東京大学 公共政策大学院

ワーキング・ペーパーシリーズ
GraSPP Working Paper Series
The University of Tokyo

GraSPP-P-E-12-001

Yangon Circular Railway
Development Project
Moe Thida Zhu Zhui Zhou Xiaojing
Muhammad Halley YudhistiraJeﬀ Volinski
March 2012

GraSPP Policy Research Paper E -1 2-001

GRADUATE SCHOOL OF PUBLIC POLICY
THE UNIVERSITY OF TOKYOHONGO, BUNKYO - KU, JAPANGraSPP-P-E-12-001

Real Estate and Urban Development Policy 2011

Yangon Circular Railway
Development Project
Moe Thida1, Zhu Zhui2, Zhou Xiaojing3,
Muhammad Halley Yudhistira4, Jeff Volinski5
March 2012

1) International Program Course, second-year2) International Program Course, first-year3) International Program Course, second-year4) National Graduate Institute For Policy Studies5) International Program Course, first-year

GraSPP Policy Research Papers can be downloaded without charge from:http://www.pp.u-tokyo.ac.jp/research/prp/index.htm

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Discussion Papers are a series of manuscripts in their draft form. They are not intended forcirculation or distribution except as indicated by the author. For that reason Discussion
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Yangon Circular Railway
Development Project
By Moe Thida, Zhu Zhui, Zhou Xiaojing, Muhammad Halley Yudhistira,and Jeff Volinski
Graduate School of Public Policy, University of Tokyo
Real Estate and Urban Development Policy 2011

Yangon Circular Railway Development Project

Table of Contents

Executive Summary ................................................................................................................................................. 1
1 Introduction ............................................................................................................................................................ 3

Socio-Economic Situation of Myanmar ...................................................................................................... 3
Transportation in Yangon ................................................................................................................................ 4
Transportation Problems in Yangon ...........................................................................................................6

2 Proposed Improvement on Circular Railways .......................................................................................... 8

Objective I: Better Train Service ................................................................................................................... 8
Objective II: Better Time Schedule ............................................................................................................... 8
Objective III: Better Amenities....................................................................................................................... 9

3 Financial Analysis .............................................................................................................................................. 10
Schedule ............................................................................................................................................................... 10

Financial Estimations ..................................................................................................................................... 10
Construction Cost ........................................................................................................................................ 10

Operation Cost .............................................................................................................................................. 11
Revenue........................................................................................................................................................... 11Interest Rate and inflation rate ............................................................................................................. 11

20-Year Cash Flow ........................................................................................................................................... 11
Sensitivity Analysis .......................................................................................................................................... 12
Conclusion of Financial Analysis ................................................................................................................ 13

4 Cost Benefit Analysis of Yangon Circular Line ....................................................................................... 14
Social Cost of Automobiles ........................................................................................................................... 14
Social Benefit of Circular Railway Improvement ................................................................................ 15
Impact on Bus Transportation .................................................................................................................... 18

Conclusion for Cost Benefit Analysis ........................................................................................................ 18

5 Public Private Partnership Model ............................................................................................................... 19ii

Yangon Circular Railway Development Project

The Proposed PPP Structure of Yangon Railway Project ................................................................ 19

Railroad Development for Efficient Transportation Service.......................................................... 20

Real estate business as a way of covering the financial shortfall ................................................. 21
Key Considerations for Implementing a PPP Project ........................................................................ 23

Conclusion ................................................................................................................................................................ 25
Acknowledgements............................................................................................................................................... 26
Bibliography ............................................................................................................................................................ 27
APPENDIX (1) 20-Years Financial Balance Sheet (US$ million) ........................................................ 28

APPENDIX (2) Sensitivity Analysis................................................................................................................. 29

APPENDIX (3) Economic surplus Calculation............................................................................................ 30
Table of Figures and Tables

Figure 1: Yangon Circular Railway .................................................................................................................... 1
Figure 2: Myanmar and its major cities. .......................................................................................................... 3
Figure 3: Yangon city.............................................................................................................................................. 4

Figure 4: Yangon land use plan. ......................................................................................................................... 5
Figure 5: Myanmar Railway’s and Yangon Circular’s network..............................................................6
Figure 6: Vehicles in Myanmar............................................................................................................................ 7
Figure 7: Wooden and Precast Concrete Sleepers ...................................................................................... 8
Figure 8: Sensitivity for NPV and IRR............................................................................................................ 12
Figure 9: Social Cost Model. (Source: Myanmar Statistics 2010) ...................................................... 14

Figure 10: Time Cost Savings............................................................................................................................ 16
Figure 11: Justification for the PPP model .................................................................................................. 19
Figure 12: Proposed PPP Structure for Yangon Project ........................................................................ 20

Figure 13: DOT and BOT Structure ................................................................................................................ 21

Figure 14: Capital Balance ................................................................................................................................. 22
Figure 15: Land acquisition areas for the Yangon Railway estate project..................................... 22iii

Yangon Circular Railway Development Project

Figure 16: Implementing Steps..………………………………………………………...…………………………...23
Table 1: Cost and Revenue Estimates for Yangon Circular Rail Project.............................................2

Table 2: The growth of Yangon city ................................................................................................................. 4

Table 3: Household data for citizens in Myanmar ...................................................................................... 4

Table 4: Project Schedule ................................................................................................................................. 10
Table 5: Construction Cost Examples ............................................................................................................ 10

Table 6: Operation Cost Example ................................................................................................................... 10

Table 7: Land acquisition data ……………………………………………………………………………………….22
Box 1: Additional consumer surplus ............................................................................................................. 16

Box 2: Increased demand……………………………………………………………………………...………….……17iv

Yangon Circular Railway Development Project

Executive Summary
This paper analyzes the Yangon Circular Railway, currently the only rail-based public
transportation option in Yangon, Myanmar. Specifically, we consider the shortcomings of
the Circular Rail, propose a series of improvements, and perform financial and cost-benefit
analyses to assess the feasibility of improving the quality and capacity of the Circular Railline.

