Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-3721-BA REPORT AND RECONMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 23.7 MILLION TO THE SOCIALIST REPUBLIC OF THE UNION OF BURMA FOR A SECOND WOOD INDUSTRIES PROJECT February 15, 1984 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENT S SDR 1.00 = Kyat (K) 8.51 US$1.00 = K 7.88 K 1.00 = US$0.127 WEIGHTS AND MEASURES 1 hoppus foot (HF) = About 1.28 cubic feet (cu ft) irue geometric measure for roundwood 1 hoppus ton (H ton) About 50 HF in round logs, equivalent to 1.4 to 1.8 cubic meters (m3) of wood under bark 1 sawn ton (S ton) = 50 cu ft of sawnwood, or 1.4 m3 1 metric ton (mt) = 2,205 pounds FISCAL YEAR April 1 - March 31 ABBREVIATIONS ADB - Asian Development Bank CC - Construction Corporation, Ministry of Construction CP - Cooperative Program (FAO/IBRD) ERR - Economic Rate of Return FAO - Food and Agriculture Organization of the United Nations FD - Forest Department, Ministry of Agriculture and Forests FINNIDA - Finland's International Development Agency GDP - Gross Domestic Product H tons - Hoppus tons MAF - Ministry of Agriculture and Forests PPAR - Project Performance Audit Report PU - Project Unit S ton - Sawnwood tons SEE - State Economic Enterprise TC - Timber Corporation, Ministry of Agriculture and Forests UNDP - United Nations Development Programme FOR OFFICIAL USE ONLY BURMA SECOND WOOD INDUSTRIES PROJECT Development Credit and Proiect Summary Borrower: The Socialist Republic of the Union of Burma. Beneficiary: The Timber Corporation (TC). Amount: Special Drawing Rights (SDR) 23.7 million (US$25 million equivalent). Terms: Standard. Relending Terms: 15 years including five years' grace with interest: at 8.5% per annum. TC will bear the foreign exchange risk. Proiect Obiectives and Description: The main objectives of the second project will be to: (a) improve further the efficiency and product quality of Burma's export oriented teak processing industry through modernization and rehabilitation of existing capacity; (b) improve the supply of hardwood sawn timber and panel products to the domestic market and thereby reduce the use of teak for construction purposes in the domestic market; (c) introduce production of block board production for the fist time in Burma; and (d) advance further the technical and export marketing skills of teak processing industry personnel, through training and technical assistance. The proposed project, implemented over five years, would continue the program undertaken in the First; Wood Industries Project (Credit 1114-BA - the First Project) and would include: (a) rehabilitation of teak sawmill No. 4 at Ahlone to saw about 45,000 H tons per annum of teak logs using modern band saw technology; (b) recon- struction of a teak sawmill No. 14 at Dallah to saw 45,000 H tons of teak logs also using modern band saw technology; (c) construction of a new panel products mill at Monywa to produce 4,000 cu m plywood and 1,000 cu m teak veneer annually, and to introduce block board production on a pilot scale; (d) construction of two mobile hardwood sawmills with annual throughput capacity of 10,000 H tons to be located in north Pegu area; (e) provision of consulting services to assist TC in the areas of saw doctoring, panel products production and production planning and control and on the job training This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. -ii- of TC personnel; and (f) strengthening of administra- tive and construction facilities. Risks Both implementation and market risks are minimal since the proposed project is the second IDA assisted wood industries project and is based on the good implementa- tion experience of the First Project. TC wood products have excellent demand and TC has managed to increase revenues even in a recessionary world economy. Estimated Project Cost: US$ Million Local Foreign Total Teak Sawmill Rehabilitation 3.8 5.2 9.0 Teak Sawmill Reconstruction 7.1 8.3 15.4 Panel Products Mill 8.3 10.3 18.6 Hardwood Mills in Pegu Area 0.4 0.5 0.9 Technical Assistance and Training - 0.6 0.6 Strengthening Administrative Support and Construction 1.5 0.7 2.2 Incremental Working Capital 1.1 - 1.1 Base Cost 22.2 25.6 47.8 Physical Contingencies 1.6 1.4 3.0 Price Contingencies 2.7 3.9 6.6 Total Project Cost 26.5 30.9 57.4 Less Taxes and Duties 14.0 - 14.0 Total Net Project Cost 12.5 30.9 43.4 Financing Plan: IDA - 25.0 25.0 TC 26.4 - 26.4 FINNIDA - 6.0 6.0 26.4 31.0 57.4 -iii- Estimated Disbursements: US$ Million IDA FY FY86 FY87 FY88 FY89 FY90 Annual 4.1 14.6 5.0 1.0 0.3 Cummulative 4.1 18.7 23.7 24.7 25.0 Economic Rate of Return: 25% Staff Appraisal Report: Report No. 4596-BA, dated December 23, 1983. Map: IBRD Map No. 17205. INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE SOCIALIST REPUBLIC OF THE UNION OF BURUMA FOR A SECOND WOOD INDUSTRIES PROJECT 1. I submit the following report and recommendation for a proposed Development Credit to the Socialist Republic of the Union of Burma for Special Drawing Rights (SDRs) 23.7 million (US$25.0 million equivalent) on standard IDA terms to help finance a Second Wood Industries Project. FINNIDA would make a grant of US$6 million. The proposed Credit amount would be onlent to the Timber Corporation (TC) for a term of 15 years, including five years of grace, and at an interest rate of 8.5% per annum. TC will bear the foreign exchange risk. PART I - THE ECONOMY I/ 2. The latest economic report entitled (Burma: Priorities for Continued Growth" (Report No. 3852-BA, dated May 7, 1982) was distributed to the Execu- tive Directors on May 10, 1982. Country data are presented in Annex I. 3. The present leadership of Burma assumed the responsibilities of government in 1962 and vested authority in a revolutionary council. There- after, a Constitution was adopted in a nationwide referendum in December 1973, creating the Pyithu Hluttaw (People's Assembly) with supreme executive, legislative, and judicial authority. The Burma Socialist Program Party (BSPP) was confirmed as the only authorized political party. The Govern- ment's guiding philosophy stated in the 1962 document entitled The Burmese Way to Socialism reflects a combination of traditional Burmese values and socialist doctrine. Its economic objectives are set out in the Twenty-Year Plan, which was adopted by the BSPP in 1972 and is being implemented through a succession of Four-Year Plans. U Ne Win, who had been President since 1962, announced his resignation just prior to the national election in November 1981 and was succeeded by U San Yu, former Secretary General of the BSPP. Insurgency remains a problem, particularly in the hills and border areas, although there is definitely greater territorial control by the Government now than at any time since Independence in 1948. 1/ Parts I and II of this report are substantially the same as in the President's Report (Report No. 3682-BA) dated November 22, 1983 for a Textile Finishing Plant Project in Burma. The report was distributed to the Executive Directors under cover of the Secretary's memorandum IDA/R 83-121. -2- 4. During the 1960s and the early 1970s, the Government made substantial progress in the attainment of its social and political goals, particularly in terms of existing public ownership and Burmese control of economic institu- tions. On the other hand, economic performance suffered over this period, the major features being slow growth, a fall in domestic savings and a shrinking of the external sector. In recognition of this poor economic performance, the Government came up with a new development strategy in 1972 with the publication of the Twenty-Year Plan. The main objectives of the Plan are to foster economic growth within the context of a socialist system, to enhance economic strength and self-sufficiency by converting from an agricultural to an agriculture-based industrial society, to eliminate unemployment and to reduce income disparities. The main elements of this strategy are: (a) to give higher priority initialy to the directly produc- tive sectors, especially to agriculture, forestry, and mining; (b) to make greater use of aid, trade, and to a lesser extent technical assistance; (c) to follow a price stabilization program which emphasizes cost reduction, through increased efficiency in industry and technical change in agriculture; and (d) introduce work incentives and commercial principles, especially in the State Economic Enterprises (SEEs). 5. A wide range of policy reforms followed the publication of the Twenty-Year Plan. While pricing policy still reflected the desire to provide basic consumer goods cheaply and to prevent inflation, procurement prices of a variety of agricultural products were raised substantially to improve the economic position of the farmer. In industry, the Government increased the ex-factory prices for many of the SEEs. Meanwhile, the official exchange rate was devalued and the interest rate on savings deposits raised. In addition to these pricing reforms the Government introduced a major tax reform designed to restore the country's public finance to a sound basis. 6. In part, as a result of these measures, and in part as a result of favorable weather and increased capital inflows, Gross Domestic Product (GDP) during the Second Four-Year Plan (1974/75-1977/78) increased by an annual average of 4.7%, compared to 2.7% in the previous decade. Gross fixed capital formation increased by about 8% per annum in real terms, and domestic savings as a percent of GDP also increased. The improved budgetary provision of the Government lessened its dependence on the banking system, which, in turn, contributed to a reduction in the rate of inflation. 7. The growth momentum was sustained through the Third Four Year Plan period (1978/79-1981/82). During this time, Burma achieved an average annual GDP growth of 6.5% in real terms, accompanied by rising export and stable prices. This favorable performance has been largely due to (a) steadily rising agricultural production, resulting mainly from the Government's intro- duction of high-yielding varieties; (b) higher capacity utilization primarily in industry; and (c) rapid increases in investment, particularly in the public sector. 