Korea Myanmar Industrial Complex

MIGA has been approached by Korea Land and Housing Corporation (LH) (the Guarantee Holder) to cover equity investment and a loan guarantee in Korea Myanmar Industrial Complex Co., Ltd (KMIC or the Project Company) for the development, construction and long-term lease of a 2.2 square kilometer (km2) industrial complex (the Project). The Project is located adjacent to the Nyaung Hnitpin Livestock and Agricultural Zone No.3 in Hlegu township, approximately 40 km north of Yangon.

The Project is being developed by KMIC, a joint venture between the Government of Myanmar (GoM) through the Department of Housing and Urban Development (DHUD) under the Ministry of Construction (MoC) and a consortium of two Korean companies (LH Consortium) LH and Global Sae-A Co., Ltd (Sae-A). The Project will be developed in two phases - Zone A approximately 56% of the land, developed by mid-2023 with construction expected to last two years; Zone B represents the remaining 44% of the land, and its implementation is conditional upon 75% of Zone A subleases having been secured, currently expected in late 2023. MIGA’s coverage includes Zone A only.

LH is a State-Owned Enterprise that is wholly owned by the Government of South Korea. It was established in 1962 with responsibility for development, supply and management of land, cities, industrial facilities in Korea. LH has developed over 90 industrial complexes. Sae-A is one of the largest apparel manufacturers in the world and is seeking to expand its business into property development. Sae-A also has experience in developing industrial parks from its investment in Caracol Industrial Park in Haiti, a Public Private Partnership with Government of Haiti, the Inter-American Development Bank and the US Government.

The Project site is situated within an area known as the Nyaung Hnitpin National Convention Compound which is a disused facility that includes a hall, hostel, theater and hospital. The facility has not been in use since 2008, the facility is overgrown with vegetation and is in an unkempt state. The ownership of the land was transferred to the MoC in 2009. KMIC will enter into a land lease agreement with the MoC to use the Project site for 50 years.  The Project site is largely vacant, and access is restricted There are however nine households residing within the Project site and one immediately adjacent to it. 

The current land use in the surrounding area is predominately small-scale agriculture with some livestock breeding, including poultry farming and fish farming. There are six communities in the vicinity of the Project Site: i) Kya Inn East (4.5 km to the north); (ii) Kya Inn West (6.5 km to the north); (iii) Kya Kan (4.5 km to the south), (iv) Nyaug Hnit Pin (6.5 km to the south); (v) Sone Kone (4.6 km to the north) and (vi) Ta Gu Kone (1.5 km to the south).

The Project includes the following stages: (i) land clearance and site preparation; (ii) design and construction of common infrastructure including a waste water treatment facility, an internal road network and basic utilities connections (sewerage, electricity, water supply, drainage); (iii) sale or lease of pre-designated plots of land to industrial tenants.

The industrial tenants are currently unknown. The site is being designed to accommodate large, medium and small-scale industrial companies (based on the expressions of interest received to date). The KMIC industrial complex will consist of three separately designed industrial precincts that will each incorporate industrial facilities including: textiles and garment manufacture, food, jewellery manufacture, vehicle parts manufacture and assembly, and electronics assembly.  Tenants will enter into subleases with KMIC to obtain rights over plots to build and operate their own production facilities.

Construction is expected to start at the end of 2020 and last approximately 2 years for Zone A. The engineering, procurement and construction (EPC) contractor is yet to be appointed. The EPC contractor will be responsible for implementation of the mitigation, management measures, and monitoring program under KMIC. The Operation and Maintenance (O&M) of the Project will be undertaken by KMIC, in which the LH consortium is the main developer and will be responsible for marketing and planning, design, construction and operations.

