6), there are almost 100 farms breeding fish and prawns in about 1,416 ha of water.

Crops, livestock and aquaculture production

Of the abovementioned crops, maize sesame seeds and cotton lint are in the top five commodities exported by Myanmar as a whole. Other top 20 commodities exported by Myanmar include natural rubber, raw sugar, cake of sesame seeds, dehydrated vegetables, and ginger (see table 8).

Myanmar agricultural exports only partially linked to production

Agro-processing should be introduced to move the agricultural industry into the higher value chain, as well as to diversify the livelihood of the farmers. For example, sugarcane currently produced in Kyauk Phyu district can be processed into raw sugar and vegetables can be dehydrated for export. Raw sugar is exported at USD 331/ tonne, while refined sugar is imported into Myanmar at USD 793/ tonne (see tables 7 and 8), thus there is potential for agro-processing to increase the value of the products, as well as to reduce the reliance on imports.

Move agricultural industries up to higher value chain

Table 8: Exports, Myanmar15

15

Food and Agriculture Orgnisation of the United Nations (http://faostat.fao.org)

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Increase yields for agriculture products

In order to increase yields for the agriculture products, the farmers can be aided by an eased access to good quality seeds, fertilisers/ compost, vaccinations for livestock, equipment (such as machinery, nets, boats), irrigation and drainage. Training can also be provided to the farmers on modern agricultural technology and techniques. There are now four Government irrigation projects in Rakhine State, with 182 ha of beneficial area, as compared to a total of 170 such projects benefitting 928,599 ha in the whole of Myanmar (see table 9).

Table 9: Irrigation projects, Myanmar16

3.4.3 Cooperatives Organise and centralise cooperatives

Increasing yields can be achieved by organising and centralising cooperatives by and for farmers. At the same time, the cooperatives can also provide insurance, price support, sales and promotion of the products as a community. To date, there are a total of 43 cooperatives in the study area of Kyauk Phyu, Yanbye and Man Aung townships, presenting a large potential for consolidation and growth, see table 10.

Microcredit for farmers

A microcredit system can be introduced to encourage and support the sustainable livelihood of the farmers. It can be effectively carried out via the cooperatives.

Typical layout of cooperative village

Existing villages can be consolidated strategically to develop modern villages to increase productivity. Incentives for such a consolidation might include the provision of free land, as well as social infrastructure, such as schools, clinics, etc. A typical cooperative village layout is proposed (see figure 11), whereby cooperative facilities are consolidated. This allows for more efficient provision of facilities and infrastructure, as well as for the outreach of the cooperatives.

Figure 11: A typical cooperative village layout proposal

16 17

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http://www.fao.org/nr/water/aquastat/countries_regions/mmr/index.stm Government of Rakhine State

Kyauk Phyu Special Economic Zone Development Plan

Table 10: Cooperatives17


Figure 12: Tourism industrial value chain

3.5 Special Action Plan - Tourism Development Strategies Currently, the tourism industry in Kyauk Phyu district is still underdeveloped. However, with the availability of abundant cultural and natural resources, the district is ready to be an emerging tourist destination in this region. The tourism concept aims to develop Kyauk Phyu district, especially Man Aung Island, while retaining its iconic native wildlife and rustic charm.

Kyauk Phyu district as the regional tourist destination

3.5.1 Site Analysis i. Ecology There are three major mangrove florae in Myanmar, and the Rakhine mangroves being one of them. The mangrove forest on Yanbye Island is predominantly tropical coastal mangrove wetland, with a land area of approximately 56,000 ha. The mangrove species in this wetland are primarily the Rhizophora mucronata, R. candelria, Sonneratia spp., Kandelia rheedeii, Bruguiera spp., Xylocarpus granatum, X. moluccensis, Nipa fruticans, and Phoenix paludosa. Apart from this, the island is mainly covered by original forests and agricultural lands with villages scattered in-between.

Rakhine mangroves are one of the three major mangrove florae in Myanmar

ii. Coastline

Figure 13: Control human activities in the wetland by zones

There are abundant coastlines and beaches along the West coast of Yanbye Island and Man Aung Island. Man Aung Island has approximately 50 km long natural white sandy beaches overlooking the clear blue water of the Bay of Bengal, backed by swaying coconut palm and Casuarina trees.

50 km long white sandy beach

iii. Fauna The mangrove wetland of Yanbye Island has attracted a lot of migratory birds as well as the local species, thus creating opportunities to develop a wildlife sanctuary in the district. In addition, there are also dugongs living in the shallow shoreline waters of North, East and South of Man Aung Island. The island is also rich in some of Myanmar’s most unique marine fauna, such as sea turtles.

Rich in fauna

iv. Culture Currently, there are 63 Buddhist Pagodas on Man Aung Island. Meanwhile, the ethnic groups found on the island are relatively diverse; they include the Myo, Kame, Dinae, Thet, Kayin, Kayah and Shan people.

Pagodas and ethnic groups of Man Aung Island

3.5.2 Tourism Development Recommendations The tourism industry to be developed in Kyauk Phyu district should be low impact, support biodiversity conservation and be able to enhance and improve the natural environmental protection zones in the district. To achieve this, eco-tourism should be the core development concept. It creates opportunity for visitors to visit the scenic and beautiful landscape in the region, and takes up the role of educating people on the importance of protecting the natural environment. This is a prerequisite to create a sustainable tourism industry. There are six guiding principles in developing the eco-tourism industry in Kyauk Phyu district: • • • • • •

Eco-tourism as the core of tourism industry

Six principles of developing eco-tourism

Conserve biological diversity and cultural diversity through ecosystem protection Minimise the tourism’s own environmental impact Build environmental awareness and respect local culture Generate employment and business opportunities for Kyauk Phyu district Provide direct financial benefits for conservation Improve the tourist infrastructure that involves tourist facilities, transportation, tourist services and theme routes

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Comprehensive tourism industrial value chain

It is crucial to establish a comprehensive tourism industrial value chain for Kyauk Phyu district. A tourism industrial value chain will maximise the industry’s contribution to the district’s economy, and to ensure the local community benefits from it (figure 12).

Figure 14: Activities in mangrove areas

3.5.3 Strategic Approaches for Tourism Development Four strategic approaches

There are four strategic approaches and destinations prioritised for immediate development: i. Experience wetlands This will focus on the experience of mangrove wetland exploration and wildlife spotting in Yanbye Island. However, careful planning needs to identify core zones of protection to limit human activities within these zones, and to prevent potential negative impacts brought by these activities (see figures 13 and 14).

Figure 15: Agro-tourism

ii. Bio-learning Bio-learning is the tourist programme to be introduced in the “agri-tainment” cluster within the tourism zone. It aims at providing a unique experience for visitors to interact during local farming activities, thus increasing their awareness on food security and the importance of agriculture (see figure 15).

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Kyauk Phyu Special Economic Zone Development Plan


Figure 16: Activities in coastal area and eco-forest

iii. Diversification of activities The strategy takes into consideration market demands in interactive activities, which will eventually lead to attracting more visitors. It offers visitors a relaxing vacation experience in the district. The diverse activities include eco-hiking, bird watching and marine sports facilities, as well as intact and private beach along the coastlines of Kyauk Phyu (see figure 16).

iv. Unique destination Figure 17: Adventurous and experiential tourism

Yanbye Island and Man Aung Island will be anchored as tourism destinations with different features, which together will make Kyauk Phyu a distinctive tourist destination. The special adventure programmes include visiting mud vents, a golf course and turtle beaches that will create memorable experiences for visitors (see figure 17).

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Kyauk Phyu Special Economic Zone Development Plan


4 KYAUK PHYU SPECIAL ECONOMIC ZONE POSITIONING


4 Kyauk Phyu Special Economic Zone Positioning After introducing the concepts for the strategic development of Kyauk Phyu district, the following Chapters will focus on the development of KP SEZ. The Chapter reviews the previous master plans (4.1), provides principles for the KP SEZ development (4.2), outlines a brief definition of what a Special Economic Zone is (4.3), and reviews Myanmar’s three SEZs that are currently established (4.4). Further, the rationales for port (4.5) and industrial positioning (4.6) are given.

4.1 Review of Previous Master Plans

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Previous master plans and concepts

Between 2009 and 2013, three earlier master plans and concepts, respectively, for KP SEZ have been developed.

CITIC concept master plan

In 2009, the Chinese company CITIC prepared a concept master plan. The comprehensive concept focuses mainly on the potential of natural resources in the area, especially oil and gas, as well as on Kyauk Phyu as a gateway for Western China. A railway line connecting Kyauk Phyu with Kunming via Muse at the Burmese-Chinese border had been suggested in a separate project. Besides its gateway function for China, the master plan highlights the potential of this connection to unlock the development potential along the railway corridor. The proposed location for the SEZ includes a site that is currently under environmental conservation and further areas currently covered by mangrove forests.

Nippon-Koei review and conceptual layout

In 2012, the Japan-based company Nippon-Koei reviewed the CITIC concept master plan, concluding that the KP SEZ should focus on environmentally sensitive, non-pollutive industries. The review further highlights the ecological value of the existing mangrove forests and supports the strategic importance of the rail connection to China. The proposed conceptual plan remains vague, but outlines agricultural land in an area that is currently under environmental conservation.

JDI master plan

Based on the review of Nippon-Koei, the Japan Development Institute (JDI) prepared a master plan for a 520 ha large development of the KP SEZ. The master plan focuses on the development of light industries. The proposed location for the KP SEZ is within the proximity of three active mud vents.

Critical success factors of KP SEZ in previous master plans

All three documents agree on three critical success factors which can be seen as a common recommendation from the authors: First, the high potential for a logistic park in the Kyauk Phyu area is highlighted. Second, the different concepts emphasise that the development in Kyauk Phyu should capitalise on local resources based industries (fish, garment, steel, etc.) for export and reduce the import of raw material for local demand. Third, they emphasise the importance of the earlier planned Kunming – Kyauk Phyu railway project.

Spatial allocation requires re-assessment

With regards to spatial allocation, all three master plans offer partially sound solutions for individual industries and residential areas. However, certain specific locations of the previous proposals require a re-assessment in line with natural disaster risks, existing conservation areas and further ecologically valuable sites.

Kyauk Phyu Special Economic Zone Development Plan


4.2 Principles for the Development The development of the KP SEZ master plan follows four key principles that are considered prerequisites by the client. These are job creation for the local population, a sustainable, environmentally sensitive development with a long-term perspective, as well as bringing “good investors” aboard.

Four key principles for the development of KP SEZ

1. Job Creation for the Local Population The planning target is to achieve full and productive employment and decent work for all, including women and young people. This is especially important given the current employment rate of 46.2%18 in Rakhine State. 2. Sustainability and Long-term Perspective A sustainable development can only be achieved by taking on a long-term perspective. Therefore, our planning horizon extends far beyond the initial tender process and provides solutions until 2036 when KP SEZ has grown into full maturity. 3. Environmentally Sensitive Development The development in Kyauk Phyu aims at an environmentally sensitive development – one that “meets the needs of current generations without compromising the ability of future generations to meet their own needs19”. 4. Finding a “Good Investor” Our aim is to find “good investors” for KP SEZ. A good investor has positive impacts on a development and supports our long-term planning. Our tender process will fully focus on this target.

18 19

IHLCA Project Technical Unit (2011): Integrated Household Living Conditions Survey in Myanmar (2009-2010). MDG Data Report United Nations (1987): Our Common Future. Report of the World Commission on Environment and Development, United Nations

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4.3 What is a SEZ? SEZ = business environment intended to be more liberal from a policy perspective and more effective from an administrative perspective than national territory

Table 11: Summary of types of zones

21

SEZs are demarcated geographic areas contained within a country’s national boundaries where the rules of business are different from those that prevail in the national territory. These differential rules principally deal with investment conditions whereby the zone is given a business environment that is intended to be more liberal from a policy perspective and more effective from an administrative perspective than that of the national territory20. SEZ is one of the type of economic zones that have been in existence around the world. Table 11 gives a good picture of the complexity of this particular policy tool. As per the World Bank Publication on SEZs, the following four policy objectives are some of the main reasons of setting up SEZs20: 1. To attract Foreign Direct Investment (FDI) Virtually all zones’ programmes, from traditional Export Processing Zone (EPZ) to China’s large-scale SEZs aim, at least in part, to attract FDI. 2. To serve as “pressure valves” to alleviate large-scale unemployment The SEZ programmes of Tunisia and the Dominican Republic are frequently cited as examples of programmes that have remained enclaves and have not catalysed dramatic structural economic change, but that nevertheless have remained robust, job-creating programmes. 3. In support of a wider economic reform strategy In this view, SEZs are a simple tool permitting a country to develop and diversify exports. Zones reduce anti-export bias while keeping protective barriers intact. The SEZs of China, the Republic of Korea, Mauritius, and Taiwan, China, follow this pattern. 4. As experimental laboratories for the application of new policies and approaches China’s large-scale SEZs are classic examples. FDI, legal, land, labour, and even pricing policies were introduced and tested first within the SEZs before being extended to the rest of the economy.