8. The Government's introduction of an agricultural intensification program, the Whole Township Program, has contributed to a revitalization of agriculture in Burma in recent years. This Program, extended now to about 80 townships, has a number of unique features, including the participation of the People's Councils in coordinating production and procurement; selectivity and concentration through a campaign-type approach; mobilization of the -3- community to provide additional labor; and the priority provision of consumer goods to project areas to complement rising incomes. Program coverage for paddy, expanded from 2% of paddy-sown area in 1977/78 to 51% in 1981/82; during this period, paddy production increased by about 50%. The Whole Township Program has also been extended to other crops, including groundnuts, maize, wheat, sesame, cotton, beans and pulses with good results. The focus of the Government's agricultural program over the next few years will be on the consolidation of past grains in paddy, with particular emphasis on quality improvements in export rice, and further extension off the Whole Township Program to non-paddy crops. There are indications that the dramatic increases in agricultural production in recent years have highlighted the bottlenecks in complementary transportation, handling, storage and milliLng facilities. In the coming years, the Government will have to deal with these bottlenecks through investments in additional capacity. 9. Benefitting from increased domestic supplies of agricultural raw materials as well as from a steady growth of intermediate good imports, capacity utilization in the light and agro-based industries in the public sector has improved. The increased level of economic activity during this period is also reflected in the higher gross domestic capital formation., The share of investment in GDP in constant prices increased from 15% in 1978/79 to 17% in 1981/82. On the other hand, the rapid expansion of public invest- ment, which accounts for 70% of the total, has been largely responsible for the widening in the overall budgetary deficit from 10% of GDP in 1978/79 to an estimated 17% in 1981/82. Public savings have shown only a modest growth, and the increasing deficit has been financed by large increases in external assistance and domestic credit. 10. Over the same period, merchandise exports increased in nominal terms by 19% per annum, though the export growth in 1981/82, the last year of the Third Four Year Plan period, was adversely affected by a sharp decline in the international price of rice. Merchandise imports increased in current prices by 20% annually. The current account deficit stabilized at about 6% of GDP, and net disbursements of loans at around US$350-400 million a year. The relatively small current account deficit reflects the Government's conserva- tive approach to balance-of-payments management, not the real import needs of the country. The Government controls all imports through a foreign exchange budget, drawn up in accordance with anticipated financing. Although foreign exchange availabilities have improved, shortages of imported intermediate and consumer goods still remain. 11. The Government's planned annual GDP growth for the Fourth Four Year (1982/83-1986/87) Plan is 6.2%. In order to attain this ambitious target, the Government needs to achieve: (a) continued success in the development of the agricultural sector; (b) further improvements in capacity utilization especially in industry; (c) a judicious choice of investment projects; and (d) sufficient resources - both foreign and domestic - to expand the invest- ment program at the required rate. Over the medium term, rice exports will undoubtedly continue to be the mainstay for Burma's foreign exchange earn- ings. However, the Government's longer term strategy is to broaden the country's export base through agricultural diversification and promotion of agro-based industries, to reduce Burma's reliance on rice and teak and to insulate the economy progressively from the international rice fluctuations of less processed primary commodity exports. -4- 12. Moreover, in order to maintain the growth momentum, the Government will need to expand absorptive capacity for external assistance by emphasiz- ing institution building and management development to a much greater extent than in the past. The Burmese planning and administrative system, as it now exists, is complex and rigid in its manner of operation and appears to focus excessively on the formulation of targets. Streamlining of the entire plan- ning and administrative apparatus, decentralization of decision-making, and strengthening of the capability of Government entities to prepare and imple- ment projects are urgently needed. 13. Burma's debt service ratio increased from 13% in the 1977/78 to about 28% in 1981/82, due primarily to a substantial increase in the loans from private financial institutions and suppliers' credits. By March 1982, Burma's external public debt, disbursed and outstanding, was approximately US$1.6 billion. Burma's exports have been showing steady growth in recent years, but the prospects over the medium term is less favorable. According to the World Bank's price projections, Burma's term of trade which had deteriorated during the last two years would, at best, recover slowly over the next four years. Moreover, because of the rising debt service burden and because of Burma's low income level, external assistance should continue to be on concessionary terms and should, in addition, finance part of local cost requirements which cannot, at present, be covered adequately by domestic savings. Local cost financing is particularly needed for the agricultural sector where most investments have a low foreign exchange component. 14. Burma is potentially one of the richest countries in South Asia. Apart from an impressive natural resource base, it is endowed with a rela- tively healthy and literate population. The crucial question is the quality with which these resources will be managed and developed. The Bank continues to discuss with the Government further improvements in economic management which would help Burma realize its promising potential for economic develop- ment as well as external assistance requirements. Discussions on these topics are carried on jointly with other donors and the IMF during the Burma Aid Group meetings which the Bank has organized at the Government's request. The first meeting of the Group was held on November 30, 1976, in Tokyo; and there have been four subsequent meetings, with indications of increasing donor supporting each year. PART II - BANK GROUP OPERATIONS 15. Burma became a member of the Bank in 1952, IFC in 1956, and IDA in 1962. Between 1956 and 1961, the Bank made three loans totalling US$33.1 million, all for transportation projects. One loan for the Port of Rangoon helped finance reconstruction of cargo berths and storage facilities, and procurement of cargo handling and port equipment. Two loans helped finance the post-war reconstruction and dieselization of the railways. All three projects were satisfactorily completed and the loans fully disbursed by FY68. 16. No lending was requested between 1962 and 1972. IDA lending resumed in 1973 and since then 23 credits totaling about US$609 million equivalent (net of cancellations) have been made. About 60% of this assistance was for the agricultural sector, consisting of twelve projects: irrigation pumps, rubber, livestock, seed development, two paddyland development projects, -5- grain storage, two forestry projects, a wood industries project, the Kinda Dam multipurpose project, and a tank irrigation project. About 12% of IDA's assistance supported the rehabilitation of the transport sector through four projects, namely inland water transport, railways, a second ports project and a construction industry project. The renainng 28% of IDA assistance has been for two projects in the telecommunications sector (10%), one project in the mining sector (3%) and a power project (15%). Six credits have been fully disbursed so far. On the resumption of operations in 1973 there were some difficulties with disbursement performance. However, performance has improved considerably particularly as agencies, such as the Irrigation Department, have become more famliar with the Bank's procedures. In general, IDA-financed projects have been carried out satisfactorily. Annex II con- tains a summary statement of Bank Loans and IDA Credits as of September 30, 1983. IFC has made no investments in Burma. 17. In the past, lending was partly constrained by incomplete knowledge of some sectors and the lack of adequately prepared projects. Through the ongoing projects and sector work, the Association's knowledge of many sectors has improved. A US$4.1 million UNDP technical assistance project (Burma Umbrella Project), for which the Bank is the executing agency, has developed a project pipeline suitable for external financing in priority sectors such as agriculture, transport, power, and industry. Several projects, namely, Seed Development, Rubber Rehabilitation, Power Transmission, Construction Industry, Third Port and Groundwater Irrigation were prepared under the Umbrella Project, which is now in its third phase. Furthermore, the Associa- tion plans to continue its technical assistance on a project-by-project basis to help further strengthen Burmese project preparation and implementation capabilities, as well as administrative and managerial skills through in-service and overseas training. 