First, we examine the current economic situation of Myanmar and Yangon and consider the
implications for public transportation in Yangon. In general, Myanmar is a very poor
country of 58 million people and there is little income available for consumption. Per capita
GDP is about US$700 per year with approximately US$125 of household expenditure permonth. Yangon is the commercial hub of Myanmar with higher population densities andhigher population growth rates (3% versus 1.9%) than the rest of the country.
Figure 1: Yangon Circular Railway

This paper also briefly reviews the current transportation situation in Myanmar and in
Yangon. There is quite a bit of public infrastructure that is currently being developed under
government projects or left over from the British occupation period available for use. In
Yangon, the Circular Rail line is the sole rail-based public transportation option. It suffersfrom poor quality, low speed, and infrequent service. Thus, it is relatively underused as aresource. Currently only 130,000 commutes per day are made on the line, which comprises
only a few percent of all public transportation users in Yangon. Current fares are very low,with long trips costing about US$0.025 per ride. The bus system is currently much more1

Yangon Circular Railway Development Project

widely used. We believe that with improvements, the line can serve as the mainstay of the
public transportation system in Yangon and provide a valuable public and environmental
service for the city.

To explore the costs and benefits moredeeply, this paper looks at the financial
effects and the quantifiable societal effects
Calculated Net Present Values (US$ million)of a series of proposed improvements toConstruction
Operation
Operating
the Circular Rail line.
We find that
Cost
Cost
Revenueconstruction costs aside, the project can
367.7
545.02579.39become profitable in about 15 years when
considering only operating income andcosts. The large upfront costs associated with construction and refurbishment of existing
infrastructure presents a challenge to financing the project. Construction costs are
estimated at US$10 million per kilometer, for a total of approximately US$ 400 million. The
calculated net present values of costs and revenue are summarized in Table 1.
Table 1: Cost and Revenue Estimates for Yangon
Circular Rail Project

For a more complete analysis, we consider the social benefits of an improved Circular Rail,including environmental and social cost savings. We find that although significant, social
costs saved still do not cover the sizable construction costs. Total cost savings fromreductions in commuting time (i.e. reducing the time lost in congestion, waiting for trains,etc.) and increased consumer surplus from the reduction in generalized costs (recognizingthat the willingness to pay for this service by a large portion of the public is well above theprice charged) are calculated to be approximately US$67,000 per day and US$21,000 per
day respectively. In addition, the social benefits of the consumer surplus increases as
demand of the rail line increases. A successful project will increase demand for rail travel inYangon, which will lead to an extra benefit that is estimated to be US$ 39,400 per day. Thus,
total social cost savings are estimated to be approximately US$ 39.1 million per year.
Finally, we consider using the “Japanese model”, or integrating real estate development in
the construction of the Circular Rail line as a way to increase demand and increase revenues
for the project company. Based on the best data available, we consider the mostappropriate public private partnership (PPP) model and the costs and benefits ofintegrating real estate development into the project. Specifically, we find that real estaterevenues could be significant and contribute for huge construction cost of rail, but specificnumbers can only be calculated with the availability of better data.

2

Yangon Circular Railway Development Project1 Introduction
There are two main reasons why improvements in Yangon’s rail system are chosen for thisanalysis rather than other modes of transport, such as the bus system. The first is that a
railway system is more sustainable in supporting the “compact city” model in the long run.
Developing Yangon into a compact city, where the growth of the footprint of the city is
contained to manageable levels by maintaining high levels of population density andconvenient public transportation options, requires higher capacity and faster public
transportation. This requirement can be met by a well-functioning railway system more
effectively than by a bus system. Recent experience shows that with its huge metropolitan
population, Jakarta’s bus system can only solve the problem of high transportation demand
temporarily. The second is that railway development can attract high levels of investment
from the private sector and promote real estate development around the station. Thistypically does not happen in case of a bus system. Such incentives can enable the Yangon
local government to form public private partnerships (PPPs) such that government
spending on railway improvement can be minimized.

Socio-Economic Situation of Myanmar
Myanmar is a country of approximately
58 million people that borders
Bangladesh, India, China, Lao PDR, andThailandinSoutheast
Asia.
Approximately 70% of the populationof Myanmar lives in rural areas, where
the per capita GDP is about 600,000
kyats, or US$700.
The annual
population growth rate has averaged
1.9% per year from 1991 to 2009. In
2007, the capital of Myanmar moved
from Yangon to Nay Pyi Taw,
approximately 200km north, but
Yangon remains Myanmar’s mostpopulous city. 1

Figure 2: Myanmar and its major cities.

Myanmar has one of the world’s lowest
per capita GDP’s and therefore one of
the world’s lowest per capita expenditures. It is estimated that the average monthly family
expenditure is about US$125 at current exchange rates (780 kyat/USD).

1UN Country data.

3

Yangon Circular Railway Development Project
Figure 3: Yangon city.

Table 2: The growth of Yangon city
Year
1920
1964
1985
1991
2011

The city center is located within the yellow oval,
and the yellow half-circle to the east of the oval
indicates expansion in last 30years. The large
brown circle indicates the recent expansion andgeneral boundary of the city proper.

the country.

Population(million)

Municipal
Area(km2)

0.34

87

0.76

202

4.0

580

2.5

5.9

347

600

Suburbs, newtowns
Kanbe, Thingangun,
Kamayut, Thamine
S/N Okalapa,
Thaketa, Thuwanna

Shwe Pyitha, Hlaing
Thayar, S/N Dagon
together withindustrial zones

Yangon currently has a population of nearly 6
million people and has been growing steadily insize for the past one hundred years. The urban
population growth rate in Yangon has outpaced
national growth rate, and currently stands at
about 3% annually. Yangon is the commercial hub
of Myanmar and has the highest number ofuniversities and health care facilities of any city inYangon is located on a peninsula
Table3: Household data for citizens in Myanmar
near the confluence of the Yangon
Household Income and Expenditure Survey
and Bago rivers, about thirty
Particulars
OverallUrban
Ruralkilometers north of the Gulf of
Average
4.72
4.87
4.67
Martaban. The city itself has a large
household size
Average monthly
footprint, but the central commercial
family97,145.7
113,320.5
90,631.8
district is confined to a relatively
expendituresmall area at the southern tip of the(kyat)Per capita
peninsula. Recently, Yangon has
expenditure
20,581.7
23,269.1
19,407.2
been expanding to the east, west, and(kyat)
north in a series of both residential
and industrial projects. The highest value of real estate is located near the central
commercial district and the residential areas around the Inya Lake and Kantawgyi Lake
where the urban facilities can access easily.