The Project will also require the installation of a number of associated facilities which include: (i) upgrade of 9.5 km existing access road from the Yangon – Mandalay main road to the proposed site. MoC will upgrade the access road from 2 to 4 lanes (6 m to approximately 22 m wide); (ii) construction by the DHUD of a water intake infrastructure at the Kalihtaw Dam and  a new water pipeline approximately 20 km in length and 600 mm  in diameter buried alongside an existing canal and beneath existing and planned roadways from the Kalihtaw dam to the  Project site; and (iii) a new high voltage (230 kV) transmission line of approximately 9 km in length from the existing Myaungdakar – Kamanat 230 kV line - which forms part of the national grid - to the Project Site, to be constructed by the Ministry of Electricity and Energy (MoEE). A substation will be installed inside the Project Site and then managed by Yangon Electricity Supply Cooperation. It is estimated that the Project will need approximately 50 MW of installed capacity during operations.

The associated facilities will be financed by a loan from the development arm of the Korean Government (GoK) - the Economic Development Cooperation fund (EDCF). EDCF funded projects are required to comply with its Safeguard Policy which includes preparing an Environmental and Social Impact Assessment (ESIA), Environmental and Social Management plan and if required, a Resettlement Action plan.

Under the structure of the MIGA Guarantee, MIGA has little to no leverage/influence, regarding the E&S performance of associated facilities and of the industrial tenants.

The Project is “Category B” under MIGA’s Policy on Environmental and Social Sustainability (2013). The key E&S issues relate to: (i) expansion of industrial activities in a rural setting including cumulative impacts from industrial tenants resulting in air, water, noise, vibration, waste emissions during the development of Zone A and the potential development of Zone B; (ii) influx of migrant labor, and the related community health and safety risks; (iii) management capacity to provide adequate environmental, social, health and safety oversight of the tenants; (iii) labor and working conditions, including occupational health and safety during construction and operations.

While all Performance Standards are applicable to this Project, MIGA’s environmental and social (E&S) due diligence indicates that the Project will have impacts which must be managed in a manner consistent with the following Performance Standards (PS):

• PS1:  Assessment and Management of Environmental and Social Risks and Impacts
• PS2:  Labor and Working Conditions
• PS3:  Resource Efficiency and Pollution Prevention
• PS4:  Community Health, Safety and Security
• PS5:  Land Acquisition and Involuntary Resettlement
• PS6:  Biodiversity Conservation and Sustainable Management of Living Natural Resource
• PS8:  Cultural Heritage

PS7 is not considered applicable although the presence of ethnic minority families (Kayin, Shan and Chin households) was identified. The families are living in two of the six villages within a 5 km radius from the project site.  None of these ethnic minority families/groups appear to have any ancestral ties to the area having moved in more recently. There is no communal use of land, and although some ethnic languages have been maintained by some families, they also speak Burmese and are well integrated in the communities. No significant cultural, economic or social institutions or traditions differ between ethnic groups, except for some religious organizations and practices which occur alongside each other in these communities. There is no evidence to suggest that the ethnic minority families residing in the two nearby villages are more or less vulnerable or marginalized than the general population.

No cultural heritage issues were identified in the Project area from the documents reviewed and the site visit. However, a chance finds procedure will be developed for the construction phase of the project, consistent with PS8. At the request from Yangon Regional Government, the convention center site will not be developed and is to be left for preservation.

In addition, the following WBG Environmental, Health, and Safety (EHS) Guidelines are applicable to the Project:

• General EHS Guidelines (2007)
• Guidelines for Electric Power Transmission and Distribution (2007);
• Construction Materials Extraction (2007).

The following documents were reviewed by MIGA:

• MSR, Draft ESIA Report for Nyaung Hnitpin Industrial Complex Project, Hlegu Township, Yangon, April 2019
• MSR, Scoping Report of the ESIA for Nyaung Hnitpin Industrial Complex Project, Hlegu Township, Yangon region, October 2017

MIGA conducted a due diligence site visit in April 2019. The site visit included a tour of the proposed Project location and associated facilities. Meetings were held with representatives of LH and MSR (E&S consultant). MIGA also met with Government authorities (Directorate of Investment and Company Administration (DICA) and Ministry of Natural Resources and Environmental Conservation (MONREC) Environmental Conservation Department (ECD)).