18. The Bank Group strategy is aimed at easing the most immediate constraints to growth and, particularly, at increasing and diversifying production for export in order to alleviate the shortage of foreign exchange. Within this overall strategy, primary emphasis is being placed on the development of agriculture and forestry and where possible, priority is being given to quick-yielding projects. Projects under preparation include grain storage and seed development, irrigation rehabilitation and forestry. At the same time, financing of infrastructure improvements will continue in the development of power and such areas as water supply, industry, telecommunica- tions, and construction, mainly to rehabilitate and maximize utilization of existing facilities. In near term, projects are being developed to reduce transport bottlenecks from areas of production for principal export com- modities, namely, rice and timber. IDA's involvement through the proposed Second Wood Industries Project is for purposes of continuing the productivity in this large export sector which directly affects the economic well being of the country. The project would improve further efficiency and product quality of export teak processing industry and local supply of hardwood sawn timber and panel boards. The project will address policy, technical, finan- cial and management issues which are central to the proper performance of state enterprises in Burma. -6- 19. The Bank Group currently accounts for about 15% of Burma's total external debt outstanding and about 1% of its debt service. In five years, the Bank Group's share in the total external debt is projected to rise to about 20% and its share in the debt service to about 2-3%. PART III - THE FORESTRY AND FOREST INDUSTRIES SECTOR Background 20. Burma is well endowed with forest resources which cover almost half of its 167 M ac land area. Burma's relatively low population density (120 per sq. mile) and growth rate (2.2%) have helped against any significant encroachment on the forest area which has consequently declined by less than 0.1% per year; mostly around population centers where a shortage of firewood is now developing. The reserved forest area (24 M ac) is away from popula- tion centers and has increased at about 0.4% per annum during the last five years. Forest Department aims to increase the reserved forest from the current 14% to 30% of the total land area. 21. Forestry activities account for less than 3% of GDP in current prices. However, the sector is much more important in export trade where it has traditionally been the second largest foreign exchange earner and in FY81/82 forest products earned about K 696 M. The sector is an important source of funds for the national budget and made a net contribution of about K 600 M to public sector resources in the form of royalties, taxes, duties and surplus in FY81/82. Forest products provide a high proportion of rural energy consumption through firewood and charcoal. The rural population is also dependent on forest products such as bamboo for housing construction. The sector provides total permanent employment to about 160,000 persons of which 40,000 are employed by the Timber Corporation (TC). Forests are also important ecologically and play a significant role in protecting Burma's watersheds, preventing soil erosion and ensuring a sustained flow of water. Forest Management and Extraction 22. All forest land in Burma is owned by the State, and the Forest Department (FD) of the Ministry of Agriculture and Forests (MAF) is primarily responsible for its management. FD, which was founded in 1856, manages Burmese forests in accordance with the Forest Act of 1881 as amended in 1902 and 1941. The Act authorized creation of reserved forests, where teak forms about 10% of growing stock. FD sets annual allowable cuts currently about 360,000 Hoppus (H) tons for teak and 2.1 M H tons for other hardwood. To protect against localized overcutting, the Government has also set a minimum girth of 7 ft. 6 in. for dry teak extraction and 6 It. 6 in. for green teak. Timber extraction reached a peak of 1.3 M H tons in 1972/73 but declined after that to a low of 1.0 M H tons in 1975/76 due to shortage of extraction equipment and fuel. Since then IDA assisted Forestry I and II Projects (Cr. 493-BA and Cr. 949-BA) and the ADB assisted Sagaing Forestry and Second Forestry Projects have provided substantial assistance to help restore teak and other hardwood logs extraction levels to about 1.4 M H ton in 1981/82. After extraction, FD assesses royalties on the logs extracted at rates of K 200/H ton for teak and K 15-30/H ton for other hardwoods. The Government also receives substantial contributions from wood industries operations through export tax of about K 1100/H ton and local tax of about K 110/H ton. -7- The combined royalty and tax level is higher than in most other timber exporting countries. FD also has a forest plantation program under which about 170,000 acres of teak and about 80,000 acres of other hardwood species have been planted. The program is supported in part by the IDA assisted Forestry II Project (Cr. 949-BA), and is expected to increase teak supply in future. A project with a significant forest plantation component is cur- rently being prepared for possible IDA assistance. Wood Processing Industries 23. Background. Burma has a long history of wood processing industries dating back to at least the late seventeenth century. British timber com- panies established extensive teak sawmilling operations about a hundred years ago and many of the sawmills which were established then are still in opera- tion. As a result of this long history, Burmese sawmill workers are skilled and experienced, but at the same time many of the sawmills are old and well beyond their economic life. The Government is giving high priority to the development of wood processing industries most of which are in the state sector under TC. TC is a Government-owned state enterprise in the Ministry of Agriculture and Forests. 24. Hardwood Sawmilling. There are about 185 hardwood (other than teak) sawmills with a total capacity of about 600,000 H tons, out of which about 40% are owned by TC and the rest by the private sector. IDA assisted First and Second Forestry Projects and ADB assisted forestry projects are providing about US$21 million worth of equipment and spares for rehabilitation and expansion of TC hardwood sawmilling capacity. The private mills are allowed to do primary sawing only for TC on a piece-work basis. The output of these mills goes almost entirely to the local market with less than 5% being exported. 25. Teak Sawmilling in Burma is now reserved for the public sector, with only custom resawing permitted in the private sector. Therefore, all the 20 teak sawmills with 275,000 H ton annual capacity are owned and operated by TC. But most of these mills (about 62%) are more than 40 years old. They employ circular saws with wide kerf which results in a significant amount of the valuable teak wood being wasted as excessive sawdust. Newer technology, using bandmills with narrower kerf can increase recovery percentage from the present 43% to 46% Hoppus. Therefore, there is a significant scope for improving efficiency, output volume and quality through the modernization of the Burmese teak sawmills. The IDA assisted on-going First Wood Industries Project (Cr. 1114-BA) will replace and upgrade 105,000 H ton of existing sawmilling capacity, and the proposed Second Project would upgrade another 90,000 H ton capacity. The best quality teak sawnwood produced by these mills is exported which in 1981/82 was about 71,000 sawn (S) ton, worth about US$45 M. The lowest grades of teak sawnwood are sold at lower prices to meet the high local demand for teak because of a shortage of durable hardwood sawnwood. In 1981/82, local teak sawnwood sales were about 75,000 S ton, worth about US$12 M. 26. Plywood and Veneer Production. Burma has three plywood and veneer mills operated by TC. The mills produce teak veneer and plywood with an estimated capacity of about 13,000 cubic meters. The capacity utilization is only about 50% due to frequent breakdowns. The wornout machines also waste -8- raw materials resulting in a very low outturn of about 20%. TC is, there- fore, planning to close one plymill and rehabilitate the other two mills under the First Project. In 1978/79 about 18 M sq ft of 5/32" thick plywood panels worth about US$3.3 M were sold locally. Low production volume and poor quality have prevented any significant exports. Production level and product quality is being improved under the First Wood Industries Project and further assistance would be provided under the proposed Project. 27. Furniture and Flooring Products. Burma has one factory complex for the production of furniture and flooring products. The factory produced about 26,000 pieces of furniture and special items in 1978/79 worth about US$0.7 M. In addition, flooring products such as teak parquet mosaic and lamparquet components worth US$0.3 M were also produced. Most of the furni- ture has traditionally been sold within Burma and the flooring products outside Burma. In line with Government's policy to sell more teak in processed form, TC is now making increased efforts to export furniture by improving product quality and marketing. TC has reached agreement with firms from Denmark, Hong Kong, Japan and Singapore for technical and marketing assistance. Further, TC is rehabilitating and expanding production capacity of furniture and flooring products under the First Project. 28. Pricing Policy. Export prices for wood products are set by TC, which is the sole Burmese exporter of those products. TC has a monopolistic posi- tion in world teak markets, supplying virtually all of teak logs and 70% of teak conversions entering international markets. Prior to 1978/79, TC management instituted sharp price increases in an unpredictable manner. This led to a contraction of teak markets as many consumers switched to other hardwoods. Since 1978/79, TC has developed a more systematic pricing policy with revisions in export price being made only once every year in April. The market is informed about price changes sufficiently in advance and the price increases have been moderate at about 10%, which is only about 2 to 3% above inflation. As a result, TC has been able to regain most of its customers. The current average export price for teak logs is K 4,900 per H ton and for teak sawnwood - K 5,500 per S ton, which is about 5% higher than the Indonesian teak price and reflects the quality premium for Burmese teak. The Government allows TC to set local prices of wood products so as to cover the standard cost of production with a 10% extra allowance for profit. For wood products such as lower grades of teak, sawnwood, plywood and furniture, the cost based formula yields reasonable prices when compared with export prices. However, the average price for the construction grade hardwoods sold on local markets is about K 800 per S ton. That compares with an equivalent export price of about K 1,640 per S ton and local free market price of K 2,500 per S ton. Thus, official prices for hardwood