Transportation in Yangon

The main railway station in Yangon, Yangon Central Railway Station, is located on
Myanmar’s 5,403-kilometer national railway network. The network consists of 858 stations.
The quality of the network is relatively poor, and many areas of the track are unusable
during the monsoon season, and most parts can only be used at up to speeds of 24
kilometers per hour. 2According to the Irrawaddy newspaper, the government of Myanmar
2 Xinhua news, http://news.xinhuanet.com/english/2009-01/20/content_10688991.htm

4

Yangon Circular Railway Development Projectis currently undertaking a plan that will extend the network by approximately 3,600
kilometers. Myanmar Railways operates both the national network of rail lines andYangon’s Circular Railway, the city’s only intra-city rail line. The loop network has 39
stations that span 45.9 kilometers, and features about 200 coaches on 21 trains that carryapproximately 130,000 passengers daily on 200 separate trips. It is estimated that theCircular Railway carries about 48 million passengers per year. The ticket price isapproximately ten kyats (about US$0.02) per ride of fifteen miles or less, and twenty kyats
for trips over fifteen miles.
Figure 4: Yangon land use plan.

The commercial district is located near the southern tip of the landmass near the confluence of the two rivers. Three
recent expansion episodes are marked with the colors purple, orange, and yellow.

Along with rail travel, commuters in Yangon also make use of taxi, ferry, and bus
transportation. It is estimated that there are more than 18,000 taxis in Yangon city, and theaverage fare is approximately 1500 kyat for a trip within the city. Ferries run across the
Yangon River to connect the areas west of peninsular Yangon to the commercial district. It
is estimated that 1,185,000 passengers take the ferry daily. Yangon has over 300 bus routes
and a fleet of over 6400 busses that make over 30,000 bus trips per day. Busses, after the
Circular Rail, are the cheapest form of transportation at about 200 kyat per trip.
Approximately 3.14 million passengers ride busses in Yangon city every day.

5

Yangon Circular Railway Development Project

Historically, ownership of vehicles in
Myanmar is low because of low per capita
GDP and because of the government’s
restrictive policies on importing foreign
automobiles and motorcycles. Recently,
the government has begun to relax suchpolicies, and it is now legal to own
motorcycles in rural areas of Myanmar.
Similarly, it has become easier and cheaper
to own cars, and it is expected that in thenear future the number of cars on the roadin Yangon and other areas of Myanmar will
increase.

Figure 5: Myanmar Railway’s and Yangon
Circular’s network. (source: Ministry of RailTransportation, Myanmar. (2011), Facts about
Myanmar Railway.

Transportation Problems in Yangon

A number of problems with thetransportation system in Yangon makecommuting difficult and time consuming.
The Circular Rail system is Yangon’s mostaffordable form of transportation, but thepoor state of the rail line contributes toslow speeds and low service levels. It has
been estimated that it takes nearly threehours to travel one loop. Trains are
overcrowded and in poor condition. The
train loop also does not extend into themain commercial district on the southern
tip of the peninsula, which means that
commuters are forced to take busses, taxis,
or rickshaws in the commercial district,which contributes to severe congestion
problems. The Circular Rail is heavily
subsidized by the government and runs asignificant budget deficit, which has
prevented further investment in thesystem to upgrade performance.

6

Yangon Circular Railway Development Project

Figure 6: Vehicles in Myanmar. (source: Fourth Regional EST Forum Presentation of Myanmar)

7

Yangon Circular Railway Development Project2 Proposed Improvement on Circular Railways
Current conditions in the railway system in Yangon show that its service quality is poor.
Low service frequency, slow speed, poor conditions of the station and its surrounding areas
are main problems faced by the current railways system. Therefore, we propose three key
objectives in improving the operation of the Yangon Circular Railway, as follows:
1. Increasing the frequency of train services
2. Improving train time schedule
3. Improving amenities inside and around stations

Objective I: Better Train Service
Better train service can beobtained by increasing thefrequency of train services
from 20 to 40 and then 80
services per day in theearly stage and medium
stage respectively. It is also
proposed that this beachieved in parallel withimproving average train
speed from 15 to 40 km/h.
There are several actions
mustbeundertaken,
including:•••Figure 7: Wooden and Precast Concrete Sleepers
Wooden Concrete

Precast(source: http://www.kwena.co.bw/kwena-productdetail.php?id=38&name=INFRASTRUCTURAL%20PRODUCTS)

Increasing the rail level. Current Yangon railway level is less than 25 cm, which is
the ideal rail level used in the world’s rail systems. Low rail levels prevent the train
from running faster since it cannot completely absorb vibrations from high-speed
rail.
Replacing wood sleepers with precast concrete (PC). One-third of the Yangon
circular railway has already been installed with precast concrete to strengthen therail system. Next agenda is to complete all sections with PC.
Replacing the current rail. With weight about 37 kilograms per meter, the current
rail is only sufficient for slow speed trains with low frequency. A bigger rail gauge,
for instance 50-70 kg/m as in Tokyo or Jakarta, must accompany higher speed andfrequency service.

Objective II: Better Time Schedule

The current time schedule is not preferable for the passengers, as trains often run not asscheduled. The uncertain schedule refrains potential passengers from using railways andencourages them to use less-uncertain modes such as bus, private car, or taxi. To fix suchproblems, we propose installation of train radio system that the train driver can use to8

Yangon Circular Railway Development Project

anticipate the transportation conditions, To avoid train collision accidents, the train radio
should provide clear communication along the railway line (JICA and Bappenas, 2004).

Objective III: Better Amenities
Better amenities are meant to increase the convenience and coziness of the train stations
and therefore attract more passengers to use railways as their mode of choice. The actions
are:
•

•

Raising the platform level. Current platform is about 30 cm above ground level.
However, this structure means the platform level is lower than train level andinconvenient for passengers. It will be dangerous as the service frequency increases.
Increasing the platform level to 1 meter will make it more convenient for thepassengers to enter the train since the platform level and the train level are about
the same. In addition, a station bridge or tunnel must be provided to accommodate
those passengers who want to cross to another platform.
Adding or improving auxiliary infrastructures such as station maps, service
schedules, waiting rooms, smoking rooms, toilets, and direction signs.

Adding plaza squares in order to accommodate transfers from any other mode of transport
to rail and vice versa (i.e. a bus feeder system) is also suggested. Adding more parking forprivate cars should also be considered as some new towns have emerged recently (i.e.
Mingaladon new town).

9Yangon Circular Railway Development Project

3 Financial Analysis
In the following section, we analyze the financial implications of the above changes andimprovements to the Circular Railway Line.