MIGA’s due diligence review considered the environmental and social management planning process and documentation for the Project and identified gaps between these and MIGA’s E&S requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period, are summarized in the paragraphs that follow and in the Environmental and Social Action Plan (ESAP) attached to this Environmental and Social Review Summary (ESRS). Through the implementation of these measures, the Project is expected to be designed and operated in accordance with MIGA’s Performance Standards. Key E&S issues associated with the Project business activities are summarized in the paragraphs that follow.

PS1:  Assessment and Management of Environmental and Social Risks and Impacts

Environmental and Social Assessment and Management System and Policy: KMIC will be the administrative authority of the Project. A management committee will be established under KMIC, who will be responsible for supervising and monitoring E&S performance and compliance of the Project. KMIC will have direct control over common infrastructure (e.g. water supply, wastewater treatment plant, etc). Industrial tenants will be ultimately responsible for the E&S performance of their own activities but with oversight from KMIC over common areas that require a shared E&S management approach, including but not limited to energy efficiency, solid waste management, water resource management, emergency preparedness and response, community consultation, grievance mechanism, labor and working conditions. KMIC will establish an umbrella ESMS in line with Good International Industry Practice (GIIP), PS requirements, supported by environmental and social management plans, standard operating procedures (Action 1). The ESMS is underpinned by an Environmental Social Management Plan (Action 2) and a set of internal regulations that tenants will be required to comply as part of their tenancy agreements.  Any failures in performance would be a breach resulting in fines/termination of the lease (Action 3). 

Identification of Risks and Impacts: As part of the environmental licensing process (described in more detail below), LH consortium, contracted a Myanmar certified consultancy firm to develop the Environmental and Social Impact Assessment (ESIA) for the Project based on national regulations. The ESIA was submitted to the Ministry of Natural Resources and Environmental Conservation (MONREC) and is pending approval. The Industrial tenants will be responsible for preparing individual EIAs or an Initial Environmental Examination (IEE) as required by MONREC, for their own activities.  A cumulative impact assessment will be prepared by KMIC to assess impacts against past, present and reasonably foreseeable projects and activities in the vicinity of the Project area, including activities of the industrial tenants, in relation to potential impacts to air quality, water quality, waste, noise and vibration, flora and fauna, biodiversity and community health and safety. KMIC will incorporate recommendations of the cumulative impact assessment in the umbrella ESMS (Action 4).

The project site is also expected to be affected by increased mean annual temperatures and increased rainfall variability. Flood risk is anticipated to be the major threat to the Project as a result of changes to the climate. KMIC will carry out a climate risk assessment to support the basic design and management of the Project, taking into account potential impacts of extreme weather events such as floods, cyclones and others (Action 4).

Management Programs: KMIC will develop environmental and social management plans in line with the umbrella ESMS for construction and operations phases respectively (Action 2). Typically, implementation of the construction environmental and social management plan is delegated to the EPC contractor, in such cases, KMIC will incorporate E&S clauses and conditions in the agreement with the EPC contractor to ensure that the PS requirements are cascaded to the EPC contractor and sub-contractors (Action 5).  

Organizational Capacity and Competency: LH is experienced in the development of industrial complexes. At the corporate level, LH’s E&S team is organized in four departments - Environment Planning; New town environment assessment; Traffic and disaster assessment; and metropolitan traffic, responsible for supervising all of LH’s projects including KMIC. KMIC will appoint an Environmental, Health and Safety Manager and two Environmental Health and Safety (EHS) officers to oversee the Project’s E&S performance and implementation of the ESMS during construction and operations (Action 6). The EHS manager will report directly to KMIC’s managing director and will be supported by LH’s corporate E&S team.

During construction, the EPC contractor will be responsible for the day-to-day management of E&S impacts and mitigation measures associated with construction activities. The EPC contractor will be required to allocate adequate resources to manage the E&S aspects of their work, including appointing an EHS Manager and at least two EHS officers for the duration of the construction period (Action 7).