sawnwood are low and do not reflect its opportunity cost. The Government, believing that increasing local hardwood prices at this time would fuel inflation, has encouraged increased use of cheaper substitutes such as plywood, whose production would be increased by about 36% under the proposed project. Transfer prices of sawnwood and plywood within TC have recently been revised upwards under the First Wood Industries Project and log prices are currently being reviewed. -9- Other Forest Industries 29. Other forest industries include bamboo based pulp and paper manufac- ture, firewood and charcoal production, and other activities such as resin, wax and lac production. Firewood and charcoal production of about 15 M H tons is mostly in the private sector with pulp and paper production mostly in the state sector. Manufacturing facilities consist of an integrated pulp and paperboard mill, and a waste-paper paperboard mill but the production of about 23,000 tons per annum meets only about two-thirds of Burma's paper product consumption. The Government, assisted by consultants financed under the IDA project preparation facility, is now preparing a pulp and paper project for possible IDA financing. Project Implementation Performance 30. TC is the beneficiary of three IDA credits (Cr. 493-BA, Cr. 949-BA and Cr. 1114-BA) for two forestry projects and one wood industries project. The First Forestry Project has been completed and a project performance audit report is being prepared. Initial implementation problems relating to con- sultant hiring, vehicle procurement and diesel supply have been overcome and project unit output is now excellent. Consequently, the project Economic Rate of Return is estimated to be above 50%, and the net present value (at 10% discount rate) is 18% higher than SAR estimates. Benefitting from the first forestry project experience, progress of the Second Forestry Project (effective December 20, 1979) has been excellent and total log extraction volume to-date of 1.2 M H tons is ahead of appraisal target of 1.1 M H tons. To cope with excessive hardwood log inventories, TC is increasing hardwood milling capacity and also reducing hardwood extraction to match existing milling capacity. TC is also making excellent progress under the First Wood Industries Project (effective June 25, 1981). The machinery for three of the five project mills has already arrived and is being installed. Some problems with local supply of cement were experienced, but the Government is addressing this problem by banning cement exports and increasing production capacity. Project construction is expected to be completed on schedule in 1985. 31. The following lessons were learnt from these projects: (a) The establishment of project implementation units within TC proved very effective. It helped in starting geographic decentralization of this large corporation with operations spread throughout Burma, and at the same time it allowed better cross-functional (logging and milling) co-ordination and integration at regional levels; (b) New and more efficient operating systems for log extraction and transport were developed under the First Forestry Project and are being used in other areas. Decentralized and opera- tionally oriented accounting systems are helping to improve decision making and cost control at regional level. The reporting and auditing targets under the first forestry project were too ambitious and more realistic targets are now being used; -10- (c) Due to lack of previous experience, TC was unable to recruit good quality international consultants and supervise and co-ordinate their activities. Consequently, technical assist- ance design has been modified to obtain the services of one consulting firm which then provides, supervises and co-ordinates the many individual specialists required; (d) The forest feasibility studies prepared under the First Forestry Project provided detailed background information which formed the basis for future development in the forestry sector; (e) Though overall equipment procurement was satisfactory, in some cases problems with incompatible equipment were experienced. The First Wood Industries Project, therefore, experimented with larger bidding packages and turn-key contracts. The experience so far is very favorable; the fear that larger packages might lessen competition and increase costs was not warranted. The approach has helped ensure equipment compatibility and greater technical input from suppliers in design, installation and start-up. TC also agreed to allocate funds to advertise more widely through trade journals in different countries. The response has been very favourable, producing more bids, keener competition and lower cost; and (f) The overseas training program in previous projects has been successful in familiarizing TC personnel with the latest developments in technology. It has helped make TC more out- ward looking and receptive to new ideas. This has facilitated a faster modernization of the sector than would have been possible otherwise. Overall the project implementation performance of TC has been good and the lessons learnt from previous projects would be used in further improving performance under the proposed Second Wood Industries Project. PART IV - THE PROJECT Background 32. Since 1974, the Government and TC have embarked on a rehabilitation and modernization program for the forest and forest industries sector with forestry and wood industries projects assisted by IDA and ADB. The proposed second project was identified and discussed with TC during an IDA supervision mission in late 1981. This was followed by project preparation in 1982 with assistance from FAO/CP. A Staff Appraisal Report is being distributed separately. A timetable of key events relating to the project and special conditions are given in Annex III. Negotiations were held in Washington, D.C. from November 14 to 18, 1983. The Burmese delegation was led by His Excellency U Ye Goung, Minister of Agriculture and Forests. -11- Project Objectives and Description 33. The main objectives of the second project would be to: (a) improve further the efficiency and product quality of Burma's export oriented teak processing industry through modernization and rehabilitation of existing capacity; (b) improve the supply of hardwood sawn timber and panel products to the domestic market and thereby reduce the use of teak for construction purposes in the domestic market; (c) introduce block board production for the first time in Burma; and (d) strengthen further the technical and export marketing skills of teak processing industry personnel. 34. The proposed project, implemented over a five-year period, would include: (a) rehabilitation of teak sawmill No. 4 at Ahlone to saw about 45,000 H tons per annum of teak logs using modern band saw technology; (b) reconstruction of teak sawmill No. 14 at Dallah to saw 45,000 H tons of teak logs also using modern band saw technology; (c) construction of a new panel products mill at Monywa to produce 4,000 cu m plywood and 1,000 cu m teak veneer annually, and to introduce block board production on a pilot scale; (d) construction of two mobile hardwood sawmills with annual throughput capacity of 10,000 H tons to be located in north Pegu area; (e) strengthening and modernizing of technical and marketing skills of wood industry personnel; and (f) improvement of administrative and technical facilities. The Timber Corporation (TC) 35. TC is a Government-owned corporation, formed under the State Timber Board Act of 1950 in the Ministry of Agriculture and Forests. TC is respon- sible for (a) extraction of teak and hardwood logs; (b) operation of most of the wood processing industries in Burma including all teak sawmills, plywood and veneer mills, furniture and flooring products factories; and (c) marketing of wood products, both within and outside Burma. TC is a large corporation with about 40,000 full time employees and 600 professional staff. Following the new commercialization guidelines for State Economic Enterprises (SEEs), TC's setup was modified in 1976 into a matrix organization. TC's practice to establish project units (PU) to implement externally assisted major development projects has been very successful and TC intends to use -12- similar arrangements for the proposed project. In the past, TC's management concentrated mainly on extraction without due emphasis on wood processing industries and marketing. Exports declined sharply because of poor product quality and inadequate marketing efforts. Export volume of teak sawnwood declined by 40% over five years ending in 1977/78, and, of teak logs by 15%. In 1977/78, under a new managing director with stronger marketing and processing background, adequate attention has been devoted to these functions and the export volumes of processed wood products and logs had increased to 71,000 S tons and 73,000 H tons respectively in 1981/82, thereby recouping previous declines. 36. TC, like most SEEs, had very little operational autonomy until 1975, when new guidelines for SEEs gave some financial and operational autonomy, allowed use of incentives to encourage better performance, and acknowledged that SEEs should make a profit. The price revisions made at that time together with increased operational autonomy improved the financial viability of most SEEs including TC. Prices have been allowed to increase to cover costs and return a profit of around 10% on sales. However, substantial central control remains. Price increases, production targets, and main investment decisions require Cabinet approval, which is time consuming. Project Implementation 37. The proposed project would be implemented by a project unit (PU) which would be established within TC. A similar organizational structure was followed in earlier projects implemented by TC and found to be successful. PU would continue to operate after project construction has been completed in order to handle initial operation of the project mills and form the nucleus for a wood industries department to be created within TC. PU would be headed by a Project Director who would be assisted by a team of consultants provided under the technical assistance program. Formation of the PU within TC and appointment of a Project Director and two Deputy Directors for PU would be a condition of credit effectiveness [Sections 3.06 and 7.01(b) of the draft Development Credit Agreement (DCA)]. The project mills are at present managed by generalists and do not have any engineers responsible for industrial engineering functions such as production and quality control. Consequently, these functions are neglected and cause low capacity utiliza- tion, high material wastage, and low product quality. TC would appoint at least one engineer with mechanical or industrial engineering background in each of the project teak sawmills and at the panel products mill by the time these mills become operational around end March 1987 and make them respon- sible for production and quality control (Section 3.07 of the draft DCA). TC would be able to hire such engineers graduating from the Rangoon Institute of Technology. These engineers would be assisted and trained by foreign con- sultants under the technical assistance program. TC currently has about 44,000 sanctioned posts but the new mills would require additional 556 posi- tions by the time the project construction and installation are completed. The three support units, administration, finance and audit, along with PU office would have about 110 positions. Most of these would be filled with experienced staff from TC headquarters. 