Schedule

According to the current situation of the Yangon transportation system and the generally
accepted procedures of railway construction projects, this circular railway improvement
project will be carried out as a five-year phase-in plan. The schedule is as follows:
Table 4: Project ScheduleYear 1

Phase I

Year 2

Year 3

Year 4

Year 5Phase II

Phase III

Phase I includes government plan and approval, public bidding, integration with theexisting system and other preparation work. Phase II is the construction of the new railway.
Phase III is the test ride and improvement of service.

Financial Estimations
Construction Cost
Table5: Construction Cost Examples
Average Cost

Location(mill. US$/km)

Karachi Circular
Railway`
EuropeanAverage

LRT

Jakarta Railway
ToyamaLRT
Rehabilitation

Remarks

51.6

includingaresettlement
project

14

tunnels
bridges25high quality

andThe Yangon circular railway is a doubletrackover-ground
light
rail.
The
construction work in this improvement
project includes replacing the foundationand sleepers, introduction of new tracks, andimprovement of the facilities. Here are thecosts of some similar projects from othercountries in recent years.

Compared with other countries, theinfrastructure in Yangon is poor, which
technology
AfricaLRT
5assistance frommight
bring extra costs to the project.
Average
China
However, on the positive side, the land for
the Yangon circular railway is ready and no resettlement of inhabitants is required.
Additionally, as Myanmar also could get technology aid from Japan, we take Toyama LRT
Rehabilitation Project as reference. The estimation of construction cost per kilometer would
be 10 million US dollar, which includes 9 million dollars as regular cost plus 1 million
dollars as contingency cost.
910

Yangon Circular Railway Development Project

Operation Cost
The operation cost includes service and maintenance cost. Just like construction cost, itvaries widely in different countries (Table 7). Compared with other cities, the labor cost in
Yangon is low, but human resources (i.e. managers) are limited.

Our expected annual
ridership in Yangon is
5.6
millionperannual operation cost annual ridership
Railways(million US$ / km)(million/ km)
kilometer (according to
Manila Line 1 - Philippines
1.5
7.1
the revenue estimation
Kuala Lumpur PUTRA - Malaysia
4.4
2.5
Mass Rapid Transit - Singapore
4.3
5.9
in following paragraph),
Metro Santiago de Chile
6.1
8.2
which is close to
Sao Paulo Metro - Brazil
42.9
17.7
Singapore.
However,theeconomicdevelopment level is lower than Manila. We assume in the fifth year (the year of test ride),
the operation cost would be 2 million US$ per kilometer, and there is 1% annual increase infollowing years.
Table 6: Operation Cost Example (year 2011 data)

Revenue
The current ridership of Yangon circular railway is 130,000 passengers per day. It is only
2% of Yangon population and hence there is a large amount of potential demand. Due to thebigger capacity, more trips and better service provided after the improvements arecompleted, expected ridership in the test ride year would be 700,000 passengers per day.
The forecasted annual population growth rate of Yangon is 3%, and the amount of economic
activities is assumed to increase; the expected ridership annual growth rate would be 5%.

Current ticket price of Yangon circular railway is 10 kyats for short trip and 20 kyats forlong trip. After this improvement, our designed average ticket price would be 300 kyats($0.3). Therefore, the expected ticket fare revenue would be US$ 76.65 million in the testride year and would increase at a 5% annual rate.

Interest Rate and inflation rate
This project is financed in US dollars; the current interest annual rate of USD is 1.5%. The
annual inflation rate in Myanmar is 7 to 12% in the past five years; therefore, we assume
there is an 8% average inflation rate in the years ahead.

Additionally, due to the high inflation rate, the ticket price might increase in the next 15
years. However, in our basic calculation, ticket price will be held constant as it is not easy toincrease the fare of public service. However, in the conclusion of financial analysis we will
also provide additional calculations in the case that the ticket price goes up with inflationrate.

20-Year Cash Flow

According to the cost and revenue forecast above, we have the financial balance sheet of
Yangon Circular Railway as presented in Appendix 1.
11

Yangon Circular Railway Development ProjectSensitivity Analysis
Sensitivity analysis is the study of how the uncertainty of input variables could affect the
Figure 8: Sensitivity for NPV and IRR

result. For this project, we examine the ex parte effect of the change in construction cost,
operation cost, ticket price and ridership separately. Here are the results.
12

Yangon Circular Railway Development Project

Conclusion of Financial Analysis
The net present values of construction cost, operation cost and ticket revenue are $-367.71
million, $-545.02 million and $579.39 million respectively. Additionally, if the ticket pricegoes up with the inflation level, the net present value of revenue will be $621.85 million.
Therefore the whole project can hardly finance itself; but without the construction cost, theoperation of Yangon Circular Railway is profitable in 15 years.

According to the sensitivity analysis, the operation cost and ridership are sensitive variables
for both NPV and IRR. The operation cost can be reduced by more effective management,
but we do not go to the details here. For ridership, i.e. the demand side, if there were a 60%
increase in demand, the NPV would be positive; and if there were a 200% increase, the IRR
would be 26.2%, which makes it a desirable business investment. However, in practice, theincrease of ridership will increase the operation cost, which we did not take into account inour calculations but may possibly decrease the profit. Another crucial point, which isdifficult to forecast, is the inflation rate in Myanmar. If the government could lower theannual inflation rate to 2% in the future, like other Asian countries, then 25% increase indemand would make this project financially feasible.

Although the result of financial analysis is not attractive, this project is still sociallydesirable, which will be explained in the cost-benefit analysis part; and international aid
and commercial plans could cover the financial gap, which will be discussed in our PPP
project.

13

Yangon Circular Railway Development Project

4 Cost Benefit Analysis of Yangon Circular Line
According to the financial analysis, the overall capital cost of the circular rail line is $367.7
million which covers the 5-year project construction period, with an additional annual
operating and maintenance cost of $92 million and $76.65 million revenue per year
received from the 700,000 commuters. This circular rail projects seems unprofitable
although it can integrate environmental, social and economic sustainability of Yangon in thelong term and ultimately reduce the consumption of fuel, traffic congestion and accidents. In
this context, the accompanying cost-benefit analysis of the proposed projects is quantified
in monetary expressions through social cost of automobiles, time saving for rail commutersand consumer surplus effects.