Three measures for success of SEZs

Note: EPZ = Export Processing Zone; SEZ = Special Economic Zone 1. Bangladesh passed a new Economic Zones Act in 2010 that will open up the potential of zone activities beyond the traditional EPZs; Vietnam has various forms of economic zones, among which are EPZs. 2. Many EPZ programs offer licenses for both EPZ industrial parks and “single unit” EPZs. Examples include Dominican Republic, Honduras and Kenya. 3. Some multiuse SEZs, particularly those that do not include a resident population, may be smaller in scale.

The measures for success of SEZs that the policy makers need to consider can be broadly categorised into the following three:20 1. Attracting investments and creating jobs This measure would be the first-order or static measure of success, the reason why SEZs are set up in the first place. They would include indicators like employment creation, attracting FDI, generation of foreign exchange through exports and creation of economic value added. 2. Moving from static measures to dynamic gains The long term success of the SEZs is dependent on two factors. Firstly, the degree of integration of zones in the domestic economy. For example, investments by domestic firms into the zones, the seamless movement of skilled labour and entrepreneurs between the zones and the domestic economy. Secondly, disposing of a model that eliminates legal restrictions on forward and backward links. For example, promoting skills development, training, and knowledge sharing, supporting the integration of regional value chains and supporting public-private institutions.

20 21

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Farole, Thomas; Akinci eds. (2011): Summary of SEZ- Progress Emerging Challenges, and Future Directions. The World Bank Table source: Farole, Thomas; Akinci eds. (2011): Summary of SEZ- Progress Emerging Challenges, and Future Directions. The World Bank; derived from FIAS (2008) and Farole (2011)

Kyauk Phyu Special Economic Zone Development Plan


Figure 18: Economic impact of KP SEZ

3. Social and environmental sustainability The success of SEZs should go beyond economic measures and deliver non-economic benefits to the society. The economies that set up SEZs are often faced with poor conditions for the workforce and the environment. The SEZs should provide opportunities for quality employment, upward mobility of trained staff and better work environment for female workers. The long-term sustainability of the SEZ is linked to the environmental performance of the region and thus the development should have minimal impact on the local environment. The KP SEZ will provide economic benefits, which are specific to certain jurisdictions (see figure 18). Within the SEZ boundary the primary benefit will be that of job creation. This will have to be supported with the provision of social infrastructure for the workforce to ensure its continuing success. The foreign investments will start from the SEZ but will soon spur further investments at the regional level. This will translate into added tax revenue for the Rakhine State. At this level, providing for reliable road, power and water infrastructure becomes crucial. Lastly, KP SEZ’s success will unleash the potential of the hinterland by serving the necessary market linkages to the majority of towns and villages in Northern Myanmar.

Multiple economic benefits of KP SEZ across the various administrative jurisdictions

4.4 Review Myanmar’s SEZs There are three SEZs currently being developed in Myanmar, namely Dawei SEZ, Thilawa SEZ, and KP SEZ. Located in the Taninthayi Region, Dawei SEZ is a 200 km2 economic cluster that aims to jump-start the economic development of the Southern region of Myanmar, targeting the vast hinterland market of the GMS. The focused industries for Dawei SEZ are as follows: • • • • • •

Heavy industries (steel mill, fertiliser, and shipyard) Upstream and downstream industries related to petrochemical Mid industries (auto-mobile) Logistics and transportation industries New township and commercial sectors Independent Power Producer (IPP) business (coal fire, gas, hydro power)

Thilawa SEZ is a 24 km2 economic cluster catering for mainly light industries development in Yangon region. It is located approximately 20 km South of the Yangon city. The SEZ focuses on developing industrial clusters as follows: • • • • •

Thilawa Special Economic Zone

Light industries (labour intensive but non-traditional sector) Logistics and transportation sectors Financial, insurance and medical service sectors New township and commercial sectors Research & Development, incubation, and vocational training

Located at the Yanbye Island in Rakhine State, KP SEZ is the third economic cluster in Myanmar. KP SEZ is the study area of this report and the size of the cluster is yet to be decided. However, the initial proposed industries for the zone are as follows: • • • • •

Dawei Special Economic Zone

Kyauk Phyu Special Economic Zone

Infrastructure development Logistics and transportation sectors Manufacturing industries Tourism sector Agro-processing (especially fisheries) industries

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4.5 Port Positioning

Table 12: Volume of cargo and container throughput handled by Myanmar ports 2004 - 201322

4.5.1 Myanmar Cargo/ Container Market Review Myanmar’s cargo market development

Myanmar major container markets

In line with Myanmar’s steady economic growth and strong regional demand for Myanmar’s agricultural products such as rice and timber over the past ten years, total volume of general cargo throughput grew by an annual average of 11.0% - from 11.28 million tonnes in 2004 rising to 28.8 million tonnes in 2013 as illustrated in table 12. The volume of container throughput handled at Myanmar ports also increased from 157,947 TEU in 2004 to reach 575,280 TEU in 2013, a compound growth rate of 15.4% per year (see table 12). Compared to other regional countries, Myanmar is still in its early stage of containerisation and there is great potential for Myanmar ports to increase its volume of container traffic in the future because the existing types of cargo handled at Myanmar port are highly containerisable. The container trade flow indicates that South- and North-East Asian regions are the largest container markets for Myanmar over the past years. The two-way container trade between Myanmar and South-East Asian countries amounted to 243,352 TEU in 2013 accounting for 42.3% of total Myanmar container trade. Two-way container trade between Myanmar and North-East Asian countries amounted to 217,456 TEU which accounted for 37.8% of total. China and Korea contributed 77% of total regional container trade23.

Container trade with overseas

Container trade with Europe and North America is small but these two regions will form a large potential market for Myanmar export goods as Myanmar has been re-instated in the European Union’s Generalised System of Preference for duty free and quota-free market access. The container market share for various regions is shown in figure 19.

Myanmar cargo/ container market size

Total cargo market is projected to grow by 9.1% per year from 30.9 million tonnes in 2014 rising to 193.5 million tonnes in 2035. The volume of containerised cargo is projected to grow by an average of 13.9% per year from 8.7 million tonnes to reach 133.8 million tonnes during the same period. In tandem with the growth trend of containerised cargo, total Myanmar container market size in TEU is expected to grow from 646,000 TEU to reach 9.915 million TEU during the same period (see table 13).

4.5.2 Myanmar’s Cargo Hinterland Review Main cargo hinterland in Yangon, Mandalay, Sagaing and Ayeyarwady

Myanmar is traditionally divided into 14 economic states and regions, namely Yangon, Sagaing, Magwe, Mandalay, Rakhine, Bago, Ayeyarwady, Nay Pyi Taw, Shan, Chin, Kachin, Kayin, Mon and Tanintharyi. Currently, more than 85% of the gateway container traffic is generated by nine states and regions (see table 14). Yangon region is the largest cargo hinterland in Myanmar which generates 22% (or 140,300 TEU) of total country container throughput in 2014. This is followed by Mandalay, Sagaing and Ayeyarwady regions of which the combined throughput contributes 214,100 TEU, accounting for 33% of the total country’s throughput in 2014.

Container traffic in major cargo hinterlands projected to increase

The volume of container traffic to be generated by the nine major cargo hinterlands in Myanmar is projected to grow from 549,800 TEU in 2014 to 8.8 million TEU in 2035.

Figure 19: Myanmar container market share in 2013

Note: Source from various regional hub ports

22 23

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Myanmar Port Authority 2013 Yangon Port and other regional transshipment hub ports

Kyauk Phyu Special Economic Zone Development Plan


Table 13: Myanmar cargo/ container market size

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4.5.3 Cargo and Container Throughput Potential of Kyauk Phyu Container Port The key immediate container hinterlands for Kyauk Phyu port comprise Sagaing, Mandalay, Shan, Magwe, Rakhine and Nay Pyi Taw. The volume of container traffic generated by these cargo hinterlands will grow from 285,550 TEU in 2014 to 4.6 million TEU in 2035. Likewise, the volume of container traffic to be generated by Yangon cargo hinterlands will grow from 264,250 TEU to 4.2 million TEU during the same period (see figure 20). The existing Kyauk Phyu port/ cargo handling terminal currently handles 425,928 tonnes of cargo (equivalent of 31,550 TEUs) for 2012-2013. Figure 20: Myanmar major cargo hinterlands

Volume of Kyauk Phyu cargo hinterland to grow

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Table 14: Projected Cargo Volume from Myanmar Hinterland 2014 - 2035

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*Others comprises Chin, Kachin, Kayin, Mon and Tanintharyi.

24

GMAPS The projected throughputs are the hinterland sizes i.e. cargo market sizes for the period 2014 – 2035. This is derived from the above mentioned “Table 14: Projected volume of container traffic generated by Myanmar hinterlands 2014-2035” 25

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Kyauk Phyu port to capture high volume of container throughput

Upon completion of the new cargo handling terminals in Kyauk Phyu, more cargo traffic from Yangon hinterlands will be diverted to Kyauk Phyu Port because Yangon port container handling capacity will reach its saturation level from 2020 onwards. Hence, Kyauk Phyu port stands good chance to capture high volume of cargo and container throughput after it has started cargo and container handling operations. The volume of throughput to be captured by the port will increase from 2.4 million tonnes in 2020 to reach 34.6 million tonnes in 2035 for non-containerised cargo (see table 15); and increasing from 344,000 TEU in 2020 to reach 8.8 million TEU in 2035 for containers (see table 16).

Table 15: Projected non-containerised cargo throughput captured by Kyauk Phyu Terminal

Kyauk Phyu SEZ port also has the potential to establish itself as a mini-hub port for cargoes coming from Bangladesh, India and China.

*Proposed year of operations for KP SEZ Port

Table 16: Projected container throughput captured by Kyauk Phyu Terminal

*Proposed year of operations for KP SEZ Port

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GMAPS

Kyauk Phyu Special Economic Zone Development Plan

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Figure 21: Industrial positioning previous master plans

4.6 Industrial Positioning 4.6.1 Review Industrial Positioning Previous Master Plans

Figure 22: SWOT analysis on the potential of KP SEZ industrial development

The three previous master plans analysed in Chapter 4.1 show notably different industrial positioning strategies (see figure 21). The CITIC Plan recommends a heavy industries approach which is able to bring significant economic benefits to Kyauk Phyu area. However, the environmental impact and the level of involvement of the local community in the economic upswing are of major concerns as most of the industries recommended have a comparatively high level of environmental impact and also most of them require skilled work force, which does not suit the local condition. In contrast, the Nippon-Koei and the JDI plans are proposing a light industries approach which is more environmental sne, and also able to generate jobs for the locals. Yet, this approach raises the concern of how economically sustainable these two schemes are as they do not fully make use of the strengths and opportunities of KP SEZ. The area disposes of the only natural deep sea port that has the potential to serve the large hinterland of Northern Myanmar, India and Western China.

Different approaches of CITIC, Nippon-Koei and JDI master plans

A comprehensive approach is needed to develop KP SEZ, which is able to bring economic benefit to the zone and in which the locals are able to participate, while minimising possible environmental impacts in the area.

New approach for industrial positioning required

4.6.2 Industrial Development Potential of KP SEZ Formulating an industrial positioning concept involves identifying industrial clusters with growth potential to move up the value chain, or identifying new industrial clusters and subclusters that make use of the opportunities of a particular development zone. For KP SEZ of which the economy is traditionally relying much on agricultural activities, introducing new industrial clusters to the zone will be the key focus to jump-start the industrialisation of the zone. A SWOT analysis is carried out to identify the industrial development potential, which has taken into consideration the geographical advantages, the availability of resources, socio-economic conditions, possible threats and other factors that may affect the type of industries, and thus the success of the zone (see figure 22).

Industrial clusters for KP SEZ to be identified

The analysis suggests that industrial clusters to be introduced to KP SEZ should utilise its geographical advantages as a gateway serving the huge hinterland in Northern Myanmar, India and China. The industries should also be utilising the richness of resources of the area (labour, land or natural resources). While looking at the opportunities that KP SEZ could provide, other threats of limited existing infrastructures, low skill level of labour force, and negative perception of potential investors on the mud vent on site should also be mitigated in order to make KP SEZ successful.

Strengths and opportunities Kyauk Phyu for industrial development

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4.6.3 The Economic Engine for KP SEZ Major economic objectives

Economic engine to achieve objectives

Figure 23: Industrial activities defining the economic engine of KP SEZ

There are three major economic objectives of industrial development in KP SEZ: 1. To attract FDI 2. To encourage export while reducing import dependency of the country 3. To generate employment for the locals In order to achieve the objectives and to maximise the development potential of KP SEZ, an economic engine based on industrial activities is formed, which includes: 1. The Flow-through Industries Industries to attract FDI and to earn foreign exchange. This enables the zone/ country to trade in the international market in the future. Being dependent on higher skilled labour (engineers), these industries are not suited to generate much employment opportunities for locals (generally of lower skill level). However, it should be highlighted that these industries will be able to bring in significant foreign exchange. 2. The Industries to Cater for Domestic Market These industries aim to reduce import expenses of the zone/ country, by importing only the raw materials and processing locally for local consumption. The urbanisation of Myanmar could be an opportunity for KP SEZ to nurture these industrial activities to help reduce import dependency of the country. 3. The Industries for Employment Generation These industries are generally light industries that are export oriented, and able to generate jobs for the locals. However, considering that KP SEZ is at the advantageous location to serve the Central and Northern part of Myanmar, industries that are supporting the domestic market should also be introduced in the zone. Figure 23 shows the industrial activities defining the economic engine of KP SEZ.