Emergency Preparedness and Response: KMIC will develop and implement an emergency preparedness and response plan (EPRP) covering workplace accidents and incidents including management of fire, spill or emergency events, accident reporting, evacuation protocols, incident investigation (Action 2). Buildings to be constructed will incorporate fire protection measures, including: (i) fire proof construction, (ii) firefighting equipment, (iii) alarm systems; (iv) emergency exists and (v) evacuation routes in case of fire and/ or other disasters. During construction, the EPC contractor will be required to implement an EPRP in line with KMIC’s requirements. During operations the complex will house a clinic, staffed with qualified medical professionals.

Monitoring and Review: Monitoring will be conducted throughout construction and operations to ensure compliance with regulatory requirements as well as to evaluate the effectiveness of operational controls and other measures intended to mitigate potential impacts.

KMIC will develop and implement a Monitoring Program in accordance with the ESIA and will include as a minimum:

1. monitoring of contractors, sub-contractors and tenants’ activities including waste management, accommodation, traffic, material and vehicle storage within and outside of the KMIC boundary and implementation of corrective actions where required;
2. monitoring of community health and safety to check on pressure experienced by existing social infrastructure and services (including health clinics, schools, groundwater);
3. air quality, water quality and quantity, noise and vibration monitoring in line with GoM National Environmental Quality (Emission) Guidelines (NEQG).

Monitoring reports will be submitted to MIGA quarterly during construction and annually during operations (Action 8).

External Communications and Grievance Mechanism:  KMIC will develop an external communications plan, and will implement a grievance mechanism for external stakeholders, describing procedures to be followed to receive, address and register external communications including grievances from the public, and adjust management programs as appropriate (Action 2).

PS2:  Labor and Working Conditions

It is estimated that the Project will engage approximately 24,000 workers during peak construction. During operations it is expected that approximately 150 – 170 industrial tenants will settle in the complex creating around 100,000 jobs during operations.

Human Resources Policies and Procedures: Human resources policy and procedures will be developed in line with GoM labor laws and the requirements of PS2 (Action 9). KMIC will recruit a HR manager who will form a team to oversee the HR policy and procedure development implementation (Action 6).

KMIC will also include minimum requirements in the tenancy agreements on labor and working conditions such as: (i) no forced labor; (ii) policy and procedures to manage and monitor child labor (iii) workers’ code of conduct; (iv) grievance redress (v) payment of minimum wages; (vi) occupational health and safety to ensure a set of standardized labor and working conditions across all tenants and (vii) prioritization of local employment. The HR manager will conduct spot checks to confirm adherence to minimum requirements.

In order to maximize employment opportunities for local people, KMIC will develop a Local Employment plan that will be rolled out to contractors, sub-contractors and tenants with first priority of jobs given to local residents from directly affected villages and second priority for other Hlegu township residents. The Local Employment plan will be supported by a job-seeker database for use by KMIC, contractors, sub-contractors and tenants (Action 2)

Working Conditions and Terms of Employment: The HR policy and procedures to be developed by KMIC will incorporate employees’ rights and entitlements including but not limited to pay, holiday, sickness and bereavement leave, and rest breaks in line with PS 2. All employees and contracted workers will be issued with individual contracts of employment detailing conditions of service in line with PS 2 requirements.

KMIC will assess the need for workers accommodation as the Project advances. It is currently anticipated that during construction and operations local workers will commute to the Project site. Non-local workers will be accommodated in existing housing opportunities either in nearby villages or in Yangon. KMIC will require construction contractors, sub-contractors and industrial tenants to not hire or house workers informally (Action 2).

Workers Organizations: The Labor Organization Law of Myanmar (The Pyidaungsu Hluttaw Law No. 7/ 2011) came into effect in 2012, which describes the rights of workers in Myanmar to form and join labor unions, and the right of labor unions to collective bargaining with employers. KMIC confirms that should employees wish to set up a worker union or enter into a collective bargaining agreement, their right to do so will be ensured.

Non-Discrimination & Equal Opportunity: KMIC is committed to non-discrimination and equal opportunity and this will be reflected in their HR policy and procedures.