Social Cost of Automobiles

Although the automobile has allowed for convenient and easier access to remote places, it
has negative external effects for society. The distinct impact is traffic congestion that delays
motorized and non-motorized travel and also increases pollution emissions. Traffic
congestion imposes economic costs by wasting people's time and by slowing the delivery of
goods and services. In cities like Bangkok,
Figure 9: Social Cost Model. (Source: Myanmar
Jakarta or Manila, traffic congestion costs
Statistics 2010)3
account for 6% of GDP . In order tocalculate the social cost of automobiles
shadow prices of US$ 0.10 /mile/car for
United States 4 can be used which includes
congestion, pollution, fuel dependency andaccidents cost.
Myanmar, under the socialist system (for
25 years until 22 years ago), which had
not encouraged private ownership, andmilitary government system (for the past
22 years) restricted the increase of car
population with high tax and permit
system. Thus, road capacity was balancedwith car population and congestion was
not so severe, except for peak hours inYangon. Recently, government has allowed
the importation of cars and will relax thepermit system. This policy will increase
car population of Yangon and further lead
3 See Santucci (2011).

4 Parry, Walls, and Harrington (2007) analyzed and expected the external cost of automobiles used in

U.S.

14

Yangon Circular Railway Development Projectto the under-capacity of roads, higher congestion and also higher fuel consumption.

Yangon is the main commercial city of Myanmar and absorbs 50% of vehicles in Myanmar(excluding motorcycles, which are prohibited to use in Yangon). As per registered vehicles
list in 2008, the automobile population is 0.15 million, of which 74% is passenger cars, withbuses making up only 6%, although the majority of population still uses public transport.
The increased rate of automobiles is 8-10% per year and the total number increased to 0.17
million in 2010, which is expected to reach 0.25 million in 2015. If the government cannot
introduce alternative modes of public transport then the social cost for automobiles will
become higher and higher together. The Government should take steps to alleviate thisescalating problem by considering efficient public transport that can further replace theprivate car usage and reduce mounting social cost of cars.

Social Benefit of Circular Railway Improvement

Automobile-dominated transportation is a major contributor to air pollution. Many cities
throughout the world are implementing strategies to reduce dependence on private
vehicles and increase the use of public transport. A sustainable transportation system suchas fuel-efficient and ecofriendly transportation system (e.g., bus rapid transit and electrictrain system) has been identified as a feasible strategic plan.

Although Yangon has operated the local commuter rail network that serves
the metropolitan area, the ridership is only 3% (0.13 million) of public transportation users
because of low quality of rail service with long commuting times. Up to 76% of Yangon citydwellers (4.5 million) rely on public transportation, especially the bus system, to commute
from suburban areas to the central business district. Public transportation in Yangon,
mainly buses and rail, is the most affordable mode of transport for those who have low per
capita income and unable to own cars and motorcycles. That is indeed a good foundation to
implement a sustainable transportation system. If the railway service can be improved to aregular schedule and faster service then demand for train will surely increase.
The expected user benefits will be obtained from several sources. These include reduction
in travel times that users of present circular rail receive, benefits to users of other modes
receive as a result of lower congestion, savings in the costs of other modes and reductions inemissions as a result of travelers being diverted from bus and auto to the rail. Because of
the time constraints and lack of data availability for further analyses, the cost benefit
analysis can focus only on time cost saving and additional consumer surplus of rail
commuters.

(i) Travel Time Cost Saving: At present the circular rail takes at least 3 hours to finish one

loop of 45.9 km, which leaves Yangon station and passes Mingaladon and Insein and arrives
back to Yangon. Most of the commuters need to travel only the half loop to commute central
business district and suburban area where the airport, highway bus gates and wholesalemarket exist. Travel time costs for present rail commuters (0.13 million/day) are based on
the per capita GDP of Yangon and roughly calculated as US$0.5/ hour. The present
commuters are spending US$ 37million/year for travelling with circular train. After the
projects, the travel time for half loop will reduce to 35 minutes from 90 minutes and save
US$ 24.7 million/year, which can increase commuters, and economic activities.
15

Yangon Circular Railway Development Project
Figure 10: Time Cost Savings
Yangon-Mingaladon-Insein-Yangon (45.9km) Travel TimeFor half route travel time cost (90 minutes) = US$101,562/day (without project)
For half route travel time cost (35minutes) =US$33,854/ day (with project)

Time cost saving= US$ 67,708 /day (For present rail commuters of 0.13 mn)(ii) Additional Consumer Surplus: In addition to increased operating revenue from the rail

service, the circular rail improvements can provide extra benefits in terms of increased
consumer surplus. The impact of transportation improvement upon users of the service ismeasured by consumer surplus. The consumer surplus exists because users’ willingness to
pay is higher than the actual charged price for the service. The service can generate
additional
consumerBox 1: Additional consumer surplus
surplus by reducing thecost paid by consumers.
In fact, cost paid by the
consumers to make a trip
is the combination of fareprice and travel time cost,which is the generalized
cost for transportation.
Therefore, transportation
improvement
reduces
the generalized cost of
travel by improving
mobility, which in turnleads to an increase in
consumer surplus.
Thoughthepresent
ticket fare US$ 0.025 is
far cheaper than othermode of transportation,
time cost is higher andthus generalized cost foratrip
becomeUS$0.78/commuter.
After improvement, it
will reduce to US$0.67
per commuter as it candecrease time cost ofcommuting. A reductioningeneralized
cost
generates
rail
user
benefits ($21,125/day)16

Yangon Circular Railway Development Project

which can apply for existing users and increased commuters as shown in Box (1).

The demand curve for the rail transport is determined by the ticket price, travel time andpopulation catchments around the stations. Thus, the quantity demanded varies as the priceand time needed to use the service varies. In addition, the impact of new housing projects
around the stations can alter the demand schedule as people want to consume housing neareasy transportation. In fact, this is the general equilibrium demand curve, which isinterrelated with changes in various goods markets, such as housing and commercial
activities around the stations and cost of other transport modes.
Box 2: Increased demand

Although the ticket price is set higher (300 Ks) than present charges (20 Ks) the ridershipcan be greatly increased to 0.26 million (double in 1st Year) because of decreased
generalized cost. However, this cost will become constant for a certain period after rail line
improvement and service providers have diversified other businesses and services to alter
the quantity demanded at any given price.
With increasing population, Yangon needs more entertainment sites and proper housing
estates with easy access and affordable prices. If the rail operators can engage in other17

Yangon Circular Railway Development Projectbusinesses related to the urban life support industry, such as real estate development,
entertainment and retail, the demand curve will shift out to the right and achieve ridershipof 0.6 million/day. Furthermore, the improvement of government support policy for rail
operators investing in urban development can attract private construction groups to invest
in rail service and provide estate projects in suburban areas. Thus the demand curve forrail service will shift out by promoting the real estate market and may reach 0.7 million/day
even though the fare price are set higher to cover the operating cost.