4.6.4 Industrial Clusters Recommendation Requirements for economic clusters

The industrial clusters to be introduced in KP SEZ should be sustainable and taking into account a long-term perspective, which utilises but does not abuse the zone’s richness in natural resources and geographical advantages, while tapping into the opportunities of having a deep sea port and serving the huge hinterland market. Also, the clusters should start with labour intensive industries to provide jobs and fulfill the needs of a large untapped labour market, and should target at industries that require lower level of skills in the early stages. Of all, the industrial clusters should be able to jump-start the economic engine of KP SEZ and achieve the economic objectives of the zone. Figure 24 shows the KP SEZ industrial development framework.

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Kyauk Phyu Special Economic Zone Development Plan

Figure 24: KP SEZ industrial development framework


Figure 25: KP SEZ phasing strategy

KP SEZ clusters and sub-clusters

Four major industrial clusters can be further divided into twelve sub-clusters: 1.

Logistics: Port-based logistics and land-based logistics

2.

Manufacturing: Textile & clothing industries, construction materials industries, and other general industries

3.

Processing: Export processing industries, food processing industries

4.

Supply Base: Type 2 industries, marine bunker, LNG terminal, Marine Supply Base, etc.

4.6.5 Industrial Phasing Strategies In general, the industrial development of KP SEZ will be divided into two phases: the Limited Connectivity Phase, where the road connecting the zone to the NH2 highway is not constructed; and the Enhanced Connectivity Phase, where the road connecting the zone to the NH2 highway is ready (see figure 25).

KP SEZ industrial phases

1. Limited Connectivity Phase Due to the limitation of access of the zone to the hinterland market, industries to be developed in this phase will be smaller in scale and focusing on providing jobs to the locals. Proposed industries for this stage include textile & clothing industries, construction materials industries and food processing industries that focus on fishery. A smaller port is expected to be in operation at this stage and the port-based logistics will be mainly for warehousing purposes. 2. Enhanced Connectivity Phase Enhancement of KP SEZ’s connectivity to the hinterland market will unlock the full potential of industrial development of the zone. The deep sea port is expected to be in full operation. An export processing zone is to be developed to house export processing industries that generate jobs to the locals. Construction material industries and textile & clothing industries are expected to move up the value chain with the support of port infrastructure. Food processing industries are moving from focusing on fishery products, to processing that includes the agricultural products from Northern Myanmar. The type 2 industry cluster will be developed in different sub-phases, with a supply base as the core to drive the other downstream industries e.g. LNG terminal, etc. With good connectivity and accessibility to and from the port, the logistics industries are expected to grow into one of the pillar industries in KP SEZ, supported by both port-based logistics and land-based logistics.

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Kyauk Phyu Special Economic Zone Development Plan


5 KYAUK PHYU SPECIAL ECONOMIC ZONE MASTER PLAN


5 Kyauk Phyu Special Economic Zone Master Plan Notice on the master planning work

The following Chapter provides a detailed spatial site analysis (5.1). It further explains the concept planning of KP SEZ including the port, industrial and residential areas, as well as sites protected for the water catchment and for environmental reasons (5.2). The Chapter further outlines the phasing concept of KP SEZ (5.3), the infrastructure requirements including electricity, water supply, sewage system, telecommunications, and the collection of solid waste (5.4), as well as a preliminary overview of the Environmental Impact Assessment and a high-level Environmental Monitoring & Management Plan (5.5).

5.1 Spatial Site Analysis Methodology of spatial site analysis

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This chapter discusses the existing natural and land-use conditions, current infrastructure situation of the focused area in reference to the development of KP SEZ. Kyauk Phyu has numerous advantages and constraints regarding its geophysical conditions, conservation reserve, infrastructure and socio-economic conditions to be considered when developing the SEZ. The different conditions have been analysed and combined in a layering technique. This leads to the suitability analysis at the end of this chapter which combines the different studied factors into one single composition showing different levels of suitability, especially for industrial development (see figure 26).

Kyauk Phyu Special Economic Zone Development Plan


Figure 26: Analysis factors for industry suitability

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5.1.1 Natural Disaster Risk Mud vents

Figure 27: Location of mud vents

There are three groups of live mud vents discovered East of Kyauk Phyu town (see figure 27). Eruptions sometimes occur with gas, fluid, mud, smoke and even flames27 like the one on January 5th, 2008 which was reported to have spewed lava and magma 300 feet in the air28. To avoid any potential damage caused by mud-vent eruptions in the future, industry developments must be located in the low risk zone, at least 3 km away from craters. Medium-risk zone29: In this zone, the risk of injury or death from a volcanic eruption is comparable to other activities where an increased risk is commonly accepted (driving a car, skiing etc.). Typically, it consists of the area around an active vent where hazards are present only occasionally. High-risk zone29: This is usually the area frequently affected by the eruptive phenomena that volcano exhibits. With small to medium eruptions, this zone extends often up to 1 km from the vents.

Cyclone risk, landslide, storm surge, earthquake and tsunami hazard assessment

United Nations Development Programme (UNDP) conducted a comprehensive risk and hazard assessment of Rakhine State, including potential locations for hazards30. With regards to cyclones, Rakhine State, and specifically Yanbye Island, are hit on a recurring basis (see figure 28). In 2010, Cyclone Giri hit the Kyauk Phyu area affecting more than 50,000 households. In the past, cyclones were often originating from the West or SouthWest. In Yanbye Island, the cyclone risk is the highest on the Westernmost tip of the island. This should be thus avoided for development. Likewise, the Western tip of Yanbye Island may be affected by flooding due to storm surge (see figure 29). In addition, the South-Western shore and lowlands along the coastline might be affected by storms. The projected inundation depth is between 3-5 m. Developments are thus only suggested when provided with natural protection from storms (e.g. mountain ranges) or at an elevation of at least 7 m above sea level. This altitude also accounts for 1 m of sea level rise due to climate change.

27

Figure 28 Cyclone risk assessment

Myanmar Earthquake Committee (2006). Report on Tectonics and Seismotectonics Field Survey (Pyay-Taunggok-Kyaukphyu Trip) Myanmar News 29 www.volcanodiscovery.com/volcanic_risk_zones.html and www.volcanolive.com/safety 30 UNDP Myanmar, ADPC, GRIP, UNDP (2011): Multi-hazard Risk Assessment in the Rakhine State of Myanmar 31 100-year return period 28

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Kyauk Phyu Special Economic Zone Development Plan

31


Figure 29: Storm surge risk assessment

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Flooding in the same locations might also occur due to tsunamis. Also here, the expected inundation depth is between 3-5 m in a medium risk scenario (see figure 30). As a result of earthquakes or during the rainy season, landslides might occur in locations of steep slopes. The foot of such slopes, when not covered by sufficient vegetation, should thus be avoided for development. Myanmar is at the junction of four tectonic plates with active boundaries: the Eurasia plate, the India plate, the Sunda plate, as well as the Burma plate. Earthquake hazards on Yanbye Island may reach 5.0-5.5 on Modified Mercalli Intensity (MMI) scale with a 10% exceedance probability in 50 years. With a 2% exceedance probability in 50 years, even earthquakes exceeding 6 on MMI scale have to be considered (see figure 31). Consequently, preliminary low-rise construction and reinforced structures are recommended.

Figure 30: Tsunami risk assessment

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Figure 31: Earthquake risk assessment

34

32

corresponding to a tropical cyclone event of maximum wind speed 200 km/h spatial distribution of onshore inundation at high tide 34 based on MMI scale, 2% exceedance probability in 50 years (2,475-year return period) 33

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5.1.2 Current Land Use Scattered settlements and other developments

Manifold religious sites

Figure 32: Existing developments

The largest settlements in the focused area concentrate in the Northern-most tip of Yanbye Island: Kyauk Phyu town and the villages West of the town (see figure 32-34). These significant settlements, containing major cultural, religious and administration functions, should have sufficient reserve lands for future expansion. Besides these large settlements, there are many villages distributed throughout the focused area. These villages are usually small in size, having about 40-100 houses each. Due to the large land area needed to be acquired for SEZ development, some of these villages are suggested to be relocated to other sites where rural characteristics can be maintained and farming can be continuously practiced in a later phase of the project. Besides the town, there is an Onshore Gas Terminal (OGT) and a port on Made Island already developed.

Figure 33: Existing Kyauk Phyu town

Figure 34: Typical village

Religion is an important part of life in Kyauk Phyu district. Most villages have one religious site each. There are thus numerous religious establishments and they are scattered in the focused area (see figure 35-37). Among these establishments, many may need to be protected due to their religious, cultural, historic and architectural significance. It is suggested that the local government should give instructions on which religious establishments are required to be preserved.

Figure 35: Religious sites

Figure 36: Pagoda

Figure 37: Pagoda

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Kyauk Phyu Special Economic Zone Development Plan


Figure 38: Environmental Conservation Areas

Figure 39: Aerial view of mangrove forests

Figure 40: Typical mangrove forests

Kyauk Phyu district has one of largest contiguous wetlands in Myanmar. In Kyauk Phyu township on Yanbye Island, wetlands concentrate along three main rivers on the East side: Nga La Pwe, Thaing Chaung, and Min Yat Chaung (see figure 38-40). Except two wetlands which are already protected by the Government and those located South of Nga La Pwe and Min Yat Chaung River, most wetland areas are already partially reclaimed for farming and settlement. Since wetlands make up a large portion of flat terrain along the focused area’s East coast which is a desirable location for deep sea ports, some wetland areas will have to be utilised for the development of sea port terminals and port-based logistic parks. Industry zones and other developments, however, should avoid wetland areas. At the same time, the Government should consider providing protection for large and intact wetlands in the Northeast corner of Yanbye Island where land is not required for the SEZ development. There are four Environmental Conservation Areas identified by the Government in the focused area (see figure 41-43). Among them, two are mountain forests and the other two are wetlands. These conservation areas, while unsuitable for urban and industrial developments, will provide environmental benefits (e.g. reducing storm-water runoff, enhancing water quality) and enhance quality of living for residents and workers in KP SEZ. Urban and industry zones must not be developed within protected conservation areas identified by the Myanmar Government.

Figure 41: Mangrove forests

One of the largest wetlands in Myanmar

Existing conservation areas

Figure 42: Forest

Figure 43: Mangrove

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5.1.3 Topography Complex topography

The focused area has a complex and diverse terrain. It varies from mountain ranges and hills interlaced by small farming valleys along the West coast and on Made Island to wetlands concentrating along rivers and the East coast (see figure 44). Industry developments, which depend on trucks to move heavy goods and materials, as well as precise machinery for manufacturing, will require flat terrain and geophysically stable land. If the development sites are lacking these conditions, more funding will be required for land grading and foundation construction.

Slope analysis

Steep slope, above 10%, is considered unsuitable for industry development due to high construction cost, particularly in the early stages of development. In addition, very steep areas, above 30%, are usually rich in biodiversity and vulnerable to erosion. Therefore, they should be protected against any development. In conclusion, only flat areas will be considered for development in the focused area (see figure 45).

Figure 44: Topography map

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Kyauk Phyu Special Economic Zone Development Plan

Figure 45: Slope map

Figure 46: Infrastructure


Figure 47: Port locations CITIC master plan

5.1.4 Existing Infrastructure Available road infrastructure on Yanbye Island consists of asphalt roads, rock roads and dirt roads with most of the roads being single-lane roads. In order to cater for the KP SEZ, an upgrade of the main roads to two lanes is required. Further, new street sections are required, densifying the road network between the individual components of KP SEZ.

Road infrastructure

In Kyauk Phyu town, there is an airport available with daily service to Yangon and other major cities in Myanmar. It provides a sound basis to serve the future KP SEZ (see figure 46, facing page).

Airport

Electricity

A land area near Lay Da Byin village, West of Kyauk Phyu town, is reserved for the Kyauk Phyu substation and a 100 MW gas power plant. In addition, a 230 kV transmission line, which links Kyauk Phyu town with the national grid, is under construction and aims to be completed by the end of 2014. With these two sources, electricity supply for KP SEZ in early stages of development is secured.

5.1.5 Potential for Port Locations

Port site selection

The selection of suitable locations for terminals in the area is based on the review of the following documents: • Past master plans by CITIC, Nippon-Koei and JDI (see figure 47-49) • Nine potential port locations proposed by Myanmar Port Authority This review was in addition to two site visits in March and May 2014 to visually assess the environment and conditions in the area and at the potential sites. Presentations, meetings and discussions with various interest groups and Government agencies were also held to obtain views, feedback, data and information in the selection and development of the port master plan. Figure 48: Port locations Nippon Koei master plan

Figure 49: Port location JDI master plan

35

35

Kyauk Phyu Economic and Technological Development Zone Conceptual Plan by CITIC, Concept Paper for Kyauk Phyu Special Economic Zone by Nippon Koei, Master Plan for the Development of Kyauk Phyu Light Industry Special Economic Zone No.1 by Japan Development Institute (JDI)

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Further handling terminal sites

Besides the potential sites for multi-purpose/ container handling terminals, sites were also identified for the following: • • •

Criteria for site selection

36

Fishery Industrial Park (FIP) Marine Supply Base Marine Terminals and Facilities

The following criteria were considered in the site selection: • • • • • • • •

Multi-purpose/ container terminals

Figure 51: Terminal sites identified

Environmental aspects: Impact on mangroves, protection from monsoon weather Social impact: Resettlement, livelihood of villages, social interest for SEZ development Dredging and reclamation requirements Navigational feasibility: Suitability of approach channel, water depth of channel and basin Connectivity and proximity to industrial parks in the SEZ Availability of utilities Constructability Site constraints

Out of nine possible sites (T1-T9) proposed by the Myanmar Port Authority (see figure 50), T2 (Site 2) and T4-T6 (Site 1) are considered most suitable for the multi-purpose/ container facility (see figure 51). T1 on Yanbye Island is omitted as a potential site due to its proximity to the known mud vents37 while sites T3, T7, T8 and T9 do not meet the selection criteria. Notwithstanding, these sites should be re-visited for possible future development when reviewing the master plan. Figure 50: Nine potential port sites listed by Myanmar Port Authority36

36 37

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Myanmar Port Authority The assessment has used a 3 km radius around known live mud vents as a risk & safety parameter whereby no development will take place within the demarcated area.