38. The major civil works would be undertaken by the Construction Corporation (CC) under a contractual agreement with terms and conditions satisfactory to IDA (Section 3.08 of the draft DCA). The design section -13- within CC would prepare detailed construction drawings. CC would undertake construction using the existing First Project's construction unit in Rangoon and the Sagaing Forestry Project construction unit at Monywa. CC would assign a project coordinator, by July 31, 1984, to coordinate construction work amongst PU, CC's design section and the project construction units (Section 3.09 of the draft DCA). Technical Assistance and Training 39. TC operates a central training school for workers in Rangoon, but the training school has few permanent staff and therefore relies solely on prac- tical training in the mills. A UNDP financed and FAO executed training project is currently strengthening local training by setting up a training school and developing training skills within TC. The proposed project would further strengthen the technical skills of TC staff by providing about 26 man-months of consulting services and 111 man-months of foreign training. A suitable consulting firm, with terms and conditions satisfactory to IDA, would provide assistance in areas of saw doctoring, panel products produc- tion, and production planning and control. The firm would also provide short-term consultancy and backstopping in problem areas not covered by experts in the field. The consultants would also impart on-the-job training to project staff of TC, and for that purpose the consultants would prepare operational manuals and other training material. They would also help in arranging more intensive overseas technical training visits for about 35 staff members who would be sent abroad for courses lasting from three to six months each. Financial Performance 40. TC's financial performance has been excellent and has improved sig- nificantly since 1977/78 with a 68% increase in net profit before tax. Even after heavy taxation (62% of income before tax), TC now has a return of about 17% on equity, and has succeeded in reducing its long term debt to equity ratio from 45% to 33%. TC's current ratio of about 1.9 gives adequate liquidity. Current assets have increased at a rate of 8% per annum higher than sales growth (10% per annum). This has been due to improvements in extraction capacity while transport and processing facilities have not kept pace; this has caused a build up in log inventories. TC is currently implementing projects which would improve transportation and processing. Financial Reporting 41. TC's financial reporting has also improved over the last five years, but there is scope for further improvement. Annual financial statements are completed almost one year after the end of the fiscal year. Auditing is delayed because accounts from far away agencies are received late due to outdated systems and procedures which result in communication problems and delays in consolidation. Recognizing this problem, TC has created separate accounts for income, assets and liabilities of all externally aided projects. The preparation and auditing of these project unit financial accounts has generally been timely. TC has engaged consultants under the IDA assisted projects and they are helping to improve the quality of reporting. The ADB assisted Second Forestry Project is also providing 24 man-months of financial consultant assistance. To avoid delays in getting project expenditures -14- audited, TC would prepare separate project accounts in a format similar to those agreed upon in the First Wood Industries Project (Section 5.01(b) of the draft DCA). Project unit financial statements would be made available for auditing and to IDA within six months of fiscal year end; and project unit audited financial statements and audit report would be made available to IDA within nine months of fiscal year end (Section 5.01(c) of the draft DCA.) Budgeting 42. All Government departments and corporations are required to prepare an annual budget for approval by their Ministry and then by the Ministry of Planning and Finance and the Cabinet. Even though a project may have been approved and foreign financing assured, a corporation may not be able to implement the project if the required expenditures are above the budgeted expenditure. The budget revision procedure is time consuming. To ensure against possible delays, TC would forward to IDA for review the draft project budget and implementation plan for each fiscal year before the end of September of the preceding fiscal year (Section 5.02 of the draft DCA). IDA would thus be able to assess in advance the adequacy of the proposed finan- cial provisions and forward to the government any observations it may have. Production 43. Project mills would produce mainly teak and other hardwood sawnwood, teak faced and other plywood, teak veneer, and block board. Low grade teak sawnwood and firewood would be produced as byproducts and would be sold on the local market. The project would increase teak sawnwood output by about 3,600 S tons and improve the quality of about 34,600 S tons of export grade teak sawnwood. Teak faced plywood production would increase by 5 M sq.ft., other plywood by 16 H1 sq.ft.; teak veneer, by 14 M sq.ft.; block board by 1.6 M sq.ft.; and hardwood sawnwood by 4,720 S tons. Marketing and Pricing 44. Export grade teak sawnwood would form the bulk of the project produc- tion (78%) and exports (94%). The average export price for teak sawnwood increased by about 20% per annum compounded, over the last decade. In January 1983, TC had an order backlog of about 47,000 S ton which represents about 8 months export production. The large export order backlog, inspite of the recessionary climate, shows the strength of market demand for TC products. The project incremental production forms only 5% of total teak sawnwood exports from Burma (73,000 S tons), and would therefore not present any marketing problems. The project would improve sawing quality and thus prices by 10%. The teak sawnwood price structure set by TC shows some anomalies. Very thin teak scantlings (sawnwood below 2" thickness) require more sawing and therefore have a higher cost of production. Nevertheless TC has in some cases priced these thin scantlings lower than the standard size scantling. TC now recognizes these anomalies and has agreed to increase export prices of thin teak scantlings. TC would review the teak sawnwood price structure annually, commencing September 30, 1984, and discuss with IDA the results of such review by September 30 of each year (Section 5.03(a) of the draft DCA). 45. While the local markets are in short supply of TC products, the Government is against market determined prices because of its concern for -15- containing inflation. The Government sets local prices of TC products using a formula based on standard costs and a 10% profit margin allowance. This policy may not adequately provide reasonable prices for TC. TC and other agencies have, therefore, to be alert in recognizing increases in the cost of production and in revising local prices. TC would, therefore, review annually the cost of production and prices of panel products and hardwood sawnwood and, commencing September 30, 1984, discuss the results of the review with IDA by September 30 of each year. Subsequent action would be taken to ensure that an average profit margin of 10%, a level in compliance with SEE guidelines set by the Government, would be maintained (Section 5.03(b) of the draft DCA). Cost Estimates and Financing Plan 46. The total project cost, including duties and taxes, would be about US$57 M equivalent including US$31 M in foreign exchange. Equipment costs are based on March 1983 quotations updated to September 1983. Civil works costs are based on the Construction Corporation estimates of unit rates for local construction in FY82/83 updated to September 1983. Physical contingencies for civil works are estimated at 10%, and for equipment, at 5%. Price contingen- cies are based on an estimated local inflation of about 4% per annum. Infla- tion in foreign equipment costs is estimated at 8% for 1983, 7.5% for 1984, 7% for 1985, and 6% thereafter. Total physical contingencies amount to 6.2% of base costs, and price contingencies, 13.4%. The project mills will require increased working capital to cover increased raw material and finished good inventories, and accounts receivables net of payables. The project will provide about US$1.1 M to cover incremental working capital needs during the four year investment phase of the project. Provision for technical assistance and training is based on 26 man-months of expatriate specialist services at US$10,500 per man-month; 1/ and 111 man-months of foreign-training at US$2,500 per man-month. 