Child & Forced Labor: KMIC will not make use of forced labor, and will ensure that its contractors, sub-contractors and industrial tenants do not either. The Factories Act of 1951 allows children who are 14 years old and above to work if they can show a certificate of fitness but are not allowed to work at night and for more than four hours a day if they are under 15 years old. According to PS 2, certain types of work performed by children may be acceptable, but only when carried out in a manner that is both legal and safe. According to PS 2, under no circumstances should children perform work that is 1) economically exploitative; or 2) likely to be hazardous or to interfere with the child’s education, or to be harmful to the child’s health or physical, mental, spiritual, moral, or social development; or 3) illegal, even if such practices are socially or culturally acceptable.

KMIC will, with the help of an international E&S consultant identify gaps in relation to Myanmar law and PS 2 requirements and put in place a policy and procedures to  manage and monitor their own child labor practices and those of contractors, sub-contractors and industrial tenants to ensure compliance with PS 2 requirements and ensure compliance with national labor laws and regulations (Action 10).

Grievance Mechanism: KMIC will establish a worker grievance mechanism, as per PS2 requirements, for its own staff and will ensure that the EPC contractor establishes one for the construction workforce (including sub-contractor staff) (Action 11). This mechanism will be explained to all workers as part of their formal induction, including details of how the mechanism works and how grievances can be made. Worker grievance records will be retained for future analysis and monitoring by government authorities and/or MIGA.

Occupational Health and Safety (OHS): The ESIA includes an overview of the occupational health and safety guidelines and standards that KMIC will implement. These will be expanded upon in an OHS procedure based on PS 2 requirements. The OHS procedure will include identification of potential hazards and risks at the workplace, incident and accident investigation and analysis, safety rules and regulations (for e.g. use of personal protective equipment, lifesaving rules, safety violation disciplinary procedures, authority to stop work) monitoring health and safety at work among others (Action 2). OHS requirements will be cascaded to contractors, sub-contractors and tenants.

During construction, appropriately qualified onsite EHS officers will be appointed by for KMIC, to liaise with the EPC’s HSE officer. Once the industrial complex is operational, the appointed EHS officers, will also be responsible for health and safety. Roles and responsibilities will be included in the OHS procedure. Adherence to OHS will be included in the contractual agreements with the EPC contractor. The EPC contractor is required to have at least two permanent EHS officers on site, to provide induction for new employees or visitors, and to observe and correct unsafe behavior as well as to prevent, manage or report on OHS incidents, and the EPC provides monthly reports to KMIC. Any person sustaining injuries is taken to the local hospital for treatment.

Workers Engaged by Third Parties: KMIC is expected to outsource the following services: cleaning, pest management, security. KMIC will revise and update agreements with third party contractors to be in line with PS 2 requirements (Action 12). All contract or outsourced staff will be included in an induction session, with training on OHS, Personal Protective Equipment (PPE), security, access control, appropriate behavior and emergency procedures, as well as access to grievance mechanism.

PS3:  Resource Efficiency and Pollution Prevention

The key impacts from construction of the Project are expected to be on air quality, water quality and quantity, waste and take into consideration potential impacts from the operations of industrial tenants.

Resource Efficiency:

KMIC will develop common infrastructure facilities of the Project, utilizing sustainable design principles such as: use of natural lighting, ventilation and solar passive designs, water recycling and rainwater harvesting, use of solar power panels. KMIC will explore opportunities to further promote water and energy efficiency during the operation of the Project.

Greenhouse gases (GHG): GHG emissions associated with the operations of common facilities and industrial tenants for the Project are expected to be mainly associated with electricity and fuel requirements of the industrial complex. GHG emissions are estimated at approximately 113,000 tons of carbon dioxide equivalents per year (tCO2e/yr). The Project will be required to quantify and report on the CO2-equivalent emissions as required under this PS for projects with emissions exceeding 25,000 tCO2/yr

Pollution Prevention:

Air Quality: During construction, the Project will generate dust and gaseous emissions from construction equipment, vehicles and demolition of existing buildings. During operations, air quality impacts will result from tenant’s operations. The tenants will be required to submit an EIA or IEE report with ESMP including mitigation measures on air pollution to MONREC.  KMIC will implement an Air Quality Management and Dust Control Plan (Action 2) and as part of its monitoring program, KMIC will conduct air quality monitoring at the Industrial Park and surrounding sensitive receptors.

