Insight: With Japan's help, an ex-soldier leads Yangon from backwater to megacity By Andrew R.C. Marshall YANGON (Reuters) - Every evening, long after Yangon's office workers have squeezed onto packed buses for grueling commutes to the suburbs, a single room remains lit up on the top floor of City Hall. Inside sits Toe Aung, a former army major who almost by accident bears one of the biggest responsibilities in reform-era Myanmar: planning Yangon's unstoppable transformation from a regional backwater into Southeast Asia's next megacity. As deputy head of urban planning, a department which didn't exist until he set it up in 2011, Toe Aung's task is unenviable. With its power shortages, floods, traffic jams, pollution and slums, Yangon is a moldering testament to nearly half a century of economic stagnation under military dictatorship. Its population of about 5 million is expected to double by 2040, reflecting the rapid urbanization of a largely rural country. The prospect of jobs is luring thousands of underemployed villagers into a city ill-prepared to receive them. "So many problems," muses Toe Aung, whose soft-spoken English has a U.S. accent picked up as a child in Washington, where his father was a military attache at the Myanmar embassy. Which should be prioritized? Some answers lie - at least on paper - in the Yangon Master Plan, a 852-page study drafted with funds and expertise from the Japan International Cooperation Agency (JICA), which oversees Japan's aid to developing countries. The plan will be finalized in December amid fears the city's soaring land prices are scaring off foreign investors. There are also concerns that City Hall's close cooperation with JICA will give Japanese companies an unfair advantage in bidding for infrastructure projects. Yangon lost its status as Myanmar's capital in 2005, after the former military junta carved a new seat of government from a parched wilderness some 380 km (236 miles) to the north and called it Naypyitaw ("abode of kings"). But the old capital remains Myanmar's commercial, industrial and financial center, with Yangon Region accounting for about 22 percent of GDP in 2010-11, according to the master plan. Yangon has the country's main ports, making it the most obvious location for export-oriented manufacturing. It is also the main tourist gateway, with visitor arrivals surging since a quasi-civilian government took office in 2011. In short, Myanmar's reform-era economy depends upon the fortunes of its biggest city. JICA puts the cost of 103 "priority projects" in Yangon at $5.4 billion, with experts predicting the city's long-term transformation will cost tens of billions more. As with all great cities, Yangon's dysfunction is part of its charm. But not if you live there. The power shortages mean back-up generators clog its crumbling pavements. The rear windows of many dilapidated tenements look out upon alleys carpeted with rat-infested garbage. This clogs up drainage pipes and worsens the flooding during the monsoon season. Downtown Yangon has a decrepit sewer system built when Myanmar, then better known as Burma, was a British colony. Elsewhere, septic tanks are emptied into open drains. Less than half the city has access to piped water. Then there's the traffic. During decades of military-imposed isolation, Yangon boasted fresh air and sleepy roads. Not anymore. The easing of government restrictions on car imports in 2011 led to a surge of vehicles on Yangon's narrow and rutted streets. The city center is often gridlocked and thick with exhaust fumes. Without a comprehensive land use and development plan, Yangon risks becoming "yet another poorly managed and unattractive Asian megacity," the Harvard Ash Center, which advises the Myanmar government, said in a report last year. The JICA-led master plan proposes scores of projects, including a million-house building program, the regeneration of Yangon's waterfront and a new central business district just south of the existing airport. The Yangon City Development Committee (YCDC), as City Hall is officially known, is already inviting foreign and local companies to tender for land leases in the new 14.8-hectare CBD. Japan expects to benefit from these projects. Earlier this year it wrote off 176.1 billion yen ($1.78 billion) in debt and extended billions of yen more in aid, much of it earmarked for the Thilawa port and industrial zone being developed by Japanese companies to Yangon's southeast. As well as the master plan, JICA is also conducting four studies to support Thilawa's development. Its staff occupy the office next to Toe Aung's. Unlike its Western counterparts, Japan's aid agency often pursues a "two-pronged approach" to assistance, said Andrew Gulbrandson, an American urban planner who has given the master plan's authors critical feedback. First, they want to help. Second, they want to identify opportunities for investment," said Gulbrandson. Case in point: a February seminar organized by City Hall and JICA to improve Yangon's water supply, sewerage and