47. The proposed IDA credit of US$25 M (about 58% of total project costs net of taxes and duties) and a FINNIDA grant of US$6 M would finance the full foreign exchange costs of the project. Receipt by the Government of commit- ments, satisfactory to the Association, for contracting the Finnish grant would be a condition of effectiveness (Section 7.01(c) of the draft DCA). TC would finance US$26 M of local costs from internally generated funds. The Socialist Republic of the Union of Burma would be the borrower and the proceeds of IDA credit would be onlent to TC, under a Subsidiary Loan Agree- ment, for a period of 15 years, including 5 years grace and interest at 8.5% per annum. The proposed onlending rate, which is in line with the current rate structure in Burma, is positive in real terms. TC would bear the for- eign exchange risk. The execution of a Subsidiary Loan Agreement between the Government and TC, acceptable to IDA, would be a condition of credit effec- tiveness (Section 7.01(a) of the draft DCA). 1/ Man-month rate includes salary, social and overhead costs and post adjustment, international travel and subsistence. -16- Procurement 48. Procurement would be carried out by PU within TC while FINNIDA will procure goods and services to be provided under FINNIDA grant. Of the total base project cost of US$47.8 M, the major part (62%) would be for goods procured following international competitive bidding (ICB) in accordance with Bank Group Guidelines. Machinery and equipment (US$26.3 M) and structural steel (US$3.5 M), not produced in Burma, would be procured following ICB and would be eligible for IDA financing. Equipment and material, such as calculators, office furnishings, and cement (US$2.0 M) would be reserved for local procurement and would not be eligible for IDA financing. Bulky con- struction materials such as sand, shingle, bricks and timber (US$3.1 M) are not suitable for ICB and would be procured locally. Small items (costing less than US$20,000 cif) and which are not suitable for ICB, would be purchased through normal Government procurement procedures, which require obtaining a minimum of three bids, and which are acceptable to IDA. These would be limited to US$0.7 M. Plywood rotary line equipment suitable for Burmese conditions and technical assistance and training (US$6.0 million) will be provided by FINNIDA on a tied basis using Finnish suppliers. There are two main manufacturers of plywood rotary line equipment which would ensure adequate price competition. Most of the civil works construction and management (US$4.5 M), not financed by IDA, would be undertaken by CC under a cost plus contract which will be approved by IDA under a supplementary agree- ment as done in other projects in Burma. Some minor construction works (US$0.5 M) will be undertaken by TC. The civil works are small and dispersed over five sites in three provinces and would not be of interest to foreign contractors. The remaining cost is for incremental working capital (US$1.1 M). Disbursement 49. Disbursement under the credit is expected to be completed by March 31, 1990. The project disbursement period is slightly shorter than the eight year disbursement period experienced in similar IDA assisted projects in the past. The projected period is in line with disbursement experience of the ongoing First Wood Industries Project which is ahead of disbursement profile as estimated at appraisal and similar good performance under the proposed project is expected. Disbursements from the proposed Credit would be made for: (a) 100% of foreign expenditures on directly imported machinery, equipment, and vehicles or 100% of local expenditure on locally manufactured goods-exfactory (US$21.5 M); (b) 100% of foreign expenditures on directly imported construction material or 100% of local expenditure on locally produced construction material-exfactory (US$3.5 M); and (c) 100% of foreign expenditures on TA and training (US$0.7 M). Applications for withdrawals would be fully documented and no statements of expenditures would be necessary. Financial Benefits 50. The project would be financially attractive to TC and the Government. It would support future capital formation within TC and would help Govern- ment's domestic resource mobilization. The project would generate about K 88 M. in incremental revenues annually after project completion, of which about K 68 M would be left for distribution after expenditures. About 35% of -17- the benefits would accrue to the Government as taxes and contribution, leav- ing about K 42 M for TC. The financial rate of return on project investments would be about 11% which is above both the real (5%) and nominal cost (8.5%) of financing the project and therefore the project will generate sufficient incremental revenues to service debt. Since TC is wholly owned by the Government, a better measure of financial incentive for the latter is provided by the fiscal rate of return on investment (FISRR), which measures the impact of the project on the budget. The project FISRR would be 23%, and would be very beneficial for the Government's Budget. 51. Environment, Health and Safety. Existing teak sawmills have exposed saw blades and inadequate waste material collection system. These pose both health and fire hazards. The project will improve waste collection and provide new sawing equipment with safety features and saw guards. Project mills will be equipped with sawdust collection equipment and good ventilation near driers and dust removal systems near sanders. Waste water will be recycled and mills provided with water treatment plants. The project will result in substantial improvement in environmental, health and safety aspects of project mills. Project Justification and Economic Analysis 52. The project forms part of the Government's development strategy for the forest and forest industries sector, which emphasizes higher export earnings through better material utilization and efficiency. The project would also support the Government objective of increasing local processing and availability of its agriculture and forest exports by increasing produc- tion of teak veneer for exports, and of panel products and hardwood sawnwood for local market. The project would produce incremental annual revenues of about US$11 M of which US$7 M (64%) would be from exports. The Economic Rate of Return (ERR) is estimated to be 37% for teak sawmill rehabilitation (19% of Project Cost); 26% for teak sawmill reconstruction (33% of Project Cost); 19% for panel products mill (40% of Project Cost); and 19% for hardwood mills (6% of Project Cost). No ERR has been estimated for joint overhead costs (8% of Project Cost). The overall Project ERR is estimated at 25%. Project Risks and Sensitivity Analysis 53. The proposed project would be the second IDA assisted wood industries project in Burma, and is based on the good implementation experience of the first project. TC wood products have excellent demand and TC has managed to increase revenues even in a recessionary world economy. Therefore, both implementation and market risks are minimal. Furthermore a sensitivity analysis of project ERR shows that the risk of project ERR falling below 12% is low. Project operating and capital costs can individually double without affecting project viability. The project is also not very sensitive to production levels. Even if only half of the projected increase in production were realized or production increase were delayed by six years, the ERR would remain above 12%. The chances of such delay are very low. The project is relatively more sensitive to changes in benefits through changes in price, but all prices would have to fall by more than a third before the project ERR would fall below 12%. That is considered unlikely and the risk of the project ERR falling below 12% is therefore very low. -18- PART V - LEGAL INSTRUMENTS AND AUTHORITY 54. The draft Development Credit Agreement between the Socialist Republic of the Union of Burma and the Association, and the Recommendation of the Committee provided for in Article V, Section l(d) of the Articles of Agree- ment are being distributed to the Executive Directors separately. 55. Special conditions of the project are listed in Section III of Annex III. The following are proposed as additional conditions of credit effectiveness: (a) execution of a Subsidiary Loan Agreement between the Government and the Timber Corporation; (b) formation of a Project Unit within TC and the appointment of a Project Director and two Deputy Directors in the Project Unit; and (c) the Government has received commitments, satisfactory to the Association, for contracting the Finnish grant. 56. I am satisfied that the proposed Credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 57. I recommend that the Executive Directors approve the proposed Credit. A. W. Clausen President Attachments February 15, 1984 Washington, D.C. -19- ANNEX I Page 1 T A B L E 3A BURMA - SOCIAL INDICATORS DATA SHEET BURMA REFERENCE GROUPS (WEIGHITED AVERAGES) /a MOST (MOST RECENT ESTIMATE) /b b RECENT LOW INCOME MIDDLE INCOME 1960/b 1970'' ESTIMATE.LŽb ASIA & PACIFIC ASIA & PACIFIC ARBA (THOUSAND SQ. EN) TOTAL 676.6 676.6 676.6 AGRICULTURAL 106.9 108.0 103.8 GNP PER CAPITA (US$) 50.0 70.0 190.0 276.7 1028.6 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 60.0 73.0 87.0 398.4 792.8 POPUIATION AND VITAL STATISTICS POPULATION,MID-YEAR (THOUSANDS) 21780.0 27000.0 34109.0 URBAN POPULATION (X OF TOTAL) 19.3 22.8 27.7 21.5 32.9 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILL) 52.0 STATIONARY POPULATION (MILL) 114.1 YEAR STATIONARY POP. REACHED 2125 POPULATION DENSITY PER SQ. KM. 32.2 39.9 49.2 161.7 260.7 PER SQ. KM. AGRI. LAND 203.7 250.0 320.8 363.1 1696.5 POPULATION AGE STRUCTUKE (Z) 0-14 YRS 38.2 40.3 41.1 36.6 39.4 15-64 YRS 59.2 56.3 55.2 59.2 57.2 65 AND ABOVE 2.6 3.3 3.7 4.2 3.3 POPULATION GROWTH RATE (X) TOTAL 1.9 2.1 2.1 1.9 2.3 URBAN 3.7 3.9 3.9 4.0 3.9 CRUDE BIRTH RATE (PER THOUS) 42.9 40.1 37.0 29.3 3L.3 CRUDE DEATH RATE (PER THOUS) 21.0 16.8 13.1 10.9 9.6 GROSS REPRODUCTION RATE 2.8 2.8 2.6 2.0 2.0 PAMILY PLANNING ACCEPTORS, ANNUAL (THOUS) USERS (X OF MARRIED WOMEN) .. .. .. 48.1 46.6 FOOD AND NUTRITION INDEX OF FOOD PROD. PER CAPITA (1969-71-100) 100.0 101.0 107.0 111.4 125.2 PER CAPITA SUPPLY OF CALORIES (% OF REQUIREMENTS) 96.0 104.0 113.0 98.1 114.2 PROTEINS (GRAMS PER DAY) 52.0 57.0 63.0 56.7 57.9 OF WHICH ANIMAL AND PULSE 11.0 12.0 12.0/c 13.9 14.1 CHILD (AGES 1-4) DEATH RATE 24.7 18.3 12.3 12.2 7.6 HEALTH LIFE EXPECT. AT BIRTH (YEARS) 43.8 48.7 54.1 59.6 60.2 INFANT MORT. RATE (PER THOUS) 158.0 127.9 98.1 96.6 68.1 ACCESS TO WAFE WATER (%POP) TOTAL *- 18.0 17.0/d 32.9 37.1 URBAN .. 