In order to realize the ambitious demand forecast, government support for the rail operator,
who also will act as a land developer, is critical. The ridership can increase year by year
together with increasing demand of other services and both consumers and producers ofrail transport will become better off. User benefits of the 0.7 million commuters include
both the consumer surplus ($0.0394 million/day) and the revenues from rail ($0.273
million/day) as shown in Box (2).

Impact on Bus Transportation

Yangon bus transportation system has been gradually improved with private sector
involvement and extends the network to most of the urban area, although government
strictly controls the bus fares (50-200 Kyats). However, insufficient management of theproliferation of routes, the poor quality of vehicles, inadequate bus networks, and lack offinancial support are the problems faced by the bus system, which cause on-the-roadcompetition and threaten the safety of the public. Government can settle those problems
through the integration of rail and bus operation network.

Circular rail service improvement may affect indirectly the demand of the secondary market(bus transportation and taxi, with approximately 7000 taxi cars, and 283 bus lines with
6839 buses). If there is no price distortion, benefits and costs of indirect effect can cancelout each other and the secondary market changes can be omitted. In addition, small
capacity bus and track used in existing bus transportation can be modified into feedertransportation to access terminal stations and main bus routes, so demand for secondary
market cannot alter the demand situation extensively.

Conclusion for Cost Benefit Analysis

As noted above, implementation of the rail system will bring social benefits of reducing
social cost of automobiles, increasing commuters’ benefit and additional benefit such asenvironmental benefits, transportation safety, and productivity improvements. Moreover,rail transit can encourage more efficient land use and compact development patterns if the
projects can integrate well with other modes of transportation and urban planning. The
impacts of those benefits are difficult to quantify in monetary terms without a detailed
analysis. Actually, the project can be profitable and the huge fixed capital cost can be
subsidized through the real estate and commercial services by imitating the Japanesedevelopment model. In Japan, railway companies can survive and provide sustainable
services by incorporating residential and commercial projects in rail operations that canincrease land values, land productivity, and generate revenue. Therefore, the public private
partnership scheme is proposed as a way of implementing the real estate solution into the
Circular Railway project.

18

Yangon Circular Railway Development Project

5 Public Private Partnership Model
This section intends to propose a scheme for a PPP and real estate development for the
Yangon Circular Railway development project. The PPP aims to solve problems that exist in
Yangon circular railway. The real estate development scheme focuses on the business profit
side, providing funds to capitalize the transportation system.

The main problems that exist in
the old railway system include oldinfrastructure
and
lack
of
maintenance support, capital
shortfall,bureaucratic
management and low efficiency,
limited experience in railway
planning and development, and no
incentive for innovation (Figure11). Among these, capital shortfall
and technical inexperience are thetwo most urgent problems thatcannot be solved by public sector
alone. With the permission to pursue of foreign investment from central government, therailway improvement project can benefit from a private partnership. The private sector cancontribute by helping to solve above problems, while providing capital and technology
transfer for better transportation service.
Figure 11: Justification for the PPP model

The Proposed PPP Structure of Yangon Railway Project

The PPP structure can be divided into three parts. The first part is capital source. In order tosmooth the project financing process, there are three capital and equity providers,
government, equity investors and financiers. Second part is to select one contractor torebuild the Yangon Circular Railway. For typical PPP projects, the Project Company or Joint
Venture Company outsources construction and maintenance to contractors. Therefore, we
could see in the middle of the graph below, the project company plays the role of the agentof the principal and constructor (Figure 12). The third section is the capital inflow from the
PPP project. There are two main methods that could be used to accumulate capital inflow torecover the debt from financiers and provide future dividend for equity shareholders: one is
the railway transportation operation, and the other is the real estate business. The income
from real estate business mainly accrues from both the land price increase and thedevelopment of land for condominiums and commercial use.

19

Yangon Circular Railway Development Project

Railroad Development for Efficient Transportation Service
Partnership
Public Sector
Ministry of Railway Transportation (“MRT”) is in charge of railway and road transport in
Myanmar; hence, it represents the public sector for the development of Yangon circularrailway. 5
Figure 12: Proposed PPP Structure for Yangon Project

Private Sector
Project Company (“JV Corporation”) is in charge of the construction and maintenance of
Yangon circular railway, and also the improvement of infrastructure like the addition of
sleepers. The selection of the constructor would involve international bidding, with thewinner admitted to this program.
PPP type and Risk sharing mechanism

Designing the risk-sharing mechanism between public and private sector is a critical role ofeach party in the PPP project. In adopting the Develop-Operate-transfer (DOT) model, we
can divide the risks shared between public and private sector in the following way. The
public sector mainly takes the burden of regulation risk and contingent liability while theprivate sector mainly takes the burden of design and development risk, construction risk,
performance risk, revenue risk, environmental risk and financial risk. The risk-sharing
5 Ministry of Rail Transportation, Myanmar --Facts about Myanmar railways 201120

Yangon Circular Railway Development Projectmechanism like this could properly reduce the risk that is originally wholly shouldered bypublic sector in the case that PPP model is not used. This would change the role of the
public sector from service provider into regulator, which could largely improve theefficiency of project. The DOT model
Figure 13: DOT and BOT Structure
could fully benefit from the realestate development revenue as acapital source and ensure a stable
return from operational revenue inticket fees from the public. Joint
Venture Corporation is founded
specially to coordinate and combine
the MRT and private sectors, tomake sure the government involves
in every decision of the railway
development project. It could be
divided into two divisions, one forrailroad development, and the other for real estate development. In railway development
division, only one DOT private developer is chosen to take the responsibility. The DOT
developer could be granted fare adjustment rights under the regulation of the MRT. Also,
the subsidy from the MRT and the real estate income collected by the DOT developer would
ensure sufficient capital necessary for railway development and operation (Figure 13). As apart of the DOT model, the developer has been entitled the right to develop properties orgain partial revenue from auxiliary businesses. This makes the DOT model more flexible
than BOT in finding capital sources.

