Japanese firm, Sumitomo Corporation will replace Chinese as financial partner in Yangon Central Railway Station Development project19 Sep 2019
Japan’s Sumitomo Corporation will act as financial partner for the Yangon Central Railway Station Development Project, replacing China’s Sino Great Wall as part of a consortium selected to implement the project, according to U Ba Myint, Managing Director of Myanma Railways.
“Sumitomo approached us as a new investor in the Yangon Central Railway Station project while we were seeking a new partner to replace Sino Great Wall,” he said.
‘’Now, Sumitomo will participate in the project as financial partner. We are expecting to finalise the arrangement between the other partners and seek approval from the government soon, U Ba Myint added.
U Aung Thu Latt, General Manager of Myanma Railways, said the decision to choose Sumitomo came after advise from international consultancies. He added that the original terms and design of the project will remain unchanged.
Sino Great Wall, which is listed in Shenzhen, China, is being replaced due to mounting debt problems arising from its extensive portfolio of projects in the region. Earlier this year, it was investigated by the Chinese authorities for failure to properly update investors about major projects and recording transactions with dubious companies.
Aside from the railway project, Sino Great Wall is also involved in several other real estate projects in Myanmar led by local developer Mottama Holdings and Singapore developer Oxley Holdings. These include M Tower on Pyay Road and Min Residences, a large-scale condominium project on Mindhama Road.
Last year, Mottama Holdings announced that it had a total of nine major projects valued at US$1 billion in the pipeline which it expected to be completed by 2022. These included M Tower and Min Residences as well as an aquarium inside Kandawgyi Park. All the projects have yet to be completed.
Both Mottama Holdings and Oxley Holdings are also part of the original consortium selected to develop the Yangon Central Railway Station project.
In fact, Singapore-listed Oxley Holdings has also been under scrutiny for its high debt levels. Earlier this year, analysts in Singapore flagged the company for potential debt stress.
While it managed to lower its gearing levels to just over 2 times from 2.5 times in the previous financial year, Oxley’s total borrowings rose to S$3.6 billion as at June 30, 2019, the bulk of which fall due within the next two years, according to the company’s financial statements.
The Yangon Central Railway Station, which will take at least eight years to complete, is expected to link the south of Yangon to the downtown business district and promote more extensive trade and economic growth across Yangon.
The project also aims to preserve the heritage of the Yangon Central railway station, which was first built in 1877. Work will be done refurbish and extend the station to include residential units, shared spaces and a railway museum.
Expressions of interest for the development of the project were first called by the government in 2015 and 15 companies were shortlisted for the job.
In 2018, the Central Transport Development Consortium was selected as the preferred bidder for the redevelopment of the $2.5 billion, 63.5-acre project. The consortium comprised Oxley Holdings, Sino Great Wall and Min Dhama Co Ltd, which is controlled by Mottama Holdings.