Kyauk Phyu Special Economic Zone Development Plan


Figure 52: Fishery Industrial Park site selection38

The requirements for the industry include a dedicated fishery port with handling and processing facilities for the fishery products. Apart from the selection criteria, other determinants include the present operations of the fishery industry (i.e. landing area for the catches; transport means; support services for the business) as well as the immediate needs to support and grow the industry. The selected site for FIP development (see figure 52) is suitable for a quick jump-start as it has: • • • • • •

Figure 53: Marine Supply Base site selection

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• • • •

Fishery Industrial Park

Existing landing points for the fishing boats Sheltered waters Close proximity to the airport Road connectivity to the main town. Subsequent improvement of the road access will further facilitate the movement of goods from the developed fishery industry Labour for the industry which can be sourced from the immediate vicinity Land available at the immediate vicinity for the development of storage and processing factories Close proximity to the fishing community and residence Available fuel supply Utilities that can be drawn for the fishery industry No/ minimal impact on commercial shipping traffic

The site selected also allows for the future development of a dedicated fishery port and land area for new processing facilities when the need arises. The attributes of such a supply base are similar to that of a cargo handling terminal. The base functions as an one-stop centre providing a comprehensive range of support services for the oil and gas exploration, development and production activities. The facilities include berths, open and covered warehouses, handling equipment, repair and fabrication, marine engineering, inspection services, customs clearance and waste management.

Marine Supply Base

Given that out of the 20 oil block concessions recently awarded in April 2014, eleven are within the vicinity of Kyauk Phyu, this dictates the viability of such a base. The need for a fullscale supply base will, however, depend on the stage and level of offshore drilling activities. In addition, an efficient transport network (air, sea and land) must also be available.

Figure 54: Site selection for other marine terminals and facilities38

Apart from being close to Kyauk Phyu town (from which utilities may be drawn) and to the airport, the selected greenfield site has land and waterfront for development of berth, storage and ancillary facilities. The site is sheltered and has minimal or no impact on other commercial shipping movements (see figure 53). The marine terminals and facilities include berths, storage (tanks) and possibly processing facilities for the Oil and Gas Industry. Loading/ unloading arms and pipelines will be used for the discharge and load of liquid or gas cargo to/ from the vessels and storage facilities onshore. Other services include the provision of bunker fuel to vessels calling the port. The selected site is located across the bay from Kyauk Phyu town in an area which is sparsely populated. There is a large flat land upon which tank farms and processing plants may be developed. The suitability of the site includes the deep waters off the Paungnet Kyi Kyun Island (berth facilities) and predominant North-Westerly wind direction which will carry air-borne discharge (if any) from the site away from populated areas (see figure 54).

38

Marine terminals and facilities

GMAPS

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5.1.6 Suitability Analysis for Industrial Development Criteria for suitability analysis

In order to identify suitable locations for industry establishments, ten analysis factors (see figure 55) grouped in five categories are considered: • • • • •

Protecting environment by avoiding development in Environmental Conservation Areas, catchment areas and eco-tourism areas Minimising construction cost by concentrating development in flat terrain, outside wetlands and low land Maximising access to infrastructure and labour by locating development in the Yanbye part of Kyauk Phyu township and in proximity to sea ports Reducing the natural disaster risks by maintaining a safety buffer from mud vents and locating developments away from hazard-prone areas Minimising impact on and reserving land for Kyauk Phyu town to grow by locating large and environmentally sensitive developments away from the town Figure 55: Structure of the suitability analysis

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Kyauk Phyu Special Economic Zone Development Plan


Figure 56: Results of industrial land suitability analysis

In each layer, the focused area is divided into suitable, less suitable and unsuitable areas. The less suitable category is applied to areas in which development is discouraged while the unsuitable category is applied to areas in which development is not allowed. Unsuitable, less suitable and suitable areas are assigned value zero, one, and two or three respectively. The final suitability composition is calculated by multiplying all layers. The final suitability composition is produced by multiplying all layers. There are eight areas identified (see figure 56) as suitable locations for industry developments:

Kyauk Phyu

Eight areas defined suitable for industrial development

Area #1: Located in Nga La Pwe village, South of Kyauk Phyu town, where the fishing jetty is operating Area #2: Located in the small delta of Thit Pein River where a sea port terminal is proposed Made Island Reserve for township development

Area #3: Located in the Northern part of Made Island where a sea port terminal is proposed Area #4: Located along the existing main road connecting Kyauk Phyu with the national highway system Area #5: Located along the East side of the catchment areas Area #6: Located in a valley East of the mountain range along the West coast of the focused area Area #7: Located in Paung Net Kyi Island and surrounding area Area #8: Located further East away from other locations, at the East corner of the focused area

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Figure 57: KP SEZ Master Plan

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Kyauk Phyu Special Economic Zone Development Plan


5.2 Concept Planning The master plan presented on the following pages shows conceptual land allocation solutions for KP SEZ for the development in the next 20 years. As a conceptual framework, the long-term plan should not be taken literally as a zoning map in regard to specific development allowances for individual plots or sites. The long-term master plan requires further study at a later stage of the development, refinement and articulation at a much finer scale before it can be used to take on a regulatory role. It further has to pass through the approval process of local authorities in order to become a regulatory framework. The plan also outlines in Phase 1 sites that have been studied in-depth and that are recommended for development with the specified functions in Phase 1. The detail planning within the sites will be carried out by selected investors in cooperation with the management authority of KP SEZ. 1. Economic Development and Job Creation for Locals Land allocation for industrial parks should aim at supporting local economy by developing local-related industries such as fishery and food processing near existing supply sources. Labour-intensive industries, particularly ones with high employment opportunities for women and disadvantaged groups, should be concentrated in proximity to existing settlements.

Master plan

Master plan’s key directions

2. Sustainability and Long-term Perspective KP SEZ is aimed to be sustainable socially, environmentally and economically. These objectives can be translated into the master plan as the following planning objectives: • • • • •

Avoid any impact on existing settlements and religious establishments in the first phase of development Prioritise in the early stage of SEZ development and allocate industries and businesses that provide immediate employment opportunities for local people and support local businesses in proximity to Kyauk Phyu town Reserve land for ecological and environmental functions Contain urban and industry development within a boundary well defined by green belts and corridors Select easy-to-implement sites for Phase 1 launch and reserve sufficient land for longterm expansion

3. Environmentally Sensitive Development The master plan should aim to protect and enhance environmentally sensitive areas through control and mitigate soil contamination, air and water pollution. 4. Feasibility for Phase 1 Implementation Phase 1 implementation is critical to the success of the SEZ development. Therefore, land allocation for Phase 1 must focus on infrastructure-ready, cost-effective, minimum-landpreparation and non-community-objection sites.

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Environmental framework

Industrial areas

Kyauk Phyu has a distinctive and rich ecological context. The master plan is mandated to preserve and enhance the ecologically significant areas in Kyauk Phyu through the establishment of an environmental framework that consist of tropical forest, wetland and marine environments, as well as disaster-vulnerable areas (see figure 57). These environmental components are connected to allow animal movements and enhance biodiversity. The system also functions as a green belt to contain urban and industry development and protect rural areas South of the SEZ boundary from urban sprawl (see figure 58). The development framework, which is established based on the availability of key infrastructure, such as sea ports and road network, set the growth direction for KP SEZ in the next 20 years. First, major sea ports are determined to be built on Made Island and at the mouth of Thit Pein River, adjacent to the deep sea bed but away from existing large settlements. The LNG Terminal and the Marine Bunker Terminal (Industrial Type 2 land-use), however, are located on Paung Net Kyi Island, far away from the rest of KP SEZ development to ensure safety and security while minimising potential environmental impacts. Other port and port-based facilities like the fishery jetty and the Marine Supply Base (Logistics/ Warehousing land-use) are located near Kyauk Phyu town to gain access to it and to support local fishery and supply businesses. Following the establishment of port locations, a road network with North-South and EastWest arterials is laid out to connect major port terminals and the entire SEZ with the national highway system. Manufacturing clusters (i.e. Textile Industrial Park, Construction Industrial Park, and General Manufacturing Industrial Park, all designated as Industrial Type 1 land-use) are strategically located along the new North-South arterial and the East-West arterial, which form the backbone of the land transportation system in Kyauk Phyu, to have the best access to sea ports and the hinterland market. Logistics Parks and an EPZ (Industrial Type 1 land-use) are developed next to and in proximity to the sea ports to maximise logistics efficiency.

Residential areas

Residential developments are intensified along the valley near Kyauk Phyu’s West coast and between two mountain ranges. The residential cluster is divided into manageable and walkable communities, separated by greenways which connect the hilly rural area to the East with the protected mountain forest to the West. As the major wind directions in Kyauk Phyu area are North and North-West, this up-wind location allows future residential developments to be unaffected by any potential air pollution caused by industry development to the East. In addition, this location is on higher ground and in a separate watershed from that of the industry sites. Therefore, it is also immune from any potential water pollution caused by industry developments. On the other hand, the location of residential developments allows dwellers to commute easily to nearby industry clusters. The town centre (designated as Commercial land-use), a cluster of commercial/ office developments, is strategically located in the geographical centre of KP SEZ at the junction between the existing and new East-West arterial. This creates a scenario where this concentrated business and commercial area can serve both residential neighbourhoods and industry clusters and also functions as a transition zone between them.

Reserve land and rural areas

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Lastly, reserve lands which are suitable for development but are not in demand in the early stages of KP SEZ development, are distributed throughout the SEZ to allow future expansion of ports, industry parks, residential areas, as well as the existing Kyauk Phyu town. Other areas, which are either unsuitable for urban and industrial establishments or outside the green belt, are remaining in rural settings and restricted from any development.

Kyauk Phyu Special Economic Zone Development Plan

Figure 58: Zoning districts and land uses

• •

• •

• •

Environmental Conservation Area: Environmental conservation areas consist of ecologically-rich tropical forests and wetlands identified by the Government for conservation purpose. Open Space/ Recreation: Open space consists of unsuitable areas for urban and industrial development due to their scenic values, topographic and/ or geophysical conditions and environmental functions such as wetlands and catchment areas. This also includes areas for the common enjoyment of the residents. Open space area does not include building footprints. Rural Area: This district includes both village settlements and agricultural production areas. Urban and industrial developments are not allowed in this district to maintain its rural characteristics and to protect its environment. Residential: These are areas used or intended to be used predominantly for residential development. Examples of residential developments include landed properties, flats, condominiums, retirement housing and serviced apartments. In addition, other civic uses are also allowed in this district, including but not limited to parks, civic and educational institutions, hospitals, sport facilities, fire and police stations. Besides residential uses as per above definition, Residential may include commercial areas. Commercial: This district is intended to accommodate primarily commercial uses including office, retails, convention centres, theatres and restaurants. Other residential and civic uses are also allowed in this district, including park, civic institutions, fire and police stations. Industrial Type 1: These are areas used or intended to be used mainly for clean industry and light industry. This includes manufacturing, processing and service which incur no major impact on adjacent properties regarding noise, vibration, odour, soil and water quality. Supporting facilities located in this land use might include storage warehouses, storage yards, repair workshops, ancillary offices, showrooms, cafeterias, etc. Also dormitories for unskilled workers might be placed on industrial land. Industrial Type 2: This district is intended to provide for industrial developments including manufacturing, marine bunker, LNG terminal, major utilities and other related uses, particularly those that require mitigations and buffer to avoid noise, vibration, odour and contamination impacts to adjacent land areas. Supporting facilities located in this land use might include storage warehouses, storage yards, repair workshops, ancillary offices, showrooms, cafeterias, etc. Also dormitories for unskilled workers might be placed on industrial land. Logistics/ Warehousing: This district is an attributed area that facilitates domestic and foreign trade by providing added-value services including warehousing, cold storage, multimodal transport facilities and inland container depot. Logistics districts include port-based logistics, which facilitate trading activities going through the portand land-based logistics which serve the logistics needs of industrial parks. Airport/ Port: Airports and port terminals form major infrastructures. This land use might include small commercial and service areas, including repair, warehousing, container depots and other closely related services. Utilities: Any building or structure to house the following utilities, such as substations, pumping stations, water tanks, overhead pylons, telecommunication infrastructure, sewage treatment plant, water treatment plant, etc. is included in this land use category. Existing Town: This area includes the existing Kyauk Phyu town and adjacent area reserved for future expansion. Developments and land-uses allowable in this district are subject to either local planning authority’s or KP SEZ management authority’s approval. Reserved Land: This area includes land areas that are suitable for urban and industrial development but lacking in demand in the early stages of SEZ developments. This district should be maintained in its current condition. All new developments in the district are subject to the authorities’ approval.