Real Estate Business as A Way of Covering the Financial Shortfall
Partnership
Public Sector

The MRT is in charge of railway and road transport in Myanmar; hence, it cooperates withthe concerned institutions, and represents the public sector for the development of Yangon
circular railway.
Private Sector

BOT developers are in charge of the real estate development. A corporation experience inreal estate and business development can bring more profits to the project by incorporating
the development of railway station department stores, rental housing, feeder transportationand other profitable programs. The development of auxiliary business could help to fully
realize the potential of the commercial value of the land and generate revenue from realestate purchases of local citizens, which will help to compensate the loss from initialconstruction of the improved line and transportation operation. As at the beginning of the
program, the capital burden is much higher than the later part, and revenue generated not21

Yangon Circular Railway Development Project

only from the natural increase of land price but also from successful side businesses would
help release the capital pressure faced by the government.
Capital balance from real estate

As a rough calculation, let us examine
Figure 14: Capital Balance
how much money would have to begenerated from real estate to make theproject feasible. As we can see thecapital balance (Figure 14), let us
assume that the percentage of debt
under debt to equity ratio is 2:1.
Therefore, the capital inflow includes$111.11 million real estate revenue (K isthe ratio of debt according to debt toequity ratio), financing debt of $222.23
million as well as operating revenue$579.39 million. The inflow equals the outflow part on the right with operating expenses of$545.02 million, construction cost $367.71 million and contingent liability (included in NPVof construction cost). The total balance of capital is $ 912.73 million.
Land acquisition planningLandacquisition
anddevelopment
couldbe
implemented in the districts asshown in Table 7. Government
owned and Myanmar railway
owned land could be contributed
for area development projects
with PPP system. According toother real estate projects in
Myanmar undertaken by the
Departmentof
Human
Settlement
andHousing
Development, the land tenure
can be expected to be 60 years
for residential use and 50 years
for commercial use. The project
life of a PPP, therefore, should belong enough to realize a returnon investment.
The land acquisition in Insein,
Tokyaunggale
andWaibagi

Table 7: Land acquisition data
US$/acreArea(acres)land cost(mill)
Intended
population(mill)

0.0125- 1

InseinYangonTokyaunggale

Waibagi

50

7.41
7.41

50

0.625

50

0.625

0.2

1.4

0.2

0.2

0.625

Figure 15: Land acquisition areas for the Yangon Railway
estate project22

Yangon Circular Railway Development Project

would be 50 acres each for the land prices in these districts are relatively cheaper as it is theoutskirts of city. With the development of the railway system, the land price would naturally
increase thus could generate high revenue that would make up for the construction cost andoperation fees. Different real estate developers could undertake those different districts
using the Built-Operate-Transfer (“BOT”) model for market competition in real estate
projects around the stations. The JV Corporation real estate division takes charge of land
adjustment affairs and coordinating BOT developers from different stations.

Key Considerations for Implementing a PPP Project

PPP is one way to get capital financing and improve the efficiency of public infrastructureservice providing. However, in order to run a smooth PPP project, there are also some key
considerations that should be put an eye on before the construction begins.
(1) Proper legal environment for implementing PPP project

The legal environment for both public andprivate sectors ensures the proper right ofprivate investors as well as the regulationrole of public sector. The steps for
implementing PPP project should at least
include five parts (Figure 16). The firststep is to have a strong legal framework tosecure public and private interests and to
reduce long-term uncertainties. This isimportant because the amount of capitalnecessary is huge, the repayment schedule is long, and the welfare of the public is involved.
Aside from the legal issues related to the project development, land use regulations are inpriority to be considered since it can directly affect the main source of revenue for the
project company. Finally, regulations for foreign direct investment and the right
permissioned for private participation in public services and real estate should be key
considerations. Above all, it require refined and well-designed legal framework for
implementing public-private partnership in Myanmar.
Figure 16: Implementation Steps(2) Proper financing way to ensure the balance between public and private sectors

In Sullivan (2009), the author discussed two ways that can be used to maintain the public
control while getting a first rate railroad facility: Fee-based V.S. Ownership financing. Feebased financing sources the capital based on a consulting contract, the private sector would
not bear any of the risk of the project’s failure. The ownership financing, on the other hand,might take a long-term lease over a real estate property, hence shifts both risk and reward
to the private sector. This could also be considered in Yangon circular railway development
project.
From the private sector’s perspective, the ownership financing would be desirable because
the private sector could benefit from a significant financial return. Although the adoption of23

Yangon Circular Railway Development Project

BOT model in this program requires the selected real estate developers to shoulder theburden of construction risk as well as operational risk, under the land tenure provisions, theprivate sector could earn large financial returns that can make up for losses on railway
operations. In addition, if the government is able to subsidize the railway operator, it could
multiply the benefits for them. However, without further analysis, the optimal length oftime to ensure the proper revenue generated for private developers and proper land
property control for the public sector is unclear.

From the public sector’s perspective, the fee-based financing seems more prudent as it
avoids property transfer, which directly protects the revenue that generates from the realestate sector. However, it would increase the financial burden of public, which may also
affect the railway demand. As the riding fare will definitely be increased as a part of the
improvements to the railway system, some customers may choose the bus or othertransportation to avoid paying the higher railroad fare. Nevertheless, if MRT subsidies therailway operator enough to compensate the loss from railway operation, it may be able touse fee-based financing and keep the ticket fare affordable by public.
(3) Experience and key aspects for successful international bidding and negotiation

Public-private negotiation could benefit from the experience of developing the railway
system in the US and Ørestad, Copenhagen. The negotiation procedure between the public
and private sector certainly demands a strong agenda and well-developed negotiating skillson the part of the government (Majoor, 2008). Empirical research shows that cities withstrong-will and high-quality negotiation skills can get better results for the project (Savitch
and Kantor, 2002). The lack of planning concepts and effective planning tools are thebiggest shortcomings affecting the project success. Hence, the progressive planning ideals 6that had been used in the case of Ørestad, Copenhagen, a well-designed agenda and welldeveloped negotiating skills would be critical for the success of Yangon circular railway
development project.

For successful international bidding and negotiation, besides above experience, there are atleast four aspects needed to be included in international bidding and negotiation: the priceadjustment mechanism, the regulation mechanism, financial issues and assessment criteria.
The price adjustment mechanism ensures the benefits for private participators; theregulation mechanism ensures the right of public under government control; the financial
issues ensure the financial supply and demand of PPP project; and the assessment criteria
ensures the quality of facility gained by public. These four parts may ensure the smoothnessof PPP project and result in a win-win agreement among private investors and thegovernment.

6 The progressive planning ideals aimed to marry grand economic investments with long-term development of certain community benefits. See the article in the bibliography.