Water Quality: Impacts on water quality result from wastewater discharged from the project area to Kalihtaw creek during construction and operations phase. During construction, water quality may be impacted by transporting of materials, oil spills/ leaks, demolition of buildings and land clearance. Mitigation measures include setting up diversion channels and temporary sediment basins which will be incorporated by the EPC contractor. During operations, water quality may be impacted by treated wastewater, stormwater runoff or emergency release. KMIC will install a wastewater treatment plant (WWTP) with a capacity of approximately 9480 m3/ day to treat both domestic and industrial wastewater during operations), designed to be in line with regulatory requirements and within WBG EHS parameters.

The WWTP will treat effluents from industrial tenants who are required to ensure that effluents meet minimum parameters and, in some cases, will be required to install pre-treatment facilities. KMIC will monitor the effluent quality of each premises and in the event of any discharge breaches, notify the tenant for mitigation measures to be implemented, if there are systematic violations, notify the regulatory authority. Wastewater from industrial tenants will discharge through an enclosed drainage system to a reservoir of sufficient capacity prior to treatment in the WWTP. The treated water will be discharged onto Kalihtaw creek. KMIC will monitor water quality upstream and downstream from the point of discharge. Stormwater runoff will be channeled through storm drains and culverts equipped with oil/water separators to a reservoir for discharge onto the Khalitaw creek.

Prior to construction, KMIC will carry out additional surface water quality baseline surveys to capture conditions during the dry and rainy season and a hydrogeology assessment to assess impacts on groundwater (if any) and instigate mitigation measures as appropriate (Action 4).

Water Quantity: During construction, KMIC plans to install temporary ponds to prevent flooding during the rainy season. The water from these temporary ponds will be used for dust suppression and washing of construction vehicles as needed. During operations, water will be supplied from the Khalitaw dam, currently supplying the Nyaung Hnitpin Livestock and Agricultural zone 1, 2 and 3 during the dry season (December to May) through earth canal. During operations, water consumption is estimated to be approximately 12,400 m3/ day (7,800 m3/ day for industry 4,600 m3/ day for domestic use). Water will be piped from the Khalitaw dam to the purification plant on site and from there, distributed to the tenants through underground pipes. Total storage capacity of the Khalitaw dam is 32 million cubic meters and can irrigate a total of approximately 3642 hectares (ha) of agricultural land. Almost all household garden/farmland surrounding the project area rely on tube wells for water instead of the dam.

In order to determine whether KMIC’s proposed water requirements would have any material impact on water accessibility to the community, the Irrigation and Water Utilization Department recorded the minimum water level during the dry period after releasing water through the canal network to the Agriculture Zone. It was then determined that the average annual water storage volume with minimum water level from dam at the end of the dry season was sufficient to meet the requirements of the KMIC project.  The lowest estimated storage at the end of the dry season is approximately 16 percent of dam capacity after projected KMIC usage. Industrial tenants will be encouraged to use rainwater harvesting tanks to collect rainwater. KMIC will regularly check water connections, pipes and taps to prevent leaks and wastages.

Wastes:

Solid and hazardous waste: Waste generated during construction are expected to include domestic waste, inert waste, recyclables and small quantities of oil and oil contaminated materials. Non-hazardous waste will be reused and recycled as much as possible. During operations, it is estimated that approximately 2,344 ton/year of industrial waste and 1,152 ton/ year of domestic waste will be generated, the amounts of waste generated will be confirmed after confirmation of industrial tenants for Zone A. KMIC will develop and implement a Waste management plan (Action 2) to ensure proper handling and disposal of wastes. Industrial tenants will be responsible for the proper disposal of hazardous wastes produced in their activities handled through a professional company authorized by KMIC.

