Myanmar’s rivers have great economic and historical significance. Trade and transport along the Ayeyarwady began as early as the sixth century and canals were built to cultivate rice by the 12th. The Ayeyarwady and many other rivers have supported various settlements along its banks, providing fresh water, natural resources and irrigation for agriculture.
It is not just access to essential commodities that make rivers so integral to the country’s development. At an estimated nearly 7000 kilometres in navigable length, Myanmar’s waterways are essential for transporting both goods and people.
River transport carries mostly liquid fuels, construction materials, grains and household goods in the form of general cargo and serves predominantly farming communities along rivers. Additionally, there are an estimated 13 to 15 million passengers who rely on waterway transport. But even with that staggering figure, Myanmar’s waterways are underutilised and numbers have declined in recent years.
Challenges: channels, facilities and fleets
According to the Asian Development Bank, the share of long-distance river transport has fallen from 3.5 percent to 1.5pc for passengers and from 22pc to 3.5pc for freight from 1990 to 2013. In recent times, the rise of imported cars and the construction of new roads and bridges have supported the shift towards road transport. Recent loss in passenger volumes is partly attributable to the Inland Water Transport (IWT), the state owned river transport enterprise, which cut its service routes from 53 in 2010 to just 14 today, to reduce operating costs. Additionally, the IWT has been struggling with legacy issues and new private competition.
A range of other challenges beset Myanmar’s river transport sector.
Firstly, there are navigational challenges, related to geography, seasons and infrastructure. For instance, in some areas of the Ayeyarwady, waters have been known to be only 2 feet deep, particularly in dry seasons. Sedimentation along the river also reduces the operating draft available. In addition, a lack of navigation aids and markers limit the navigability of the rivers, especially at night.
Secondly, inland river port facilities are severely underdeveloped. Most river ports are merely landing beaches without the necessary structures. They are also poorly equipped, with limited mechanisation, and lack facilities to process passengers and cargo fast, hampering productivity.
Thirdly, a large part of the fleet that traverses Myanmar’s waterways is in poor condition. While the number of vessel operators in the rivers has increased, it is a concern that many vessels don’t meet industry standards. One operator has a fleet where 87pc of the vessels are over 20 years and 58pc are over 40 years, much past their technical service lifetime. The sinking of a ferry in the Naungtaw River between Kyaukphyu and Myebon in 2015 is a clear sign that transformation of this essential mode of transportation must take place – and fast – to ensure long-term viability, sustainability and safety.
Investing and restructuring
A comprehensive policy that enables and stimulates private investments into revitalising the country’s waterways is needed. Revitalising river transport in Myanmar will require new investments to improve the navigability of channels and increase river port facilities. Improvements could entail a structured classification of navigable river systems, channelisation, water-level regulation, the installation of navigational aids and dredging.
Additionally, new river ports need to be built and existing ones upgraded to ensure that they have sufficient docking facilities and adopt increased mechanization for passenger and cargo handling. Old vessels that are no longer safe for operation should be retired and replaced by investments in new vessels. In short, there needs to be a long-term integrated plan for waterway development, which would include investments in water flow control, canalisation and river jetties.
However, new investments alone are insufficient to rejuvenate river transport in Myanmar. The roles and mandates of related government organisations should be reviewed to ensure that policy planning and implementation as well as industry regulation can be carried out effectively. The overall sector requires restructuring, with the ultimate goal of promoting investment and improving service standards.
Additionally, a commercially viable model needs to be defined for the IWT to nurture it back to profitability. Private sector involvement should be carved out for areas within the context of sustainable PPP, such as for capital investments in infrastructure and vessel services. Freight fees will need to eventually reflect their actual economic costs to ensure that river transport is financially sustainable. The right set of policies and incentives need to be in place to support robust private sector involvement.
Myanmar was once a great trading nation, with its rivers playing a critical role in its economic development. The rejuvenation of its waterways will play a major part in helping it relive its glory days.
Anthonie Versluis is the global head of ports practice at Roland Berger, a leading strategy consulting firm.