Figure 59: Proposed port master plan for KP SEZ

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5.2.1 Port With limited site data and information, the port master plan has been prepared using assumptions based on best port professional practices and experience. It is the Consultant’s view that detailed site investigations and studies are required to determine the feasibility of the sites for the development of the terminals. Some of the investigations and studies required includes, but are not limited to the following: • • • • • • •

Notice on the master planning work

Environmental and social impact assessments Onshore & offshore soil investigation Bathymetric studies Currents & wave studies Navigation simulations Geophysical surveys (to assess stratification of soil layers below seabed and optimise number of boreholes required during geotechnical investigations) Geotechnical investigations (to determine types of soils especially rocks which would have much impact dredging costs and duration)

The developer of the terminals will have to ascertain any other necessary technical investigations and studies required for the final planning and development.

Kyauk Phyu Town

The port master plan consists of various elements: Multi-purpose/ container terminals, a Fishery Industrial Park (FIP) including the required jetty, a Marine Supply Base (MSB) and further marine terminals and facilities (see figure 59).

Overview of proposed port master plan

Multi-purpose/ Container Terminals

Yanbye Island

The multi-purpose/ container terminals are to be developed as part of the KP SEZ. Two sites have been selected for development in this phase to meet market projections and demand for handling facilities (see table17, next page).

Multi-purpose/ container terminals at two sites

Site 1 (terminal located on Made Island) has been recommended as the first terminal site to be developed. The reasons for the selection of Site 1 include:

Site description multi-purpose/ container terminals

• • •

Made Island

Presence of active mud vents on Yanbye Island Lower estimated capital expenditure on land transformation as compared to Site 2 Site 1 provides a larger area as compared to Site 2, enabling it to accommodate both conventional and container handling facilities with ease for the initial years of operations

A major consideration to take into account for port development at Site 1 is the need to provide a bridge linkage between Made Island and Yanbye Island, as well as necessary road connectivity between the terminals, the SEZ (on Yanbye Island) and its immediate hinterland. Upon further studies conducted to ascertain the safety and to improve investor perception of the mud vents, Site 2 can be made available for future expansion of the port once Site 1 reaches maximum capacity.

39

GMAPS

69


Market projections and phasing multi-purpose/ container terminals

Cargoes and handling facilities

It is recommended to develop the multi-purpose/ container terminals in Phase 1. Given the market projections and the design capacities of the terminals, Site 1 is expected to reach capacity by year 2027-2028. This will trigger the development for Site 2 to increase handling capacity. With the completion of Site 2, the cargo handling terminals are expected to reach maximum utilisation by year 2031 (see figure 60).

Table 17: Descriptions of Site 1 and Site 2 terminals

The terminals are expected to handle a mixture of general cargo and containers during their initial years of operation, with cargoes expected to come from their immediate hinterland comprising of the Northern parts of Myanmar (Sagaing, Mandalay, Shan, Magwe, Rakhine and Nay Pyi Taw) and the Industrial Park within the KP SEZ. During initial years of commission, the majority of the cargo handled at KP SEZ terminal is expected to be general cargoes. However, as the terminals mature in their long term development, with increasing container vessel calls and the conversion of port operations from conventional handling to containerisation, the majority of the cargoes handled will be containerised. Taking into consideration the market positioning for the port, the terminals will transition from multi-purpose terminals to a dedicated container handling facility.

Table 18: Design vessel specifications for port planning

In addition to handling general cargoes and containers, the terminals (during Phase 1 development) will also carry out marine supply base functions (offshore logistics support services) to facilitate the initial phase of offshore development. Design vessel specification

With regards to design vessel specifications, the following sizes of vessels are expected to berth at the terminals (see table 18). Based on market study projections, the terminals will primarily cater to Design Vessel 1 specifications, whilst Design Vessel 2 specifications are to be taken into consideration when planning the terminal infrastructure and facilities for future expansion to cater to possible higher than expected traffic and larger vessel sizes.

Topographical and geotechnical considerations

Currently, no topographical and geotechnical investigation has been carried out for the proposed terminal locations. According to local geologists, the site has deposits of sandy mudstone, mudstone, siltstone and sandstone. The general topography of proposed terminal locations is flat with small scale scattered hills. Furthermore, the sites are located on irregular shore lines which extend to the sea bed. Brief topographic and bathymetric features are deduced from the following: • •

40

70

Topography reference: Rakhine State map Sheet No. 1993 11 published by the Survey Department, Ministry of Agriculture & Irrigation, Union of Myanmar Bathymetry reference: Chart 24b Gadechy Harbour, published by the Central Naval Hydrographic Depot, Myanmar Navy

GMAPS

Kyauk Phyu Special Economic Zone Development Plan

Figure 60: Projected maximum capacity

40


Figure 61: MPA proposed approach channel to Made Island (plan to be approved 42 by IHO)

The “General Layout of Aids to Navigation” plan41 has been submitted by the Myanmar Port Authority (MPA) to the International Hydrographic Organisation (IHO) for approval. The following is noted in the plan: • • • •

MPA approach channel for KP SEZ port

A 320 m wide, 38 km long channel that runs along the Northern coast of Yanbye Island and Made Island Shallow spots in the channel are as low as 10 m A total of 45 lateral buoys to mark the channel Luminous range of flashing lights of the buoys = 6 nautical miles (for night navigation)

Preliminary assessment indicates that the current channel plan can only allow the transit of vessels of not more than 9 m draft presently. In consideration of Phase 1 port development with expected increase in marine traffic, the approach channel will have to be deepened to accommodate Very Large Crude Carriers (VLCC) of 300,000 DWT and container vessels of 6,000 TEU capacity and widened to allow for two-way traffic. Figure 61 shows the approximate layout of the channel proposed by MPA for approach. At this moment, the existing approach channel towards Made Island is dredged and maintained by the Myanmar Oil & Gas Enterprise (MOGE) which operates a terminal located on the Eastern side of Made Island.

GMAPS proposed approach channel

GMAPS proposed approach channel is demarcated, as shown in figure 62 along the track on the chart (Chart 24b Gadechy Harbour, published by the Central Naval Hydrographic o o Depot, Myanmar Navy) in the direction of 140 /320 . The approach channel to Site 1 (from entrance of Kyauk Phyu town to Site 1) is approximately 17.3 km long. The approach channel to Site 2 (from entrance of Kyauk Phyu town to Site 2) is approximately 14.6 km long. The shallowest depth within the proposed approach channel going towards Site 1 is 11-12 m; for Site 2, the shallowest depth is 3.9-10 m. Dredging is required at the highlighted areas (figure 63) to allow passage and berthing for vessels of design specifications. Figure 62: GMAPS proposed approach channel

41 42

42

Figure 63: Demarcation of shallow areas around Sites 1 and 2 (< 16 m)

42

Charted by the CCCC First Harbour Consultants Co. Ltd., for the use of the Crude Oil Terminal of Myanmar-China Crude Oil Pipeline Project (Myanmar Section). GMAPS

71


The width of GMAPS proposed approach channel is 600 m. With this width, the proposed channel is wide enough to accommodate two-way vessel traffic. Anchorage of KP SEZ port

There are currently no studies available to determine suitable sites for holding anchorage to service KP SEZ port. Further consultation with MPA will be required to determine the potential anchorage areas.

Dredging and reclamation considerations

Port land for Site 1 terminal development will be mainly reclaimed land using dredged materials. Cut/ fill material from landward borrow areas may be employed if dredged material volumes are not sufficient. However, whichever method is adopted will depends on available volume of suitable dredged and cut/ fill materials. Fill volumes required for reclamation would be estimated after determination of the most optimum formation level, which is controlled by present topographical and existing land use conditions. In this respect, in-situ survey is vitally important to obtain the following engineering characteristics about SEZ site preparation by dredging and reclamation method: • • • • • • • •

Survey to get precise bathymetric contours of 1/5000~1/2500 scale Conduct topographic survey to 1/5000~1/2500 scale Conduct detailed soil investigations on land and sea areas Determine the land formation levels based on type of land usage in each area Calculate fill material balance between dredging and reclaiming volumes Seek borrow pit areas from which required quantities of fill material could be excavated including taking necessary environmental mitigation measures Investigate most appropriate compacting method for both dredged and soils from borrow areas Select the most appropriate dredging method, by taking into consideration all necessary conditions of not only quality and volume of dredged materials, but also overall SEZ implementation plan, so that proper work productivity can be achieved

Dyke and overflowing process

After the particle size distributions of dredged soil are known, the overflow process will be studied, so that environmental impact on seawater may be mitigated. Important parameters will be the rate of loss during overflow, particle size of overflow materials, the period and frequency of overflow.

Balancing dredged and borrow materials

Balancing volume of dredged material with volume of borrow material (by cutting of high ground) will be checked, and additional volume of borrow materials required can be estimated.

Dredging and reclamation work

Based on the available information and recommended maximum vessel size calling the multi-purpose/ container terminals with design draft of 14.5 m CD, it is proposed to dredge the sea bed to -16.0 m CD for the approach channel and turning basin. The reclaimed level for the port and back up area is proposed to be +6.0 m CD based on the findings from the site analysis. The highest of the finishing level of the paving will reach approximately 7 m. Table 19 shows the estimated quantities for dredging and reclamation.

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Kyauk Phyu Special Economic Zone Development Plan

Table 19: Estimated quantities dredging and reclamation


Figure 64: Proposed Fishery Industrial Park location

43

Site formation level should be decided in conjunction with the Terminal Areaâ&#x20AC;&#x2122;s formation level, circumferential land use/ existing buildings, and meteorological conditions which will affect storm water drainage. In addition, during reclamation, sourcing and management of fill materials (via dredging/ cut & fill method/ import of fill materials) will be required. Considering the lack of technical land studies/ investigation at the present moment, it is assumed that the formation level should be the same level as the existing jetty facilities within Kyauk Phyu vicinity that is +6.00 m CD.

Construction considerations - site preparation for wharf and backup area: Reclaimed/formation level

Soil classification will be required to determine if fill materials from either dredging or borrowing/ high land cuttings are suitable or unsuitable for reclamation. The volume estimations are important factors for both technical and economic aspects. These will be clarified from results of geophysical surveys and geotechnical investigations and subsequent soil laboratory test results.

Fill materials

Materials which are unsuitable for reclamation or filling process such as marine clay or organic soils are to be dumped at a designated area approved by local authorities near the project site on land or in open sea. Quantities of suitable materials which are either dredged or borrowed/high land cuttings may also be estimated from the results of subsoil investigation.

Unsuitable materials disposal

Unsuitable materials can be utilised by soil improvement, in case fill materials are not sufficient for reclamation/ filling to prepare the required area of the terminal and backup area. In this case, a soil improvement method which accelerates significant ground settlements in a certain limited time will have an effective technical application in order to complete the site preparation, thus meeting key target completion dates of the project. Requirements for the soil improvement methods to overcome the settlement issue, if any, will be studied from the soil investigation report.

Settlement and soil improvement

From site surveys, it is considered most vital that the existing roads should be improved to provide access to the SEZ area from the terminal locations. The new roads should be developed for the locations where there is no accessibility to the terminal, with connecting bridge structures where required. Figure 64 shows the proposed location for FIP development, based on a preliminary assessment of the site visit and the local industry. The proposed FIP site is at Nga La Pwe and in close proximity to the town, the existing berths and jetties which are used by the fishing boats to land and obtain the required equipment and supplies.

Fishery Industrial Park development

The suitability of the jetties to accommodate feeder/ coastal vessels for the shipment of the marine products will need to be ascertained. This is of importance as the development of the terminals will take several years.

Requirements Fishery Industrial Park

The infrastructure and facilities required for a typical fishing port/ fishery industrial park includes a jetty and processing facilities. The jetty includes the wharf and the back-up facilities within a fenced area for the operations of the industry along the shore. The facilities to be provided within include an auction hall (covered shed for the fishery sales), an office building for traders and Government agency(ies), a cold store facility, an ice-crushing facility, a bunker facility for water and fuel, a vehicle parking area, as well as Gate In and Gate Out. The fishery processing factories will be located outside the fenced area of the fishing jetty. These factories will receive the harvest, store, process and ship the product. 43

GMAPS

73


Other Marine Terminals/ Facilities Overview demand for terminals and facilities

Recent developments in Myanmar and the Kyauk Phyu region suggest the need for additional marine terminals and facilities. In 2013, 20 new off-shore oil block concessions have been awarded to international tenderers. Thus, an immediate need for other marine facilities in support of the oil and gas activities in the region arises. An additional need arises from the plan of the Myanmar Government to import Liquefied Natural Gas (LNG). Lastly, a demand for other marine facilities generated from the proposed development in Phase 1 might trigger an additional demand in marine terminals and facilities. Since the existing marine terminals and facilities in Kyauk Phyu currently are not able to serve these needs, a Marine Supply Base (MSB), a LNG Terminal and a Marine Bunker Terminal are suggested.

