Myanmar has enjoyed rapid economic growth since sanctions were lifted in 2011, but the Rakhine humanitarian crisis and a reduction in foreign direct investment (FDI) has slowed the economy over the past two years and hampered faster progress on infrastructure development.

According to PricewaterhouseCoopers (PwC), FDI peaked at US$9.5 billion in 2016 before falling to US$5.7 billion last year, while GDP growth is forecast at 6.2% in 2019, down from a high of 8.4% three years ago. This still pegs Myanmar as one of the fastest growing economies in Asia, albeit from a low base.

Source: PricewaterhouseCoopers

The Asian Development Bank (ADB) says the government’s policy reforms will see FDI picking up again this year, however. Increased outside investment is crucial if Myanmar is to meet its transport infrastructure development goals, which the ADB estimates to require US$60 billion in funding up to 2030.

As with regional counterparts Cambodia and Laos, Chinese investments under the Belt & Road Initiative are playing a major role in Myanmar’s infrastructure upgrades. Plans for the China-Myanmar Economic Corridor, which will give China strategic access to the Bay of Bengal, centre on the west-coast town of Kyaukphyu.

China has already built oil and gas pipelines costing US$1.5 billion between Kyaukphyu and southern Yunnan province, and in November officials inked a deal to build a US$1.3 billion deep-sea port and special economic zone there. The “Kyaukphyu corridor” also includes plans for a 1400km railroad to the Chinese city of Kunming and a parallel expressway.

Situated on a natural harbour, Kyaukphyu port will provide a deeper draft and greater shipping access than Yangon, the southern commercial capital and currently Myanmar’s only major container gateway.

Yangon’s river terminals, which are limited to 1000-TEU feeder calls, experienced tremendous growth over the past eight years as the country’s economy “opened up” to global trade. Volumes leapt from 346,000 TEU in 2011 to 1.05 million TEU in 2017, according to data from the Myanmar Port Authority.

Looking to tap into the booming demand for container shipping, India’s Adani Ports announced in April it will build a US$290 million box terminal in Yangon. The first phase of 500,000 TEU capacity is due for completion by 2021.

Port developments aside, upgrading Myanmar’s road network will be crucial to improving logistics connectivity. For example, there is already a larger port outside Yangon at Thilawa Special Economic Zone, but it remains underused due to the poor road access with the industrial heartland closer to the city.

Two new highways, Mandalay-Tigyaing-Muse and Kyaukpyu-Naypyidaw will be built under the Master Plan on ASEAN Connectivity 2025, notes the Asean Post. Only 26% of the country’s roads are paved, according to British Chamber of Commerce Myanmar, while the ADB estimates the road network needs to be increased from 157,000km to 260,000km to fully cover the country.