24

Yangon Circular Railway Development Project

Conclusion
This paper considered several aspects of a project to improve the Yangon Circular Rail line.
The current problems plaguing the system were investigated and a series of improvements
were proposed. The financial implications were calculated, which showed that construction
costs were large and significant, preventing the “bankability” of the project without othersources of revenue. To this end, this paper looked at the social cost savings provided by ahigher quality rail line, and while significant, they are still smaller than the initialconstruction costs. Finally, we examined the possibility of using a PPP project structure tofinance the project, providing an opportunity for the project company to derive additional
revenue from the development and sale of real estate as a side business. There is significant
potential here, but concrete cash flow projections are difficult to calculate because of lack ofavailable data, population catchments and the unclear state of land law and land usage
rights in Myanmar.

25

Yangon Circular Railway Development Project

Acknowledgements
First and foremost, we would like to express our gratitude to Professor Yoshitsugu
Kanemoto, University of Tokyo for providing the course of Real Estate and Urban
Development Policy and organizing lectures of practitioners from the real estate sector.
Through those lectures, we had the opportunity to undertake this study. We are extremely
grateful to him for his valuable guidance that allowed us to complete this paper, and forproviding hard-to-find documents and research papers. We want to extend our appreciation
to Mr. Takeshi Mugishima from Japan Housing Finance Agency, Mr. Shuji Tomikawa, Mr.
Chishu Zushi, and Mr Yukinobu Takiyama from Mitsui Fudosan, and Mr. Junji Shibata from
Oriental Consultants Co., Ltd. for their advice and comments. We also thank to Mr. Kaburaki
and Mr. Taniwaki from CTI Engineering Co., Ltd. for their valuable inputs, especially inregards to the technical analysis of the railway improvement. All errors and omissions are
our responsibility.

26

Yangon Circular Railway Development Project

Bibliography
Boardman, A. E, D. H. Greenberg, A. R. Vining and D. L. Weimer. (2010), Cost-Benefit Analysis:
Concepts and Practice, Fourth Edition. Prentice-Hall, Upper Saddle River, NJ.

JICA and Bappenas. (2004), The Study on Integrated Transportation Master Plan for
JABODETABEK (Phase II), Final Report.

Kanemoto, Y. (1984), Pricing and Investment Policies in the System of Competitive Commuter
Railways, Review of Economic Studies 51, 665-681.

Santucci L. (2011), Eco-efficient and sustainable urban infrastructure: Key issues andstrategic principles, ESCAP.

Ministry of Rail Transportation, Myanmar. (2011), Facts about Myanmar Railway.

Saito N. and H. Kato. (2011), Comparative study on institutional system of urban bus
transportation: Bangkok, Hanoi, S’pore, Tokyo and Yangon, Eastern Asia Society forTransportation Studies, Volume 9.
Majoor, S. (2008), Progressive Planning Ideals in a Neo-liberal Context, the Case of Orestad
Copenhagen. International Planning Studies. Vol.13, No.2, 101-117.

Saito T. (1993), Private Railway Industry, Koyo Shobo (in Japanese).

Mugishima, T. (2011), Tsukuba Express Project, lecture notes.

Parry, W. H., M. Walls, and W. Harrington. (2007), Automobile Externalities andPolicies .Journal of Economic Literature, Volume 45, Issue 2, 373-399.
Sullivan, A. H. (2009), Rail Station Renovation Studies: Recommendations for the
Redevelopment of New York City’s Pennsylvania Station. John F. Kennedy School ofGovernment.
http://www.hks.harvard.edu/var/ezp_site/storage/fckeditor/file/pdfs/degreeprograms/oca/Sullivan_Rail%20Station%20Renovation%20Studies.pdf
Presentation of Myanmar. (2008), Third Regional EST Forum,(http://www.uncrd.or.jp/env/3rd-regional-est-forum/doc/23_Myanmar.pdf)

Transportation Economics & Management Systems, Inc.,(2006), Midwest Regional Rail
Initiative Benefit Cost & Economic Analysis.
(http://www.dot.wisconsin.gov/projects/state/docs/mwrri-economic.pdf)

Victoria Transport Policy Institute. (2009), Transportation Cost and Benefit Analysis.
(Second Edition), Chapter 2 Literature Review (www.vtpi.org).

27

Yangon Circular Railway Development Project

APPENDIX (1) 20-Years Financial Balance Sheet (US$ million)
Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
NPV
IRR

Construction-114.75-114.75-114.75-114.75
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

Operation00
00-91.80-92.72-93.65-94.58-95.53-96.48-97.45-98.42-99.41-100.40-101.40-102.42-103.44-104.48-105.52-106.58-367.71-545.02

Revenue
0
0
0
0
76.65
80.48
84.51
88.73
93.17
97.83
102.72107.85113.25118.91124.85131.1
137.65144.54151.76
159.35579.39Net Currency-114.75-114.75-114.75-114.75-15.15-12.24
-9.14
-5.85
-2.36
1.35
5.27
9.43
13.84
18.51
23.45
28.68
34.21
40.06
46.24
52.77
-333.34-4.17%

Here r = interest rate =0.015; f = inflation rate = 0.08;
20

NPV = net present value =Vi∑ (1 + r + f ) ;i

i =1

IRR = internal return rate, 0 =20Ci∑ (1 + IRR) .
i =1

i

28

Yangon Circular Railway Development Project

APPENDIX (2) Sensitivity Analysis
construction cost
NPV($ million)

-50%

0%

-6.6%

-4.2%

ticket price

-33%

0%

-333.357.9%

annual ridership%change in NPV
IRR

0-526.5%change in NPV

NPV($ million)%change in NPV-517.2-0.01%

IRR

55.2%-333.3-55.1%

NPV($ million)

operation cost-149.5%change in NPV
IRR

+50%

+33%

-140.2

NA

0

-4.2%

-57.9%

-25%

-10%

0

5.0%

-478.2-391.3-333.3

NA

-8.8%

-4.2%

43.5%

17.4%

0

-20%

0%

+20%

NPV($ million)-224.3-333.3-442.4

IRR

1.4%

-4.2%

-12.6%

2%

5%

8%

ridership increase rate

-32.7

0

NPV($ million)-430.3-333.3

IRR

NA

-4.2%

%change in NPV+10%-275.4-17.4%
-0.8%

29.1%

32.7%

-208.80-37.4%
3.3%

+25%

+50%

+100%

+200%

-43.5%-86.9%-173.8%-347.6%-188.5

3.2%

-43.7

8.2%

246.0

15.6%

825.4

26.2%

29

Yangon Circular Railway Development Project

APPENDIX (3) Economic surplus Calculation30