LNG Terminal

The development of LNG handling and storage facilities are suggested in anticipation of the Government’s plan for LNG imports.

Marine Bunker Terminal

A Marine Bunker Terminal is a centralised facility which provides marine fuel to sea-going vessels operating in Kyauk Phyu. A feasibility study on marine facilities will have to be conducted to ascertain among others: • • •

Demand requirements (size and types of facilities, berth length, equipment, etc.) Suitability of the site Existing marine and land infrastructure

Phasing of Port Master Plan Phasing of master plan

74

The port master plan is proposed to be implemented in two phases as follows:

Phase 1: Multi-purpose/ container terminals and Fishery Industrial Park

The impetus for this to proceed ahead is in consideration of the various industries that will be developed in the SEZ requiring cargo terminal handling facilities and providing support to the local fishing industry. The multi-purpose terminals, being a greenfield site, would likely take five to seven years to construct with the first two to three years allocated for site investigation, studies and approvals.

Phase 2: Marine Supply Base and other Marine Terminals and Facilities

This will be contingent to the Oil & Gas Industry demands. At this moment, there are dedicated facilities developed in Kyauk Phyu but not on sites which may be expanded for a multitude of users, operators or developers. Though Phase 2 is envisaged to be developed in a later stage, these marine terminals and facilities may be brought forward.

Kyauk Phyu Special Economic Zone Development Plan


Figure 65: Industrial areas

5.2.2 Industrial Areas Manufacturing Industrial Cluster The manufacturing industrial cluster consists of light industries that aim to generate jobs in the SEZ. It is located at the closest proximity to the main population centre, i.e. the Kyauk Phyu town, and also near the port to encourage export oriented industries. There are three major sub-clusters (see figure 65) under the manufacturing industries: • • •

Figure 66: Processing Industrial Cluster

Overview manufacturing industrial cluster

Textile & Clothing Industries Construction Industries General Industries

Textile & Clothing Industries will be one of the focused industries of Phase 1 in KP SEZ, which will be housed in a specially allocated Textile & Clothing Industrial Park (TIP) with a gross land area of 600 ha. The park is located approximately 4 km South of the existing Kyauk Phyu town, with proposed road connection to the deep sea port to facilitate import/ export activities of the park.

Textile Industrial Park

Construction Material Industries will be housed in the Construction Industrial Park (CIP), which takes up 400 ha of the SEZ area in Phase 1. The park is located next to the Textile Industrial Park (TIP), approximately 10 km from the proposed deep sea port. The CIP aims to reduce the country’s dependency on importing construction materials from other countries, by producing the construction materials locally to support the rapid urbanisation of the country.

Construction Industrial Park

Apart from TIP and CIP, a General Industrial Park with an area of 894 ha will also be allocated to house the general industries in the SEZ. Other than textile, clothing and construction material industries as pillars, the SEZ is expecting other general industries to be attracted here. The park can also function as a hub to house Small Medium Enterprises (SME) that are supporting the pillar industries of the park in the future. Also, the park can be used as an expansion for the TIP and CIP.

General Industrial Park

Processing Industrial Cluster The Processing Industrial Cluster can be divided into two sub-clusters (see figure 66): • •

44

Overview Processing Cluster

Food Processing Industries Export Processing Industries

With the agriculture sector contributing more than 30% of the country’s GDP in 2013 , Food Processing is an industry with high potential to be developed in Kyauk Phyu. The cluster will start with a marine produce focused industry – Fish Processing to be allocated in a Fishery Industrial Park (FIP) near the existing Kyauk Phyu town. The park is approximately 50 ha, which will integrate the existing jetty of the town with the adjacent vacant land to be the processing plant for the fishery products.

Food Processing Industries

Export Processing Industries are located in the EPZ adjacent to the deep sea port. With an area of approximately 400 ha, the zone is targeting export oriented industries that will be attracted to the SEZ by various incentives, to provide jobs for the locals.

Export Processing Industries

Construction Industry figures from AECOM & Davis Langdon KPK

75


Supply Base Cluster Supply Base Industrial Cluster

Figure 67: Supply Base areas

The Supply Base Industry is one of the important industrial clusters to be developed in KP SEZ to generate FDI for the country. It serves the Oil & Gas Offshore Industries. The oil and gas reserve available in Kyauk Phyu and nearby region is one of the rich resources that the zone should utilise. As supply base industries are land consuming, the proposed land area for the cluster is approximately 18.5 km2, with the following sub-clusters: • • •

Marine Bunker LNG Terminal Marine Supply Base

Logistics Cluster Overview Logistics Cluster

The Logistics Cluster in KP SEZ is divided into port-based logistics and land-based logistics (see figure 68). The Port-Based Logistics Park is a 100 ha logistics park that is located adjacent to the deep sea port, which also functions as the trading and warehousing zone for goods that are going through the port. On the other hand, the Land-Based Logistics Park is located between the CIP and the deep sea port, a 490 ha park that provides logistics services to the SEZ.

Marine Supply Base

The 20 ha MSB is intended to provide a one-stop service centre for comprehensive logistics and support services for the oil and gas exploration, development and production activities. The dedicated Marine Supply Base will be established during later phases, when the development of the offshore sector reaches a level of growth and maturity. Phasing of Industrial Park

Phase 1 development

The industrial development of KP SEZ will start with a 1,000 ha industrial park which is located approximately 5 km from the deep sea port. The start-up zone is focusing on two major manufacturing industrial clusters: the Construction Materials Industries, to be housed in the Construction Material Industrial Park (CIP) with the land size of approximately 400 ha; and a 600 ha Textile & Clothing Industrial Park (TIP) to house the Textile & Clothing Industries.

Construction materials industries

The emerging economy of Myanmar has led to the rapid urbanisation of the country. Bago, Myingyan and Meiktila are among the cities in the country with the highest growth rate according to McKinsey Global Institute45. With a Compound Annual Growth Rate (CAGR) of 8% as reported by the Singapore BCA Country Report of Myanmar in year 2013, the country’s total construction industrial output is forecasted to reach USD 14.5 billion by year 203046. This will create demands in construction materials to support the growth of the country. With its geographical advantages of locating strategically between these developing cities, and having a deep sea port, KP SEZ sees the opportunity to develop construction material industries in its economic zone to support the country’s growth. Area of opportunities to be explored in the industry includes precasting materials, metal fabrication, glass and blocks, pipes, etc.

Textile & clothing industries

Clothing industries were previously a large industrial sector in Myanmar in the 1990s. With the share of 2.5% of Myanmar total exports in Year 1990, the industry’s export share increased to 39.5% in year 2000, which made it the most largely exported good of the country then47. However, the industry’s performance has dropped drastically after year 2003 when the United States, one of the biggest importers of Myanmar’s apparel products, imposed sanctions on the country. In year 2010, the textile and clothing export of Myanmar reported by the World Trade Organisation (WTO) was USD 342 million, nearly 60% lower as compared to year 2000. 45

McKinsey Global Institute Research New Crossroads Asia 2014 47 Kudo 2013 46

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Kyauk Phyu Special Economic Zone Development Plan

Figure 68: Logistics Cluster


Figure 69: Residential boundary within KP SEZ

In addition, to support local fishery industry, 10 hectares of Fish Processing facilities will be also developed in the first stage of SEZ development in the site of future Food Processing Park (FIP) near the existing Kyauk Phyu town.

Fishery processing industries

5.2.3 Residential Residential in a SEZ play a crucial role of providing stable housing and social infrastructure for the workforce and other residents of the township. The demands on the residential land in meeting that expectation have been considered in the current master plan. The location chosen for the residential development has the following characteristics: • • • •

Characteristics of KP SEZ residential area

The site is predominantly flat with slopes not exceeding 20% gradient. This makes it suitable for residential development and other supporting amenities and infrastructure. It provides the advantage of being closer to the existing and proposed major roads within Kyauk Phyu making it highly accessible. The coastal mountain ranges act as buffer from the severe effects of cyclone originating from the Bay of Bengal. It is located ideally between the existing town and the new industrial areas and port, thus benefitting from the proximity to the existing community and future areas of economic activity (see figure 69).

The land estimation for a single residential development is based on internationally accepted planning standards to ascertain the minimum population to support infrastructure like hospitals, schools, commercial establishments, etc. On average, it is 500 ha in area with a total population of 212,000 or approximately 47,000 households.

Land estimation overall residentials

The estimated residential and commercial land area can be found in figures 70 and 71.

Figure 70: Land estimation commercial area

Figure 71: Land estimation residential area

Note: Total employment-generated land area of 51.5 km2 includes industrial, logistics / warehousing, port and commerical land uses in the town center area and excludes resort developments (commercial land use) along the western coast of Yanbe Island. Assumption of 15 m2 by comparing floor area per person for following countries and their respective Country GNP per capita. Bangladesh (Dhaka), Indonesia (Jakarta), The Philippines (Manila) and Thailand (Bangkok).

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Five clusters in residential development

Key considerations to ensure success of residential development

Development metrics of the KP SEZ residential

Residential developments in a SEZ are built in many phases to keep in step with the industrial growth. Though the timeframe of this growth is not years but decades, there is merit in clustering the residential developments together for synergy. Based on the metric of approximately 500 ha for one development48, KP SEZ will be able to accommodate about three residential developments in total as per the master plan. Defining a single residential development is crucial as it is the unit of measure for success of the livability and the community landscape within the SEZ. Therefore the key considerations in the following pages define the development parameters of a single residential development, develop the framework to ensure it is sustainable in the long term and identify sites that are ideal for residential developments. The development of residential should ultimately meet the needs and demands of the population that resides in it. The regional context of the development then plays an important role in assessing the needs. In the case of KP SEZ, there are no major cities, towns or amenities in its vicinity. Given the context, the development metrics for KP SEZ residential developments are the following: • •

Different types of infrastructure

Core infrastructure

Supporting infrastructure

Self-reliance for a residential development translates into providing its residents core and supporting infrastructure. It comprises of healthcare services like hospitals and clinics, a full range of educational institutions and commercial facilities like neighbourhood stores, banks and shopping mall. Though the core facilities are important for basic needs, the neighbourhoods should also provide infrastructure that enhances quality of life. Supporting infrastructure of parks, places of worship and sports venue will satisfy its residents’ social and recreational needs. • • • •

Population size

It has to be self-reliant, with a population size that will ensure viability of hospitals, schools etc. and also has provisions for the core and supporting infrastructure. The residential development has to be sustainable, one that is context sensitive and pushes for better ecological performance. It should be built on strong principles of density distribution by being transit- oriented and creating walkable neighbourhoods. This will eliminate the dependence on private cars and thus promote livable neighbourhoods. It has to be market responsive, which means being realistic in creating neighbourhoods that cater to the market conditions at every stage of the development. Also, it should be a development that provides easy linkages to the industries.

Major Park: A park of 10 ha as the main recreational space for the community will provide opportunity for recreation and social gathering space. Places of Worship: A number of religious institutions within the reach of the various neighbourhoods will give the spiritually-inclined a place to continue their religious practice. Sports Complex: One multi-facility complex comprising track and field, swimming pool, indoor and outdoor courts will promote the development of youth and help in building their physical and emotional growth. Public Transit: Provision for public transit service both for within the residential development and SEZ-wide will mean less dependency on cars. This sets in place a strong foundation for the transportation needs.

To provide these infrastructures there has to be a population base that will justify the investment. Based on international benchmarks, a population size of 100,000 to 200,000 will enable the establishment of the above mentioned infrastructure.

Figure 72: Development parameters CORE INFRASTRUCTURE General Hospital

400 – 500 beds

1

Full range of Educational Institutions

Kindergarten Primary Secondary High School Vocational College

Based on local standards

Components

Sub-Components

Total number

Public Transit

Local transit Regional transit

Identify the system parameters

Major Park (town)

To serve a population of 120K

1(10 ha to serve a population of 120K)

Places of Worship

Buddhist Temples Mosques

Based on local standards

Sports Complex

Sports Field; Multi-purpose court; Swimming Pool

1 Complex

SUPPORTING INFRASTRUCTURE

POPULATION SIZE Optimum size to support good quality of life

SCALE

Neighbourhood Neighborhood

Based on 10 min walking radius of 400 m

50 Ha

Residential

Based on distance of 800 m between town and neighbourhood centers

500 Ha

Residential Areas

Due to seismic activity and to preserve views

<= 5 Storeys

Town and Neighbourhood centers

Due to higher plot ratios and demand

Upto 10 Storeys

Residential Areas

Development will be predominantly low to medium rise

1.0

Town and Neighbourhood centers

Mixed use and based on higher demand

2.0

Provides access to nature and promoting social interaction

15% of overall township land

BUILDING HEIGHT

PLOT RATIO (TRANSIT ORIENTED)

OPEN SPACE Overall open space requirement

RESERVE LAND Development Reserve

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Basic international housing indicators, 1993 http://www.areuea.org/Publications/ree/activities/V25/REE.V25.1.1.pdf, http://data.un.org/CountryProfile.aspx?crName=MYANMAR (Accessed 24 April 2014)

Kyauk Phyu Special Economic Zone Development Plan

For potential future growth

30% of land as white site

RESIDENTIAL PRODUCTS Low-cost housing

Dwelling Units Based on markets

Middle income housing

Dwelling Units Based on markets

Luxury Housing

Dwelling Units Based on markets

Service Apartments

Dwelling Units Based on markets

DISTANCE FROM INDUSTRY Commuting distance

48

100 to 200K

Assuming bicycle speed of 20 km/h

10 km


Figure 73: Residential boundary

Residential developments unlike industrial areas do not change in their role based on economic policies. They will have to be formulated on the basis of a strong sustainability framework. A well-conceived residential development will have positive benefits on the physical, environmental and social growth of the SEZ.