35.0 30.0/d 70.8 54.8 RURAL .. 13.0 13.07W 22.2 26.4 ACCESS TO EXCRETA DISPOSAL (X OF POPULATION) TOTAL .. 35.0 33.0/e 18.1 41.4 URBAN .. 45.0 38.O/e 72.7 47.5 RURAL .. 32.0 32.07 4.7 33.4 POPULATION PER PHYSICIAN 15560.0 8790.0 4660.0 3506.0 7771.9 POP. PER NURSING PERSON 8520.0/f 7380.0 4750.0 4797.9 2462.6 POP. PER HOSPITAL BED TOTAL 1520.0 1170.0 I100.0/c 1100.6 1047.2 URBAN 330.0/f 350.0 370.07W 298.4 651.1 RURAL *- 15220.0 7160.O/c 5941.6 2591.9 ADMISSIONS PER HOSPITAL BED .. 34.0 .. .. 27.0 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL 4.6 .. URBAN .. .. RURAL .. .. AVERAGE NO. OF PERSONS/ROOM TOTAL .. .. URBAN .. .. RURAL .. .. ACCESS TO ELECT. (X OF DWELLINGS) TOTAL .. .. URBAN .. .. RURAL .. .. -20- ANNEX I Page 2 T A 8 L E 3A BURMA - SOCIAL INDICATORS DATA SHEET BURMA REFERENCE GROUPS (WEIGHTED AVERAGES) /a MOST (MOST RECENT ESTIMATE) /b RE/CENT lb LOW INCOME MIDDLE INCOME 1960/ 1970/b ESTIMATF/ ASIA & PACIFIC ASIA & PACIFIC EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 56.0 87.0 84.0/c 96.1 101.2 MALE 61.0 92.0 87.0/c 107.8 106.0 FEMALE 52.0 83,0 81.07W d2.9 97.5 SECONDARY: TOTAL 10.0 21.0 20.0/c 30.2 44.9 MALE 13.0 26.0 22.07 37.3 50.0 FEMALE 7.0 17.0 18.07W 22.2 44.6 VVCATIONAL (Z OF SECONDARY) 0.5 0.8 O.1/c 2.3 18.5 PUPIL-TEACHER RATIO PRIMARY 42.0 47.0 54.0/c 34.4 32.7 SECONDARY 40.0 32.0 37.077 18.4 23.4 ADULT LITERACY RATE (X) 59.7/f .. 65.9 53.5 72.9 CONSUltPTION PASSENGER CARS/THOUSAND POP 0.8 1.1 1.3_g, 1.6 9.7 RADIO RECEIVERS/THOUSAND POP 5.3 14.8 21.0 96.8 113.7 TV RECEIVERS/THOUSAND POP .. .. .. 9.9 50.1 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 11.3 8.7 10.1 16.4 54.0 CINEMA ANNUAL ATTENDANCE/CAPITA 6.0/h 7.9/i .. 3.6 3.4 LABOR FORCE TOTAL LABOR FORCE (THOUS) 10404.0 11577.0 13549.0 FEMALE (PERCENT) 40.1 36.9 35.5 33.3 33.6 AGRICULTURE (PERCENT) .. 69.9 67.1 69.0 50.9 INDUSTRY (PERCENT) .. 8.0 9.8 15.8 19.2 PARTICIPATION RATE (PERCEN'r) TOTAL 47.8 42.9 39.7 42.5 38.6 MALE 58.0 54.7 51.4 54.4 50.7 FEiALE 37.8 31.3 28.2 29.8 26.6 ECONOMilC DEPENDENCY RATIO 0.9 1.0 1.1 1.0 1.1 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5% OF ILOUSEHOLDS 14.6/4 .. .. 16.5 22.2 HlGHlEST 20% OF HOUSEHOLDS 44.7T9 40.0/i .. 43.5 48.0 LOWEST 20Z OF iiOUSEHOLDS 6.5/1 8.07 .. 6.9 6.4 LOWEST 40% OF HOUSEHOLDS 16.5f 21.07W .. 17.5 15.5 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 94.0/c 133.9 194.5 RURAL .. .. 68.0/c 111.6 155.0 ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 50.0/c .. 178.0 RURAL .. .. 36.o07 .. 164.8 ESTIMATED POP. BELOW ABSOLUTE POVERTY INCOME LEVEL (Z) URBAN .. .. 40.O/g 43.8 24.4 RURAL .. .. 40 .0J 51.7 41.1 NOT AVAILABLE NOT APPLICABLE N O T E S /a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicators depends on availability of data and is not uniform. /b Unless otherwise noted, "Data for 1960" refer to any year between 1959 and 1961; "Data for 1970" between 1969 and 1971; and data for "Most Recent Estimate" between 1979 and 1981. /c 1977; /d 1976; /e 1975; /f 1962; /g 1978; /h 1964; /i 1972; /j 1958, Rangoon only. May 1983 -21- ANNX I Page 3 DEINifITIONS OF SOCIAL INDICATORS Notes: Aluhough the data aredrawn Pra sourcesgenerally judged tbe nst sthorlt,tatin and reial *I should a'lso11 ,,- I be,ntdta hynynth tncsroaetooa.llp comarble because uf na lac k of snodardied definitIons and conneple . wed b ofset ...otetee to -1ohleoig the data. The data are, ntehoo. wflc dneeoremof naniud,indicate trends, and borauteritee ucroai saucdifeee betsoc, elo The reference. grunpo a- (I) the . east ..utry grop of the sabject o...otry and (2) a ewantcy group sith s-h.ba htgh., averge Iocoe thaoh the . cutry group of the sabject country (encept for "High Ont il Enprtet-` grouP where "Mtddle Income N-rtb Africa sod etddie tate" It chosen becanoe of et-n-g sac.o-c...ura uf f ds) nho referana goup da,ta the,.. anerge are popuIatin. neighted arthbetlo means for each indiator sod htnan unly ahen eajority of the -nutries It A ourbadathfr ht nd-ta...n.beonrge of catrlt mug tbe luiotr dpnd tthe an- labitin of dta and is u fr,cotn uoh .eterise In relating a.eragas of une idlaorn ohe.Theta an-ges are only usfl oI moIng the nalue of one ditdlct-raan raun the county aud AREcA homn si. Population ye rhyolia- coplaton dlnided by -unber ofpccie - IT ta orae ara cusprlinig land area an d tiso.dasen 1960, pyiin nlfe raamdclsbn norlyloi 'iiTi and 1900 data. PopulatIon ~~~~~~~per urIng11 recant Pupulatiun divided by unohec of practicing A9rirlfuratl - Esconatn of agriculturlI area umedesprnl rpraetyslndfeaegraduate naroet,. aaiatant ntrnet, prcstica1 Itoaou and fo cop, pawurenp monger and kitchen gardens or to low falw 90 urlgnlire 19ff and 199 data. Populat2ion par HoPOcl led - total. nrba, and rual- t oultin(totl. urban, and rursi) dioldad by their r.sec Onei number of h.yOr bade GNP PER CAPITA (US$) - iNP y- capicoee -i-ates an -oc entnoken pricem, wellal "It yab1lic and Price gat ra ad sPeijtased bopjspin nod airulatald by sao onetin-ehod as World Sank Atlas (1979-SI batis); rebabtiitotio cener.Hfo'plnalouee .tanwlisbennh- snneyanf 1960, i970. aol 1991 dens, ~~~~~by atlwt one pyliojue. tatblishmen- proniding principally1 catwfdi 001900 MNe01009TION PER CAPITA - Awnual aptewn nstyioo ne s m.edia enIters dnon pa.aeti huptaffed yapyIin(u y -atedica1 r ayenryfcl and lint,erueantrl gao sod hydra-, enler P'itat nre nidelfe, woo.) witc ofe itpat.ient sromt oeonan en eieelnieceiip OR k ..gas ofca equcln a cpepoId t,untd ag of--,edlnl faIfe,oc fnr jtuinicu ynyoe 190 970, and 990 data,ubnbsltl cld ANn princplfeh o hsial,addua huPlrl loa Ir ua hoePitule and wed ic and maternity contort. POPULTIllON A09 VITAL STATISTICS ipnilie hoptaa rHhoodpny ndrrua.' ToalPountto odYer( -oad.) A. beof July 1; 1960, 1970, and 1991 dlneeprH piaSd-Tolnubrfaniennnordchga data. trus.. hos'"11- Piftals dinided by the vanhec of bedt. differentdeini196et uf9rbn aead ny,afec ...p....ity 0f dat 1009 amongti.? contiew; 1960 190 n 91dt.AeaeSits of Houswhnld (proepr uehald)- tal,uban, and rural papola0OonPCoutaoun -.A bhoeinid untse fa ru ofP hd.nIdale h hr Iigqatr Porittonin ear200 -Corec pduIId o p lietion ace. hwd on 1980I ad ternt el.Abadror lodger sa lueoyncbeIonlde-i nonai poulatiunby age nd eon ad the O sorta oop nod fertIlty the houaehld foe terosI.., parpee.. tb ilddJ raes irfwsintuasteAfu oruOrErls uprero tre nrae obe f eros o con nni2aontndrra aeug use lenele onsuming lie enpantancy at brth increostog inOh rnunrtry'u par of peoo e prra nalabn r r.uraloccpId nneoa asoigdcin nfriIt codn toboelee n ps ailenet oIeelIr pron fdullns)-erl urban, ndPrura - coelnninn f onait ad trtlly oeoa or roecionpupoes.ofrnol eba, ad url delb. longs naspe pinely structure-.,ino. P refin cosEnh l.ThnIacIevd -pafe feet fliryrace .d lited erolent atin yuolti-nnioeaoe-rimtydo hehes fseejcd frhauote-"pr lar scheol-ag p1opuain; on nldsthlrnhgd6i ia o o h popatfoe nctyn t00h anAheccao-dnteotpao but adjnsted forlh diferentlengths of prmay dcaio;o fecriliyraneooopiaces" leve. coI _tIeaIc mg uieol eoainnclernytca 0 enc p-baln Otwllbrsi ed.Oeonar ahdl tnal mleandfmaeI ICtf tbed anaoeW eodt Peoltin enit duotnnoqiesc eor ou yat f ppovd enay ssrubin Per en.lam. - ld-yearpopuiusnt per quar klonete (105 J. herp-os 7 fpoiengnrt oc P-l,ortahrtriigiero to o h .p.utn . 190t 90,I d181dt._tl-ererrni -cia andhennd ry.-.T tal-I ..I.fen dnennltdi yoploeoo ros lte pereor -Il" Int',,, Armoal fow -ali of. el. id p Isty n eeodr itn the dinided hynaeso erhr ntere yerpopulat-ion fnc 1955-90, 1 t-h, and, 190-f responding hleveis..... t ' PouaInGot ae(aco)-obn-Anu ent rates of- orban Adu, lt1ireey ae(pnet)-L tar idutealed. to redl and wri, anI popolatlons for 1950-60, 1960-70d,te and o 19f-S. prcntgeoftoalad'Ipoultin ge 15 peri yedand oe.ti.; Crude tli Sate Per Ihosiand)-- denualblIne bibr-ttparffioua1nf of mid- poulu I;110, 0197, and iSI dens ar etiglstta eigh pernne rec Ind amulnes ei_en hernosaCrprdutie erodIfsh e barene prset aeseIi I w.gdin enarer (prtosn.-Iltn)-al ye frcivr o ai frIliy; rates; utaw Ilyfn-eraeae iti i9hI,d1970,Vandtirad.sn to g-e1 ersi IPnbllc per -casad o pyny tnn jnctudwa a- 64 y.- Iicetnilded recoy-l-era in(5- ' " doutriesl an in fenc he,p en11 e-glhnrri--o radon Pumiy Pannne-Acepors oaua ( -runoe -. oeulnmef id rapeoro notensI effect;.. dta ofn re- t er nyetdecoprbl icen of bth-cncruldevOee ade now pIne of naional Paet tIp plnnn countries aboiiosheud I Icentiog. psonly Pluoing-Use O (_ren fcrre amnt Pret g 1tare ateral- pubi perd:F chuteid pnrusc Oo;yeiOnn)iene,qrnu al are ncni on f rnp auoe C.....lotionL brrtns, opltin toon t-he ioc thale FOODHot 0011 IA RT-hOiTOof-bS ciclllnc dol lyittl tt pr- -ecn -atI dcrotwut c lu p tpe", teyed suaperodlco lindn ofPnndPru f oci19n0 per Ca60nto fd19790hOiI-81 Ioe Sprcpn pur -ior drnof prtlsadrI I flI.riccedlod 6wnru y un. ItIo otdea huedn narl-ineal960 1970ag produe price d eiir 19O-h,SifM,andiON ParodcapIta wot. uf- calor.Iw(prcen of th re pieset 1h-. Computd-feam Total lbo Purrs (.tintan...dapplt.) - Pnn .s.u.. aiet pasos Incluing acte ewrgtululn ofnt o9 nple aelb treer papdapIa pr frre endll oalayed banI linc pludngintelo ir-deno, eo. covein enporra, ac rhanges toaeonb. Settopplias aelude aninu fred Ped,coprbl;1h0 tO n 90 os qfentilt, Owtue Ic oo fenetsng and etr Oin dImto96hotin d beald (percent) g. e.mable P labrfoc-s aretg of l.nIII labor fo_a he oirnens oceassontd A PA bsedon hysolgicl nedsfornomilfaroolad (pecet)- lab-orti lucr In faig,foesr, huting sof di oga beAseedisr- s io %f_plain n ens yt1 peerntftO wst -ndatr b paeht)d lab.or oc. n lOslrntungo,mnaanrn Parcaita Plnypiy of .roitn(grm erday -.Potein cotent of percapta 90an.dl ea ne upl n od e d-ttnsppyoffo is-defInd as-shoe.i tarcrtnlte)rman)-toa,m-e n fei-aiip tionw Reqairreenna fur al cert ealae yOU end frnunmeect acoaertue as total, tale,Icud an -fmle aor- owa pos Fooend f hc 1 rs u 7innld O he Inida protei , mate 190 97,adH ISidaa These art i- hae en . IL h' patiiptonrae inteodrx aeO rta hs f 5gaso oa rti n 2) gra19bs7oref I eci tgag-sen stutur fteppuaIn n on-ieted nfeed alrters lotr bfrbenldynpadhr inee d f-wcnteaafneaonlosrs Third crId ud Onrsy; lhi-6lI97ead ..900 data. Iconl epoec Rto-laI-fpouuioodr1 ad6 odAat Per.d capIt p ...onplyfo Ini_al an Pulse-Prti spIt uffn h oaliirfre derve taPaislsa d p lse n rn per- dayt; 196i-65, 1970, d and iiSyf- tv-i-lo-- O da lPte ..IP'CO2mE OItiTtISLABORFOR t Childy (ages I-A) Deat lae(crcoaad If annual deth -Cpar. thasa_ inTreee fPinn noe(ebiGcs n id ecle prce dg gop -y yas,n children lin; tIs age !7 grup fn am en pigprcent,F-- riheth-0 pcreo pnEl r2- ecn,adporo 0prero bnncls at entedlfi- lPife tablet; 5h, 19ff andl P991 dana. penusaboldta.ill.in - anitm POOIOT~~~~~~~PI Tariff olf DP .T1 Ipatanr ot Sirt yan vrg abeu years of I- Ife. c.at.g.h..loao entiml.erastar very hpruiat eaurso,pvrt wo..n anbit; 90,1ff- and 1991 i data. etboudldPIb. 