drainage. It was an all-Japanese affair attended by big construction companies such as Kubota Corporation and senior Tokyo officials. All this gives Japanese companies an edge when bidding for Yangon projects, said Sungmin Ko, assistant commercial attache at the Korea Trade-Investment Promotion Agency (KOTRA) in Yangon. "Even though it's open bidding, Japanese companies have more time, more information, more specs," he said. Many Myanmar officials privately express a preference for Japanese firms, but this doesn't mean their bids will be successful, said Akihito Sanjo, a senior JICA representative in Yangon. In August, for example, the Myanmar government awarded a billion-dollar project to build a new international airport for Yangon to South Korea's Incheon Airport, beating a consortium led by Japan's New Kansai International Airport. "The result was very unfortunate for us," said Sanjo. Yangon's biggest problem is one the former junta had trouble even acknowledging, never mind tackling: widespread urban poverty. At least 40 percent of its residents are "poor or extremely poor," said the United Nations housing agency UN-HABITAT. Yangon owes its grid-like central layout and monumental government buildings to the British, who ran the city for nearly a century until Myanmar won its independence in 1948. But it owes many of its slums to the junta, who in the 1980s and 1990s moved thousands of people from the city center to suburban wastelands, where they live in flimsy, flood-prone settlements with little or no access to basic services. A fast-growing population is also heaping pressure on already overburdened health and educational systems. Many families can't afford to send their children even to government schools, where supplies and various fees can cost up to 50,000 kyat ($50) a month - a huge sum when the average Myanmar salary is only a few dollars a day. Failure to help this poor, ill-educated underclass in a city where luxury cars and other conspicuous displays of wealth are increasingly common could lead to social unrest. Most democracy uprisings in Yangon against the former junta were sparked by the economic woes of the people. All this adds urgency to Toe Aung's work. It is often 10 p.m. before he leaves City Hall, a spire-bedecked monolith with cavernous, ill-lit rooms and desks piled high with Dickensian-looking ledgers. Computers are hard to spot. Now 46, he spent 18 years in the Myanmar military, serving as a staff officer for a junta hardliner called Brigadier General Aung Thein Linn, whom the junta appointed mayor of Yangon in 2003. Toe Aung followed. City Hall had no dedicated urban planning unit until Toe Aung set it up in September 2011, just six months after another reform-minded ex-soldier, Thein Sein, became Myanmar's president. "My dream is to make Yangon a model of urban development," he said. That might seem far-fetched, but stagnation and neglect has bequeathed Yangon some advantages over its Asian rivals. Its historic buildings, though in disrepair, have not been bulldozed, nor its green spaces devoured by greedy developers. But time is running out. Much of the area slated for new development is unproductive agricultural land, but speculation is driving up its price, said Toe Aung. "We can't control land prices in our city," he said. One such proposal being considered is a bridge to link the downtown with Dalat, a largely rural area on the opposite bank of the Yangon River. This has prompted land prices in Dalat to shoot up, said locals. As gridlocked Asian capitals such as Jakarta and Dhaka show, megacities don't function properly without mass rapid transit systems. At least 80 percent of Yangon commuters rely on the antiquated buses which honk and jostle in the streets below Toe Aung's office. They are overcrowded even outside peak hours. Motorcycles, common elsewhere in Asia, are not an option. They were banned by the former junta, because - so one story goes - a paranoid general felt vulnerable to bike-riding assassins. Reintroducing them to Yangon's clogged and chaotic streets would be "impossible," said Toe Aung. Fortunately, Yangon already has a circle and suburban lines plied by infrequent, slow-moving and ramshackle trains that connect the center to suburbs and industrial estates. Japanese experts working at Myanmar Railways are already researching how to upgrade the circular line, although no contract has yet been awarded for the actual work, said JICA's Sanjo. Japan is "definitely interested in that project," he added. Yangon lacks two other things - the first being money. The YCDC's 2012-13 budget is just 55 billion kyat ($56 million). Chicago, a city with half the population, passed a $6.5 billion budget last year. The second is a charismatic mayor in the mold of New York City's Michael Bloomberg or Jakarta's popular governor Joko Widodo. But don't ask an old soldier like Toe Aung to comment on this. In 2011, his ex-boss was replaced as mayor by Hla Myint - another former brigadier general. (Additional reporting by Jared Ferrie in Yangon.