RESIDENTIAL BOUNDARY (Phase 1) 500 Ha

The scale of the development is defined so that each unit within the neighbourhood is within a 400 m walking radius to its centre. This yields a neighbourhood that is approximately 50 ha. Each neighbourhood centre will be at 800 m radius to the commercial centre in the development. Each residential development is approximately 500 ha.

212,000 Population 47,000 Units

EXISTING ROAD

The development is to be context sensitive: •

NEIGHBOURHOOD BOUNDARY 50 Ha

21,200 Population 4,700 Units

Figure 74: Residential street orientation (right)

Figure 76: Residential Transit-oriented developement

SUB TOWN CENTRE SECONDARY STREETS East-West orientation to capture the views of the mountain .

400 m RADIUS 10 minutes walk

NEIGHBOURHOOD CENTRE TOWN CENTRE

MAIN STREET North-South orientation to position it parallel to the existing arterial to facilitate connections.

Sustainability framework

Walkable neighbourhood

Context sensitivity

Building Height Control: As the area is prone to high seismic activity the majority of the development should not be higher than five storeys. Wind Orientation: The development location and construction phasing should ideally be aligned with the predominant wind direction (North-West). This will ensure no harmful fumes and dust are carried into the residential neighbourhoods. Preserve Scenic Views: The site is surrounded by beautiful mountain ranges which should be preserved.

Predominantly the residential neighbourhoods will be 1.0 plot ratio. The exception to this rule will be the town and neighbourhood centres with 2.0 plot ratio.

Development density

Better quality of life can only be ensured if a residential has programmable open space and natural environment. This will keep the residents active and help to bring people closer to nature. There should be about 15% land reserved for open space.

Open space to development ratio

The development metrics provide the qualitative basis for the planning of a sustainable and successful residential development. The quantitative development parameters are a result of the metrics and are summarised in figure 72.

Development parameters

Phasing of Residential Development SUB TOWN CENTRE

Figure 75: Residential Transit-oriented developement

Figure 77: Residential Walkability and Connectivity

Phase 1 of the residential development will set the stage for the pattern of urbanisation that will follow in Kyauk Phyu. In the early phases there will be enormous pressure due to the demands of growth. It is crucial for the development to be established on strong and sustainable framework. Such a framework will make Kyauk Phyu more attractive to future investments and will become a benchmark for the other SEZs in Myanmar and other developing countries in the world (see figure 73-77).

Phase 1 development to provide exemplary pattern

INTERNAL CONNECTION

15% GREEN SPACES EXTERNAL CONNECTION

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5.2.4 Water Catchment and Environmentally Sensitive Areas

Figure 78: Water catchment areas

The master plan development framework includes four major devices to safe-guard the ecological wealth and control developments: A definition of the water catchment area, the environmental conservation areas, eco-tourism areas, as well as environmentally vulnerable areas (see figure 78). Water catchment area

Environmentally sensitive areas

For such a remote island like Yanbye Island, securing sufficient fresh water supply for the SEZ development is one the most challenging issues. Currently, residents in Yanbye Island depend on an underground source for water supply. This source, however, is too limited and precious to meet the industry water demand in the future. Instead, rainwater, which is abundant in Kyauk Phyu township (2,000 mm per annum), can be an alternative source if it is harvested. In the focused area, there are many small river valleys which can be dammed and used as reservoirs for storage. Some small reservoir projects are already identified and studied to provide water supply for Phase 1 developments in KP SEZ. Using Geographic Information Systems (GIS) technology, a potential larger catchment area is delineated and incorporated into SEZ master plan for protection. Industry zones and new urban settlements should not be developed within catchment areas to protect the surface water resources. Existing environmental conservation areas consist of ecologically-rich tropical forests and wetlands identified by the Government. This master plan amends this network of environmental conservation areas by providing linkages between habitats and by protecting the high-risk zones around mud vents (see figure 79). The latter is suggested to be protected from development to prevent disaster risks as well as to reserve a uniquely geological area. All developments including agricultural, rural villages and resorts are prohibited from environmental conservation areas.

Figure 79: Environmental conservation

80

Kyauk Phyu Special Economic Zone Development Plan

Figure 80: Eco-tourism areas


Figure 81: Phase 1 development

Figure 83: Overall development

Areas that are unsuitable for urban and industrial development due to their scenic values, topographic and/ or geophysical conditions and environmental functions such as wetlands, catchment areas and green links have been demarcated as open space/ recreation and eco-tourism areas. These areas are prohibited from urban and industry development but could be used for tourism and recreational purpose (see figure 80, previous page). Agricultural activities and rural settlements are discouraged within these areas. Environmentally vulnerable areas are exposed to environmental risks, such as flooding and mud-vent eruptions. They are restricted from urban and industry developments. There are existing villages and agricultural activities within these areas. Further studies are required to identify the level of disaster vulnerability for these villages and farmlands, and to determine if they should be relocated to safer locations.

Open space/ recreation/ eco-tourism areas

Environmentally vulnerable areas

5.3 Phasing Phase 1 (until 2025) of SEZ development will include sea port terminals, Textile Industry Park (TIP), Construction Industry Park (CIP), Fishery Processing Park (FIP â&#x20AC;&#x201C; Phase 1) and first residential cluster with a total land area of 17.8 km2. Except the sea port terminals whose locations are determined by sea bed topography and ship navigation requirements, other Phase 1 development sites are selected to be adjacent to existing roads and to cause no impact on existing villages (see figure 81, and figure 82).

Phase 1 development boundary (17.7 sqkm)

Figure 82: Land area required for Phase 1 development

Overall development boundary (106.7 sqkm)

After Phase 2 (until 2036), all components of SEZ developments identified in the Master plan will be realised with a total development land area of 106.7 km2. The expansion after Phase 1 includes General Manufacturing cluster, EPZ, Port-based and Land-based Logistics Park, Marine Supply Base, Supply Base, new Residential clusters and the core area with town centre and Business Park (see figure 83 and figure 84).

Phase 1 of SEZ development

Overall SEZ development

Figure 84: Land area for Overall development

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5.4 Infrastructure Sizing of infrastructure

Figure 85: Road infrastructure Phase 1 KP SEZ development

All required infrastructure have been sized for Phase 1 of the KP SEZ development. These infrastructure requirements include road infrastructure (see figure 85), electricity, water supply, sewage system, as well as telecommunications. For all infrastructure elements, the following information is provided: • •

Size/ length of the infrastructure Recommendations on the responsibility for provision

5.4.1 Road Infrastructure Different hierarchies of road infrastructure

With regards to roads, infrastructure on three different levels is required: • • • •

Roads within the industrial and the residential area will form the finest grained level of road infrastructure. It is in the responsibility of the tenderer to provide this infrastructure. During operation, these roads will be managed by the tenderer. The new road connection between the industrial park and Kyauk Phyu Town will be upgraded/ built under the responsibility of the KP SEZ Management Committee. The selected Port Developer will provide and maintain the access road from the terminals to the main road connection (figure 85). Connections to the national and international key markets have to be ensured. The road leading to NH2 highway will be upgraded (figure 86). The existing road between Kyauk Phyu and NH2 highway will be upgraded by 2017. In addition, it is planned to be upgraded to a double-lane road after 2017, wherever there is not a double-lane road existing today. The responsibility of this road connection is with the national government. Figure 86: Connection to NH2 highway

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Infrastructure development in Myanmar - Public Works, Ministry of Construction. May 2012

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Table 20: Power demand KP SEZ in Phase 1

5.4.2 Electricity

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The power demand for KP SEZ has been estimated for the Phase 1 development on the basis of the industries recommended in the market study. Table 20 shows the expected power demand of KP SEZ at the end of Phase 1 development.

Power demand

Power supply for KP SEZ will be ensured through an extension of the gas power plant currently under construction. In addition, Yanbye Island will be connected to the national power grid of Myanmar from 2015 onwards, so that the power supply can be ensured at all phases of the development.

Gas power plant and connection to national grid

5.4.3 Water Supply 51

52

53

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Water demand for the future KP SEZ development is estimated by benchmarking similar developments in Yangon and overseas. Calculation unit for residential water demand is cubic meter per day per capita while the one for industry demand is cubic meter per day per hectare of net development land area (see figure 87). This excludes land areas for road, infrastructure and greenery.

Water demand of KP SEZ Phase 1

It is estimated that residential and industrial water demand in KP SEZ by the end of Phase 1 (2025) is 31,800 and 91,708 m3 per day respectively. Textile Industry Park and residential development account for the largest water consumption, approximately 83% of the total demand. In contrast, Fishery Industry Park has the lowest water consumption due to its small scale of development (10 ha). Taking into account 15% leakage and 20% reservation, the total water demand for Phase 1 is 0.17 million m3 per day or 62.1 million m3 per year. Figure 88 shows the calculation for water demand in Phase 1 development.

Figure 87: Water demand per development type

Figure 88: Water demand Phase 1 development

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57

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Based on International Benchmarking of Mixed-Use Development in similar climate zones Based on Case Study 52 Based on Case Study 53 JDI Report 54 Based on Case Study 51

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Frauke Kraas, Hartmut Gaese, Mi Mi Kyi (2006): Megacity Yangon. Transformation Processes and Modern developments, Second German-Myanmar Workshop in Yangon/Myanmar 2005, Lit Verlag, Berlin. 56 CPG 57 K. Laxminarayana Rao, (2006): Agro-industrial Parks : Experience from India, Food and Agriculture Organization of The United Nations

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Water catchment areas and responsibilities

Throughout Yanbye Island, rivers and streams will be dammed to create storage reservoirs. Figure 89 shows the potential main catchment area and locations of first reservoirs to be constructed.

Water supply

Raw water will be supplied by the Government. For portâ&#x20AC;&#x2122;s Site 1 on Made Island, the developer will work in conjunction with the Government to develop its water supply source. Developers shall be responsible for transmission of the raw water from source to the sites. The Government will be facilitating the process of the piping alignment and construction. Local water treatment plants are to be installed by the developers for their respective sites to ensure the supply of water quality according to the required standard (see figure 90).

Figure 89: Water catchment and reservoir locations

5.4.4 Sewage System Sewage system of KP SEZ Phase 1

Sewage treatment will take place decentralised on-site in the residential area, the port and the industrial area according to the requirements of the waste produced (toxic substances, etc.). The minimum discharge standards from sewage treatment plants are to follow the Yangon City Development Committee Standard. Storm water discharge from the residential area and from the port is to be separated from the sewage treatment system to achieve a more efficient infrastructure.

5.4.5 Telecommunications Land line and mobile networks

All industrial, residential and port sites in KP SEZ are to be provided with telecommunication lines. It is recommended that telecommunication infrastructure includes both land line communication (incl. internet access) and a cellular phone system. A third party telecommunication provider is suggested to be invited to provide a fibre-optic connection and land line. The mobile network has to cover the Northern part of Yanbye Island entirely to ensure that international businesses are connected at all times. Land line infrastructure can be aligned along the existing and new road network.

5.4.6 Solid Waste Collection

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Waste types generated in KP SEZ

Waste generated in KP SEZ can be differentiated into two groups: conventional solid waste (municipal solid waste), and industrial waste. Industrial waste might be composed of liquid industrial waste, as well as solid industrial waste, depending on the industries established.

Waste collection and treatment

Municipal solid waste, as well as industrial waste in the quality of conventional solid waste can be collected by an external contractor for disposal. In a later stage of KP SEZ development, when a higher amount of waste occurs, it might be financially feasible to operate a waste-to-energy facility in which non-toxic solid waste is combusted and energy is recovered in form of electricity for the national power grid. Toxic solid and liquid wastes are to be separated from the conventional waste collection system and to be collected by a specialised contractor. Alternatively, depending on the type of toxic wastes generated, toxic liquid waste might be treated in decentralised sewage treatment plants to be installed by developers onsite.

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Figure 90: Responsibilities for water provision


Figure 91: Overview of development phases of KP SEZ and EIAs/ EMMPs of the respective phases

5.5 Environmental Impact Assessment and Environmental Monitoring & Management Plan 5.5.1 Overview In line with Myanmarâ&#x20AC;&#x2122;s Environmental Conservation Law (Law No. 9/2012), Environmental Impact Assessments (EIA) and the formulation of Environmental Monitoring & Management Plans (EMMPs) are required for all developments. The EIAs are to be conducted on the level of the individual projects and initiated by the investors. They are a precondition for the approval of the projects. Also, detailed EMMPs are to be defined in this project stage. In addition, a preliminary high-level impact assessment has been conducted on the master plan level to ensure a highly sensitive master plan design and to identify issues that will have to be followed-up with in later stages of the project.

