Incheon to Build New Airport at Yangon: Southeast Asia

Dexter Tan gets a weekly reminder of the challenges Myanmar faces in catching up with the world when he lands at Yangon’s international airport.

“The airport doesn’t seem to be very business focused,” with long immigration lines and only a few baggage carousels, shops and restaurants, said Tan, 55, treasurer of the Malaysian Myanmar Business Council. “There are no international standard eateries like McDonald’s.”

That will change in coming years after Incheon International Airport Corp. was awarded the $1.1 billion contract to build a new international airfield last week. The Korean company, owner of the Seoul airfield that has been rated the world’s best for the past eight years, will help quintuple the city’s passenger capacity by 2018.

The upgrade is part of President Thein Sein’s efforts to create jobs in one of Asia’s poorest countries. The U.S. eased sanctions last year and the European Union and Japan wrote off loans owed by the nation, which McKinsey Global Institute estimates needs to spend $320 billion on infrastructure by 2030 to lift economic growth to 8 percent. That has already brought investments from Coca-Cola Co., PepsiCo Inc. and Unilever Plc.

“With scant investment in infrastructure over the past many decades, Myanmar is in massive need of infrastructure upgrades in almost every sector,” said Daniel Gelfer, director of Singapore-based political risk consultancy firm Vriens & Partners. “Even though they are the newest airports in the country, the Mandalay and Yangon airports are in need of updates in order to handle tremendous increases in tourist and business visitors.”

McDonald’s Outlets

McDonald’s Corp. hasn’t set a firm date for development of its outlets in Myanmar and “in the future we may take steps” to open its locations in the country, the world’s biggest restaurant chain said on its website.

Incheon, ranked the world’s best since 2005 by the Airports Council International, and its partners were chosen as the preferred bidders to build a new airport at Hanthawaddy, about 60 kilometers (37 miles) away from Yangon.

This facility will be able to handle 12 million passengers annually when it opens for business in 2018. The city’s existing airport is also aiming to more than double its capacity to 5.5 million by 2016.

“There are difficulties expanding the existing Yangon International Airport,” said Daw New Ni Win Kyaw, an assistant director at the Department of Civil Aviation, in an interview Aug. 12. “The current airport is small and we plan to have both airports operational.”

1947 Terminal

Yangon’s existing airport opened a new terminal in 2007 for international travel, while a facility built in 1947 is used for domestic flights. That includes Singapore Airlines Ltd. and Cathay Pacific Airways Ltd.’s Dragonair unit.

The airfield at capital Naypidaw, Myanmar’s biggest with a capacity to handle 5 million passengers, is served by 18 international carriers.

AirAsia Bhd., the biggest budget airline among the members of the Association of Southeast Asian Nations, Asean, is also planning to add flights to Myanmar.

“Myanmar is the next big thing within Asean,” said Shukor Yusof, a Singapore-based aviation analyst at Standard & Poor’s. “This is the last frontier.”

Coke, Best Western

President Thein Sein signed a foreign investment bill in November to woo overseas investors. Companies scouting opportunities or striking development agreements include Visa Inc., the biggest payments network, Unilever, and closely held hotel chain Best Western International Inc.

Coca-Cola, the world’s largest soda maker, opened a bottling plant in June and pledged investment of $200 million in Myanmar over the next five years after leaving the country about six decades ago.

The nation is boosting economic, military and political ties with Western nations after years of isolation that left its 64 million people among Asia’s poorest. Its transition to democracy last year after about five decades of military rule prompted the U.S. to ease sanctions.

The economy may grow 6.75 percent this fiscal year, led by natural gas sales and investment, the International Monetary Fund said in a May report.

That growth will bring in more tourists and businessmen, who will expect better amenities, like in Singapore’s Changi airport, says Tan. Changi has plenty of retail stores, duty-free shops and eateries, he says.

“When you step into Singapore airport, you are spoilt for choice,” he says. “Yangon is the exact opposite of that, and as a traveler from Singapore to Yangon for the first time you have to manage your own expectations.”

Before it's here, it's on the Bloomberg Terminal.