United International Group Limited ("UIG", the "company" or the "Amata Hotels"), wholly owned by Mr. U Win Aung (the "sponsor") together with his wife, has 3 operational hotels in Myanmar under the Amata umbrella, including:92-room Amata Ngapali Beach Resort,http://www.amataresort.com76-room Amata Garden Resort Inlehttp://www.amatainleresort.com
, and31-room Amata Boutique House Baganhttp://www.amatabtqhouse.com.The sponsor plans to expand his existing operations in Bagan and Inle through the construction of a new 144-room hotel in Bagan in close proximity to the existing Amata Bagan hotel (http://bit.ly/2qeNQW2
); and a new 110-room hotel and 20 villas development on the same site (goo.gl/maps/6C1cDCoqtMR2) as the existing Amata hotel in Inle (together, the "project").The project will be undertaken in 2 phases, with Phase I comprising of 72 rooms in Bagan, 55 rooms and 20 villas in Inle, and shared facilities such as lobby, restaurant, etc. in both hotels ("Phase I"), and Phase II comprising of 72 rooms in Bagan and 55 rooms in Inle ("Phase II").IFC is considering to provide a loan of up to US$13.5 million for the proposed project; with US$8.5 million for Phase I and US$5 million for Phase II.
Overview of IFC's Scope of Review
The scope of IFC’s review of this investment included assessing the company’s capacity to oversee and monitor compliance with IFC’s Performance Standards (PS) as well as national environmental and social (E&S), and occupational health and safety (OHS) regulatory requirements.
The review relied on documents made available by Amata Hotels such as design plans, Initial Environmental Examination (IEE) reports for the proposed project, human resources (HR) policies and manuals, environmental, health and safety (EHS) monitoring data for its operational facilities, design specifications and drawings for the proposed developments under the project; etc.; and interviews conducted by IFC staff and consultants during site visits to the company’s operational hotels in Bagan and Inle Lake as well as at the company’s headquarters in Yangon.
The project will be implemented in Bagan and Inle Lake area – which are Myanmar’s flagship tourist destinations known for its cultural heritage and biodiversity resources respectively. Both Bagan and Inle Lake are already facing E&S challenges and impacts due to the effects of economic development in general, and tourism development in particular. This context adds to the above project-specific risks and impacts, and was carefully reviewed and analyzed as part of this due diligence.
For this purpose, several publicly available studies, master plans and such documents related to E&S issues associated with tourism development in Myanmar in general, and in Bagan and Inle Lake area in particular, were reviewed.
Moreover, to understand the E&S issues and risks associated with tourism development in Inle Lake area, IFC staff and consultants met with several local stakeholders active in the tourism sector and environmental conservation in the area. The organizations met with during the due diligence include: Biodiversity and Nature Conservation Association (BANCA), United Nations Development Programme (UNDP) Myanmar office, MCRB, Myanmar Forest Association, MIID, Partnership for Change – Inle Speaks and Nature and Wildlife Conservation Division of the Ministry of Natural Resources and Environmental Conservation among others.
The risks present at Inle Lake are primarily related to impacts on the lake’s biodiversity. Inle Lake is designated as Myanmar’s first Biosphere Reserve under UNESCO’s Man and the Biosphere (MAB) program- due to economic activity and floating gardens on the lake, and are described in detail under the PS6 section of this review summary.
With over three thousand Buddhist temples, monasteries, stupas and monuments compacted into one area, Bagan is home to the highest density of Buddhist architecture anywhere in the world. This very important and unique cultural heritage site also presents its own set of risks and issues for tourism development in the area, which is seeking designation as a UNESCO World Heritage Site. These have been discussed under the PS8 section of this review summary.