90 be 970arpet d 1oc 1 dnntOdral rtine Infant Cortaliny lte I lper sbyoPAOud) . - annual d leatsIf o antslodnr.ow fsfloiedibalu.te P o,ertyIno- foLevl(tpecai)-uheerrnl- yea oi ae enY hnnaf iv beooths;_SRtISf an b181 data Abs-Itte (povetyuose leeli fthan income 8 lene hlota shirt a -ll dneso Rf Wooe (pree of POPa1acie) - t lotal, nih,an ua -nelinnlyaeutdecpoesnIlvn-fdrqiemtsnnt Tabe fo people (Innt,uban u d cre) sihwstalaca tiaeafodbe Fncon_anonape naa uha htfa etce hchls ptg,sdbdrltiv poet inrm..e.e it n~or-tiord t... nf .oeag pe lpta- houst.e. nrt l raf cesf_h dolesnl ipyta hebnelene ad ual- eretofptoaOe (urban ' end rural em bO are l- 1960n nenthertuO the eusehol do nothane Inspend adtoprnprtlnnat part o hua eted n Zet-aerlylaeeboe th . d tyatw ccth ate of pioth OcnmrAayi n fuenonlpodn petnie and mIle.inaaleaions OeyiNS -22- ANNEX I Pago 4 COUNTRY DATA - 3URKA* AREA POPULATION DENSITY 676.581 sq km 35.7 million (1982) 53 per sq km Rate of Growth: 2.32 (from 1981 to 1982) 192 per sq km of arable land POPULATION CHARACTERISTICS j/ HEALTH (1980) Crude Birth Rate (per '000): 37.2 Population per physician: 4,550 Crude Death Rate (per '000): 13.6 Population per Hospital Bed: 1,407 Infant Mortality (per '000 live births): INCOME DISTRIBUTION (1972) DISTRIBUTION OF LAND OWNERSHIP (1975) % of national income, highest quintile: 40 2 owned by top 142 of owners: 42 lowest quintile: 8 2 owned by smallest 622 of owners: 26 ACCESS TO PIPED WATER a/ ACCESS TO ELECTRICITY (1977) 2 of population - urban: 30.0 2 of population: 6.6 rural: 13.0 Total: 17.0 NUTRITION a/ EDUCATION A/ Calorie intake as 2 of requirements: 106 Adult literacy rate: 672 Per capita protein intake (grams per day): 59 Primary school enrollment: 84S GROSS NATIONAL PRODUCT IN FY1983 ANNUAL RATE OF GROWTH (. constant orices) S Million 2 1973-78 1978-83 1973-83 GNP at Market Prices 5,915 100.0 4.3 6.5 5.3 Gross Capital Formation 1,337 22.6 9.8 15.3 12.5 Gross National Saving 953 16.1 10.4 16.5 13.4 Foreign Saving bk 536 9.1 7.0 20.9 14.2 Exports of Goods, NFS 438 7.4 -1.8 10.0 3.9 Imports of Goods, NFS 950 16.1 3.3 14.5 8.8 OUTPUT, LABOR FORCE, AND PRODUCTIVITY IN FY1983 Value Added Labor Force V. A. Per Worker $ million % Million 2 US$ Agriculture c/ 2,883 48.4 9.4 66.3 307 Industry d/ 757 12.7 1.5 10.3 505 Services/Trade 2.322 38.9 3.3 *l 23.4 et 704 TOTAL 5.962 100.0 14.2 100.0 420 GOVERNMENT FINANCE Public Sector Union Government Kvats Million 2 of GDP Kvats Million 2 of GDP FY83 nY83 FY83 FY83 Current Receipts 7,751 0/ 16.5 LI 6,823 14.5 Current Expenditures 6,221 13.3 6,062 12.9 Current Surplus 1,530 3.3 761 1.6 Capital Expenditures 8,494 I/ 18.1 x| 1,998 4.3 External Assistance (gross) 3,720 7.9 *All data for FY83 are revised estimates of the Government of Burma. a/ Most recent estimates, referring to any year between 1979 and 1981. bJ Defined as external current account balance excluding grants. c/ Includes livestock, fishery, and forestry. d1 Includes mining, power, and construction. e/ Includes workers not elsewhere specified. flI Includes current surplus/deficit of public corporations. /J Includes capital expenditures of public corporations. not available -23- ANNEX I Page 5 MONEY. CREDIT. AND PRICES 1978 1979 1980 1981 1982 1983 (Kyats million outstanding at Mar. Mar. Mar. Mar. Mar. Mar. end of period) Money and Quasi Money 6,631 8,017 9,619 11,213 13,135 14,808 Bank Credit to Public Sector 6,550 7,194 8,990 10,885 13,487 16,323 Bank Credit to Private and 1,706 1,728 1,653 1,651 1,749 1,702 Cooperative Sectors (Percentages or Index Numbers) Money and Quasi Money as Z of GDP 22.4 25.2 27.2 29.0 30.7 31.5 Consumer Price Index at Rangoon (1972 = 100) 234.6 247.9 249.4 249.4 252.9 266.3 Annual Percentage Changes in: Consumer Price Index at Rangoon -6.0 5.7 0.6 0 1.4 5.3 Bank Credit to Public Sector 5.4 9.8 25.0 21.1 23.9 21.0 Bank Credit to Private and 14.6 1.3 -4.3 -0.1 5.9 -2.7 Cooperative Sectors BALANCE OF PAYMENTS MERCHANDISE EXPORTS (FY83) a/ FY81 FY82 FY83 $ Million 2 (us$ Million) Exports (GNFS) 531.2 515.0 437.8 Rice and Rice Products 144 41.9 Imports (GNFS) 755.5 880.5 950.7 Teak & Hardwood 87 25.3 Resource Balance -224.3 -365.5 -512.9 Pulses and Beans 33 9.6 Base Metals and Ores 27 7.8 Animal Feedstuff 8 2.3 Net Factor Income -24.2 -23.0 -46.7 All Other Commodities 45 13.1 Net Current Transfer 16.6 17.6 23.7 TOTAL 344 100.0 Current Account Balance -231.9 -370.9 -535.9 Official Grant Aid 96.6 58.6 79.4 EXTERNAL DEBT. March 31. 1983 Net M< Loans (DRS) b/ 215.9 347.6 334.3 uS$ Million Disbursements 282.2 431.1 402.5 Repayments 66.3 83.5 68.2 Outstanding and Disbursed 1,960.1 Short-term Capital -0.9 0 -0.7 Outstanding, including Other Medium & Long Term Capital c| -46.8 -77.4 -20.4 Undisbursed 3,242.3 Overall Balance 32.9 -42.1 -102.5 Gross Reserves (end-March) 274.8 221.7 101.3 Net Reserves (end-March) 232.5 158.4 23.1 DEBT SERVICE RATIO FOR FY1983 Z Ratio of debt service to exports of 26.9 goods and services (excluding IHF) RATE OF EXCHANGE 1980 (End of Calendar Year) SDR 1.00 = K 8.51 IBRD/IDA LENDING. September 30. 1983 (US$ Million) US$1.00 - K 6.76 IBRD IDA 1981 (End of Calendar Year) SDR 1.00 - K 8.51 Outstanding and Disbursed 256.92 US$1.00 - K 7.40 Undisbursed 334.62 1982 (End of Calendar Year) SDR 1.00 - K 8.51 Outstanding, including US$1.00 = K 7.78 Undisbursed -- 591.54 As of October 31. 1983 SDR 1.00 - K 8.51 US$ 1.00 - K 8.10 a/ Reported on shipment basis iJ Transaction reported to the World Bank's debt reporting system, (DRS). cI Includes errors and omissions. South Asia Programs Department Division C January 16, 1984 -24- ANNEX II STATUS OF BANR/IDA OPERATIONS IN BURMA STATEMENT OF BANK LOANS AND IDA CREDITS (As of September 30, 1983) US$ Million Loan or Amount (less cancellations) Credit No. Year Borrower Purpose Bank IDA Undisbursed Trhree loans and six credits fully disbursed 33.1 103.6 -- 597 1975 Burma Livestock - 7.5 1.03 642 1976 Burma Paddyland Development - 30.0 6.20 686 1977 Burma Tin and Tungsten - 16.0 0.76 745 1977 Burma Seed Development - 5.5 1.13 835 1978 Burma Paddyland Development 1I - 34.5 18.07 879 1978 Burma Rubber Rehabilitation - 4.5 1.77 949 1979 Burma Forestry II - 35.0 18.19 958 1979 Burma Telecommunications II - 35.0 23.12 1031 1980 Burma Kinda (Nyaunggyat) Dam - 90.0 46.46 l092 b/ 1981 Burma Grain Storage - 23.0 17.21 :1114 bl/ 1981 Burma Wood Industries I - 32.0 17.75 :1245 bI 1982 Burma Power I - 80.0 73.33 :1253 bI 1982 Burma Construction Industry I - 20.0 20.00 1315 bI 1983 Burma Tank Irrigation - 19.0 19.00 1372 bl 1983 Burma Third Port Project - 50.0 50.00 1381 b/d/ 1983 Burma Groundwater Project I - 14.0 14.00 1i985 bId! 1983 Burma Rubber Rehab. II - 9.0 9.00 Total 33.1 608.6 of which has been repaid 33.1 0.2 Total now outstanding - 608.4 Amount sold 2.7 of which has been repaid 2.7 - Total now held by Bank & IDA a! - 608.4 -Total Undisbursed 337.02 A' Prior to exchange adjustments. bI IDA Sixth Replenishment Credits, principal amounts shown in US dollars equivalent at date of negotiations, as shown in the President's Reports and disbursed amounts shown in US dollars equivalent at the rate of exchange for the SDR on September 30, 1983. cI Effective October 18, 1983. d/ Not yet effective. -25- ANNEX III Page I BURMA SECOND WOOD INDUSTRIES PROJECT SUPPLEMENTARY PROJECT DATA SHEET Section I: Timetable of Key Events (a) Time Taken by Country to Prepare the Project Two years (b) Agencies Preparing the Project TC with assistance from FAO/CP (c) Date of First Presentation to the Bank December, 1982 (d) Date of Departure of Appraisal Mission March 1, 1983 (e) Date of Completion of Negotiations November 18, 1983 (f) Planned date of Effectiveness July, 1984 Section II: Special IDA Implementation Action None Section III: Special Conditions Conditions of Effectiveness (a) Formation of a project unit within TC for implementing the project and appointment of a Project Director and two Deputy Directors for this Unit (para 37); -26- ANNEX III Page 2 (b) execution of a Subsidiary Loan Agreement between GOB and TC acceptable to IDA (para 47); and (c) the Government has received commitments satisfactory to the Association for contracting the Finnish grant (para 47). Other Special Conditions (a) TC will appoint at least one engineer with mechanical or industrial engineering background in each project teak sawmill and in the panel products mill in a timely manner before start of production (para 37). (b) CC would assign by July 31, 1984 a project coordinator to coordinate construction work amongst TC, CC's design section and the project construction units (para 38). (c) A draft project budget and implementation plan would be sent to IDA for review before the end of September of the preceding fiscal year (para 42). (d) Commencing September 30, 1984, the teak sawnwood price structure would be reviewed annually and the results of such review discussed with IDA by September 30 of each year. The review would consider all relevant aspects in setting prices including market demand and cost of production (para 44). (e) The cost of production and prices of panel products and hardwood sawnwood would be reviewed annually and discussed with IDA by September 30 of each year, and subsequently actions taken within the next year to ensure that an average profit margin of 10% would be maintained (paragraph 45). ~~~'-i ,I00ao,o.OOo,ds, ,~~~~~~~~~~~~~~~~~~~~~~~~~o ~~ ~,INDIA5 ~ CHINA , PEOPLE I- Z~I EOCRSATIS, f o- THAILAND -2> / H / 260~ D (EMOCRATI _____~~~__p __ H A~0 N / 920 ~ {5AGA/C JHOIOI, ~~A \ / 0010,0 & N~~~~~~~~~~LA ~~2,.,i ~~~ 01001 l(aolo~~~. PEOLE' BAY OF:efvrAL DEMOCRATI 20 yI~~~~~~~~~~ (1 ~~~~~~~303ooo ~ ~ ~ ~ ~ UBI A loso M 0,1 f CHIN ~~~~~ ~~ ~~~jOj