WASHINGTON DC, October 26, 2020 – MIGA, a member of the World Bank Group, has issued guarantees to Korea Land & Housing Corporation of the Republic of Korea (LH) covering its equity investment of up to US$5.7 million to the Korea-Myanmar Industrial Complex Development Co., Ltd (KDC) for a period of up to 15 years. MIGA is expected to further cover a loan guarantee issued by LH to a commercial lender. The MIGA guarantees provide protection to LH against the risks of Currency Inconvertibility and Transfer Restriction, War and Civil Disturbance and Breach of Contract.
MIGA’s guarantees will support the development, financing, construction, subleasing, and operation of the Korea-Myanmar Industrial Complex (KMIC) in Nyaung Hnit Pin, located in the populous northern part of Yangon and the economic center of Myanmar. When operational in 2022, the complex will support Myanmar’s economic growth and industrial advancement by creating a new industrial park with modern infrastructure, attract private sector investments, create new jobs and generate tax revenue for the government, and amplify economic impact through indirect job creation through its tenant companies, vendors, and partner companies.
A complex legal framework on land usage, high land prices, lack of access to electricity, and underdeveloped infrastructure have been key constraints for business operations and private sector investment in Myanmar. MIGA’s private sector guarantees and LH’s investment in the industrial complex will help build confidence in large-scale investment projects, strengthen supply chain linkages, and encourage foreign equity investing—all part of the long-term development strategy of the Government of Myanmar (GoM).
“The development of KMIC will create jobs, strengthen the supply chain, and improve Myanmar’s industrial competitiveness,” MIGA Executive Vice President Hiroshi Matano said. “MIGA’s involvement encourages investor confidence through its ability to work with investors and Governments, and as a member of the World Bank Group.”
Approximately 71 percent of the complex will be reserved for industrial areas designed for subleasing to tenant companies. These areas will be designed to meet the specific needs of different industries, such as textiles and garment manufacturing, food and beverage processing, parts and electronics manufacturing and assembly, and logistics. Additional shared facilities and infrastructure will also be constructed within the complex, including roads and footpaths, water drainage, an electricity and electrical substation, landscaping and open spaces, a wastewater treatment plant, a water purification plant and other public amenities.
“The Complex will help create jobs and boost local economies by accommodating international enterprises,” LH Vice President of Global Business Division Yongsam Lee said. “With MIGA’s guarantee, LH will be able to develop the Korea-Myanmar Industrial Complex under internationally renowned performance standards. Upon completion, LH will continue monitoring progress, with an aim to ensure provision of a quality work environment and a smart-green industrial complex in Myanmar.”
The land at the industrial site is owned by GoM and will be leased to KDC for 50 years. The entire industrial complex of 2,249,288 m2 will be developed in two phases. Construction is expected to start on Zone A in early-2021, will take approximately 2 years, and entail land clearance, site preparation and design and construction of common infrastructure. The second phase of the development, Zone B, will be implemented only if 75 percent of the sublease payments for Zone A have been received. KDC is a joint venture company owned by LH (ownership share: 40 percent), the GoM’s Department of Urban and Housing Development of the Ministry of Construction (40 percent), and Global Sae-A Company Limited (20 percent).
LH was founded in 2009 through a merger between the Korea Land Corporation (KLC) and the Korea Housing Corporation. LH is a government-owned corporation responsible for the development, supply, and management of land, cities, and housing properties in the Republic of Korea. Operating since 1962, LH, through KLC, has been developing 79 industrial complexes in Korea, which account for 14 percent of the country’s industrial complexes covering a total development of 201 km2. LH currently has 6 similar industrial parks under construction. LH is rated as Aa2 by Moody’s and AA- by Fitch.
MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment in emerging economies by helping mitigate the risks of restrictions on currency conversion and transfer, breach of contract by governments, expropriation, and war & civil disturbance; and offering credit enhancement to private investors and lenders.
Since its creation, MIGA has issued over $59 billion in guarantees across 118 developing countries.
The World Bank Group, one of the largest sources of funding and knowledge for developing countries, is taking broad, fast action to help developing countries strengthen their pandemic response. It is supporting public health interventions, working to ensure the flow of critical supplies and equipment, and helping the private sector continue to operate and sustain jobs.
The World Bank Group is making available up to $160 billion over a 15-month period ending June 2021 to help more than 100 countries protect the poor and vulnerable, support businesses, and bolster economic recovery. This includes $50 billion of new IDA resources through grants and highly concessional loans and $12 billion for developing countries to finance the purchase and distribution of COVID-19 vaccines.
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