Hazardous Materials Management: During operations, KMIC will store and handle small quantities of hazardous materials in the form of chemicals used in the waste water treatment process, and in handling of the waste water sludge.  KMIC will develop and implement a hazardous materials management plan which will include information on proper labelling, handling, storing based on compatibility assessment, where required provision of secondary containment, corrosion resistant lining as required, access control and disposing of hazardous materials (Action 2). Industrial tenants will be responsible for the handling and storage of their hazardous materials in line with the requirements stipulated in their individual EIAs or IEEs.

PS4:  Community Health, Safety and Security

Community Health and Safety:

Impacts on community health and safety are anticipated as a result of increased vehicle movements, influx of workers, pressure on local government resources and capacity to manage changes (e.g. reduced community health due to overcrowding, poor waste management, etc) and semi-urbanization of the Project area which is currently rural.

To manage the project-related transport of heavy equipment and materials risk, KMIC will develop and implement a traffic management plan that will include a journey risk assessment and at a minimum incorporate the following: (i) reduction of project traffic routing through community areas; (ii) speed limits; (iii) signage, visibility and overall safety of roads, particularly near schools; and (iv) rapid survey of properties adjoining access points at risk from vibration-related damage. As part of the traffic management plan, KMIC will monitor traffic levels along main routes and vehicles exiting/ entering the KMIC complex and use results to develop appropriate mitigation and management measures, e.g. additional signage, approved routes to minimize passing through sensitive receptors (schools, clinics), rolling out of road safety campaigns (Action 2).

Community health and safety risks can be exacerbated by project induced in-migration. The project may attract job-seekers and settlers from Yangon and other regions of Myanmar that can cause tensions and/or alter the social fabric of communities impacting on community health as a result of overcrowding; exposure to communicable diseases and increased level of crime. An influx management plan will be put in place, complemented by a Local Employment plan and Workers’ Code of Conduct to minimize associated negative impacts to community health and safety as well as social conflict and clashes of culture (Action 2).

KMIC will also establish a Community Development Plan taking into account the potential semi-urbanization of the Project area with the support of Village, Village Tract, township officials to track and report on influx/ population changes and conduct strategic review of local infrastructure and services requirements and the potential need for any repairs/ upgrades due to the KMIC Project (Action 2). 

Ecosystem Services: The project will require raw water intake from the Khalitaw dam of approximately 12,400 m3/ day for industrial and domestic use. Water from Khalitaw dam is used only for agricultural purposes and used to irrigate the Agricultural and Livestock Zone (1,2 and 3) and the Irrigation Department reports that the dam capacity is enough for use by the KMIC project without any affect to other existing water users. KMIC will carry out a supplemental study to determine potential impacts from this water withdrawal on ecosystem services (Action 4).

Security Personnel: Construction and operation of KMIC does not involve security provision by government armed forces.  Should armed security be deemed necessary either by KMIC or the EPC contractor, the decision to arm will be based on a prior evaluation of security risks. Additionally, KMIC will be required to develop and implement security management systems in line with GoM guidelines and IFC Use of Security Forces Handbook (2017) including formal procedures for reporting, responding to and documenting security incidents; training requirements; review of security record of potential security contractors including: review past records of private security personnel deployed; training on objectives and permissible actions for security personnel; training of security personnel in avoidance of abusive conduct and handling various situations with clear procedures. In the event that armed security is deemed necessary, KMIC will implement procedures such that bona fide complaints against security personnel are investigated and disciplinary actions implemented.

PS5:  Land Acquisition and Involuntary Resettlement

The land required for the Project belongs to the GoM. The Project site is largely vacant, and access is restricted. There are however nine households residing within the Project site and one immediately adjacent to it.  Some of the households are ex-government employees. Most appear to have established residence on the Project site through family ties and/ or farming activities.  One household has lived on the Project site since 2002, others have been in the area from 2009 to as recently as May 2019. Five of the households cultivate Eugenia plant in the Project site and one household raises small livestock (chickens, pigs) as secondary sources of income. Main sources of income include casual labor work and motorbike taxi services.