Environmental Impact Assessment and Environmental Monitoring & Management Plan according to the Environmental Conservation Law

Figure 91 shows the overall process of EIA, including the development of EMMPs. An EIA is required to include a baseline study, an impact assessment study, the development of mitigation measures, as well as the formulation of the EMMP. During the impact assessment, sources of impact and sensitive receptors are to be identified. A prediction of impact has to be conducted that includes the severity, the duration, as well as the frequency of each identified impact. Mitigating measures aim at being implementable during the planning, design and operational phases of the projects to limit or reverse any adverse effects. The EIAs are required to cover the following topics: water quality, air quality, air-borne noise, ground-borne noise and vibration, geology/ soil contamination, waste management, biodiversity, as well as social impacts. In order to guide and monitor the process of the EIAs, as well as the implementation, an Environmental Monitoring Committee for the Special Economic Zone has been established by the Government of the Republic of the Union of Myanmar.

Environmental Impact Assessment of KP SEZ

5.5.2 Potential Environmental Impacts and Mitigation Measures Water quality is considered to be one of the most sensitive elements of the EIAs due to the numerous rivers, the close proximity to the sea and drinking water of villages being drawn from groundwater wells. The topic includes surface water run-off, groundwater quality and seawater quality. Sensitive receptors for the water quality are human beings, the wildlife, as well as livestock from farms. Potential water quality impacts include physical, chemical and biological impacts which have to be investigated. Of high importance are the seasonal differences between the rainy and the dry seasons which have to be considered in the framework of the EIAs.

Water quality

In the planning process, the watershed boundaries on Yanbye Island have been analysed and a water catchment area for water supply is identified. It is recommended that this water catchment area is protected for securing water supply in the long-term. During the construction process, it has to be taken into account to minimise erosion, siltation and sedimentation in rivers. This is of special importance during the rainy season. In order to ensure high water quality levels during the operation and maintenance phase, decentralised sewage treatment plants are to be monitored by the Government or by a thirdparty contractor assigned by the Government. The monitoring of the waste water quality is thus eased. The potential sources of pollution have to be analysed carefully in the projectâ&#x20AC;&#x2122;s EIAs. Besides waste water, the projects have to address storm water discharge during the rainy season. These systems are to be designed with care.

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Air quality

Air quality comprises various indicators, such as ozone (O3), nitrogen dioxide (NO2), sulphur dioxide (SO2), particulate matter (PM2.5 and PM10), lead (Pb), carbon monoxide (CO), as well as dust. The predominant wind direction in Kyauk Phyu area is from North-West. The master plan design accounts for this situation by locating the industrial and port sites at the South-East of Kyauk Phyu Town and of new residential developments. In the construction phase, dust is expected to be one of the major pollutants on-site. However, since only small settlements with people (air-sensitive receivers) are located South-East of the developments, only small impacts are expected. These can be reduced by concentrating the construction over a short period of time and by minimising soil movements during construction, which is in line with Myanmarâ&#x20AC;&#x2122;s Environmental Conservation Law. Besides the construction sites, roadside areas along the main arterial road on Yanbye Island might be affected by the exhausts of vehicles and dust. This effect can be kept to a minimum by fully asphalting all roads before construction starts and by making use of existing jetties for the delivery of construction materials wherever possible. Air quality standards for the industries during operation phase are to be set in-line with the industries to be set up in KP SEZ.

Air-borne noise

In order to determine air-borne noise, Equivalent Continuous Sound Levels (Leq) are measured. Leq describes the average noise level resulting from a single source over a period of time. Measurements and projections, respectively, are to be provided in the EIA for different durations. Besides the average noise levels, peak sound pressure levels are to be evaluated. In order to minimise impacts of air-borne noise on residents of existing settlements, the industrial areas â&#x20AC;&#x201C; the main sources of noise â&#x20AC;&#x201C; are located away from major settlements and next to an area that is considered not buildable. Air-borne noise might again arise during construction in the vicinity of construction sites, as well as along major arterial roads leading to the construction sites. Mitigation measures to improve air quality will be effective to reduce air-borne noise impacts, as well. During the operation phase, it is expected that especially workers in industrial areas are affected by noise impacts. Mitigation measures to be taken are again highly dependent on the specific industries located in KP SEZ. It is recommended that on-the-job safety is ensured through control mechanisms by the Government.

Ground-borne noise and vibration

For the assessment of ground-borne noise and vibration, the indicators predicting groundborne sound level (Lp) in dB and vibration amplitude might be suitable. The vibration amplitude is, amongst others, dependent on the soil type in the Kyauk Phyu region. It is expected that ground-borne noise and vibration will only have minimal impacts on the region of KP SEZ. However, especially during construction, impacts might occur through heavy-duty vehicles and if blasting is required.

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In order to assess future potential soil contamination, an identification of existing soil and geological conditions are required in the first step. Chapter 3.1.1 also highlights this requirement of an assessment of the baseline. In the second step, a study of potential impacts of the SEZ can be conducted. Indicators for the baseline study and the impact assessment for geology/ soil contamination might vary (e.g. impact of silty runoff from works).

Geology/ soil contamination

Only on the basis of these investigations, impacts from construction works and from operation/ maintenance can be conducted. With regards to waste management, an identification of the different types of waste arising during construction and operation/ maintenance has to be done in a first step (incl. hazardous wastes).

Waste management

As part of the EIA, a waste management report needs to be prepared by the developers that include the waste analyses, the treatment methods, as well as the expected impacts of the waste. A waste management plan has to be prepared for both the construction and the operation/ maintenance phases. In the framework of a Biodiversity Impact Assessment (BIA), an investigation of existing flora and fauna, especially in environmentally sensitive areas, has to be conducted. Given the rich biodiversity of Kyauk Phyu area with regard to mangrove forests and marine life, a careful BIA has to be conducted. Potential indicators include birds, migratory birds, small animals, migratory animals, as well as freshwater and saltwater fishes/ creatures. Besides species, habitats and their connectivity have to be investigated.

Biodiversity

The master plan takes into account the rich biodiversity by minimising interventions wherever possible. Based on the current location of mangrove forests (see Chapter 2.6.2), the location of built-up areas have been chosen, avoiding large contiguous mangrove forest areas consequently. Chapter 3.1.4 outlines small patches of additional area that are recommended for environmental conservation. With these small interventions, the connectivity of habitats can be improved. A Social Impact Assessment (SIA) is required to ensure the benefits of the individual developments to the local communities. Also, for the SIA, a baseline study of the current social conditions needs to be conducted, the potential impacts of the development on the local communities is to be identified and a management and monitoring plan to be established. It is expected that most of the social impacts will comprise of positive impacts on the communities. Where this is not possible, mitigation measures are to be established and monitored, as well.

Social impacts

The highest priority planning principle of this master plan is job creation for the local community (see Chapter 1.5). Also the subsequent detail planning should further this main priority throughout the development processes of the individual sites. All areas to be developed in Phase 1 avoid existing settlements, to avoid potential negative impacts on villagers. In contrast, residents of close-by villages will benefit from short distances to the new industrial areas and from undergoing an on-the-job training for most work places.

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5.5.3 Environmental Monitoring & Management Plan EMMP on KP SEZ level

The EMMP on KP SEZ level is designed to steer the overall development of KP SEZ, to create synergies and to address infrastructure developments that are outside the developer’s sites, yet necessary commodities for the overall SEZ. Given the lack of baseline data available at this moment, it is suggested that the EMMP for KP SEZ is to be prepared by the Environmental Monitoring Committee as soon as the baseline studies of the individual projects are conducted. A combination of this data, as well as potential additional studies carried out by the Government or by research institutions, can form the basis for the KP SEZ EMMP. Based on the findings of this master plan preparation, the following key topics are to be included in the EMMP: • • • • • • • •

EMMP on project level

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Water quality: Surface water run-off, groundwater quality and seawater quality Air quality: Dust and other pollutants from construction and industrial activities (operation phase) Air-borne noise: Ensure alignment of roads as described in this master plan, noise from industrial activities (operation phase) Ground-borne noise and vibration: Heavy vehicles, soil movement during construction and impact from industrial activities (operation phase) Geology/ soil contamination: Soil contamination due to common infrastructure (operation phase) Waste management: Waste management during construction of common infrastructure Biodiversity: Minimise impact on mangrove forests as described in this master plan, consider marine life biodiversity Social impacts: Job creation for local communities, relocation necessities

In addition to the efforts on SEZ level, EMMPs on the level of the individual projects need to be detailed out. Every project to be implemented within KP SEZ will require an EMMP. The EMMP is to be formulated as part of the EIAs and to be approved by the Environmental Monitoring Committee of KP SEZ. While the developer is responsible to address all measures formulated in the EMMP in the construction and operation/ maintenance phases, the Environmental Monitoring Committee will control the implementation of these.

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6 CONCLUSION


6 Conclusion

Figure 92: Proposed Management Structure of KP SEZ

The following Chapter explains the business model and management structure of KP SEZ (6.1) and concludes this report with an implementation road map of Phase 1 (6.2).

6.1 Business Model and Management Structure 6.1.1 Business Model Joint ventures to be formed between the Government, Government designated entities, and private investors

The Government will remain the owner of the KP SEZ through its ownership of the land comprised therein, and will provide the land to the port, industrial park, and residential developers under a long-term lease, for such term as allowed under the Myanmar Special Economic Zone Law (2014) (the “SEZ Law”). The developers will be structured in the form of a joint venture (JV) between the Government, local parties designated by the Government and an investor (or consortium of investors) from the private sector. It is expected that for each of the three KP SEZ JVs (corresponding to each of the three development initiatives highlighted in Phase 1 of the master plan), the private sector may take a majority stake in the JV with the Government designated entity and Government as minority partners. The JVs will continue to operate their respective sites after the development phase has been completed. The Port JV will utilise a Design, Build, Finance, Operate, Transfer (DBFOT) business model whereby the private sector will provide the expertise and take on the finance risk with the Government granting the JV both land and operating rights for the port over the length of the concession period. The land and the assets will be transferred back to the Government at the end of the concession period. The industrial park and integrated residential area will utilise a Design, Build, Finance, Lease (“DBFL”) business model whereby the private sector will provide the expertise and take on the finance risk and will earn profits through the leasing of land that is granted by the Government. The KP SEZ will be regulated in accordance with the SEZ Law. Under this law, the Central Body scrutinises and approves applications from interested investors, establishes work schemes and frameworks relating to implementation, performs surveillance and control of development projects in the KP SEZ, and grants relief from taxes, fees, and land use premiums to qualified investors, in accordance with the SEZ Law. The Central Body is chaired by the President, and includes, as members, Cabinet Ministers and Chief Ministers from the States and Regions. To provide assistance in the implementation of the activities of the various SEZs, the SEZ Law also provides for the establishment of a Central Working Body, which is chaired by the Vice President. In turn, each SEZ will have a corresponding Management Committee under the supervision of the Central Working Body, and this includes the KP SEZ. In particular, the KP SEZ Management Committee will be responsible for overall supervision, management, coordination and administrative support services at the KP SEZ. 6.1.2 Proposed Management Structure of KP SEZ

KP SEZ Development Corporation as the administrative body of KP SEZ to facilitate the SEZ’s day to day operational and administrative matters

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The SEZ law of Myanmar prescribes the set-up of a Management Committee for each of the three SEZs in Myanmar. As outlined in the SEZ law, the KP SEZ Management Committee will be functioning as the monitoring body and facilitator of the implementation of KP SEZ. Besides the KP SEZ Management Committee, the KP SEZ Development Corporation, the administrative body of the SEZ in the form of Statutory Board, will be set up in order to ensure the smooth implementation of KP SEZ. It will be the body that works in close liaison between the Master Developers and authorities (One Stop Service Centre) to facilitate the SEZ’s day to day operational and administrative matters. Apart from that, KP SEZ Develop-

Kyauk Phyu Special Economic Zone Development Plan

Figure 93: Organisation structure of KP SEZ Development Corporation


Figure 94: Implementation Road Map Phase 1

ment Corporation is also responsible for the marketing and promotion of the SEZ, ensuring the continuous development of the SEZ. It will also set the strategic direction for the SEZ development, both short and long term, to guide the development of the SEZ (see table 92). 6.1.3 Proposed Organisation Structure of KP SEZ Development Corporation At the initial development stage of the KP SEZ, it is crucial to have an efficient and functional organisation structure for the KP SEZ Development Corporation to carry out its functions. The organisational structure of KP SEZ Development Corporation is displayed in Figure 93. Depending on the growth of the SEZ, this organisation may be restructured in the future to ensure its functionality and efficiency.

Efficient and functional organisation structure crucial for KP SEZ Development Corporation

6.2 Implementation Road Map Phase 1 The implementation of the KP SEZ will be conducted in phases. Planning of infrastructure common to SEZ developments, such as road upgrading, the construction of new roads and water reservoirs is required to start in the first half of 2015. Concurrently, technical feasibility studies for the port development are recommended to start, as well as pre-studies for the construction of the industrial area. It is expected that all common infrastructure will be ready by the end of 2017, so that the operation of the industrial park could start mid-2018. The first phase of development of the industrial park is to be completed within five years of the award of the tender process. Previous SEZ developments have shown that the development of the residential area will follow the development of the port and industrial park with a time delay. It can be expected that the first neighbourhoods of the residential area will be ready after the first factories have gone into operation. Phase 1 of the integrated residential area is to be completed within seven years of the award of the tender process.

Phased implementation

Figure 94 shows the implementation of the road map in phase 1.

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