Although relocation of these 10 households is the responsibility of GoM, KMIC will work with DHUD to ensure that relocation is carried out in line with PS 5 requirements (Action 13). As a minimum the following is required: (i) develop and implement a Relocation Plan (supported by an inventory of potential losses such as land, housing structures, sheds, agricultural production and any loss of livelihoods/income), including any relevant livelihood restoration measures in consultation with the affected households to be relocated; (ii) track, monitor and evaluate changes and outcomes to the standard of living and livelihoods of the relocated households; (iii) ensure priority access to the community grievance mechanism by relocated households; and (iv) conduct a completion audit of the relocation program. Gaps identified in relation to PS 5 requirements will be addressed by KMIC.

The upgrade of the 9.5 km access road from the Yangon – Mandalay main road junction to the proposed site, from 2 to 4 lanes (from 6 m to approximately 22 m wide) is likely to result in physical and economic displacement. LH consortium has little leverage or influence over the E&S performance of associated facilities. Due to EDCF’s involvement it is expected that resettlement and compensation will be carried out in accordance with PS requirements.

PS6:  Biodiversity Conservation and Sustainable Management of Living Natural Resource

Modified Habitat: The project site is in a rural setting and consists of modified habitat, reclaimed by vegetation since its disuse. KMIC will carry out a supplemental biodiversity study to (i) determine the primary ecological function and species composition of the Project site and whether there are any significant biodiversity impacts; and (ii) assess whether environmental flows from Khalitaw dam will be negatively impacted as a result of KMIC proposed water requirements during operations (Action 4).

Environmental Permitting: The Environmental Impact Assessment Procedure (No.616/2015) (EIA

Procedure), was issued by the Ministry of Environmental Conservation and Forestry (MOECAF) (predecessor of Ministry of Natural Resources and Environmental Conservation (MONREC)) on 29 December 2015 defines the detailed legal process regarding EIA procedures. This includes preparation of EIA/IEE report, environmental management plan (EMP), public involvement, approval of EIA/IEE report by MOECAF, and monitoring process in accordance with the EIA report. In this EIA Procedure, “Industrial Zone Construction and Development (all sizes)” projects are required to conduct a full EIA study. Therefore, KMIC has conducted EIA based on the EIA Procedure. After review and approval of the EIA report, MONREC issues an Environmental Compliance Certificate which includes conditions of approval. KMIC has submitted an ESIA for the Project to MONREC. An ECC is still pending.

Community Engagement: Community engagements were undertaken as part of the ESIA process. Key stakeholder interviews were held in 6 villages located within a 5 km radius from the Project site with village heads, village administrative officials, religious leaders, local business owners and respectable members of the community including teachers and health workers. The Project brief was publicly disclosed at the Agricultural/ Livestock Zone Committee Office. A public consultation meeting took place in February 2019 and a second public consultation meeting is planned to be held a Zone no 2 where members of the communities will be invited to participate.  In addition, KMIC will prepare and implement a Stakeholder Engagement and Communications plan (Action 2) that will govern the community engagement activities of KMIC.

The documentation listed below is available electronically as a PDF attachment to this ESRS at www.miga.org.

• Draft ESIA Report for Nyaung Hnitpin Industrial Complex Project, Hlegu Township, Yangon, Myanmar Survey Research, April 2019.

For additional information, please contact:

Mr. Kim Dong Young (Social Aspects)

Korea Land & Housing Corporation (19, Chungui-ro, Jinju-si, Gyeongsangnam-do)

E-mail : polo1104@lh.or.kr

Phone : +82 1036547620

Ms. Shim Na Rae (Environmental Aspects)

Korea Land & Housing Corporation

19, Chungui-ro, Jinju-si, Gyeongsangnam-do

E-mail : naraes88@lh.or.kr

Phone : +82 1093223522